casg cost principles
56Defence, Plan to Reform Support Ship Repair and Management Practices, [Rizzo Review] July 2011, p. 68. 204The Rizzo Review of naval sustainment was triggered by early decommissioning of HMAS Manoora, the extended unavailability of HMAS Kanimbla and the temporary unavailability of HMAS Tobruk. One major contractor noted that Smart sustainment has achieved limited success to date through cost cutting and minor reform driven by piecemeal, top down budget pressure.115. Defence has advised that Collins Class sustainment cost per materiel ready day has decreased by approximately 40percent. The fundamentals of Defences governance and organisational framework for the management of materiel sustainment are fit-for-purpose. Defence lacked a single set of accurate information to inform decision makingThe review found that, whilst significant levels of information and analysis exist across the Collins Class Sustainment Program, the basis for long-term decision making was not always consistent or accurate, with multiple systems and datasets in use for financial, maintenance and supply chain activities. It is an estimate of the differential cost above that of the current capability and is included in submissions to government for approval. 5At the strategic level, guidance is given by the Chief of the Defence Forces Preparedness Directive. 163Defence informed the ANAO that it is seeking to address the capacity and technical knowledge of Defence staff in CASG through the introduction of the matrix management approach. The objective of the audit was to assess whether Defence has a fit-for-purpose framework for the management of materiel sustainment. At its core, this is a two-step decision-making framework comprising risk analysis and a tailored strategy done at the earliest practicable stage of a project: 5.50Defence considers that The game changer for Capability Acquisition and Sustainment Group will be the Smart Buyer model that will unleash our organisational capability.167 Defence sees the main benefit of this process as early identification of risks and, as a result, better allocation of Defence resources.168 Its smart buyer paper sets out detailed issues for consideration in areas of risk separately for both acquisition and sustainment. This was to focus more holistically on benefits realised to the organisation through reform, rather than only acquitting financial targets. 32. The nature of the contracts provides an inherent disincentive for contractors to improve platform supportability of their own accord as the quantum of their financial reward is often directly linked to the volume of repairs conducted.150. %PDF-1.4 % There is no evidence that specific merger integration activities have been undertaken to ensure consistent integrated operating models. In July2011, a further health checkthis time by external consultantsfound that Smart Sustainment had achieved some early successes with cost reductions and changes in practice. Defence should give proper attention to asset management, logistic support and engineering requirements. Improve leadership skills, knowledge and experience. This Key Health Indicator serves to measure the quality and appropriateness of the work undertaken during maintenance periods. As noted in Figure 3.2, Systems Program Office staff have numbered between three thousand and four thousand over the last decade. 115Raytheon Australia, Smart Sustainment Solutions, March 2013. One recommendation was not accepted that the DMO should be separated from the Department of Defence and become an executive agency. Capability Acquisition and Sustainment Group - Wikipedia These risks and issues are highlighted so that stakeholders can respond in a coordinated manner to guide the conduct of remediation actions. 130, Overview of the enhanced Commonwealth performance framework, July 2016. It uses industry best practice tools and techniques to execute projects throughout the Capability Life Cycle, including through Sustainment, in a way that strikes the optimum balance between performance, time and cost.a. 127Defence, First Principles Review, Key Recommendation 6, p. 73. Dr Stephen Gumley was the DMO's chief executive officer from February 2004 until his retirement was announced by the Minister for Defence, Stephen Smith, on 7 July 2011. Defence conducts reviews of sustainment performance through sustainment gate reviews that help Defence to obtain insight into a project or products progress and status. 37The performance framework was set out in some detail in ANAO Report No.30 201415, Materiel Sustainment Agreements, p. 103 forward. [4][3]. There is no record of whether the intended savings to sustainment costs were achieved from the Defence Materiel Organisations (DMO) 2008 initiative to identify efficiencies. 134Defence, Strategy& [sic] (formerly Booz & Company), Right Sizing the DMOUsing a capability-driven approach: same outcomes, fewer staff, Canberra, March 2013, p. 2. Defence expected savings from: reducing spares; making more use of performance-based contracting; discouraging unnecessary end-of-year spending; travel efficiencies and improved maintenance philosophies. Applicability of a particular set of cost principles The government-wide principles, issued by OMB (or, in the case of commercial organizations, the Federal Acquisition Regulation [48 CFR 21], or, in the case of hospitals, 45 CFR 75, Appendix IX, "Principles For Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals"), on allowability and unallowability of costs under federally sponsored agreements. Such a framework would need to articulate how an organisation responsible for both acquisition and sustainment would carry out those major tasks. Bechtel provides this assistance through Bechtel staff embedded within Defence. 3.32The First Principles Review found no direct measures of productivity in the existing management information systems, though some cost and schedule information is included in MRS and SPMS. 4.5The government announced Defences Strategic Reform Program in May2009. Asset management might not apply to items at the commodities end of the sustainment spectrum, but would apply to platforms and may apply to products (see Box 1, p. 2). Defence continues to strive towards efficiencies in the delivery of sustainment outcomes for Defence capability and to report on outcomes, noting the need to balance transparency and accountability to the Australian public and Parliament, with the national security interests of the Commonwealth. He described the areas where he expected they could make cost reductions, including by: reducing spares; more performance-based contracting; discouraging end-of-year spending to meet budget; travel efficiencies; and improved maintenance philosophies. requirements as long as they meet the standards prescribed in 2 CFR Part200.302 and 45 CFR Part 75.302 for financial management systems. Performance has been effective but unstable during the recent high demand collective training exercise series period that culminated in Exercise Hamel. ), Figure 3.4:Estimates of Service sustainment costs, 200607 to 202021. 29Defence, Operational Concept Document for DMO Sustainment Reporting System (Version A, December 2004, Sponsored by Director General Standardisation). the project was approved in March1999 with a budget of $1.58billion (December1999 prices). The consultants attributed the diversity to historical issues around original parent organisations, [and] individual service influences. 99Some of those attempts are examined later (paragraph 5.54 forward). 5.36Performance-based contracting was described in a chapter on managing sustainment in the DMOs 2007 Acquisition and Sustainment Manual, but not made a requirement or a priority.151 In 2008, a Defence internal audit evaluating the effectiveness of Defences use of performance-based contracting found that: the maturity of management systems for such contracts varied, there was inadequate central oversight and support, inconsistent contracting arrangements, and less effective outcomes in many cases.
