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sydney alternative media - non-profit community independent trustworthy
Tuesday, 18 December 2007
Crikey break story of systemic fraud in the defence department?
Mood:  down
Topic: aust govt

Crikey.com.au run an alarming story today which effectively describes systemic fraud of the public revenue by redefining contractual performance of defence suppliers. It's actually a cracking story only vaguely sketched out at this stage suggestive of systemic corruption. Stay tuned.

10. How creative Defence bureaucrats get the goods on time, every time

An anonymous public servant explains to the new minister:

Defence procurement is a complicated multibillion dollar business and, as the sad history of projects running late and overbudget proves, a lot of risk is involved. Risk to the taxpayer, but also risk to senior Defence bureaucrats who have to explain cost overruns and late deliveries, let alone put at risk of justifying salaried performance bonuses.

The problems with Defence procurements have been an ongoing saga, globally. The Yanks use a traditional approach to solving these problems - hire more engineers and hire smarter engineers - until the project is back on track, and hopefully on budget. This lack of creativity on the part of US Defence procurement officials shows, since a great many of their projects are still late and still over budget.

Our Canberra bureaucrats have solved this problem, permanently, and managed to do so without having to hire expensive engineering talent - always a pain since they have a bad habit of talking back, questioning, and generally arguing that expedient fixes will come back to bite you.

What our bureaucrats did last year was to change the way in which an item of equipment is judged to be ready for operational service. Until then, we followed the rest of the OECD defence procurement community, and used the definition of “Initial Operational Capability” as the benchmark for the equipment being ready for service. Not to be accused of copying, our bureaucracy labelled “Initial Operational Capability” as “In Service Date” or ISD. This definition says that the equipment has to be capable of performing all of the functions it was contracted to do, before it is considered ready for troops, sailors and airmen to operate.

The new approach introduced recently by our creative Canberra bureaucrats was to devise a new definition for ISD, making it quite different to the definition of “Initial Operational Capability”. This new interpretation has “In Service Date” or ISD now meaning:

The point in time that symbolically marks the beginning of the transition of a capability system, in part or full, from the Acquisition Phase to the In-Service Phase. ISD coincides as closely as is practicable with Initial Release.

Gone is the pesky expectation for the equipment to actually fully meet whatever functional and operational specs were put down when it was ordered. Now, a senior bureaucrat can simply nominate an ISD milestone, and leave the dummies all wondering what that means once the calendar rolls over to that date.

Problem solved, expediently, quickly and permanently. Now these annoying Defence Ministers, Parliamentary Committees, and media can eat their hearts out, since all projects will be on time and inside budget by the “In Service Date”.

Unfortunately we still have some folks out there complaining. They are saying naughty things like “if the In Service Date does not force the contractor to make the equipment work, our servicemen and servicewomen might get killed in combat, or in accidents”. Even naughtier is the claim that “taxpayers will have to shell out a fortune in extra costs to fix things which should have been made to work in the first place, since a contract which uses the In Service Date instead of Initial Operational Capability is not enforceable”.

One eminent spoilsport has actually described this creative problem solving approach to be a “con”; intended to bamboozle parliamentarians, media and public.

This is nonsense, obviously, since they have missed the point here. If you look at the problem, it is not that the equipment is over budget and can't do its job properly; it is that all of these silly people are complaining about it! If you use the new ISD definition, then the REAL problem goes away instantly.

There is still a risk that the new government might just toss this creative innovation out the window, not having any appreciation for what REALLY matters in government contracting. But if the new Defence Minister endorses all at the upcoming MRH-90 helicopter rollout, all will be well after all.

Send your tips to boss@crikey.com.au, submit them anonymously here or SMS tips and photos to 0427 TIP OFF.

Posted by editor at 7:05 PM EADT

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