The anticipated transfer transactional workloads to industry will therefore increase the unit cost of capability delivery as far as the [Capability Managers] are concerned, regardless of the expected overall improvement in Defences budget.83, 3.47Systems Program Offices have had between three and four thousand staff over the last decade (Figure3.2, below). 130, Overview of the enhanced Commonwealth performance framework, July 2016. 126This mirrors similar changes underway in the counterpart UK organisation, Defence Equipment and Support. processes for documenting capability managers requirements around sustainment. Nevertheless, the consultants considered the program was failing because of shortcomings in governance, program management, and Defences approach to reform described by a major vendor as minor reform, driven by piecemeal, top down budget pressure. During the course of this audit (9January2017) the Committee announced that it had commenced an inquiry into Defence Sustainment Expenditure. It must cover a minimum of four years. A 2016 Parliamentary inquiry into Capability of Defences physical science and engineering workforce noted that: Several submissions and witnesses emphasised the need for Defence to have a sufficient [science and engineering] workforce to allow it to be a smart buyer or an informed customer. 164Defence, First Principles Review, pp. Defence has an implementation plan with target dates, concluding in July2018. High levels of unplanned maintenance will affect Sustainment Efficiency through uncontrolled cost of repairs and a probable increase in Cannibalisations. 114Defence, Final Audit Report, Audit Task: 12-041, SRP Savings and Performance Reporting, Audit and Fraud Control Division, August 2012. Key elements of the governance and organisational framework include: a specialist organisational unitcurrently the Capability Acquisition and Sustainment Groupstaffed by a mix of civilian and military personnel; contract-like arrangements for sustainment between that unit and the Chiefs of Navy, Army and Air Force (Defences Capability Managers); and day-to-day responsibility for most sustainment activities falling to Systems Program Offices, which carry out that work using a mix of in-sourced and out-sourced service provision. Recommendation 1 was that Navy and DMO should jointly establish practical methodologies for integrated through life asset and sustainment management. 5.65The audit found limited evidence that Defence was preparing to evaluate the reforms to Capability Acquisition and Sustainment Group, its execution of the reforms or their outcome in terms of improvements to either acquisition or sustainment. 71Defence, Rizzo Review, Chapter 4, p. 29. The PBS also contains broader commitments on sustainment management for example, the DMO will continue the implementation of a more standardised Sustainment Model to promote better and more consistent practice. Opportunities also remain to increase the completeness and transparency of publicly reported information regarding materiel sustainment. 2.1The ANAO examined Defences governance and operational arrangements for managing the sustainment of specialist military equipment, with a particular focus on the clarity of: 2.2Defence has clear and long-standing arrangements for the management of materiel sustainment for specialist military equipment. There had been limited progress on the 35 action items identified in the 2011 health check with seven action items implemented, five abandoned, and 23 outstanding (among which Defence intended to re-write 14). The consultants attributed the diversity to historical issues around original parent organisations, [and] individual service influences.

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