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Australian Deputy Prime Minister Richard Marles has confirmed his confidence that there is no system issue in the management of Defence contracts.
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The Minister for Defence reinstated his support in Defence processes following the findings of a National Audit Office report released last week into the previous management and awarding of Defence contracts.
The report, evaluating circumstances surrounding a 10-year contract to manage two Commonwealth-owned munitions facilities, detailed unethical conduct including a request for a bottle of champagne from a Defence official to defence industry.
“Obviously, this occurred between 2016 and 2020 and as a result of that, the Secretary of the Department of Defence has referred this now to the National Anti-Corruption Commission,” Marles said, speaking to ABC Insiders on 30 June.
“I don’t think that there is a systemic issue within Defence in relation to the way in which defence contracts are managed. But the way in which we ensure that we never have a systemic issue is to make sure that we jump on individual cases.
“I think the point that I’d make here is that when you look at the whole breadth of the Commonwealth government and the way in which we engage with Australian society, but particularly with the private sector, defence contracting is the space in which you really have the greatest exposure to working with the private sector.
“The defence industry is a critical partner in delivering defence capability and that’s why it’s really important that this happens in a way which is completely robust, which people have total confidence in.”
Deputy Prime Minister Marles also confirmed his confidence in Defence contract processes.
“I do have confidence in the way in which the system operates and I have that confidence based on my knowledge as the Defence Minister and watching the way in which it operates,” he said.
“I’m definitely not in a position to see every detail of contracting processes and I wouldn’t assert that I do. But I do think there is considerable oversight in relation to this.
“My sense is that there is not a systemic issue, but it’s really important that we never see one.”
A Joint Committee of Public Accounts and Audit (JCPAA) held a second public hearing on Friday, 28 June 2024, for its inquiry into the 2022–23 Defence Major Projects Report (MPR).
“The MPR is an important accountability mechanism and the discipline of the MPR over many years has had a positive impact on Defence’s internal management of major projects,” said chair of the committee Julian Hill MP.
“More evidence is needed regarding how Defence assesses military off-the-shelf options during procurement processes. For decades, previous reviews of Defence procurement have insisted that a military off-the-shelf option must be considered and compared to ‘bespoke’ options in new capability procurement.
“The committee also wants to understand how changes to scope are decided after a project is underway as variations to scope can be a key reason for delays and cost escalations. How are capability and delivery managers engaged in the context of scope changes and who ultimately decides? It’s important that industry realities and cost and schedule impacts are fully considered when a decision is made to change the scope of a new capability after initial procurement.”
