This year has been yet another busy period for the Estate and Infrastructure Group (E&IG), with a number of capital works projects progressing towards completion, others getting underway and the execution of never-ending responsibility for maintaining and running the Defence estate.
Defence is the largest Commonwealth landholder, with around 700 owned and leased properties and a gross replacement value in the order of $70 billion. As such, the estate requires significant infrastructure works and investment to sustain and develop it to meet the current and future requirements of the ADF.
The 2016 White Paper provided significant additional resources for the upkeep of estate and, as part of the First Principles Review, the Defence Estate Strategy was released to provide guidance for the management of estate and infrastructure.
Deputy Secretary of E&IG Steven Grzeskowiak calls the strategy document a ‘capstone document’, which articulates the priorities for the Defence estate and which he says is as valid today as it was when it was first written back in 2016.
“We’re now in the process of spending that additional funding to improve the condition of the estate,” Grzeskowiak said to ADM. “So, in that big picture sense, the strategy is holding up while we’re moving forward and starting to see deliverables.”
The introduction of the Lockheed Martin F-35A Joint Strike Fighter into RAAF service has resulted in major capital works programs around the country, and particularly at RAAF Bases Williamtown and Tindal, where the fleet will be home-based.
E&IG spent a little over $1.8 billion in capital expenditure in financial year 18/19, the largest in-year figure on record. Works associated with the F-35A, representing the largest single facilities project Defence has run in many years, a total of $1.4 billion over the project life.
“The new facilities for the Joint Strike Fighter at RAAF Williamtown are open, and we have the first four aircraft using them,” Grzeskowiak said. “At RAAF Tindal the equivalent facilities for the squadron to be based in the NT (75 Sqn) are well advanced and the first aircraft will arrive in a year or so from now.”
Other capital expenditure projects include the redevelopment of RAAF East Sale, largely to accommodate the new pilot training system being delivered under Air 5428; the redevelopment of Campbell Barracks in Western Australia, to support the SAS Regiment; the redevelopment of HMAS Stirling, also in WA, the $500 million redevelopment of HMAS Coonawarra and Larrakeyah Barracks in the NT; and HMAS Cerberus in Victoria.
“There are big capital expenditure projects happening all around the country, which is one of the things we wanted to be able to do following the White Paper,” Grzeskiowak said. “At the same time, we have an increased maintenance budget and we’re spending around $900 million per year on estate maintenance, which is double what we were spending three or four years ago. That is giving us an opportunity to really look across the estate and deliver a whole range of minor improvements.”
One of the ongoing activities within E&IG is a focus on improving the delivery of services on Defence establishments.
“We’ve been running a range of projects that look at improving how we do business to streamline the process and make them more customer-focussed,” Grzeskowiak explained to ADM. “We’re running workshops with our customer base, using a ‘voice of the customer’ approach and we include the customer in the design of new or refined process and really try to listen to their issues and then address them.”
One example of this has been the consolidation of call centres and enhanced internal websites, so customers can more easily access the services available to them. Another case study is the streamlining of the house removals process, which involves up to 18,000 ADF members and their families every year, as their posting cycle comes around. E&IG has been running a prototype of an integrated online system over the last two years, which enables affected personnel to access all the information they need to affect a relocation. This prototype is now being refined for adoption on a permanent basis.
Grzeskowiak says a recent customer satisfaction survey across the enabling service base (including ICT and HR services) is returning a 69 per cent satisfaction rate, compared with just 49 per cent three years ago.
“That’s a good indication that people are noticing what we’re doing and it’s worth carrying on,” he said.
Local industry capability
Over the past few years E&IG has been working with the Commonwealth to build a local industry capability around the Defence bases and has developed a pilot process which is now being adopted across the rest of Defence.
“We prototyped it a few years ago and now all of my capital projects go through a process where we ask our tenderers to explain how they will engage with local industry in their bids. If the tender is successful, we will hold them to account for the level of local content promised,” Grzeskowiak said.
Historically, E&IG has had around 60 per cent local industry content in its capital works projects but it is now achieving around 80 per cent of the value of the work done.
“While we ask a prime contractor in the tender phase to explain to us how they’re going to engage with local industry, we are very clear that value for money is still – as required by the Commonwealth rules – an overriding consideration,” Grzeskowiak explained.
“So, that doesn’t mean the local companies are going to get the work, but often we find they provide good value, when compared with bringing a company in from somewhere else. It’s about creating opportunities for them, but they still have to demonstrate value for money to win the work.”
E&IG has arguably also led the way for the rest of Defence in the indigenous procurement space and Grzeskowiak is the Defence indigenous champion.
“The Commonwealth Procurement Rules allow us to discriminate in favour of indigenous companies. We have placed a lot of contracts with indigenous owned companies, to the extent that Defence was awarded the Government Supplier of the Year award by Supply Nation earlier this year,” he said.
“As the Defence indigenous champion, I’ve personally put a lot of work into this since 2014, when I went on a three-day tour with the Cape York Partnership, which was a showcase of what they are trying to do to create work for local people in Far North Queensland.”
Grzeskowiak says that even before the release of the Government’s Indigenous Procurement Policy, E&IG was looking to use the exemption in the procurement rules, whereby an indigenous owned company could be sole sourced, providing they represented value for money.
“Last financial year we placed contracts to the value of $450 million with indigenous owned companies and half of that amount was on one large contract, the biggest we’ve ever awarded an indigenous owned company,” he said.
“In the preceding years we’ve been averaging over $100 million a year and so the Supply Nation award is in recognition of the work we’ve done. It is pleasing now to see that, across Defence, we’re starting to see more and more indigenous companies winning work from Defence and our prime contractors. It has been a success story, but there’s still a long way to go.”
Defence Estate rationalisation
Work also continues on the Defence Estate rationalisation program. Disposal fork is going on for Leeuwin Barracks in WA, Bulimba Barracks in Queensland, the former Defence site in Maribyrnong in Melbourne and the Stokes Hill fuel storage area in Darwin. Site disposal has historically been a contentious issue for Defence given the political nature of divestments.
“We have a few more business cases working through the government approval process. We are looking forward and making adjustments to position Defence facilities for the ADF of the future,” Grzeskowiak explained.
“But this is something where you have to have an eye on the long-term future and seek to get yourself there over time, because it’s expensive to dispose of a significant Defence property. Generally, you have to relocate people to somewhere else and that involves investment. The money you make by selling the property often doesn’t even cover your relocation costs but, where we do save is in the future, because we don’t have to maintain and redevelop that property.”
The remediation of former (and sometimes current) Defence sites is an important body of work for E&IG and none more so than the ongoing Per- and poly-fluoroalkyl substances (PFAS) clean up at locations where firefighting foam was used.
Defence has run investigations at 27 different sites around the country in recent times, over half of which have been completed. Once an investigation is completed E&IG puts an ongoing management plan for the site in place.
“Where we have found contamination, off the base in particular, the ongoing management plan considers the future sampling regime and what we are doing about the provision of clean water where necessary. There are only four sites where we actually have to do that, things like connecting people to town water, installing rainwater tanks or whatever the appropriate solution is, and then how we’ll seek to remediate it,” Grzeskowiak explained.
“We’ve started remediation at five places and mostly it involves cleaning water, but in some places, we’ve started excavating soil, particularly from areas where there were point sources of contamination such as the old firefighting training areas. We’ve been both storing and isolating soil, because taking PFAS out of soil is still a difficult process.”
Grzeskowiak says a prototype soil treatment plant developed by Ventia is being commissioned at RAAF Base Edinburgh and if it proves as successful as hoped, it may lead to use at other locations around the country, but he says E&IG is working with over 90 companies who have ideas on PFAS remediation.
The funding for the remediation comes from within the existing E&IG budget and over $110 million has been spent to date.
“We’ve treated over two billion litres of water to remove PFAS below limits of detection and that work will continue,” Grzeskowiak said. “We’re focussing our efforts on those areas where there are higher concentrations and those areas where it’s running through waterways. Scientists and engineers are coming up with different options for how we might clean up legacy contamination, but I expect we’ll be doing this work for a long time yet.”
Base Services Contracts
The Base Services Contracts with industry are approaching the half-way mark of their full 10-year terms, they are six-year contracts with two two-year extensions to take them out to 10 years. The current incumbent contractors have had their contracts extended to the eight-year mark and Grzeskowiak says thinking about how they may look in the future has already begun.
“We’ll do that thinking internally for a little while but, at some point we’ll be going out to industry, to our existing contractors and others, to see if there are new ideas about how we can do this more effectively than we are now,” he explained to ADM.
“There are some aspects of the original contracts that are working really well and there are some that we think could be better, for a whole range of reasons. The suite of contracts we have now is quite different to the previous suite. We’re looking to draw on the expertise of our base services contractors to help us to manage the base.
“It’s working well in many areas, but it’s now a question of what the next step might be and how we get the benefit of a partnership, rather than a pure commercial relationship.”
The Garrison Estate Management System (GEMS), which is used in the planning and delivery of estate maintenance has now been running for more than a year and is now starting to prove its value.
“We’ve been in a bit of a data black hole after we turned off the previous system. We’re now starting to get an accumulation of data into GEMS which will enable us to build confidence in our data set and use it to make better informed decisions around how we maintain our assets,” Grzeskowiak said.
“The last piece of GEMS is the geospatial capability, which will roll out in November this year. That should give us the ability to really leverage the data that’s in GEMS.”
This article first appeared in the September 2019 edition of ADM.