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									                                                    DEFENCE MEDIA RELEASE


MSPA 59/10                                                         Wednesday,10 March 2010

                 ANAO Audit on procurement of explosive ordnance

Defence today welcomed the Australian National Audit Office (ANAO) report on explosive
ordnance procurement and agrees with the two recommendations.
The ANAO recommended that:
    Defence and the Defence Materiel Organisation (DMO) develop processes for
      consolidating explosive ordnance inventory requirements of all stakeholders, at an
      appropriate level, to facilitate efforts to optimise explosive ordnance inventory
      holdings from both a capability and value for money perspective; and
    Defence undertake a strategic review of domestic manufacturing arrangements to
      evaluate the extent that value for money can be achieved from existing arrangements;
      and determine the ongoing viability of investment in domestic manufacturing
      capabilities.
Vice Chief of the Defence Force Lieutenant General David Hurley said, “The matters raised
in this ANAO report have not affected the quality or availability of explosive ordnance
provided to the ADF on operations overseas. Defence remains committed to providing our
service men and women with the highest quality equipment to enable them to do their jobs.”
“The ANAO has acknowledged that Defence was already aware of a range of issues
associated with procurement of explosive ordnance and has already established a number of
reform programs to address these issues,” he said.
In early 2008, the Vice Chief of the Defence Force was appointed as the single point of
accountability for explosive ordnance in Defence. A dedicated branch was also set up to
implement widespread reform of explosive ordnance.
Additionally, the DMO established a dedicated division to manage explosive ordnance
procurement. This division is progressing a complementary program of commercial and
inventory management reforms and staff professionalisation.
The Defence Explosive Ordnance Committee is directing a review to better coordinate all
explosive ordnance requirements. This will inform development of the 2010-11 financial year
explosive ordnance procurement plan.
The DMO will not extend the current domestic contracts with Thales Australia Limited for
the manufacture of explosive ordnance.
The DMO is actively pursuing opportunities to achieve best value for money from the current
contracts until they expire in 2015.
Defence will assess the ongoing strategic importance of domestic munitions manufacturing
and the viability of investment in these capabilities. The DMO is also investigating
opportunities for future domestic manufacture of explosive ordnance which will meet
Defence requirements in a cost effective manner.
“These actions accord with domestic manufacture of explosive ordnance as a priority industry
capability,” said Lieutenant General Hurley.


      Issued by Ministerial Support and Public Affairs, Department of Defence, Canberra, ACT
                              Phone: 02 6127 1999, Fax: 02 6265 1545
        Media Releases are available via e-mail if you register at www.defence.gov.au/media
                                                    DEFENCE MEDIA RELEASE


While the report identified an apparently high level of “Other Than Serviceable” stock, these
included such things as newly manufactured stock awaiting receipt inspection, stock returned
to depots from combat units for re-use, and stock awaiting a “shelf-life extension”
engineering decision. Stock classified “Other Than Serviceable” does not affect support to
ADF operations.

Media contact: Defence Media Liaison: 02 6127 1999 or 0408 498 664




      Issued by Ministerial Support and Public Affairs, Department of Defence, Canberra, ACT
                              Phone: 02 6127 1999, Fax: 02 6265 1545
        Media Releases are available via e-mail if you register at www.defence.gov.au/media

								
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