Defence has announced a major overhaul of its procurement and contracting practices in a bid to reduce the time it takes to approve large projects by as much as 25 percent. The changes, announced on 27 December by Minister for Defence Industry Melissa Price, are designed to reduce red tape and save industry millions of dollars.
The overhaul follows the completion of the Australian Standard for Defence Contracting (ASDEFCON) and Defence Procurement Review ordered by Minister Price in 2020.
“The implementation of the Review’s recommendations will significantly improve the way Defence does business,” she said. “It will also improve how Defence works to fast-track the delivery of capability to the ADF and how it communicates with industry.”
Under the changes, Defence will focus on reducing the time it takes to progress large materiel acquisition activities from the identification of a capability need to the signing of a contract.
The Review also identified probity as a current barrier to frank and open discussions with industry. Therefore, Defence will take a more reasonable, pragmatic and risk-based approach to probity by amending its probity practices, guidance and training for procurements. Defence will more openly engage with industry during the tender period to clarify procurement requirements and risks, and support better procurement outcomes.
The ASDEFCON suite of tendering and contracting templates, which are often used to draft solicitation documents and contracts, are designed for a range of procurements, from high-risk and software-intensive procurements all the way through to simple off-the-shelf procurements. They can be adapted to enable more rapid procurements, which enable delivery of equipment to the Australian Defence Force more quickly.
The Review found that the ASDEFCON templates need to cater better for agile procurements. As an outcome of the Review, Defence is working with industry to revise its templates and guidance to meet changing strategic circumstances and compress the time for acquisition processes.
For larger materiel acquisition projects, Defence will focus on shortening the time from capability needs identification through to contract signature, with a target of up to 12 months’ reduction for a process that can take four or more years. the time from starting to develop its requirements through to Government approval and contract signature can be many years.
The Review made seven principal recommendations:
- Time – reduce the time it takes to get to contract and Gate 2 submission to Government
- Improve communication (especially with regard to the misuse of probity as an excuse to limit effective communication and partnership with industry)
- Develop an agile template and process
- Establish a Contractor Accreditation Program
- Enhance Defence’s commercial and contracting experience and expertise
- Improve guidance and mandate regular training for Defence and industry
- Develop more agile and cost-effective approaches to market
To achieve this, Defence will:
- design better procurement processes based on a better understanding of industry, schedule, cost and capability manager requirements, such that early decisions are made on the most time- and cost-effective procurement process tailored specifically for each project
- introduce capped (rather than the current indicative) tender evaluation periods – expected to save in the order of three months for larger projects – with tender evaluation to be completed:
- within a similar time to that provided to industry for their Tender response for lower risk and value projects, but not to exceed six months; and
- not more than double the industry consideration time for more complex and higher risk projects, but not to exceed 12 months;
- changing the use of Offer Definition and Improvement Activities from routine to exceptional circumstances, based on clearly defined criteria and required approvals, which is expected to save at least six to 12 months for future procurements that do not use ODIA.
Better procurement process design will also result in mature requests for tender being released to market, which will reduce uncertainty for industry and promote higher quality tenders. Defence will enhance and improve its communication with industry, particularly when developing requirements before tender release and also during the tender process, through initiatives including:
- providing greater transparency of upcoming procurements through its Annual Procurement Plan on AusTender;
- assessing how a centralised contractor accreditation framework could be adopted to cut red tape for industry;
- improving probity practices, guidance and training for procurements in order to reduce communication barriers between Defence and industry;
- providing more opportunities for industry to brief Defence on tenders they submit to further clarify the offer proposed in support of Defence’s evaluation;
- keeping industry better informed as to the status and progress of tender processes, especially where delays occur; and
- providing feedback as quickly as possible for unsuccessful tenderers so they can improve their future tender responses.
Defence also recognises that industry needs to be informed as quickly as possible in instances where a tender response is clearly uncompetitive.
Prompt feedback on tender submissions will enable unsuccessful tenderers to improve their future tender responses.
“The initiatives introduced following the Review will help industry be better prepared and ready to respond to the needs of Defence and Government,” Minister Price said.
Defence will focus on strengthening its communication with industry as part of the procurement overhaul, with a particular focus on the tender process, she added.
- Defence will now allow industry to brief its project teams on tenders they submit to further clarify the offer proposed in support of Defence’s evaluation
- There will be greater transparency of upcoming procurements through its Annual Procurement Plan on AusTender
- There will be an assessment of how a centralised contractor accreditation framework could be adopted to cut red tape for industry
- There will be an improvement of probity practices, guidance and training for procurements in order to reduce communication barriers between Defence and industry
- Industry will be kept better informed as to the status and progress of tender processes, especially where delays occur
“The Review completes the delivery of the Five Pillars that I set out to support Australia’s defence industry,” Minister Price said. “I have mandated specific, measurable, and enforceable Australian Industry Capability and Content commitments in the body of contracts under a new contracting framework in Defence, which has been rolled out this year  on future projects above $20 million.
Defence industry and industry advocates were consulted on the Review via a survey in December 2020. About 250 survey responses were received, with 144 of those from industry across all stakeholders groups, from micro businesses to large primes.
Targeted engagement was also undertaken with industry and Defence.
Implementation of the recommendations will start in 2022.
The ASDEFCON and Defence Procurement Review 2021 findings and recommendations, as well as a fact sheet are available: