Presentation to Land Environment Working Group

1
Presentation to Land Environment Working Group

• 28 October 2008
• Damon Howes
• Industry Co-Chair

2
Aim and Scope

• Land Warfare Conference Some key points
• So whats going on?
• The Mortimer Review
• Overview of a future option for Defence
  Acquisition Strategy based on NZDF Project
  ALEXANDER.
• Upcoming events
• Land Warfare Conference 2009
• Need seek your feedback on LWC for DSTO

3
Land Warfare Conference 200810th Year

• This afternoon Chief of Army Conference
  delegates review the exhibition (need balance
  this with meeting DGLD staff).
• LWC Newsletter, LandForce, will be produced
  daily. Short information segments, maybe with a
  photo. Send your points to Colin.blair_at_dsto.defen
  ce.gov.au
• Teachers/Students/Military/Govt due on Friday.
• Feedback on LWC 08 to me at dhowes_at_thomascoffey.co
  m.au

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So whats going on?

• Lots inside Defencecomplicated by the financial
  crisis (GFC) and unpredictable markets
• Greg Combet, 21 Oct 08, said there would be some
  tough arm wrestling but expected the 3 real
  cost increase to be maintained.
• White Paper and Companion Reviews.
• Companion reviews pretty much finished
• White Paper and Budget preparation require some
  direct linkages. Budget bought down in May 2009.
• Equally the Defence Capability Plan needs
  linkages for major expenditure.

5
So whats going on?

• Defence Capability Plan 2009-19
• Public version will probably be released around
  DI at end June 09.
• Combets response to public DCP release question.
• Between now and then, we can appreciate the LEWG
  forums for what updates can be provided.

6
Mortimer Review

• David Mortimer, AO is Chair of the Defence
  Procurement Advisory Board also Chairman of
  Leightons.
• Titled, Going to the Next Level it is the
  report of the Defence Procurement and Sustainment
  Review
• http//www.defence.gov.au/publications/mortimerRev
  iew.pdf
• Announced by Labour Government on 7 May 08 and
  was released to the public on 23 Sep 08.
• Review is presented as independent and makes 46
  recommendations

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Mortimer Review

• Five main areas covered
• The Strategy and Needs Analysis of Capability
  Planning
• Defining the Requirements of Capability
• The Capability Acquisition Process
• Sustaining and Disposing of Capability and
• Driving Cultural Change in the Defence Materiel
  Organisation

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Mortimer Review

• Some motherhood statements

The Government should work with industry and
State Governments to address the skills shortages.
Changes to the scope of projects should occur
through a disciplined process that considers the
merit of the change mindful of the impact of cost
and schedule.
Contracts should reflect the risks of the
procurement being undertaken
CDG and DMO should be adequately resourced (my
emphasis).
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Mortimer Review

• DMO more business like mentioned 14 times in
  the 118 page report
• New SES Band 3 Commercial position in DMO
• The challenge
• Capability Development Group should develop the
  relevant information for a projects entry into
  the Defence Capability Plan and it should focus
  on achieving a more disciplined cost, schedule
  and risk information for a projects entry

10
Mortimer Review

• DMO should be responsible for the acquisition
  strategy throughout the requirements definition
  process.
• Greater emphasis on off the shelf
• All projects assessed for potential as Public
  Private Partnerships (PPP)
• Executive Agency??
• Acquisition funding directly appropriated to the
  DMO (not through Defence)

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Mortimer Review

• DCP Providing explicit cost information was
  contrary to the Commonwealths commercial
  interests (replaced by Acquisition Category
  (ACAT) Framework?)

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Acquisition Strategy an Option

• Recently had opportunity to be exposed to the New
  Zealand Defence Force acquisition process.
• Project ALEXANDER seeks to outsource some
  logistics support for NZ Army and other
  Government agencies. Project value is NZ 200-
  250m over 10 years.

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Project ALEXANDER

• NZDF staff did initial fact finding tour.
• Released a ROI document requiring interested
  parties interested in establishing a relationship
  to respond to an exam (ROI).
• Industry Brief, where they admitted they didnt
  have all the answers.
• Exam submitted
• They marked the exam within 30 days and gave
  comprehensive feedback (four A4 pages) on your
  result as well as a marking guide
• General statements of positives and negatives.
• Followed up by 1-1 debrief.

14
(No Transcript)
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Project ALEXANDER

• Downselected six companies to attend a round
  table of discussions and site tours.
• Focus on sharing ideas
• Conduct three such workshops, each of a few days
  with specific agenda
• Outcome is an agreed Statement of Work which has
  industry buy in
• Release a Pre-Qualification Questionnaire to
  remaining interested parties
• Assessment
• Two companies/consortiums selected to receive the
  final RFT/RFP documentation
• Assessment and parallel negotiations as required
  (so NZDF still get competition)

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Project ALEXANDER

• Outcome for NZDF is a partner who has been part
  of the process from early stages and yet has
  still needed to compete for success.
• Outcome for industry is being part of a staged
  acquisition with robust and valuable feedback,
  and where they can drop out at any time.
• Outcome for both should be a strong and robust
  partnership where each others strengths and
  weaknesses are identified and acknowledged.
• To me, this is as close as I have seen to a
  win-win. The only thing NZDF could have done to
  really make Industry fall down in delight would
  have been to make a financial contribution to the
  companies expenditure. The reality is that these
  costs have actually be quite small relative to
  the project size and scope.

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Project ALEXANDER

• Take aways
• Acknowledgement that Defence does not have all
  the answers
• Announce budget up front
• Seek and deliver on a partnership arrangement
• Open, robust and timely feedback on submissions
• Open and transparent process that meets
  competition/value for money imperitive
• This is based on a services contract, what
  process does NZDF use for a physical capability?

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LWC 2009

• Ongoing issue
• View from Industry has been considered
• For
• Cost effective while DSTO organise
• Technological changes require annual refresh
• DCP mid 2009 flows into Oct LWC/LEWG
• Against
• Cost on industry and Defence of annual basis
• Not just
• Way forward TBC by Friday

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Bits and Pieces

• Note Defence Portal at www.DplusI.defence.gov.au
• This has an acronym search feature and provides
  opportunities for overseas companies to search
  for Australian Industry partners.
• Still doesnt make sense?
• Talk with others and ask questions
• Defence Industry Unit, Australian Business
• AIDN
• DMO Industry Office
• Defence 101 Course
• LWC 2008 feedback to me by NLT end Nov 08 to
  dhowes_at_thomascoffey.com.au

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Upcoming Events

• ADM Conference 17-18 February 2009 Canberra
• Avalon 10-15 Mar 09 - Melbourne
• D I - 30 Jun 2 Jul 09 Adelaide
• LWC 2009???
• LEWG
• Canberra Drinks in Dec 08 and Apr 09

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Summary

• Shared my thoughts on Mortimer Review and an
  alternate acquisition strategy.
• Enjoy and maximise the LWC 2008
• Feedback dhowes_at_thomascoffey.com.au
• Note DI and LEWG