Defence materiel sustainment is about the maintenance and support of Defence’s fleets of specialist military equipment: the provision of in-service support for naval, military and air platforms, fleets and systems operated by Defence. Effective sustainment of naval, military and air assets is essential to the preparedness of the Australian Defence Force (ADF) and to enable Defence to conduct operations. Defence spends similar amounts each year on sustainment and the acquisition of new equipment. In 2015–16, Defence spent $6.3 billion—21 per cent of its total departmental expenditure—on the sustainment of specialist military equipment.
Parliamentary committees have frequently stated an interest in Defence’s reporting of its sustainment performance and, in particular, obtaining greater insight into that performance. During the course of this audit the Joint Committee of Public Accounts and Audit (JCPAA) announced that it had commenced an inquiry into Defence sustainment expenditure.
Part of the context for this audit is to inform the Parliament regarding Defence’s approach to managing sustainment expenditure, including in the context of the current JCPAA inquiry, and to inform the ANAO’s future program in this area.
The objective of the audit was to assess whether Defence has a fit-for-purpose framework for the management of materiel sustainment. To form a conclusion against the audit objective, the ANAO adopted the following high-level criteria:
- Defence has established an appropriate governance and operational framework for the management of materiel sustainment;
- Defence has established and implemented a high quality performance framework to support the management and external scrutiny of materiel sustainment; and
- Defence has achieved key outcomes expected from the Smart Sustainment reforms and has progressed its implementation of the reforms to sustainment flowing from the First Principles Review.