CEO Chris Walton writes in the Canberra Times on the importance of building engineering capacity in government defence procurement.
Saturday, 22 March 2014
If the government wants to deliver defence ships and submarines that don’t bankrupt taxpayers and can properly defend our nation, it must have sufficient engineering and technical expertise.
Recent findings by the Australian National Audit Office of systemic failures and cost blowouts of more than $300 million on the $8.45 billion Air Warfare Destroyer project have raised questions about the Defence Materiel Organisation, the government agency responsible for procuring equipment for our defence forces.
Given the imminent release of the National Commission of Audit report that will almost certainly usher in a tough budget, rumours grow about the DMO’s future. The private sector is circling, sensing taxpayer dollars on offer. The Australian Industry Group is calling for 3000 DMO staff to be cut from the total of 6500, as a first step to prepare the organisation for privatisation.
The ANAO report showed the DMO is already struggling to maintain sufficient oversight, and 3000 fewer staff would ensure as little government oversight of the private sector as possible.
The public will be gamed for profit if the government is not an intelligent and informed buyer of what the private sector wants to sell. What is needed is a shift in thinking. Engineering expertise needs to be recognised for the significant contribution it can make to the successful scope, design and delivery of infrastructure projects. This is not a new or individual view – there is a chorus of industry voices calling for adequate engineering expertise in the public sector.
The Chief of Navy, Vice Admiral Ray Griggs, put it succinctly in responding to the Rizzo Review, when he said: “We have for far too long viewed engineering as an overhead and not as a mission enabler.”
More recently, Peter Layton from the Australian Strategic Policy Institute addressed the rumours of a potential 20 per cent cut in DMO staff, saying: “We’ve been there, done that, and it cost us all a lot of money. The best example is Navy, which the Rizzo review found had in earlier reform programs significantly cut their headquarters engineering expertise, saved minimal cash and ended up with poorly maintained amphibious vessels that required much money to put right. The Coles review of submarines was similarly scathing. To improve efficiency, Defence management needs to get better, not get cut.”
More concerning are the potential risks and impacts of failures and safety if DMO resources are sliced, diced and privatised. After similar cuts and strains in Britain’s Ministry of Defence, the Haddon-Cave report directly attributed the deaths of 14 service personnel in a Nimrod surveillance plane crash in Afghanistan in 2006 to “organisational trauma” at MOD.
The report identified “financial pressures and staff cuts” as leading to the Nimrod project being delegated to a junior member of staff who was expected to manage the integrated project team that included BAE and QinetiQ. Unfortunately, for many at DMO, this has an all-too familiar sound.
The British government attempted to privatise its defence procurement agency but this fell apart when it was unable to find enough private bidders. With a limited pool of buyers here, our government’s hope of a quick fix could face similar hurdles. And Canberra could have conflict of interest problems, given that buyers here would almost certainly be government clients.
It’s clear we need more engineering capacity, not less. In our submission to the National Commission of Audit, Professionals Australia urged the government to invest – to get the best value from infrastructure spending and ensure it can work effectively with the private sector.
We know what happens when there is not enough engineering knowledge and capacity. There is waste. There are project over-runs. And there are increased costs.
According to the latest ABS data, governments spent $32.9 billion on infrastructure in the past year alone. If 20 per cent is being wasted because of poor scope, design and disputation, we are wasting more than $6 billion a year. There is an overwhelming imperative for reform now – taxpayers can no longer afford to waste billions.