The Ministers for Defence, Defence Science and Personnel and Defence Materiel have announced further accountability reforms which fully implement the Review of the Defence Accountability Framework conducted by Dr Rufus Black.
The new key reforms are:
• the establishment of two Associate Secretary positions to strengthen Defence’s capacity to implement the Black Review;
• the strengthening of personal and institutional accountability, particularly in the areas of capability development and acquisition;
• increasing rigour and contestability within capability development, including the establishment of a new process for the inclusion of projects into the Defence Capability Plan;
• improving project management skills, implementing three year postings for Australian Defence Force (ADF) personnel into capability projects, and developing employment incentives to retain key civilian staff in the capability area;
• reforming Defence planning, decision-making processes and performance management; and
• substantially reducing the number of Committees in Defence.
Following is a lightly edited version of the statement released by the three Ministers.
Black Review: background and details
The Black Review is the first comprehensive review to examine personal and institutional accountability in Defence as a whole.
It has found that there are significant problems with performance in many parts of the Defence Organisation.
Much of this goes to Defence management and the quality of its management systems.
The Black Review states “… Defence has reached a point in its history where there is a strong case to redesign its accountability system…. the current arrangements are under stress and their failure damages Defence.”
These failures damage Defence, weaken ADF capability and cost taxpayers money.
To meet the demanding challenges it faces, Defence must operate as a single, integrated organisation, and be managed as such. Defence’s accountability framework has to support this concept.
The Black Review also found that “…accountability systems are not working optimally, with respect to both the quality of decisions made and their implementation.”
The Black Review recommendations include reforms to enhance personal and institutional accountability, reforms to planning and decision-making, performance management, accountability and contestability in capability development, Defence Committees, financial management, the delivery of services across different parts of the Defence Organisation and skills development.
Implementation of the Black Review will improve Defence management and improve delivery of ADF capability and Defence’s ability to manage large, highly complex projects and systems and billions of dollars of taxpayer funds.
New structural reforms
To strengthen Defence’s capacity to implement the Black Review and embed a culture of accountability, the Government will create the positions of Associate Secretary(Chief Operating Officer) and Associate Secretary(Capability).
Associate Secretary (Chief Operating Officer)
This officer will be responsible for the management, coordination and better integration of the Personnel Services and Policy, Defence Support and ICT Groups.
These groups are the key to much of the Defence Strategic Reform Program and their better integration is essential to achieving the efficiencies and cultural change sought.
This officer will also be responsible for implementing key parts of the Shared Services Review and the performance and cost efficiencies that the Government is seeking.
Associate Secretary (Capability)
The Associate Secretary (Capability) will be responsible for further detailed reform and delivery of integrated capability development, acquisition and sustainment within the Kinnaird/Mortimer framework to ensure it is a seamless process, with better performance and improved support for decisions to be made by Government.
This officer will also be responsible for the integration of work in relation to capability development by Strategy Group, Capability Development Group, the Defence Materiel Organisation and the Defence Science and Technology Organisation.
In particular, this officer will ensure the more effective contestability and integration of advice at the early stages of the process, as well as for ensuring the performance and accountability of the overall capability development, acquisition and sustainment chain.
The Associate Secretary (Capability) will be responsible for ensuring that Defence meets the capability development and acquisition targets set in the Defence Capability Plan, and will eliminate unnecessary duplication of function and support services across Groups involved in the capability development process.
The Associate Secretary (Capability) will also be responsible for reviewing capability proposals before they are considered for inclusion in the Defence Capability Plan, to ensure they reflect the Government’s strategic requirements and that all risks are well understood.
Strengthening accountability in Capability Development and Acquisition
The Black Review states: “Despite much work in recent years, the capability development process continues to suffer from delivery shortfalls related to poor accountability.
The reality of much greater scrutiny and the prevailing environment of a capped budget make resolution of these issues essential for the credibility of Defence and the delivery of its outcomes.”
“Accountability for delivery needs to be assigned clearly to named individuals and, where there is joint accountability for delivery of an outcome (as will occur from time to time in a matrix organisation), a clear articulation of who does what to deliver the outcome.”
Improving the development, acquisition and sustainment of ADF capability will be a key priority for the Associate Secretary (Capability).
Defence will reduce administrative silos through the greater use of project teams which span the whole capability development and acquisition process, ensuring greater consistency of expertise and oversight for major projects.
The Defence Materiel Organisation will continue to be a Prescribed Agency under the Financial Management and Accountability Act to support financial transparency and accountability.
The Chief Executive Officer of the Defence Materiel Organisation will continue to provide independent advice to Government, at key points in the capability and acquisition cycle, on cost, schedule and risk.
Contestability
The Black Review states: “Consistent criticism from external sources have noted that internal contestability of advice has been diluted and that while central agencies provide some contestability they “cannot hope to mount compelling arguments from afar.”
New internal contestability within Defence will be strengthened. This will include a new process for the inclusion of new projects in the Defence Capability Plan.
Proposals for inclusion of new projects in the Defence Capability Plan will initially be subject to an assessment by the Associate Secretary(Capability) whose mandate will include the review of all potential capability proposals to ensure that they align with strategic requirements and that cost and risk is understood and accounted for.
To strengthen the capacity to provide this contestability, Capability and Investment Resources Division will be separated from Capability Development Group and report directly to the Associate Secretary (Capability).
Further, to address the number of proposals that need to be developed over the next several years, the resources of Capability Development Group will be enhanced.
After agreement by the Secretary and CDF, new proposals for inclusion in the Defence Capability Plan will be considered by Government bi-annually, in consultation with Central Agencies.
Project management and skills development
Accountability rests on the foundation of appropriate skills and experience.
In its response to the Mortimer Review, the Government agreed that the Capability Development Group should be adequately resourced in terms of workforce numbers and skills to develop capability proposals.
Skilling remains the major challenge in this area.
Defence will give priority to developing career streams for both ADF and civilian staff in capability development and acquisition.
Reform will include implementation of three year postings for ADF personnel into capability projects, and the development of employment incentives to retain key civilian staff.
Planning and decision-making reforms
Defence has plans for parts of its activities, but none for Defence as a whole.
Accordingly, Defence will develop a single Defence Plan to support ‘One Defence’ and ensure better accountability of the whole organisation to the Minister and Government through the Secretary and CDF.
This plan will also translate broader Defence Planning Guidance into activities for which specific accountability can be assigned.
The Plan will establish key performance measures and specific senior individuals will be identified and held accountable for the achievement of these measures.
Defence will integrate this plan with its 2012-13 budget development and management cycle, commencing in the third quarter 2011.
Performance management
Defence performance management suffers from limited personal accountability for outcomes.
This undermines performance and delivery. Defence will implement strengthened organisational and individual performance accountability arrangements for all senior officers.
Performance arrangements will focus on specifying actions and initiatives that are implemented by named individuals against specific performance measures.
Business units in Defence will be required to specify activities that align with, and support, priorities and goals identified in the Defence Plan.
Accountability for delivery against these measures will be assigned to named individuals.
Where there is joint accountability, divisions of responsibility for delivery will be clearly indentified.
All Defence staff will have their personal and professional accountability defined against performance plans which are linked to the Defence Plan.
Performance will be reviewed halfyearly.
Defence will implement performance arrangements which encourage and reward high performance and deter under-performance.
Committee rationalisation
Defence Committees will be restructured to support the management of Defence as an integrated ‘One Defence’ enterprise.
The Black Review states: “There are too many committees in Defence, which create diffused and confused accountability, and their operation is often characterised by confused committee roles, unstructured agendas, poor monitoring and feedback mechanisms for decisions made and weak commitment to decisions and actions down the organisation”.
“The number of committees attended by the senior personnel in Army alone is 297 whilst Defence Support Group leaders attend 69”.
Defence will ensure that Committees are only established as advisory bodies to accountable decision makers.
Members of Committees will be advisers to the accountable decision maker on the Committee, and the accountability of Committee members will be defined in Committee charters.
All Committees will be placed on a 12 month sunset clause, with existence beyond that date only on approval from the Secretary and CDF.
Implementation
Mr Paul Rizzo, Chair of the Defence Audit and Risk Committee has agreed to chair the Implementation Committee to oversight implementation of the Plan to Reform Ship Repair and Management Practices (the Rizzo Report).
Mr Rizzo will also provide oversight of implementation of the new capability reforms Mr Rizzo’s membership on the Defence Strategic Reform Advisory Board (DSRAB) will provide a link between the two oversight bodies and help ensure that reform activities are integrated.
Progress on implementation of the above reforms will be reported quarterly to the Minister for Defence, the Minister for Defence Science and Personnel and the Minister for Defence Materiel.
The Black Review is available online at www.defence.gov.au/oscdf/BlackReview.