Public Accounts and Audit Committee Report - Defence Materiel Organisation 2013

As the chair of the committee has just mentioned, the 2011-12 Major Projects Report was the fifth to be produced by the Defence Materiel Organisation in conjunction with the Australian National Audit Office. Over the past five years, the report has grown into a valuable tool for enhancing the transparency and accessibility of information available on Australia's largest defence projects. The committee's review of the 2011-12 MPR consisted of a public hearing attended by the DMO and the Audit Office, and a range of written questions to the DMO.

This year's Major Projects Report included the results of a survey of external stakeholders, commissioned by the DMO, on the use by and value of the report. Although the response rate to the survey was low, the results indicate that the MPR is generally seen as a valuable asset for improving the accessibility of information. However, the results also suggest that more can be done to improve the transparency, clarity and accuracy of information in the report. Improving these aspects of the report was the focus of the committee's recommendations in the report tabled today.

The committee's review also examined the presentation of financial information in the report; project schedule slippage; and DMO governance and business processes. The committee has made recommendations aimed at: supporting the development of meaningful project financial assurance statements; disclosing information on the expenditure of project contingency funds; improving consistency in the application of project 'maturity scores'; and taking a more strategic approach to business systems improvements.

The committee also examined the issue of enhancing the existing level of public reporting on the DMO's sustainment of capability functions. This is an area I am particularly interested in. Sustainment is expected to take up more than 50 per cent of the DMO's budget in 2013-14, yet the current level of reporting on sustainment is limited to a small amount of highlevel performance and expenditure information on the DMO's top 20 sustainment products. Following questions from committee members, the DMO has now agreed to increase its reporting to cover the top 30 sustainment products. However, the committee remains concerned that, while this proposal may increase the breadth of reporting, it does nothing to increase its depth. The committee has recommended that the Department of Defence report back to it, prior to the final sittings of the 43rd Parliament in June, on how it intends to increase the transparency of sustainment information. There are examples, I understand, of other defence agencies throughout the world which provide a greater depth of information on sustainment elements of projects, acknowledging the sensitivity of these areas and the fact that quite often we are in operational environments here and so it is particularly important that we balance those sensitivities with the need for greater transparency.

In closing, I would like to sincerely thank agency representatives who were involved in this inquiry for their cooperative approach in support of the committee's role of scrutinising the spending of public money.

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