Australian defence department trials new contracting model

9 January 2016

Australia’s Department of Defence has launched a trial of a new procurement model which gives significant responsibility for delivering a project to the contractor.

The Managing Contractor model aims to bring specialist expertise to projects, while also allowing defence staff to be reallocated to higher priorities.

The Land Systems Division of the defence department’s Capability Acquisition and Sustainment Group, which purchases and maintains military equipment and supplies, will pilot the new delivery model on Project LAND 155, which is the procurement of “off the shelf” combat bridges.

The contract for the work has been awarded to Jacobs Australia, which will carry out project management, budgeting, logistic support analysis and management, engineering and contract management.  The overall contract is capped at around AUS$5m per year over three years and is calculated on actual work performed, subject to successful delivery of project milestones.

Under the model, the Australian government will specify the project scope in terms of cost, schedule and user requirements and monitor progress of the project through a contract manager.

The managing contractor will assign a project director as the contractor’s representative who reports solely to the government's line management through the contract manager. The provider is responsible for meeting budget and schedule agreements and for providing objective quality evidence to the government to allow acceptance of the capability into service.

The Department of Defence said the aim was the managing contractor would bring significant business acumen to the delivery of the project, reduce project costs and maintain schedule, with the flexibility to bring specialists in for specific tasks.

The new procurement model follows on from the First Principles Review of Defence, which was commissioned by the minister for defence last year. It aimed to ensure the defence department was fit for purpose, able to respond to future challenges with the minimum resources necessary.

The review referred to a Smart Buyer model aimed at better leveraging industry, being more commercially oriented, and delivering value for money. The model is currently being developed with completion of the its design expected in the first half of this year.

Brigadier Simon Stuart, director general land manoeuvre systems, said: “The lessons learnt from this managing contractor pilot will be highly valuable for Defence to improve our smart buyer credentials and meet the intent of the First Principles Review”.

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