Australian Minister for Defence Stephen Smith and Minister for Defence Materiel Jason Clare today announced reforms to the Project of Concern process and removed two projects from the list.
Reforms to the Project of Concern process:
The reforms include incentives for companies to fix projects that are on the list.
The performance of companies in addressing Projects of Concern will be considered when evaluating their tenders for other projects.
If companies are not satisfactorily remediating the project this will result in a negative weighting against them and in extreme circumstances could result in exclusion from further tenders until the project is fixed.
Other reforms to the Project of Concern process include:
• The establishment of a more formal process for adding projects to the list;
• The establishment of a formal process for removing projects from the list;
• The development of agreed remediation plans, including formal milestones for the removal of aproject from the list; and
• Increased Ministerial involvement and oversight of the process.
“The Project of Concern process is working. The objective of these reforms is to make it even more effective,” Mr Smith and Mr Clare said.
Industry leaders contributed their ideas on this important reform to the Projects of Concern process.
The new Project of Concern process will be implemented by the new Independent Project Performance Office within the Defence Materiel Organisation.
This Office was recommended by the Mortimer Report into Defence Procurement and Sustainment and will begin operation on 1 July this year.
Further details on the reforms to the Project of Concern process are attached.
Update to the Project of Concern list:
Mr Smith and Mr Clare also updated the Project of Concern list, removing two projects – Vigilare (AIR 5333) and High Frequency Modernisation (JOINT 2043 Phase 3A).
‘Vigilare’ is an air defence command and control system giving the Defence Force improved surveillance and communications capabilities.
The High Frequency Modernisation project provides the Australian Defence Force with a modernised high frequency communications system.
Mr Smith and Mr Clare thanked Boeing for its hard work in turning both these projects around.
“These projects are excellent examples of what can be achieved when Defence and Industry work together through the Project of Concern process,” Mr Smith and Mr Clare said.
The Projects of Concern list was established by the Government in 2008 to focus the attention of Defence and Industry on remediating problem projects.
The removal of these two projects brings the total number of Projects of Concern now removed from the list to nine.
Of these nine projects, seven have been successfully remediated and two have been cancelled. (Details attached)
Project of Concern Reforms
Incentive for Industry to focus on fixing problem projects:
Where a company has a project on the list, Government and Defence will weigh their performance in remediating the project when evaluating their tenders for other projects.
When a company is not satisfactorily implementing an agreed remediation plan, this will result in a negative weighting of tenders received from the company, and in extreme circumstances could result in exclusion from further tenders until the project is remediated.
Formal process for adding projects to the list:
The process for determining whether a project should be added to the Projects of Concern list will be as follows:
• When an Early Indicator and Warning is triggered, Defence will advise Ministers, including whether a full diagnostic review (Gate review) of the project is required.
• If a Gate review is to be conducted, Ministers will write to the Chair/CEO of the prime contractor advising them that the project has triggered an early warning, requesting their involvement in the Gate review, and emphasising the p