Audit strategy overview
The ANAO’s performance audit strategy considers Defence’s mission ‘to defend Australia and its national interests’, the significant resources allocated to achieving this, and the changing strategic environment in which Defence will be operating over the coming years. The total level of Defence and Defence Materiel Organisation (DMO) funding for 2011–12 is more than $27 billion.
The 2009 Defence White Paper set out the Australian Government’s plans to strengthen the defence of Australia and indicated the level of investment needed to maintain a credible defence capability. The goals of the 2009 White Paper are to be delivered by the 2009 Strategic Reform Program – Delivering Force 2030 (SRP), which includes extensive reforms to improve the accountability, planning and productivity of Defence business. The challenge facing Defence is to deliver Force 2030 as envisaged by the White Paper, including meeting the SRP target of some $20 billion in savings by 2019 that are needed to fund the investment required.
Defence is planning on replacing 80 per cent of its capability assets over the next 15 years. Consequently, as part of delivering Force 2030, there is continued impetus for Defence to effectively deliver capability through major capital equipment projects. This is why this remains a key priority of the ANAO’s audit program. Building on our ongoing program of performance audits of major capital equipment acquisitions, a major audit was delivered in the 2010–11 program on the delivery of navy capability, and an audit is currently underway examining the progress of the M113 upgrade project. Potential audit topics related to individual projects include: examining procurements such as the Joint Strike Fighter and the Air Warfare Destroyer; the acquisition of heavy vehicles under Project LAND 121; the remediation of the Lightweight Torpedo project; and the implementation of Defence’s Military Integrated Logistics Information System.
In light of continuing reform activities in the capability acquisition area and the importance of these reforms being delivered, potential audits also include: the management of the implementation of the recommendations of the 2008 Defence Procurement and Sustainment Review (the Mortimer Review); the implementation of DMO’s project management Gate Review process; and the enhanced two-pass Capability Development approval process. This audit coverage complements the annual Major Projects Review of the technical progress, schedule and cost of 28 major capital equipment projects.