Dean Smith (WA, Liberal Party) Share this | Hansard source

On behalf of the Chair of Joint Committee of Public Accounts and Audit, I present the committee's report, Report 448: Review of the 2013-14 Defence Materiel Organisation Major Projects Report.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

This report details the findings of the committee's examination of the second Defence Materiel Organisation Major Projects Report reviewed by the Joint Committee of Public Accounts and Audit in the 44th Parliament and the seventh to be reviewed by the JCPAA overall. This year's report covers 30 projects with a combined approved budget of $59.4 billion.

The DMO MPR constitutes the Australian National Audit Office's review and analysis of the progress of selected major Defence acquisition projects managed by DMO, and aims to consider cost, schedule, and capability performance and to function as a longitudinal analysis of procurement projects over time.

The Joint Committee of Public Accounts and Audit assesses the overall content, accessibility and transparency of the information provided in the MPR, and also reviews and endorses the guidelines that constitute the MPR.

The committee is committed to ensuring the information presented in the Major Projects Report helps to maximise transparency and accountability in the Defence acquisition process for major projects that have been managed by DMO and will continue to be managed by the Department of Defence in the future.

Specific areas of focus in the committee's review of this year's report include some specific projects listed in the 'Projects of Concern' as well as broader issues regarding governance and business processes.

Defence major projects are inherently complex and meeting cost, schedule and capability targets must be considered in this context, particularly for developmental projects.

DMO has summarised the range of issues affecting the completion of major projects. These include:

The committee acknowledges these various challenges.

DMO has played a strong and positive role in the development of the MPR since its inception in the mid-to-late 2000s. With DMO's abolition and the Department of Defence reabsorbing the DMO's functions, the committee expects the department to continue working on the MPR with the same intensity shown by DMO over the past eight years.

The committee, in conjunction with Defence and the Australian National Audit Office, is now focussed on establishing a mechanism through which sustainment reporting can be better scrutinised. Sustainment expenditure is currently at approximately $5 billion per annum and predicted to increase significantly over time. The committee considers sustainment expenditure to be an area requiring further parliamentary scrutiny on the adequacy and performance of Defence involving billions of dollars in the future.

Objections in the past by DMO and Defence to providing further information on sustainment have centred on security issues—that is, that more detailed reporting of sustainment in the public arena would compromise national security. The committee is in complete agreement with Defence about the need to protect classified information.

Having had a series of options presented to the committee by the Australian National Audit Office, initial discussions with Defence have already occurred and, at this stage, it appears likely that sustainment reporting will be developed through an evolutionary process until both the committee and Defence are comfortable with a final structure, not unlike the development of the MPR itself.

The committee, along with the Australian National Audit Office, DMO and the Department of Defence, have worked diligently and constructively over the past eight years to progress the MPR to where it is today. The reforms to the department are designed to bolster efficiency, and they should not result in a diminution in the intensity with which Defence approaches its work. The committee looks forward to working with the new reformed Department of Defence to produce the same high-quality MPR in the future so as to ensure that the improvement gains made in terms of project acquisition management over the past eight years are maintained. This also applies to the new sustainment reporting that the committee, the Australian National Audit Office and Defence are now embarking upon.

On behalf of the committee, I would like to express my appreciation for the work done by the DMO and the Australian National Audit Office in producing the Major Projects Report this year.

I commend the report to the Senate.

Question agreed to.