The federal government-commissioned Commission of Audit review into government programs and spending has recommended the Defence Materiel Organisation (DMO) be abolished.
Abolishing the DMO was one of a number of key recommendations for the Defence portfolio contained in the commission’s report, released on Thursday, which also included privatising shipbuilder ASC and Defence Housing, and streamlining Defence senior leadership numbers. But the review was particularly scathing of the performance of the DMO, which is tasked with acquiring and sustaining weapons and equipment.
“In the commission’s opinion the 2005 decision to create the DMO as a statutory independent organisation outside the Department of Defence, under a purchaser provider arrangement, has not worked. It has not been effective in enhancing accountability,” the commission’s report reads.
“The commission received a number of submissions that highlighted shortcomings of DMO and the Capability Development Group. These included: high turnover of military staff; project management and costing skills shortages; unnecessarily complex contracting arrangements; underestimation of initial project costs; a lack of independent scrutiny; inadequate identification of technical risks; and unreliable whole-of-life cost estimates.”
Instead, the commission advocates rolling DMO functions back into the Department of Defence.
“Ensuring all parts of the capability process reside within Defence — including a much smaller DMO focussed predominantly on contract management rather than detailed project management — will allow for a more integrated view of the capability process, better defined accountabilities and better sharing of information. It will serve as a basis to address the shared problems faced by DMO and Capability Development Group. A more professional Capability Development Group could be achieved by ensuring it was headed by a senior policy officer experienced in independent analysis of contending military equipment and with staff recruited from a new professional capability development career stream.”
Whether the federal government adopts the Commission of Audit’s recommendations for the DMO remains to be seen. Treasurer Joe Hockey and Finance Minister Mathias Cormann said in a joint statement the government won’t provide an “immediate response” to the Commission of Audit’s findings, instead “our response to the National Commission of Audit Report will be our first Budget on 13 May”.
