The Australian Department of Defence (ADoD) is undergoing a fundamental restructure, one aspect of which aims to ensure that it has a robust military capability acquisition process. A key component of this restructuring is the establishment of an internal contestability capability to review ADoD's requirements, acquisition, and budget decisions internally before they are passed to other elements in the government. The role of this contestability function is to help ensure that the requirements and the resultant capabilities delivered to the Australian Defence Force are aligned with articulated strategy and available resources. To help develop this capability, the ADoD engaged the RAND Corporation to identify and review international contestability practices.
This report details RAND's findings. It describes key contestability functions and the primary aspects of those functions, as described in the literature. The report also provides the results of case studies of contestability functions in a variety of public and private organisations. RAND found that different organisations take a wide variety of approaches to implementing and conducting contestability functions. Still, there was a pervasive understanding that contestability could be linked to better outcomes and that a structured review of decisions could help reduce or avoid problems.
Several Ways Exist to Insert Contestability into Processes That Have Appropriate Independence, Authority, and Resources
- Contestability manifested in multiple ways: scrutiny, oversight, due diligence, and auditing.
- Each organisation developed a unique approach to establishing checks and balances that govern large capital expenditure decisions.
- There are no simple metrics for success for defence contestability functions, although there is general agreement that they improve decisionmaking.
- While private-sector contestability functions link outcomes to quantitative metrics related to profit, these do not transfer easily to the public sector.
Aspects of Contestability Vary Across Approaches
- Military contestability most commonly focused on significant procurement decisions; no organisation reviewed all possible decisions.
- The biggest differentiator among organisational designs was whether the function was stand-alone, as opposed to integrated or ad hoc.
- Engagement types varied: annual, periodic, or ad hoc.
- No interviewee at organisations with formal, stand-alone contestability expressed funding concerns. But no defence organisation had the resources to execute all possible analyses in-house.
- Typically, contestability reviews contributed to interim, not final, decisions and did not tend to be released publicly.
- Contestability reviews incorporated a range of standards, models, and methodologies, depending on the decisions.
- Contestability functions were typically staffed with seasoned experts.
- Internal contestability functions in defence organisations were more likely seen as necessary and organisationally beneficial; external functions housed in other parts of the government were viewed as more of a hindrance.
- Both public organisations and commercial companies monitor and account for risk, with the latter group focusing on financial risk.
- Support from the top of any organisation is critical to any successful organisational change. Top-management backing will be required in setting up the ADoD contestability function and is necessary to ensure support from the rest of the organisation.
- Important aspects of any contestability function, which should be part of the initial design, include supporting participants' independence and providing adequate resources so that all decisions that reach the standard contestability threshold can be reviewed.
- A clear understanding of the contestability function's mission, what resource decisions are being reviewed, and where the contestability function is injected into the current processes must be established up-front. Senior-leadership support must be consistent, with the goal of imbuing contestability in the culture and having all relevant organisations either agree that it is a value-added step or at least accede to the necessity of doing it.
- Personnel performing the contestability function must be adequately experienced in their fields and have timely access to the right data to perform their jobs well.
- Previous analyses and decisions should be stored over time to create a body of knowledge, which will help increase the long-term success of the function.
- To increase the chances of ensuring that the new contestability function helps improve decisionmaking and resource allocation, the ADoD can adapt and adopt principles of successful organisational change as it proceeds.