Optimising the Acquisition and Sustainment of a New Capability Presentation to the International Air Force Modernisation Conference Kuala Lumpur, Malaysia Presented by: Dr Andrew Jacopino Executive Director Contracting - Performance Based Contracting Defence Materiel Organisation (DMO) Australian Department of Defence 10th June 2014 Copyright 2014 Commonwealth of Australia This document is the proprietary and exclusive property of the Commonwealth except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted or used for any purpose without the written permission of The Commonwealth professionalise | re-prioritise | standardise | benchmark | improve industry relationships and industry performance | lead reform Introduction to the Australian DMO (1) Our Purpose • The Defence Materiel Organisation (DMO) exists to equip and sustain Defence’s materiel capabilities to meet Australia’s needs in an effective, efficient, economical and safe manner. Our Core Functions • To support our core business of sustainment and acquisition, the functions we perform are: – Procurement – Financial Management – Project and Sustainment Management – Materiel Engineering – Materiel Logistics 2 Introduction to the Australian DMO (2) The Australian DMO has the following characteristics: • employs over 7,100 people in more than 70 locations across Australia and overseas. • Annual budget of $9.7 billion in 2013–14, the DMO is managing: – over 180 major capital equipment projects, – over 70 minor projects, – sustains and upgrades over 100 existing fleets. • Signs approximately 2,500 contracts of $100,000 or more a year. • Relationships with industry suppliers are critical to performance; managing contracts is one of the key challenges for the DMO. 3 The New Capability 4 The New Capability $ Short term Long term .......? 5 Acquisition and Support Implementation Strategy (ASIS) (1) • Purpose of the ASIS is to document a strategy with: – manageable risks and optimal commercial and capability outcomes. • Outcome of the ASIS – most likely to achieve project success where success for the DMO is defined as: • delivery of a Materiel System that is: – fit for purpose, including considerations of feasibility, affordability and sustainability – safe, – consistent with Government approval, and – achieved on time and within budget (including expenditure profile). ASIS (2) • Provides the implementation strategy for the materiel elements of the endorsed Capability System option. – Both acquisition and support. – Mindful of the interrelationships with the non-materiel FIC elements. – Identifies the different strategy alternatives. • Sets the planning baseline for the DMO. – Provides a concise common view to all parties. – Includes other parties that interact or interface with the DMO’s implementation activities. • Defines the market-engagement strategy • Provides a summary of the schedule and resources required by the DMO to implement the strategy. • Identifies delegated authorities. ASIS Perspectives • To do this the ASIS uses 5 perspectives: 1. Solution-class 2. Support 3. Industry 4. Procurement and Contracting (P&C) 5. Management ASIS – P&C Perspective • Purpose of the Procurement and Contracting (P&C) Perspective: – consider the suitability of the range of Procurement Delivery Models and Procurement Processes – select and design the preferred Procurement Delivery Model(s) and Procurement Process(es) • The P&C Perspective examines the following: – Procurement Delivery Model(s) – Procurement Process(es) – Key commercial considerations Procurement Delivery Models Procurement Delivery Conventional Model PBC / PBL Managing Contractor Contracting for Capability Acquisition Defence Defence Defence Contractor Contractor Support Defence Defence / Contractor Contractor Contractor Contractor Defence Contractor or Third Party Asset Ownership Higher Upfront Costs Defence Defence Defence Smaller Defence Footprint 10 Key Commercial Decisions Milestone Payment Cost Exploration Cost Reduction Cost Containment Fixed Profit based on a Cost+ Approach Fixed-Price PainShare/Gain-Share Fixed-Price PainShare/Gain-Share Fixed Profit based on a Cost+ Approach Payment Mechanis Cost ($) Cost Objective Total Cost of Ownership Uncertainties in performance, usage and schedule Efficiencies gained from reduced uncertainty Year 5 Acquisition Year 10 For Aviation Equipment this is typically 10 – 12 years Aging effect Year 15 Time Sustainment Product Lifecycle 11 Summary • Need to deliver Value for Money to government by balancing: – desire for the best capability available – resourcing limitations including acquisition and support funding, and current and future workforces • Identify and explore the various options that are available – analyse the 5 different perspectives • Agree on a strategy that delivers manageable risks, optimal commercial and capability outcomes. 12 DMO PBC Centre Of Excellence E-Mail: [email protected]
© Copyright 2024 ExpyDoc
