D+I and Budget: Bidders await DMOSS panel decision | ADM June 2009
But some are hoping the panel will focus on consultants providing genuine added-value services and not just ‘body shopping'.
Gregor Ferguson | Sydney
The Defence Materiel Organisation (DMO) called for tenders earlier this year to join an expanded DMO Support Services Panel (DMOSS) of specialist consultants and service providers.
The DMOSS panel was established originally in 2005, comprising 56 firms providing the DMO's procurement and sustainment project offices and other parts of Defence with simple access to a broad range of approved, pre-qualified specialist service providers.
Between November 2005 and May 2007 the panel saw 660 contracts awarded to its members, worth just over $105 million.
The largest portion of this total, some $43.7 million, was awarded between November 2006 and May 2007.
The further enlarged panel of more than 72 companies will come into effect from August this year.
Engineering, project management and other consultancy and service contracts awarded through the DMOSS panel are expected to be worth $60-70 million a year, according to industry estimates.
In a statement 21 March announcing the expanded DMOSS panel tender defence minister Joel Fitzgibbon said, "The ... DMOSS panel ... has been very successful to date.
"This request for tender allows the DMO to approach the market for new skill sets as required and allows companies to tender for additional skill sets whenever their capacity/capability allows."
"It's good news for Defence and DMO but also for industry, especially small business.
"It provides streamlined access for both Defence and suppliers, and the way the panel operates provides a level playing field without diminishing competition."
Rationalisation
The DMOSS panel rationalised a tangle of specialist contractor panels and individual service contracts.
Members of the original panel were selected through an open tender process and serve for up to five years, with an option to renew for a further five; they are bound by a common set of terms and conditions covering 12 separate professional disciplines, 71 skill sets and four practitioner skill levels.
In 2006 the DMO recognised that some new skills sets were needed -in particular Project Support, Information and Communication Technology, Publications Authoring and EWSP-Land - and so added these to the panel, and solicited a slightly expanded membership.
However, DMO was conscious of some dissatisfaction, both internally and among the DMOS panelists, with some aspects of the panel's operations.
DMO Special Counsel Harry Dunstall told the Australian Industry Group Defence Council in late-2008 he had convened a DMOS Working Group to address these issues and recommend improvements.
The Working Group consisted of DMO and Defence representatives and focused on three principal issues: the inflexibility of the panel, in terms of its ability to add or delete members or skills; perceptions within DMO and elsewhere in Defence that it wasn't meeting users' needs - and this was often found to be because DMO and Defence users didn't understand how the panel worked and how much flexibility had been designed into the system in terms of pursuing value for money; and the system's inability to cope with requests for multiple skills sets or skill levels on a single tasking statement - this was sheer cumbersome bureaucracy.
There were other issues also: mainly process issues within Defence, but also things like poor reporting of DMOSS activities in order to monitor its effectiveness and to help manage the performance of the panellists; a slow creep towards sole-sourcing of contractors for specific jobs; and the inability of many DMOS panelists to carry out tasks for DMO project offices outside the three main metropolitan centres of Canberra, Sydney and Melbourne.
Dunstall also noted the thorny issue of using a DMOSS tasking statement to engage a Professional Service Provider (PSP) - long term (greater than six months) PSP contracts under the DMOSS umbrella conflict directly with the intent of the DMOSS panel, a point which a number of panel members have pointed out.
Some panellists also note that in the four years they have been involved, not once did they hear from anybody in DMO - there were no complaints, no surveys on how well the process was working, or not.
And when the DMOSS panel came up for renewal, again there seemed to be little consultation between the DMO and individual companies.
New and improved panel
The expanded DMOSS panel now embraces 13 disciplines, including Systems and Software Engineering; Acquisition and Sustainment Logistics; Business Support Management; Platform, Weapons, Electronics and Communications Engineering; technical authoring and Training.
These embrace no less than 83 skill sets and five skill levels: Practitioner; Qualified Practitioner; Experienced Practitioner; Discipline Specialist; and for the first time, Pre-eminent Consultant.
However, existing members of the DMOSS panel will be held to their currently agreed cost rates for current skills sets and skill levels.
And companies deemed to be ‘Major Service Providers' or earning more than $50,000 a year in DMOSS panel work will face more onerous probity and reporting requirements.
But the effects of the global financial crisis and other defence budget constraints may put the DMOSS panel under stress, warns Dave Vrancic, principal of Booz & Co Australia.
He told ADM the DMOSS panel budget appears to have shrunk a little, from about $80 million a year to between $60 and $70 million, despite what he anticipates may be increased demand for panellists' services.
Booz & Co is currently one of six Major Service Providers on the DMOSS panel that is able to offer what Vrancic terms a complete service including multi-disciplinary tasks across all the specified skill sets.
The DMOSS panel includes some but not all of Defence's pool of PSPs, specialists recruited on short-term contracts to fill out project teams.
Many of these contracts amount to simple ‘in-sourcing' of tasks traditionally performed by permanent employees and Vrancic told ADM the DMO must learn to distinguish more clearly between simple outsourced labour and genuine consultants who bring far greater levels of expertise and intellectual capital to their DMOSS tasks.
It's possible to pay too much for the former and too little for the latter, he counselled, and this could have a distorting effect on budgets also.
Observers have warned that PSPs are an expensive way of doing what should be routine work.
The danger is that a department or section may engage several PSPs on individual contracts, each of them more expensive than employing a full-time public servant, and each requiring supervision, management and assessment.
If Defence wants to engage external service providers economically, believes Vrancic, this is probably best done by outsourcing an entire function with a hundred jobs on a longer-term basis, rather than trying to manage 100 or 200 separate short-term PSPs performing the function uneconomically in-house.
Terms and conditions apply
With that in mind, the DMOS tender document warns, "For the purposes of the DMOSS Panel, support services tasks are defined as being task based, outcome focused, performance oriented and short term in duration.
"‘Time and Materials' style contracting is discouraged under the DMOSS Panel and the Panel should not be used in lieu of (longer term) labour hire arrangements."
Paradoxically, the Defence White Paper's expressed intent to cut down or eliminate the use of consultants is welcomed by many consultants.
If this means Defence discriminates better between different categories of contractor, so much the better.
While Major Service Providers such as Booz & Co sometimes have no choice but to engage at PSP levels, Vrancic said, their multi-disciplinary capabilities are better suited to significant tasks such as supporting the development of strategic roadmaps for the fielding of things like Electronic Warfare and UAVs, for which very high levels of domain knowledge and experience are required.
But there are concerns that the DMOSS panel arrangement doesn't capture all of the skills (or combinations of skills) Defence needs, and that it embraces others for which Defence shows no desire.
Interestingly, DMO's own figures show that Defence didn't award any panellists any contracts at all between 2005 and 2007 for the delivery of services based on 26 skill sets - these included Electronic Warfare Self-Protection in both land and maritime environments, HF radar, sensor management, sonar risk management and submarine systems.
One consultancy also warned that planned increases in ADF and DMO civilian manpower may not be enough to cover Defence's anticipated acquisition, sustainment and disposal workload.