Strategic Reform Program (SRP)

Transcription

1 Strategic Reform Program (SRP) Presentation to c3i Defence Watch 6 July 2010 Jane Wolfe General Manager Reform & Special Projects Defence Materiel Organisation professionalise re-prioritise standardise benchmark improve industry relationships and industry performance lead reform

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3 THE DEFENCE WHITE PAPER 2009 Most comprehensive Defence White Paper ever, covering Defence strategy, capability and funding out to Based on a force structure review, 8 Companion Reviews, 3 other external Reviews and consultation across Government, public and allies. Companion Reviews Preparedness, Personnel & Operating Costs Science & Technology Industry Capacity Information & Communication Technology Estate Logistics Defence Capability Plan Workforce Intelligence Assessments Force Structure Review Brady Review of Defence Intelligence Mortimer Review of Defence Procurement and Sustainment Pappas Independent Defence Budget Audit Make every minute, dollar and round count 3

4 STRATEGIC REFORM PROGRAM (SRP) Companion Reviews ICT Workforce Defence Capability Plan Preparedness and Personnel & Operating Cost Estate Logistics Science & Technology Industry Capacity Logistics Rationalisation of warehousing from 24 to 7 sites Improved ICT $0.33 bn Reserves Better integration of the part time/ full time capabilities Sponsored reserves $0.38 bn Smart Maintenance Increase productivity & availability across 100 platforms and systems Reduce waste Standardise Provide Flexibility $4.4bn Smart Maintenance Increase productivity & availability across 100 platforms and systems Reduce waste Standardise Provide Flexibility $4.4bn Inventory Reduce holdings Improve stock target setting $0.71bn Inventory Reduce holdings Improve stock Target setting $0.71bn NEP NEP EO, EO/Clothing/Fuel Clothing, Fuel $0.43bn $0.43bn Defence Budget Audit Key Outcomes Manage cost pressures through tighter budget process Capture lasting and substantial productivity gains Achieve greater accountability through outputs driven budget model Construct the program to ensure deep and lasting reform STRATEGIC REFORM PROGRAM Improve Accountability Better Planning Greater Productivity $20bn over the decade 3-5 yrs for mature savings Non-Equipment Procurement Targets 23 categories of spending - travel/training Better buying and contracting practices Centres of excellence 60% of savings driven by hard decisions affecting demand $4.0bn (excludes eo/ Clothing/fuel) Savings Streams Workforce & Shared Services Civilianisation Conversion of contractors to Australian Public Service Lean admin backbone Shared Services $3.3bn ICT Consolidate 200 data centres to less than 10 Create a singe enterprise architecture Standardise Defence ICT environment Review the effectiveness of the two pass process for ICT projects $1.9bn Other Reviews Brady Review into Intelligence Capability Mortimer Review into Defence Procurement and Sustainment Mortimer Review into Defence Procurement and Sustainment Defence Savings Program Savings from other categories previously identified $5.1bn

5 CONTEXT: POLICY SETTINGS The Defence White Paper, in combination with the Strategic Reform Program (which includes the Government response to the Mortimer Review) is bringing major changes to how Defence and the ADF conduct and manage their business. Industry already plays a crucial role in delivering and sustaining ADF capability. It will have an even more important role to play in the future Defence will depend on effective relationships with industry to deliver Force 2030 and the Strategic Reform Program. At the same time, the Government s long-term plan for Australia s future defence force will generate substantial new opportunities for Australia s defence industry. These new opportunities should lead to an expansion of the defence industry sector to meet these increased requirements.

6 CONTEXT: GUIDING PRINCIPLES We recognise the need for reform to deliver savings in military equipment sustainment in order to fund future defence capabilities and are jointly committed to succeed. Capability, quality and safety will not be compromised. Savings will be genuine and will not transfer costs and risks to other areas or to later years. We will be open and transparent in implementing SRP subject to normal commercial constraints. Together we will explore all avenues on both sides of contracts to reduce program and process costs, and streamline and improve decision-making. We will work in partnership to identify and implement reform initiatives. We will ensure that innovation is encouraged and lessons learned are shared across our organisations to maximise the potential to realise the intent and savings targets required under the SRP. We will support constant and positive communication of SRP goals throughout our organisations. Reasonable profit will be maintained when agreed initiatives including reducing costs to create the savings needed to achieve the SRP. Contracts will, where appropriate, include incentives to encourage long term behaviour which minimises costs and maximises effectiveness.

7 SRP SAVINGS - SOURCES Sources of savings will include (but are not limited to): Transformational change involving changes in demand (Capability Manager) through to contracts for support (DMO) and provision of support (Industry) Contract renegotiations Re-tendering support activities Improved availability planning Lean Deeper Level maintenance Asset Management Plans Improved inventory management

8 MAKING PROGRESS Air Force C-130 deeper maintenance and support options, demand practices Hornet maintenance standardised shift changeover process Navy Mine Hunter Coastal pilot program - over 70 initiatives to be examined Major Fleet Unit ship repair initiative being progressed Army Vehicle maintenance optimisation Detailed review of cross-product processes Electronics Wide Area Surveillance radar network improvement program Fuel Improving contracting, operator practices & rationalising fuel types

9 REFORM IN INVENTORY MANAGEMENT Goal: A well-balanced and affordable inventory to support Defence capability Challenge: Continue to meet today s requirements (business as usual) while positioning Defence for future success Who is involved? DMO, Joint Logistics Command, the Capability Managers and Industry

10 PRACTICAL ACTIONS Asking the right questions How much could be achieved if we took a wider view of reform? What efficiency measures could be just as relevant and applicable for other platforms? How can Defence change to become more efficient e.g. our purchasing behaviour or the way work is bundled and contracted out? Implementation today with tomorrow in mind Commitment to actions that will produce enduring savings Engage in opportunity identification to better understand and fully exploit results of value stream analyses Continuous learning and sharing for future improvement Invest in getting the job done, not hiring lawyers to haggle over T&Cs Focus on outcomes for the ADF they deserve nothing less

11 WE RE NOT ALONE US REFORMS Better buying power for warfighters and taxpayers Restore affordability in defense procurement and to improve defense industry productivity Changing approach to contracting for major procurements Annual goal of 2 to 3 percent, which accumulates over the coming years First of all, everybody knows that we re entering a new era, that we re at an inflection point, and that therefore we need to adapt our management practices to that reality -- play the game that s on the field. Secondly, they can do the math, which is that we re going to enjoy some real growth in defense spending, but not the kind that we ve enjoyed over the last decade.

12 INFORMATION AND ASSISTANCE SRP and Smart Sustainment information Defence internet: DMO Internet: Points of Contact Jane Wolfe Reform and Special Projects Group Phone: Smart Sustainment Reform To Provide Reform Suggestions and Contributions, or ask a Question dmo.sro@defence.gov.au Phone: or