23 July 2009

Delusional attitudes to DMO persist

On 22 July 2009 the Minister for Defence Materiel, Greg Combet, issued a media release in which he “congratulated the Defence Materiel Organisation (DMO) and Boeing following the first flight of Australia’s F/A-18F Super Hornet in the United States”.

Mr Combet is certainly generous with his congratulations. He is congratulating Boeing for building an aircraft of a type which had its first flight in 1995, began full production in September 1997, and entered service with the United States Navy in 1999. A total of 367 units had been delivered to the USN as of October 2008. I think we were entitled to expect that Boeing could successfully manage to fulfil its contractual obligation to produce a few more for the RAAF, so seeing the first one take to the air is not an occasion for particular surprise or celebration.

It is not clear what the Defence Materiel Organisation is being congratulated for. It is not obvious that it has made a significant contribution to getting the aircraft into the air, and the Minister’s media release neglects to tell us just what it is that DMO has achieved on this occasion. The fact that it is congratulated ahead of Boeing suggests that the Minister has something in his mind.

This release suggests a continuation of the delusional notion that the DMO can exercise some sort of magic influence over the timing and cost of major defence procurement projects. In fact the Mortimer Report (Report of the Defence Procurement and Sustainment Review) makes clear that the overwhelming majority of schedule slippages are due to matters entirely beyond the control of DMO. The primary causes of schedule slippage in financial year 2007-08 were:

- Australian industry 30%

- Foreign industry 20%

- Foreign Government negotiation and payments 16%

So at least 66% of the slippage factors are beyond DMO’s control.

This release suggests that nothing has been learned from the Project Wedgetail debacle. In Project Wedgetail: a cautionary tale I noted that when Boeing produced the first B-737 for the Airborne Early Warning and Control project, then Defence Minister Robert Hill issued a media release claiming that this unsurprising event was evidence that the then Government’s acquisition reforms were beginning to bear fruit. Seven years on, we wait with baited breath to see what the outcome of that project will be. Certainly DMO does not seem to have been able to do much to save it.

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