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Mortimer Report on Defence Procurement Released

by Staff Writers •
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The Minister for Defence, Joel Fitzgibbon, announced on 23 September that he has received the independent report of the Defence Procurement and Sustainment Review – the Mortimer Review – conducted by Mr David Mortimer AO.

In May, the Government commissioned well known businessman David Mortimer to undertake an independent review of the Defence Materiel Organisation (DMO) and the effectiveness of Australia’s defence procurement systems.

Mortimer’s report titled Going to the Next Level provides an in-depth examination of the processes, practises and acronyms that comprise Defence’s procurement system.

A key focus of Mr Mortimer’s review was examining the implementation and effectiveness of the ongoing reforms to the Defence Materiel Organisation following the 2003 Kinnaird Review of Defence Procurement[1].

The Mortimer Review has made a total of 46 recommendations. Amongst the specific recommendations were:

  • A minimum two-pass application process for complex and costly projects
  • Rigorous cost-benefit analysis for any decision to move beyond the requirements of an off-the-shelf solution
  • Significant private sector and commercial experience should be mandatory for the CEO of DMO
  • Creation of a New GM – Commercial position within DMO to manage strategic commercial issues and acquisition strategy
  • Greater flexibility for CEO of DMO to manage the organisation’s workforce including control over appointments, remuneration and performance management.

One of the more contentious recommendations is that the DMO become an Executive Agency. This was a recommendation of the Kinnaird Review that the previous Government chose not to implement. In releasing the report, the Defence Minister indicated that he would give serious consideration to this proposal, adding the he wanted to see DMO operate “more like a business and less like a bureaucracy”. He also suggested that one of the reforms still required was introduction of greater commercial discipline through the procurement process.

Mr Fitzgibbon confirmed the Government’s commitment to implementing a program of reforms prior to the release of the White Paper. This includes ensuring greater transparency and accountability throughout the Defence procurement process.

Defence Material Organisation's (DMO) role is to acquire and sustain equipment for the Australian Defence Force. Part of the Department of Defence, DMO expects to spend more than $9.6 billion in 2008-09 (around 40% of the Defence budget) in acquiring and sustaining military equipment and services. Over 7,500 people are employed by DMO in more than 40 locations around Australia and overseas.

[1] Malcolm Kinnaird's major, independent review of Defence procurement led to the restructuring of DMO and gave birth to its role at arm’s length from the Department.

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