Accord Induction

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					                    CS5.4.1
Alliance Based Defence
    Procurement and
     the P-3 Accord
            Grant Hensley
             WEDNESDAY 10 OCTOBER, 2007
       Project Management - Setting the Standard
Australian Institute of Project Management National Conference 2007
            Hobart Tasmania            October 7 – 10, 2007
   Alliance Based Defence
Procurement & the P-3 Accord




                                       Best for Capability System
                                   2
                       Grant Hensley
       Presentation Outline

•   Improving procurement in Defence
•   AP-3C Orion upgrades




                                           Best for Capability System
•   P-3 Accord Master Agreement
•   Research in Defence alliancing
•   P-3 Accord progress & challenges
•   Recommendations & conclusion


                                       3
     An Holistic Approach
          Communication

Leadership                Culture




                                        Best for Capability System
Relationships   IPTs
                       Governance

                                    4
     The Need For Change

• Defence Acquisition Reform 1998
• Defence White Paper 2000
  – Defence Materiel Organisation




                                          Best for Capability System
• ‘Kinnaird Review’ 2003
  – Performance based contracts
  – Collectively Defence & Industry
    required improvement!


                                      5
     Defence Procurement

• Traditional Defence contracting
  – Inefficient & costly




                                            Best for Capability System
• Emerging Defence contracting
  – Alliances
  – Long-term strategic relationships
  – Risk sharing


                                        6
                                 The AP-3C Orion




7




    Best for Capability System
                       P-3 Accord Origins
                       Australian P-3 Timeline
  1969          1978      1984              1991      1996               2004         2013 2014      2018




                                                                                                                        Best for Capability System
                    P-3C Update II           ESM       DMS, Sensors,
                   A9-751 - A9-760          Upgrade   Avionics Upgrade
                                                                                BUP        PWD

                         P-3C Update II.5                                               AIR 7000   P3 Replacement
         P3-B
                         A9-656 - A9-665                                                 MUAS          Phase 2




 Backlog of capability requirements
 Protracted contract process
 Limited fleet availability for multiple
  contractors                                                                                                       8
       What is the P-3 Accord?




                                                  Best for Capability System
 Master Agreement 09 Nov 2005
 Upgrade & sustainment services provided
 Risk strategy, shared equitably not equal



                                              9
               Why choose an Accord?

   Very
  Suitable         Traditional Strategy                   Collaborative Strategy
                   Risk Transfer                          Risk Share
                   Fixed price etc




                                                                                        Best for Capability System
 Suitability




Not Suitable
               - Fixed Scope              Circumstances         - Fast Track
               - Fully Documented                               - Many Unknowns



                                                                                   10
  Traditional vs P-3 Accord
         Contracting
             TRADITIONAL   ALLIANCE STYLE
             CONTRACTING    CONTRACTING

  OWNER        VARIATION
  WANTS
               VARIATION
  TO KEEP                                    Based on pre agreed
PRICE DOWN     VARIATION                     criteria only




                                                                        Best for Capability System
                              VARIATION
               VARIATION
                                              ALL PARTIES
                             ESTABLISH      WORK TOGETHER
               VARIATION
                              A “REAL”        TO IMPROVE
                                COST         PERFORMANCE
                 LOW
                             TOGETHER        FOR MUTUALLY
                INITIAL
                                WITH          BENEFICIAL
               TENDER                          OUTCOMES
                              AGREED
                              PROCESS
                                 AND
CONTRACTOR
                           TRANSPARENCY
   WANTS                      OF BASIS
  TO DRIVE
  PRICE UP
             ADVERSARIAL   COLLABORATIVE                           11
How is the P-3 Accord Managed?




                                  Best for Capability System
                             12
        P-3 Accord SWOT
• Strengths vs Weaknesses
  – Culture
  – Image




                                 Best for Capability System
  – Organisation
  – Process
  – Data
  – Product

                            13
        P-3 Accord SWOT
• Opportunities vs Threats
  – Customers
  – Environment




                                    Best for Capability System
  – Competitors
  – Political and Regulatory
  – Suppliers
  – Market

                               14
                                  Assessment




15




     Best for Capability System
                                  Assessment




16




     Best for Capability System
Recommendations to P-3 Accord
  • Accept it is not a “pure alliance”
  • Leadership is discrete to management
  • “Walk the talk”




                                                Best for Capability System
  • A separate identity for the JMO
  • Relationships on trust and respect
  • Effective IPTs
  • Adhere to the P-3 Charter
                                           17
Recommendations to P-3 Accord
  • Avoid duplication
  • Improve procurement management
  • Holistic project management




                                          Best for Capability System
  • Recruit & retain skilled staff
  • Change Management Plan
  • Communications Management Plan

                                     18
       Further Research
• Evolution of Industry Participants
• Commercial misalignment
• TCE assuring best value for money




                                                Best for Capability System
• Attract, select & retain skilled staff
• Commonwealth funding delays


                                           19
          Conclusion
• Success of P-3 Accord lies in hands
 of those participating:
   • Attitude




                                             Best for Capability System
   • Commitment
   • Values
   • Trust
   • Overall cultural influence
                                        20
                Questions?


The fundamental reason for adopting an alliance




                                                                 Best for Capability System
approach is to deliver a level of performance better than
that being achieved using more traditional contracting
methodologies




             grant.hensley@tenix.com

                                                            21

				
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