History
The Defence Materiel Organisation was formed in 2000 when the then Defence Acquisition Organisation merged with Support Command Australia, bringing together the Department of Defence's capital acquisition and logistics organisations into a single entity. The DMO was given responsibility for purchasing, through-life support and disposal of military equipment assets, other than facilities and administrative assets.
In July 2005, DMO became a Prescribed Agency under Australian Financial Management and Accountability legislation, meaning that although it remains a part of the Department of Defence, it was separately accountable to the Minister of Defence for its budget and performance.
DMO's stated vision was to become the leading program management and engineering services organisation in Australia. Its goal was to deliver projects and sustainment on time, on budget and to the required capability, safety and quality. [3]
The DMO budget in 2012–13 was A$9 billion, shared between purchasing new equipment and sustainment and through-life support (maintenance, upgrades, fuels, explosive ordnance and spares). [4] [3]
Mortimer review
In May 2008, the Australian Government commissioned a review of Defence procurement, which included in its terms of reference a report on the progress of implementing reforms from the last such review – the 2003 Kinnaird Review.
The review was conducted by David Mortimer, who presented his findings in September 2008. Mortimer identified five principal areas of concern. There was/were:
- inadequate project management resources in the Capability Development Group,
- inefficiencies in the processes leading to government approvals for new projects,
- personnel and skill shortages in the DMO,
- delays due to industry capacity and capability, and
- difficulties in the introduction of equipment into full service.
In all, Mortimer made 46 recommendations, with 42 accepted in full by the Government and three accepted in part. One recommendation was not accepted – that the DMO should be separated from the Department of Defence and become an executive agency. This recommendation, which was also made in the 2003 Kinnaird Review, was not implemented by the Howard government. As an executive agency, the DMO would receive its own acquisition funding stream as a government appropriation, and would be headed by a chief executive with "significant private sector and commercial experience". Mortimer also recommended that a general manager Commercial [5] position be created to implement a business-like focus throughout the organisation. [6]
Post-Mortimer reforms
Ministerial statements in 2010 and 2011 suggested that the Government believed new procurement reforms were needed. On 26 November 2010, the Minister for Defence, Stephen Smith, in adding project AIR 5418 Joint Air to Surface Stand-off Missile (JASSM) to the 'Projects of Concern' list, stated that the listing was because of "our poor management, our failure to keep government properly and fully informed about the project and its difficulties." Minister Smith also said that he had asked Defence to review the effectiveness of its management of major projects. [7] On 6 May 2011 Minister Smith announced further Defence procurement reforms aimed at improving project management, minimising risk at project start and identifying problems early [8] and on 29 June 2011, Minister Smith announced reforms to the management of 'Projects of Concern' including the development of formal remediation plans for designated projects. [9]
First Principles Review
On 1 April 2015, the Minister for Defence released the First Principles Review. The review recommended that the Defence Materiel Organisation should be disbanded and the transfer of its core responsibilities in relation to capability delivery to a new Capability Acquisition and Sustainment Group, [1] which took effect from 1 July 2015. [10]
The First Principles developed were:
- Clear authorities and accountabilities that align with resources
- Decision-makers are empowered and held responsible for delivering on strategies and plans within agreed resourcing.
- Outcome orientation
- Delivering what is required with processes, systems and tools being the ‘means not the end’.
- Simplicity
- Eliminating complicated and unnecessary structures, processes, systems and tools.
- Focus on core business
- Defence doing only for itself what no one else can do more effectively and efficiently.
- Professionalism
- Committed people with the right skills in appropriate jobs
- Timely, contestable advice
- Using internal and external expertise to provide the best advice so that the outcome is delivered in the most cost-effective and efficient manner.
- Transparency
- Honest and open behaviour which enables others to know exactly what Defence is doing and why.
The Focus on core business principle led to the contracting of many roles within CASG, and the lowest number of civilian APS staff within Defence.
