News came this week that Land Systems Division will be shaking up their contracting mechanism for above the line services to align with the Integrated Work Packages for the Major Service Providers (MSPs).
ADM has obtained a copy of a letter sent by CASG’s Head of Land Systems Division Major General Andrew Bottrell on the issue. ADM also understands that the email was sent to individuals rather than companies, with many SMEs finding out that their work will change dramatically from July 1 during a time of massive uncertainty thanks to the coronavirus pandemic.
An edited copy of the letter is below.
“In 2018, the Capability Acquisition and Sustainment Group (CASG) adopted the Major Service Provider (MSP) arrangement, which provides a strategic and integrated approach for its support services requirement in acquiring and sustaining capability for the Australian Defence Force (ADF),” the letter opens.
“From 1 July 2020, Land Domain is transitioning to an MSP arrangement that will see the vast majority of Above The Line contractor support services provided through MSPs Team Nova and KEY Team.
“Under this new arrangement, a collaborative relationship will exist between Team Nova, KEY Team and the Land Domain PMO, led by Dr Simon Atyeo. This arrangement, administered by the PMO, is called the Land Domain External Contractor Strategy (ECS).
“Team Nova will predominantly provide contractor services to Land Manoeuvre Systems Branch and Land Engineering Agency and KEY Team will predominantly provide contractor services to Integrated Soldier Systems Branch and Land Vehicle Systems Branch.
“Where these Branches have enduring requirements currently contracted under the Defence Support Services (DSS) panel, the PMO will coordinate and manage these to transition, where appropriate, into an MSP under one of two new Integrated Work Partner (IWP) service contracts. Armoured Vehicle Division (AVD) will also transition elements of its existing DSS project-related contractor workforce to an MSP arrangement, predominantly under Team Nova, later in the year.
“What is changing?
“DSS panel arrangements will only continue to be established in very specific circumstances where it can be demonstrated that the MSP provider is unable to supply the requirement, where there are highly specialised requirements, and/or it is a once-off, short-term engagement.
“Existing DSS panel arrangements will be honoured to their natural expiry dates, and where practical those that expire on or before 30 June 2020 will be transitioned to an MSP from 1 July 2020.
“Through the ECS, industry and Defence will work together in transitioning, where relevant and able, extant tasking into the MSPs. As such, resourcing requirements will not mandate ‘named’ contractors as being ‘solely suitable’ or provide narrow experience sets that limit the MSP’s ability to secure a resource other than a ‘named’ contractor.
“Because existing DSS contractors will now need to be engaged through an MSP in the vast majority of cases, there are some notable changes to quotes and rates:
· The MSPs will seek value for money on behalf of CASG from contractor companies, meaning that CASG has full visibility of rates, which must remain competitive and have only a pre-agreed margin placed on top by the MSP; and
· The MSPs will seek quotes from contractor companies on either a competitive or sole source basis depending on the particular situation.
“Why is it changing?
“In line with the purpose of MSPs, the ECS will deliver ongoing value for money through improved affordability over the longer term by focusing on outcomes. By engaging two MSPs to deliver the ECS, Land Domain benefits from improved flexibility, efficiency, competition and collaboration, as well as operational simplicity that creates uniformity in processes, procedures, practices and more.
“These changes represent another step forward for CASG in improving the workshare arrangements between industry and Defence to deliver high quality capability in the most efficient way to the men and women of the ADF.
“How can existing contractors prepare?
“Through the Enterprise Support Services Agreement (ESSA), MSPs are committed to using Australian small-medium enterprises and small businesses (SMEs) within their workshare, including those on the DSS Panel. MSPs are also committed to mentoring and working with the Defence SME community to grow capability and capacity. MSPs also rely on SMEs to become trusted partners, providing increased opportunities to SMEs to be engaged by an MSP on IWPs throughout CASG.
“As a result of these arrangements, existing contractors are well positioned to prepare for the transition by contacting both MSPs to discuss becoming part of their supply chain.
“KEY Team can be contacted at firstname.lastname@example.org and Team Nova at email@example.com. Further information regarding the MSP Arrangement and the MSP teams is available on the Defence website.
“MSPs may also contact current External Service Provider footprint companies to organise arrangements. Team Nova and KEY Team have been provided with the existing companies as well as a summary of taskings, duration within SPOs and current engagements within CASG.
“Existing contractors may also contact CASG’s other two MSPs, Jacobs Beca Team and Team Downer, to organise subcontractor agreements within other areas. Contact Jacobs Beca Team at firstname.lastname@example.org and Team Downer at TeamDownerMSP@downergroup.com.
“If you have any further questions or concerns regarding Land Domain’s transition to the MSP arrangement, my point of contact is Dr Simon Atyeo, lead of the Land Domain PMO.”
ADM has been contacted by numerous SMEs on this issue who have concerns about the MSPs ability to assign workshare and issues around conflicts of interest on particular upcoming land programs. For obvious reasons none of them were prepared to go on the record about their views on the change.
Policy vs practice
Also of concern are the two independent reviews from the Minister for Defence Industry Melissa Price on the Australian industry Capability (AIC) audit framework and Centre for Defence Industry Capability (CDIC).
As ADM has previously reported, the CDIC review terms of reference have now been released with responses due back next month.
“COVID-19 is creating unprecedented challenges for Australian small businesses and that is why we need to press on with a new and enhanced AIC contractual framework, Independent AIC Audit Program and CDIC Review,” Minister for Defence Industry Melissa Price said to ADM in a statement.
“The enhanced AIC contractual framework and audit program are still under development with the CDIC review still progressing, all are due to be finalised for my consideration by mid-2020.”
“My team and I have been regularly engaging with industry associations, major contractors and Australian small and medium businesses to hear their suggestions. I will improve small business practices within Defence by offering better assistance, more guarantees of work in our major programs and greater protections in contracts.”
The CDIC review is being conducted by their two co-chairs of the body while the AIC audit review framework is still being developed. There is no word yet on the organisations to be involved in that process.
ADM Comment: The MSP panel that took place earlier this year at ADM’s Congress was an interesting experience as many of the questions coming through from the audience were incredibly negative in nature. Many SMEs have complained loudly about the structure and amount of power the MSPs have and how little oversight is provided by CASG in their behaviours.
With the startling advent of a global pandemic and related economic conditions, which fall somewhere between the ‘recession we had to have’ in the early 90s and the Great Depression of last century, now is hardly the time to take work away from the engine of the Defence industry; agile SMEs.