03 June 2009

DMO: Going to the next level?

I have to confess that reading Going to the Next Level: Report of the Defence Procurement and Sustainment Review (“Mortimer Report”) and the Government’s response fills me with a morbid compulsion to bang my head on the desk, or wander off to the nearest park looking for stray cats to kick, or to go to the next ten levels and jump off the observation deck of the building.

Why do we keep asking businessmen to review the workings of the core processes of government, and why do we take the resultant advice seriously? In the case of the Defence Materiel Organisation (DMO) it must be something to do with the fatuous notion that because it buys things it must be some kind of a business, or operate like a business. It is not, and it cannot be. It is an integral part of a Department of State, performing “public good” functions pure and simple – acquiring equipment and war stocks for the Australian Defence Force, and sustaining its equipment. There is no bottom line, there cannot be, the environment, purpose and drivers are fundamentally different.

Bear in mind that the organisational effectiveness of Departments is the responsibility of the Secretary. This means that it is up to the Secretary to determine the structure of the Department that will best enable it to carry out its functions, to ensure that the right people are in the right jobs (meaning “no gaps, no overlaps” – all the jobs are needed, all the jobs that are needed actually exist, and all the jobs are filled with people who can do them to the requisite standard) and that all Departmental units are resourced for the tasks they are required to carry out.

What Cabinet does and how it organises its business is of course a matter for the Government itself.

With those points in mind I will illustrate my overarching problem with the report and the Government’s response by reference to just two of the Report’s recommendations:

Recommendation 1.1

Defence should prepare an annual submission detailing current and future capability gaps and the priority for their remediation for Government consideration and approval. This submission would be developed by the Capability Development Group.

Recommendation 2.2

To expedite the capability development process and allow the National Security Committee to focus on major issues, a subordinate subcommittee should be created to handle minor and less complex acquisition matters.

Cabinet needed an external reviewer to tell it how to organise its business, what reports to ask for and how to manage its workloads? What is the Secretary, Department of Prime Minister and Cabinet doing?

The Secretary, Department of Defence needed to be told which part of his Department should prepare the submission?

It gets worse. The Government agreed with Recommendation 1.1, and decided inter alia, on behalf of the Secretary:

This strategic planning process will be led by Strategic Policy Division, supported by Capability Development Group and with the close engagement of other elements such as the VCDF Group. The Defence Capability Strategy and Defence Capability Plan will also be central elements of this new system and overseen by the Government in a way that has not previously occurred.

So now we have raised micromanagement to the level where Government itself is not simply declaring what it expects of the Department of Defence, but is deciding the internal processes by which those expectations are to be fulfilled. That certainly lets the Secretary off the hook as far as accountability is concerned, but just as certainly constrains his options regarding future reorganisation of the way he goes about his business.

In future posts I will address some of the more specific issues raised by the Mortimer Report and the Government’s response, but first it was necessary to set the scene by addressing the threshold question about the whole process.

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