Defence Business: Devil in the detail | ADM Aug 2009
While the timescale was truncated compared to the previous document, the 2009 DCP does provide a wealth of detail on the projects it does cover.
Katherine Ziesing | Canberra
The new 2009 DCP boasts $60 billion worth of projects over the four years it covers, according to Minister for Defence Personnel, Materiel and Science Greg Combet, compared to the previous 10-year $57 billion DCP.
Projects included are those which have 1st and 2nd pass approval in the Budget forward estimates timeframe.
Working on the assumption that there will be a new Defence White Paper every five years, it would be unseemly for the DCP to look beyond that timeframe.
The document does make mention of projects beyond this horizon but only in the briefest of explanations.
Combet argued that the shortened timeframe provides more accuracy and reliability for the listed projects.
He also mentioned that the explicit cost bands seen in previous DCPs do not always lead to the best outcome for the Commonwealth.
The development of the new DCP relied heavily on the sometimes contrary recommendations from the Mortimer review.
On one hand, there was to be more strategic planning guidance for industry while also removing the cost bands seen in the older version of the DCP.
With this in mind, Acquisition Categorisation (ACAT) levels made their debut publicly as the Defence Materiel Organisation (DMO) has been using them internally since 2004.
Herding ACATs
The ACAT concept was much maligned in the lead up to the release of the DCP but does provide a high level of granularity when exploring the document.
The cost band structure is also not completely gone.
The DCP team asked the RPDE team to gauge industry reactions to the issue of cost bands and what it meant for their planning.
This saw the development of the banding system which was fairly generous but each project also has notes along the lines of ‘towards the lower end of the band' or ‘middle of the band'.
The rule of three applies here.
Divide the band into three for the lower, middle and top for band calculations.
So an ACAT II project in the middle of the band is roughly $1 billion.
Not perfect but manageable.
It also saw contact details being changed to a position title rather than a person given the constant change in personnel that the department sees, another RPDE outcome.
ACAT I projects are major capital equipment acquisitions that are normally the ADF's most strategically significant.
They are characterised by extensive project and schedule management complexity and very high level of technical difficulty, operating, support and commercial arrangements.
These are projects usually valued at over $1.5 billion.
ACAT II projects are major capital equipment acquisitions that are strategically significant to the ADF.
They are characterised by significant project and schedule management complexity and high levels of technical difficulty, operating, support arrangements and commercial arrangements.
These are usually valued at between $500 million and $1.5 billion.
ACAT III projects are major or minor capital equipment acquisitions that have a moderate strategic significance to the ADF.
They are characterised by the application of traditional project and schedule management techniques and moderate levels of technical difficulty, operating, support arrangements and commercial arrangements.
These are usually valued between $100 million and $500 million.
ACAT IV projects are major or minor capital equipment acquisitions that have a lower level of strategic significance to the ADF.
They are characterised by traditional project and schedule management requirements and lower levels of technical difficulty, operating, support arrangements and commercial arrangements.
These projects are usually valued at less than $100 million.
The headings in the body of the document don't look too different to the previous DCPs but there is much more detail on the background narrative of a project alongside tables that provide the reasoning and capabilities behind the ACAT bands.
While Capability Development Group (CDG) was responsible for the Phase Scope, a joint effort of CDG and the DMO were behind the background text.
CDG was much more involved in the dates and ACAT bands alongside established DMO project teams.
The coordinator of the Public DCP development, Ciril Karo of DMO's Industry Division, reflected that the ACAT bands were there to provide the strategic planning guidance recommended by Mortimer to the point where companies could make medium and long term decisions on the projects that they would be likely to target.
"Based on their appetite for risk perhaps companies will not want more than one or two ACAT I projects on their books at any time," said Karo.
"Smaller companies can head to the index tables [by ACAT or by Industry Capability] at the back of the DCP and see exactly which capabilities are needed in each project through the tables there.
"It really is for companies to analyse internally and make their own decisions based on their capabilities and risk appetite."
The tables also articulate how each strategic capability outlined in Force 2030 are possibly required by the project as well as what Defence would like to see in country versus overseas or off the shelf.
While the ‘optional' and ‘desirable' attributes in the Australian opportunities section could be made into ‘overseas' and ‘domestic' in mental shorthand (something the author admits to), Karo said "The intent was to put some granularity around purchasing intentions and required industry outcomes".
Living document
The DCP will also be updated online every six months as a HTML document, with hyperlinks throughout the sections, aimed at making navigation easier.
A hard copy will be produced every two years at the D+I conference.
These updates will reflect government approvals.
The ACAT level may not remain constant throughout the project may change after second pass approval, reflecting a retirement of risk through the two pass process or splitting of the project into new phases.
This has been seen in numerous decisions where government has approved certain parts of phases while not others, dividing the project into different chunks.
Speaking at D+I in his first address to the wider Defence community, Defence Minister Senator John Faulkner highlighted the fact that the new DCP contains 110 projects with 48 entirely new phases or projects worth $60 billion in four years while the 2006-2016 document was worth $57 billion across 132 projects.
There will be an average four per cent growth every year for the next four year in terms of spending.
And a new industry policy is due before the year's end.
The 2009 DCP is a document that looks to shape how the Australian defence industry plans its business with Commonwealth interests at heart.
Industry interests will be met by the eagerly awaited industry policy if the rhetoric is to be believed.
The new DCP may not have met all the expectations placed upon it but it does exceed others.
There is more detail when it comes to capabilities, risk and the narrative behind projects.
But there is less detail on cost and schedule beyond a certain timeframe, detail that cannot be found in current budget papers either.
But at the end of the day, this is what we've got to work with.
For the time being.