2017 Global SRM Research Report - Solving the value Puzzle

HELPS SRMTAKEON MILITARY CHANGES GOVERNANCE

CASE STUDY AUSTRALIANDEPARTMENT OF DEFENCE

Defence procurement is difficult. High-profile projects in the UK and the US have famously fallen behind and dramatically overspent. But the Australian Department of Defence is looking to SRM to make a difference.

To add to this complexity, the Australian Department of Defence frequently collaborates with foreign military forces to capitalise on commonality of capability and economies of scale. Although it helps procure equipment or upgrades that would otherwise be unaffordable to a single nation, the strategy means the development of requirements is often a lengthy process, needing significant investment of resources. Failure to identify and address a number of relevant complexities can jeopardise cost and schedule objectives, Mr Desmond says. At the same time, the internal organisational priorities of the Department of Defence places an emphasis on securing value for money outcomes, but there are many complexities around the defence budget. Finally, there is the challenge of internal staffing. Australian Defence Force staff are subjected to posting cycles, where they are rotated through various roles. While this equips individuals with a broader set of skills, the lack of continuity in acquisition and sustainment projects can provide challenges for the customer. “Once relationships are established they have to be rebuilt every few years, potentially discouraging suppliers from investing in them,” Mr Desmond says.

With a total budget of AU$34.6 billion (£20 billion), the Australian Department of Defence includes the Royal Australian Navy, the Australian Army and the Royal Australian Air Force, as well as a civilian public sector workforce. The result of such a diverse organisation is complex procurement and supplier relationships. In 2016, an internal review had suggested it needed to better engage with vendors to address difficulties in procurement and service delivery. The challenges were multiple, says Mike Desmond, Director SRM in the Capability Acquisition and Sustainment Group (CASG) in the Department of Defence. “The complexity and size of the organisation, together with each entity’s unique culture, make it difficult to have a standard procedure in dealing with suppliers. This is in contrast with suppliers, which typically have mature client relationship systems in place. Consequently, suppliers are likely to have a more transparent view of their contracts across the organisation, often creating an imbalance in access to information during supplier engagements,” he says.

CASE STUDY STATE OF FLUX 2017 GLOBAL SRMRESEARCHREPORT