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Mark Jenkin, Defence Support and Reform Group: Effectively working with industry to achieve ‘Value for Money’ in Defence Support

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Mark Jenkin, Head of Defence Support Operation, Defence Support and Reform Group delivered this presentation at the 2013 ADM Defence Support Services Conference. For more information about the event, …

Mark Jenkin, Head of Defence Support Operation, Defence Support and Reform Group delivered this presentation at the 2013 ADM Defence Support Services Conference. For more information about the event, please visit the conference website: http://www.admevents.com.au/defencesupport2013

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  • 1. The 2nd Annual Defence Support Services Summit Partnering with Industry Mark Jenkin – Head Defence Support Operations
  • 2. Outline Effectively working with industry to achieve “value for money” in Defence Support • Defence Support Operations » Where, who, what and why » Contracted services • How - priorities » New Operating Model » Base Services Retender
  • 3. Who DSO STRUCTURE Mark Jenkin Head Defence Support Operations Sue Parr Garrison, Estate & Business Support CDRE Jaimie Hatcher Base and Customer Support Services Regions: Central West – Ron Hunter Nthn NSW – Larry Robbins Sthn NSW – James Simpson Qld – Gerald Griffin Vic/Tas – Steve Georgiou
  • 4. What we do • Three key roles DSO performs for Defence are: – Whole-of-base support functions, through management support and a governance framework on behalf of Defence Groups and Services to assist effective command, control and administration of base-wide issues and base support functions. – Contribution to stewardship of the Defence estate, through estate upkeep, estate appraisal and estate program services and projects, and facilitating the management of estate risk and compliance. – Delivering DSO’s share of products and services to Defence as a shared services provider in support of Defence’s living, working and training environment, either through external or internal delivery.
  • 5. DSO delivers outcomes to support Defence capability supported by: • A single integrated service delivery organisation with a national footprint • Value for money through working with industry and leveraging volume • Connection to both customers and national control • Geographic coverage where Defence works, trains and lives across Australia • Large customer population base (100,000): – 58,000 ADF – 21,000 APS – 21,000 Reserves • Dispersed sites in metropolitan, regional and remote locations Why
  • 6. Current Contracted Services
  • 7. • Relocations Administration Services and Removal Services (Toll) – five years from 1 July 2010 plus extensions. ~ 22,000 relocations and 20,000 removals each year. • Provision of Housing and related services (DHA)– 12 years plus 3 x five year extensions. There is a major review every five years. 17,500 Service residences provided to meet the ADF operational needs of a mobile workforce. – Strong governance arrangements – KPIs – business improvement, reduce Defence costs, sustain and improve relationships and influence service provider behaviours to ensure quality services are delivered to Defence personnel. – DHA housing model established by government to maximise involvement of the construction industry (800 – 1000 new houses per year) Defence Contracted Services – Relocations and Housing
  • 8. • HQ Joint Operations Command – joint operational command facility at Bungendore. • LEAP 1 – 1,395 Level 5 Live In Accommodation (LIA) units located at Holsworthy Barracks, Enoggera Barracks and RAAF Amberley. • LEAP 2 – 3,015 Level 5 LIA units delivered and under construction at 14 Defence bases Australia-wide. Considerable financial incentives under PPPs for good performance – Defence pays the capital costs of the PPP facilities over a 30 year period, rather than on completion of construction, and abatements are also applicable if performance does not meet requirements. At the end of the 30 year agreement, ownership of the PPP facilities reverts to Defence. Defence Contracted Services – Public Private Partnerships (PPP)
  • 9. • Current contracted Garrison Support Services include: – Management of the Services – Cleaning – Grounds maintenance – Pest and vermin – Training Area and Range Management – Laundry and dry cleaning – Sports and recreation – Accommodation Management – Hospitality & Catering – Canteen/Cafeteria – Access control – Waste management – Airfield support – Fire Fighting and rescue – Petrol, oils and lubricants – Stores management – Transport – Workshop • Current contracted Comprehensive Maintenance Services include: – Management of the Services – Call Centre – Fixed Plant & Equipment Maintenance – Engineering Operations – General Estate Works – Special Training Facilities 21 contracts over original 12 DSO regions Defence Support Operations Current Base Services
  • 10. Other contracted services managed by DSO include: – Utilities – Fresh Rations – Safe Hand Mail – Base Security Infrastructure – Library Services Defence Contracted Services - other
  • 11. A new DSO Operating Model • DSO’s responsibilities will be carried out at the national, regional and local (base) levels based on the following accountabilities: – Activities carried out with national scope, and geographically located in Canberra – Activities carried out with national scope, and geographically located in one of our five regions • DS regions will play dual roles: – regional and base support roles focused on their geographic area of responsibility similar to those currently performed; and – designated national roles supporting activities across Australia Proposed changes to DSO roles and responsibilities:
  • 12. • DSRG is under increased pressure to demonstrate value for money, and to improve effectiveness in delivering products and services • Defence is also seeking to deliver efficiencies • Investment in the DSO future Operating Model, new base services contracts and new IT systems will allow DSO to improve the way it does business Rationale for a new operating model: New Operating Model
  • 13. • Current reforms also compel change: – Changes to Defence priorities and shared services model affect how we operate and deliver outcomes – Base Services Retendering (BSR) significantly changes future service delivery arrangements and the contracting model • DSO’s response is to enhance our ways of working: – From ‘customer’ to ‘partner’ – From ‘regional’ to ‘national’ – From ‘ambiguous’ to ‘accountable’ – From ‘reactive’ to ‘proactive’ Rationale for a new operating model (continued): New Operating Model
  • 14. • Identifies and articulates key business functions and processes of DSO to deliver its outcomes to support Defence capability • Documents key roles, responsibilities, functions, and processes required to define DSO activities • Delivers on DSO business outcomes through: – Increased consistency and reduced duplication – Improved planning processes – Improved capacity to manage risk – Increased internal product and service management capacity – Key governance processes – Changed contract management arrangements What is the DSO Operating Model? New Operating Model
  • 15. Base Services Retender Elements of the BSR The BSR comprises a number of streams. SOW Transition Planning Procurement Strategy Supporting Data BSR Information Systems Contracting Model Performance Mgt Framework Affordability & Reform
  • 16. Background 1 5 3 4 2 The overall value of these Base Service contracts is approximately $1.1 billion per annum, including estate maintenance projects (risk management works). Current Base Services comprise 24 individual products and service lines (e.g. estate maintenance, catering, access control). Contracts were tendered based on the former Defence Support 12 regional model. There are 21 current contracts comprising of: -9 Garrison Support Services contracts; -9 Comprehensive Maintenance contracts; -3 x Base Services contracts (combined). The dates of these contracts have been aligned to allow Defence to go to market at a single point of time. In 2012, a formal re-tendering process to replace these contracts commenced that will replace the existing contracts in 2014. CURRENT CONTRACTS
  • 17. Background 2009 Future Acquisition Strategy - Industry was engaged to conduct market research and analyse and assess current contracting arrangements against industry better practice.  Alternative ‘bundling’ options were proposed  Three ‘supply market’ strategies to optimise value for money:  Leveraging volume, increasing standardisation and improving demand management. Reform – Implementation of working group to progress ‘agreed’ initiatives. Funding - Budget allocations revised to reflect SRP harvest The Journey 2010 Strategic Reform Program – Establishment of SRP and savings targets. -GSS - $654m and CMS - $505m. -Reform - Commencement in developing reform initiatives
  • 18. Background The Journey Industry Consultation – as part of developing the future acquisition strategy for Base Services. Defence + Industry Conference - Three ‘bundling’ options were presented at the Defence + Industry Conference 2011 for feedback. Internal consultation also occurred. Reform and Affordability - Continuation of work on reform initiatives. 2011
  • 19. Background The Journey 2012 Request for Information – A formal RFI was issued in February 2012, seeking industry feedback on proposed bundling and market approach. Statement of Work – Using the agreed guiding principles. Supporting data was sourced from a number of systems, spreadsheets, contractors and regions. Reform and Affordability - Continuation of reform initiatives in hospitality and catering, access control, sports and recreation. Invitation to Register – Open approach to the market through AUSTENDER. Request for Tender – Released through AUSTENDER. Limited to those companies that successfully pre-qualified as a result of the ITR.
  • 20. Background 2013 The Journey 2014 Request for Tender – Closed on 28 February 2013. Evaluations – Evaluation team established Transition Preparation – Transition preparations underway including alignment with the implementation of DSO Operating Model and transition to the new corporate system GEMS. Negotiations – Subject to successful negotiations contracts will be signed. Transition In – Progressive transition of the eight service packages. Transition Out – Progressive transition out of the existing 21 contracts.
  • 21. Current Challenges 1 7 3 5 2 Funding available for Base Services contracts has been reduced as a result of SRP targets ($1.1bn over 10 years). Increased compliance and legislative requirements as well as increased scope of services. Different arrangements, processes, procedures and experience depending on where you are. Ability to access innovation or industry expertise. 4 6 CHALLENGES Inconsistent product support and service delivery arrangements. Inefficient models exist and Defence is paying to have capacity on hand. The quality of the supporting data and estate information.
  • 22. BSR Objectives 1 2 OBJECTIVES Sustain Defence Capability Optimise Value for Money Defence has identified two major objectives in delivering the provision of Base Services in unison not opposition.
  • 23. Reframe Statement of Work 1 7 3 5 2 Sustainability Total Asset Management Leverage Volume Competitive Advantage Innovation Standardisation Outcome Based Contracts 4 6 PRINCIPLES The primary objectives are supported by seven guiding principles agreed by the Star NEP Committee in December 2011
  • 24. Strategies 1 3 2 By implementing contract options that leverage volume, standardise requirements, reduce excess capacity and decrease demand management, there is opportunity to restructure and redesign service delivery. This will optimise value for money whilst sustaining ADF capability and meeting increased legislative compliance activities. Maximise the opportunity provided by BSR to optimise value for money for Defence by: ~ Allowing modernisation of the providers’ service delivery models, ~ Better leveraging volume (national tender) and standardisation (consistency of activities across Australia), and ~ Outcome focused statements of work. ~ Enhanced consistency through national product management ~ Improve accountability for both Defence and Contractors – a strong relationship of mutual respect and trust between those involved. ~ Improve Planning ~ Enhance the role of Contractors and leverage industry expertise ~ Separate estate planning/ programming from program execution ~ Manage the whole of estate
  • 25. Mapping from Current to New Bundling of Services Estate Maintenance & Operations Services (EMOS) Bundle Management, Integration & Co-ordination (MIC) Including Estate Appraisal Base Services Call Centre Cleaning & Housekeeping Commercial Operations (Central West only) Estate Upkeep Land Management Laundry & Dry Cleaning Reprographics Pest & Vermin Sports & Recreation Training Area and Range Management Transport and Airfield Support Operations GSS Mgt of Services Accommodation Mgt Airfield Support Cleaning Commercial Ops Grounds Maint Laundry & Dry Pest & Vermin Reprographics Sport & Recreation Range & Training Transport CMS Mgt of Services Property Services Centre Infrastructure Appraisal Engineering Operations Routine & Reactive Works Fixed Plant & Equip Special Forces Training Facilities Estate Maintenance & Operations Bundle
  • 26. Mapping from Current to New Bundling of Services GSS Access Control Hospitality and Catering Aircraft Refuelling Fire fighting Services Stores Mgt Services POL Waste CMS Regional Program Dev & Mgt Risk Managed Works National Program Services Retail Stores & POL Aircraft Refuelling and Rescue & Fire Fighting Bundle Access Control Hospitality and Catering Waste Project Delivery Services Miscellaneous Service Packages