Tabling JCPAA Report: Defence major projects report
Every year the Department of Defence and the Australian National Audit Office work together to produce a consolidated review of selected major Defence acquisition projects, with the resulting report called the Major Projects Report, or the MPR as it has come to be known. The MPR is then reviewed by the Joint Committee of Public Accounts and Audit.
The 2015-16 MPR has a total approved budget of approximately $63.7 billion, covering nearly 58 per cent of the budget within the Approved Major Capital Investment Program.
The MPR reviews risks, challenges and complexities facing major projects in general, as well as the status of the selected major projects in terms of cost, schedule and forecast capability.
This review of the MPR by the JCPAA also included consideration of ANAO audit report 11 (2016-2017) on the Army's armed reconnaissance helicopter—known more widely as the Tiger helicopter.
The ANAO found that the Tiger helicopter fleet has not yet delivered the original capability expected by the Australian government, and continues to experience higher-than-expected costs.
The Chief of Army declared final operational capability, or FOC, for the Tiger project in April 2016. The declaration was seven years later than planned, and was accompanied by nine operational caveats.
At the time of audit, the Tiger project had 60 capability deficiencies deemed by the Department of Defence to be critical.
The committee examined the ANAO's finding that the Department of Defence had not prepared the Tiger project data summary sheets 'on the basis of the guidelines', and that the project maturity score of the Tiger project did not 'accurately or completely represent the project's maturity' at the time of review.
The committee gave particular attention to the significance of the Auditor-General's qualified audit finding. Accordingly, the committee agreed to continue to monitor the Tiger project and related issues in future MPRs.
Previous committees have taken an interest in transparency across the project life cycle for projects reported in the MPR, and the committee has pledged to continue to maintain and enhance transparency where possible.
The committee also examined capability performance reporting and analysis, and noted the ANAO's demonstration that application of different analysis methodologies could yield vastly different results. The committee recommended that Defence review its procedures for the development of expected capability estimates and report back to the committee on the outcomes of the review within six months and with a progress report within three months.
Project maturity scores were another area of interest to the committee. Project maturity scores are designed to provide 'quantification, in a simple and communicable manner, of the relative maturity of capital investment projects as they progress through the capability development and acquisition life cycle'. In 2016 the committee recommended Defence make improvements in project maturity scores, and this year the committee has reiterated that recommendation, calling on Defence and the ANAO to commence discussions on updating project maturity scores. The committee has outlined a series of deadlines to progress these discussions.
The committee is pleased to note the downward trend of time lost over the course of projects, otherwise known as 'schedule slippage', but notes that projects should be properly classified at commencement to ensure that expectations around project delivery are realistic.
The committee also noted differing methodologies used by Defence to calculate cost per flying hour between the MPR and the audit into the Tiger helicopters project, recommending that Defence devise a single methodology, one single methodology, to enable clear comparisons to be made between documents or projects. The Department of Defence should provide this information to the committee prior to the first sitting week of 2018.
Progress has been made in improving transparency in the reporting of Defence major project expenditure over the years since the MPR was instituted, and incremental improvements occur year upon year thanks to the professionalism of the ANAO and Defence of Defence. In concluding, I would also like to extend my thanks to all members of the committee for their deliberations during this inquiry, and also to the secretariat.
I commend the report to the House.