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Thursday, 9 February 2012
Page: 696

Defence: Early Indicators and Warning System

(Question No. 1441)

Senator Humphries asked the Minister representing the Minister for Defence, upon notice, on 9 November 2011:

In regard to an Early Indicators and Warning System (the system):

(1) How many projects have activated the triggers established as part of the system and can a breakdown be provided of each post first-pass and post second-pass example.

(2) How many internal reviews have been established and conducted as a result of the activation of these triggers and can a list be provided of all completed and ongoing internal reviews.

(3) What is the average duration of these internal reviews and what resources are dedicated to their conduct, including a breakdown of those resources using average hours and work days needed to conduct the review.

(4) How many full diagnostic examinations (Gate reviews), listed as completed and ongoing, have been:

(a) recommended; and

(b) conducted.

(5) What is the average duration of a Gate review and what resources are dedicated to their conduct, including a breakdown of those resources using average hours and work days to conduct the review.

(6) Has a Gate Review Board been formed for each Gate review as announced by the Government in May 2011.

(7) For projects in contract, has the conduct of internal or Gate reviews had any effect on the Commonwealth fulfilling its contractual obligations.

(8) What changes have been made to the triggers since the system was established in May 2011.

(9) How many independent experts have been contracted to provide advice to Gate reviews, indicating for each review:

(a) who has been contracted;

(b) how much work they did or are doing on that review;

(c) when they did that work; and

(d) how much they have been or will be paid.

(10) What contracting methodology has been used for these engagements and have all of these engagements been published on AusTender.

Senator Chris Evans: The Minister for Defence has provided the following answer to the honourable senator's question:

(1) The first quarterly Early Indicators and Warnings (EI&W) report, completed in September 2011, identified 16 pre-Second Pass capability development projects and six post-Second Pass projects that breached the EI&W thresholds. A list of the projects will be published.

(2) Projects that trigger EI&W thresholds are reviewed by the Director General of the Defence Materiel Organisation (DMO) Independent Project Performance Office (IPPO) to determine if a Gate Review is required. There have been four such Gate Reviews for the following projects:

JP2089 Phase 2B, SEA1390 Phase 4B, JP2025 Phase 5 and Land 17 Phase 1A.

(3) Typically, for each Gate Review, an experienced analyst from the DMO Gate Review team and an External Board member review the project over a period of approximately two weeks. The total time varies with each project depending upon size and complexity. This analysis leads to the provision of an agendum paper to the Gate Review Board members highlighting key concerns confronting the project.

The membership of each board is tailored according to the nature of the project; the larger, more complex the project, the more senior the board members. Each board then runs for approximately four hours, plus a 1-2 hour pre-brief. The board members may choose to conduct additional sessions. The board comprises a chair, usually one of the DMO General Managers or a DMO Division Head; one or two external members; and two to four other DMO managers across the spectrum of legal, finance, engineering and project management disciplines.

(4) (a) In May 2011, the Minister for Defence directed that the DMO Gate Review program be expanded to an annual review of all DMO major capital projects. There are approximately 180 major projects to be reviewed each year.

(b) This calendar year approximately 90 projects will have been reviewed.

(5) See the answer to Q3.

(6) The composition of each Gate Review Board is identified two months ahead of the review.

(7) No, the role of the Board is to review the status of a project, and provide direction to DMO line management.

(8) No changes have been made.

(9) (a) The panel of External Board Members (independent experts) currently numbers 15, rising to 20 by April 2012.

Current external members are:

Mr Ross Smith Procurement consultant, ex Department of Defence and Finance

Dr Ralph Neumann FAICD Physicist, ex Department of Defence

Mr Roger Howick FCCA Ex industry CFO

Mr Ian Irving Engineer, project manager, ex industry executive

RADM Rtd Peter Purcell AO Project manager, Company Director, ex navy engineer

Mr Frank Lewincamp PSM Ex Department of Defence; DIO, DMO

Mr Barry Barnes Engineer, project manager, ex industry executive

RADM Rtd Oscar Hughes AO Project manager, ex navy engineer

AVM Rtd Clive Rossiter AO Consultant, ex RAAF engineer

Mr Rod Locket Engineer, ex industry CEO

Mr Garry Seaborne Engineer, shipbuilding project manager

CDRE Ret Merv Davis AM Ex industry CEO, ex navy engineer

Dr Ian Williams PSM Ex Department of Defence; DMO

Mr John Gallacher Engineer, project manager, ex industry CEO

Mr Alan Johnson Engineer, project manager, ex industry CEO

(b) An External Board Member averages 32 hours work per Gate Review. The number of Gate Reviews each has done to date varies from 5 to 20.

(c) This calendar year the external members will have sat on some 90 reviews. Next calendar year they will be sitting on some 180 reviews.

(d) In financial year 2010/11 expenditure on external members was $580,000. In financial year 2011/12 expenditure to date is $627,000, with an end of year forecast of approximately

$2 million.

(10) External Members are engaged on individual 12 month contracts at a standard hourly rate. They are paid a monthly fee plus time and materials for each Gate Review. All engagements have been published on AusTender.