plantoplanto reform supportship repair and management practices paul j rizzo—july 2011 "it is...

Plan to Reform

Support Ship Repair and

Management Practices

Paul J Rizzo—July 2011

"It is the capacity for maintenance that is the best test for the vigour and stamina of a society. Any society can galvanise for a while to build something, but the will and the skill to keep things in good repair, day in and day out, are fairly rare."

Eric Hoffer

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© 2011 Commonwealth of Australia

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth, which is available through the Department of Defence. Requests and enquiries concerning reproduction and rights should be addressed to:

Ministerial and Executive Coordination and Communication Division

Defence

Russell Offices, R1‐G‐C052

Canberra ACT 2600

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Contents Foreword ............................................................................................................................ 5 Executive Summary ............................................................................................................ 7 Recommendations............................................................................................................ 12 References........................................................................................................................ 17 Chapter 1 INTRODUCTION.......................................................................................... 19 1.1 Terms of Reference .................................................................................................. 19 1.2 Review Methodology ............................................................................................... 19

Chapter 2 CONTEXT.................................................................................................... 21 2.1 Historical Context ..................................................................................................... 21 2.2 Preparedness............................................................................................................ 21 2.3 The Causal Factors.................................................................................................... 22

Chapter 3 OVERVIEW OF THE REFORM PLAN ............................................................. 25 3.1 Introduction.............................................................................................................. 25 3.2 Reform Plan Outline ................................................................................................. 25 3.3 Reform Themes ........................................................................................................ 27

Chapter 4 LIFE CYCLE MANAGEMENT ......................................................................... 29 4.1 Introduction.............................................................................................................. 29 4.2 Life Cycle Methodologies ......................................................................................... 29 4.3 Effective Sustainment .............................................................................................. 32 4.4 Efficient Sustainment ............................................................................................... 35 4.5 Recommendations ................................................................................................... 38

Chapter 5 ACCOUNTABILITY AND RESPONSIBILITY ..................................................... 41 5.1 Introduction.............................................................................................................. 41 5.2 Complex Relationships Cloud Accountability........................................................... 41 5.3 Taking Responsibility and Being Accountable.......................................................... 42 5.4 Recommendations ................................................................................................... 48

Chapter 6 RISK MANAGEMENT FRAMEWORK ............................................................ 51 6.1 Introduction.............................................................................................................. 51 6.2 Vertical Perspective.................................................................................................. 51 6.3 Horizontal Perspective ............................................................................................. 54 6.4 Recommendation ..................................................................................................... 56

Chapter 7 ENGINEERING FUNCTION ........................................................................... 57 7.1 Introduction.............................................................................................................. 57 7.2 Regulation and Assurance........................................................................................ 57 7.3 Certification of Standards ........................................................................................ 61 7.4 Engineering Organisation......................................................................................... 62 7.5 Engineering Skills and Resource Levels .................................................................... 63 7.6 Recommendations ................................................................................................... 65

Chapter 8 CULTURE .................................................................................................... 67 8.1 Introduction.............................................................................................................. 67 8.2 Cultural Issues .......................................................................................................... 67 8.3 Recommendations ................................................................................................... 68

Chapter 9 WIDER IMPLICATIONS ................................................................................ 69 9.1 Introduction.............................................................................................................. 69 9.2 Other Current Vessels .............................................................................................. 69

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9.3 Future Vessels .......................................................................................................... 70 9.4 Recommendations ................................................................................................... 76

Chapter 10 PLAN FOR IMPLEMENTATION..................................................................... 77 10.1 Reforms Already Underway ..................................................................................... 77 10.2 How to Effect the Recommendations of this and other Relevant Reviews............. 80 10.3 Recommendation ..................................................................................................... 82 Annex A—Terms of Reference ............................................................................................. 85 Annex B—Causal Factors Contributing to the Unavailability of the Navy’s Two LPAs ........ 87 Annex C—Stakeholders Consulted....................................................................................... 89 Annex D—Submissions Received ......................................................................................... 93 Annex E—Acronyms............................................................................................................. 95

List of Figures Figure 1: Landing Platform Amphibious............................................................................... 20 Figure 2: The Pillars of Preparedness................................................................................... 22 Figure 3: Example of Rust Aboard Kanimbla........................................................................ 23 Figure 4: Incorrect Parts Fitted to Kanimbla via Improvised Coupling ................................ 23 Figure 5: Reform Plan........................................................................................................... 26 Figure 6: Asset Management Scope..................................................................................... 29 Figure 7: Iceberg Model ....................................................................................................... 31 Figure 8: Maintenance Shortfall—Kanimbla and Manoora................................................. 34 Figure 9: The Bathtub Curve ................................................................................................ 36 Figure 10: Fleet Maintenance Budget Estimates ................................................................. 36 Figure 11: Deferral of Maintenance Availability Periods ..................................................... 42 Figure 12: Fundamental Risk Management Framework for Sustainment........................... 52 Figure 13: Navy‐DMO Risk Framework ................................................................................ 53 Figure 14: Open Engineering Changes by SPO..................................................................... 69 Figure 15: Deferred or Open Maintenance Tasks by Platform ............................................ 70 Figure 16: Landing Helicopter Dock ..................................................................................... 71 Figure 17: LHD Compared to LPA ......................................................................................... 72 Figure 18: Air Warfare Destroyer......................................................................................... 73 Figure 19: Largs Bay ............................................................................................................. 75 Figure 20: Reform Implementation Timeline....................................................................... 81

List of Tables Table 1: Summary of Recommendations ............................................................................. 12 Table 2: Relevant Reviews and Reports ............................................................................... 77 Table 3: Supplementary Suggestions ................................................................................... 82

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Foreword As I worked on this project, I was heartened by the positive reception I received in Navy, the Defence Materiel Organisation (DMO) and from Industry. Many individuals are working under considerable stress and are concerned about the unsatisfactory management of the repair and maintenance of maritime materiel. They are looking for this plan to deliver a solution to the current unacceptable situation and for Defence leadership to show the commitment and tenacity to deliver the results.

I am grateful for the contribution made by those who engaged with the Team and I expect the plan I propose will improve the deficiencies I have found and discussed.

Whilst not required to report on individual accountability, in view of widespread apprehension in Defence over the outcome of this report, I would like it to be noted that the systemic breakdown described in this plan evolved over a long period. It is a result of institutional failures rather than a contemporary failure by individuals.

Of necessity, this plan is detailed. The contents capture many conclusions and suggestions, but its recommendations focus on those core actions that can make a practical difference. Indeed, the Team especially noted the many previous reports that propose remediation on the matter of technical integrity, and unsatisfactory maintenance and engineering practices. An important question is ‘Why hasn’t all this work resolved the problems apparent in the maintenance of vessels?’

The plan is built around seven major Reform Themes, which are outlined in Section 3.3. The resource requirements and impacts have not been scoped due to second order consequences. I am also conscious that the Strategic Reform Program is moving to streamline the use of resources and therefore Defence will need to make the trade‐off decisions necessary to fully resource the implementation of this plan. In addition, I have recommended one further review to identify opportunities to achieve better integration of critical interdependent activities between Defence and DMO.

If my conclusions are accepted, and the recommendations implemented, they will make a significant improvement to the repair and maintenance of all maritime materiel. Further, they will be greatly complimented by the full and timely implementation of the recommendations from previous related reports.

Paul J Rizzo

Independent Team Lead

5 July 2011

Subject Matter Experts

RADM Brian Adams (retired)

AVM Neil Smith (retired)

Secretariat

Mr. Lee Walton

Ms. Maria Crncevic

CAPT (RANR) Robert Horsnell

Special Contribution

CDRE Michael Houghton

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Executive Summary

Introduction

The recent early decommissioning of HMAS Manoora, the extended unavailability of HMAS Kanimbla and the temporary unavailability of HMAS Tobruk were the catalysts for the commissioning of this report, but the problems that led to this action are long‐standing, well known to Defence and DMO1, and the subject of many prior reports. This, coupled with the fact that prior findings remain broadly valid and that remediation action to date has had little practical effect, is reflective of on‐going systemic failure.

Recent reforms underway (for example the Strategic Review of Naval Engineering, Strategic Reform Program and the new Seaworthiness Board) should assist in the remediation of maritime maintenance and sustainment practices, but will not be sufficient, and may be in danger of the same underachievement as past actions. Indeed, in the specific case of the Strategic Reform Program, the results required from that reform may conflict with the increase in resources needed to address this plan. Defence will therefore need to make the resource trade‐off decisions necessary.

The inadequate maintenance and sustainment practices have many causal factors. They include poor whole‐of‐life asset management, organisational complexity and blurred accountabilities, inadequate risk management, poor compliance and assurance, a 'hollowed‐out' Navy engineering function, resource shortages in the System Program Office in DMO, and a culture that places the short‐term operational mission above the need for technical integrity. In addition, Navy and DMO need to improve coordination and integrate their interdependent activities more effectively. Whilst the overall outcome is a poor reflection on Defence and DMO, actions by individuals were taken, in the main, to meet the operational demands of the day with inadequate resources and tools.

The plan considers the objectives of Navy and DMO and the construct within which Navy and DMO currently operate. It nominates the strategic and tactical actions which, if implemented effectively, will ensure that the technical integrity of maritime materiel is achieved and therefore improve operational availability and outcomes. These actions will also assist in the further development of the maintenance concept for the sustainment of the Air Warfare Destroyer and the Landing Helicopter Dock. The Team makes twenty‐four recommendations. Of these, the following seven are strategic in scope, because their impact is greater and longer lasting.

• Formalise asset and sustainment methodologies.

• Take whole‐of‐life decisions.

• Establish closer working arrangements between Defence and DMO.

• Establish an integrated risk management system.

• Rebuild Navy engineering capability.

• Reinstate the cultural importance of technical integrity.

1 Although DMO is part of Defence, for clarity this plan uses the term ‘Defence and DMO’ to distinguish between DMO and other parts of Defence.

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• Confirm Defence Capability Plan (Maritime) Resourcing.

Overarching Observations

In addition to the recommendations, the Team has made the following overarching observations, which it considers to be of equal importance:

• The interdependency of Navy, DMO and Industry is critical. However, the means to bring these relationships to best practice are either not well understood or poorly practiced because of cultural differences, or skill deficiencies, or a lack of time, or a shortage of resources to focus on the challenge.

• Cooperation between Defence and DMO must be of the highest order to achieve the common capability goals. At present there is an ‘us and them’ feel to this relationship.

• The need for the sustainment of assets is understood in Defence and DMO, but it is not given the same rigorous attention as asset acquisition. Sustainment costs can exceed those of the original procurement and the challenges can be more complex.

• The importance of operational objectives is clear to Navy—but the equal importance of the technical integrity of its assets, both for the short‐term operational task and for their operational life, is not.

• Decisions addressing the risk of deferring maintenance are sometimes made without considering the benefit to be gained from accepting that risk, without clear and contemporary risk settings and without complete information.

• The Team wants to ensure that the recommendations do not fall prey to inertia or changing priorities, as seems to have occurred with many previous reports.

• Many of the causal factors relate not just to engineering, but also to operations, operational planning and culture. If the remediation does not span the entirety of the Navy and DMO (Maritime) business, then success is unlikely.

Each of the influencing factors is explored in detail in the body of the report with the key points being summarised below.

Life Cycle Management—Chapter 4

During the planning and acquisition of new capability there is a tendency to focus on delivery above all else. The intense political, media and leadership attention on acquisition means that there is a focus on schedule, budget and specification. As a consequence, this means that the project manager has only limited options if pressure or constraints arise. As a result, sustainment is neglected in priority, which leads to inadequate logistic support products and increased sustainment requirements, often to the detriment of whole‐of‐life capability and costs. This risk was to be addressed through the joining of acquisition and sustainment into a single organisation—the Defence Materiel Organisation. But the continuing focus on acquisition and insufficient attention to through‐life costs has reduced the impact of this sensible initiative.

A methodology to manage activities and practices over the whole life cycle of assets is necessary, that is, an Asset Management Methodology. Elements of the methodology exist, but are scattered and lack cohesion. If implemented correctly, it will ensure that decisions

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made are based on whole‐of‐life considerations and will deliver the governance arrangements to monitor adherence. Implementing such a mechanism will provide a good foundation to address the problems identified.

Sustainment is a sub‐component of asset management and consists of such aspects as engineering and maintenance, training, spares and inventory management, and management of the configuration. A methodology is also required to unify and fully develop this important and complex function within Navy and DMO.

Reduced sustainability has a direct impact on preparedness, and yet Navy operators often do not consider maintenance planning as an enabler of operations. The practical outcome of this culture is that maintenance activities undertaken by ships’ crews and by external organisations have often been curtailed, postponed or even cancelled with little or no action taken to recover the situation. This has resulted in the current degraded state of the Amphibious and Afloat Support ships.

There is also a need for increased efficiency in contracting mechanisms used by DMO across much of the fleet. The current short‐term and narrow approach to Industry engagement in Amphibious and Afloat Support has resulted in significant bureaucratic and administrative overheads. This is in stark contrast to the Defence aviation sector, which uses fewer contracts that engage Industry in longer‐term relationships.

Accountability and Responsibility—Chapter 5

Strong accountability is an important component of any high performing organisation, as it denotes ownership of a result or action. It is essential that the Chief of Navy, as the Capability Manager, has clear accountability for Navy through‐life capability and has the corresponding resources. The Materiel Sustainment Agreement between Navy and DMO is critical in this regard, but is currently poorly defined and weak. This agreement should be transformed into an active ‘contract’ that clearly defines the obligations of both Navy and DMO and is supported by business‐like performance measures. In order to achieve this, and to be an informed user, Navy should substantially increase the resources committed to the capability management role.

The Materiel Sustainment Agreements must be accompanied by improved reporting within Navy and DMO. It is important to capture direct, timely and candid remarks in a documented form and in conjunction with a rigorous set of metrics. This does not currently occur in a consistent manner, and consequently, has led to some dysfunctional communication.

Organisational complexity is a significant factor impacting accountability. In an organisation of the size and breadth of Defence, a level of complexity cannot be avoided. However, the structure of the engineering organisation, as it relates to Navy, is overly complex and distributes scarce personnel across several reporting chains. Head Navy Engineering has little direct management control over a large proportion of the Navy engineering workforce. In addition to being fragmented, it has been ‘hollowed‐out’ over many years as a result of change upon change in Defence and an undue focus on short‐term operational demands. The voice of Navy engineering is often not heard, or understood, further reducing accountability.

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Risk Management Framework—Chapter 6

The management of risk should be a central function in Defence. Like all organisations, Defence is influenced by external factors that impact on the organisation’s appetite for risk. Defence is beginning to develop mechanisms to quantify the contemporary appetite for risk in a formal way and to promulgate this vertically through the organisation. This is crucial as it will enable the executive to control organisational behaviour in response to both external and internal influences. It is important to note that the mechanism alone will not be sufficient, as the concept also needs to be internalised. That is, it needs to become part of everyday life in Defence, with effective risk management being both adopted and linked throughout.

Risk decisions made at the enterprise level (e.g. Navy) need to be accompanied by a robust mechanism for risk management spread horizontally throughout the organisation. As an example of current poor practice, individual technical risk assessments associated with the deferral of maintenance or acceptance of technical defects are often made in isolation. This issue became apparent at the Landing Platform Amphibious (LPA) Seaworthiness Board in September 2010. It is essential that decisions are made through consideration of the full range of risks to the platform and crew, aggregating the information to provide a complete view.

The assessment of risk must also consider the benefits to be gained and the current context. For example, technical risks associated with reduced maintenance may be acceptable at a time of imminent threat, but according priority to a routine operational mission or exercise, ahead of serious cumulative shortfalls in maintenance, is not.

Engineering Function—Chapter 7

Perhaps the area that needs most attention is that of the engineering function within Navy and DMO. The technical regulatory framework has been established for many years and is based on that of Air Force. But it is not adequately implemented in the maritime domain. This is due to a number of complex issues, including a loss of engineering influence, longstanding personnel and skills shortages, a weak and ineffective compliance and assurance function, workforce fragmentation and overlapping responsibilities. All of these, and more, have resulted in a culture that ‘makes do’ and is subservient to short‐term operational imperatives.

It is clear that compliance and assurance is inadequate in Navy engineering. Director General of Technical Airworthiness in Air Force has almost seven times the workforce dedicated to this important role.

The Team was struck by the apparent complexity of the Navy engineering organisation and the scarcity of resources applied. As a consequence, although sound in principle, Naval engineering policy is out of date and compliance is ineffective. Navy engineering needs to be rebuilt and reorganised to function properly, increase authority, improve accountability and sustain the workforce. It should be led by a two‐star Navy officer to give the necessary weight to this important function.

Culture—Chapter 8

In the course of this work, several cultural problems in Navy, and to a lesser extent DMO, became apparent. These can be categorised as: ‘can do, make do’; an assumption that a

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ship is safe to sail unless proven otherwise; and the management of bad news. These are all factors in the current condition of the Amphibious and Afloat Support ships. Implementation of the findings of the unpublished Review into Accountability and Governance in Defence (Black Review) should address some of these issues, but an additional cultural change program is required to address the specific challenges related to maritime technical integrity.

Wider Implications—Chapter 9

Several of the factors related to the current situation with the Amphibious and Afloat Support ships are relevant across the fleet, although to a lesser extent. There is also a backlog of engineering change and maintenance work in other vessels and a clear shortage of engineering resources. This is of concern in itself, but especially when considered in the context of the impending acquisition of the significantly more complex Landing Helicopter Dock and Air Warfare Destroyer. Navy and DMO should confirm whether they will have sufficient resources and skills to operate and maintain materiel that is committed for naval service over the next ten years.

The concepts in the sustainment strategies for the Air Warfare Destroyer and Landing Helicopter Dock form a sound basis for through‐life management of these vessels. However, one important caveat remains; it is essential that these strategies are implemented with rigour and that they are not diluted as pressures emerge during acquisition.

Many of the proposed actions within this plan will have an impact across the current and future fleet. Successful implementation, although challenging, will improve the current unacceptable situation.

Plan for Implementation—Chapter 10

The Terms of Reference required the development of a plan for reform. This plan identifies the actions required and proposes timelines for this work. In order to ensure delivery on the actions, an Implementation Committee should be established to drive the changes required. The Committee should report to the Secretary and the Chief of Defence Force after each meeting. In turn, the Secretary and the Chief of the Defence Force should provide six monthly updates to the Minister for Defence and the Minister for Defence Materiel on progress against this plan.

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Recommendations The recommendations are summarised below for quick reference. They are numbered in the order in which they are presented in the document. Cross‐references to the location in the report are also provided, as it is important to consider the recommendations in the context of the supporting text.

Table 1: Summary of Recommendations

Title Description Report Location

Strategic Actions 1 Formalise Asset

and Sustainment Methodologies

Navy and DMO should jointly establish practical methodologies for integrated through‐life Asset and Sustainment Management.

4.2.3

2 Take Whole‐of‐Life Decisions

Defence and DMO should ensure that decisions made during acquisition fully consider whole‐of‐life costs and capability, through a rigorous and formalised Asset Management process.

4.2.2

7 Closer Working Arrangements between Defence and DMO

Whilst retaining the benefits of specialisation, Defence should commission a review to achieve better integration of critical interdependent activities between itself and DMO.

5.3.3

13 Establish an Integrated Risk Management System

Navy and DMO should develop an integrated risk management system for maintenance of maritime capability. This must emphasise:

• the vertical link between risk appetite at the enterprise level and its application at the workface; and

• the horizontal processes necessary to capture the full risk‐benefit trade‐off.

6.4

17 Rebuild Navy Engineering Capability

Navy engineering should be rebuilt and reorganised to reduce fragmentation, increase authority, clarify accountability and enable the Head Navy Engineering to fulfil his role as the Technical Regulatory Authority. It should be led by a 2‐star Navy officer to give weight to this important technical and compliance function.

7.4.1

21 Reinstate the Cultural Importance of Technical Integrity

Navy, in collaboration with DMO, should introduce a cultural change program that promotes technical integrity as a key enabler of operations.

8.3

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23 Confirm DCP (Maritime) Resourcing

Given the evident strains of today, Defence and DMO should confirm to Government that they will have sufficient resources and skills to operate and maintain materiel that is committed for naval service over the next ten years.

9.3.4

Tactical Actions 3 Constrain the

Operation of Kanimbla

If Kanimbla is to be retained, Navy should constrain its use to contingency operations and training of Navy personnel. Resources should be assigned to the ship commensurate with safe operation in this restricted role, until the risk of a capability gap is removed.

4.3.5

4 Plan for the Aging of Vessels

DMO and Navy should have joint plans for vessels approaching the end of life, which:

• ensure that resource allocation and Fleet activity scheduling allow for the increasing sustainment needs; and

• consider the growing cost of ownership (budget and people) when making capability replacement decisions with Capability Development Group.

4.4.1

5 Strengthen Partnerships with Industry

Whilst retaining competitive tension, the Defence Materiel Organisation should implement maritime contracts that are broader in scope and longer in term, to build deeper and continuing relationships with Industry.

4.4.2

6 Remediate ICT System Shortcomings

Navy should lead work to define and then drive remediation of the information management systems for maritime engineering and maintenance.

4.4.3

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8 Increase Resources for Capability Management

Navy should enhance capability management by:

• creating a dedicated cell to analyse, evaluate, and continually assess the state of the Fleet against the Materiel Sustainment Agreement;

• increasing the resources assigned to Capability Management; and

• changing the Workforce Posting Priority to ‘Three’ for Navy staff appointed to sustainment, in line with that of acquisition.

5.3.2

9 Establish Effective Navy Workforce Planning

Navy should establish an effective workforce planning system to ensure staff have the skills and experience required for complex sustainment roles.

5.3.3

10 Refocus Fleet Command

The Chief of Navy should review the structure of Fleet Command to allow the Fleet Commander to better focus on his core function, which is the operational preparedness of vessels and crew.

5.3.4

11 Capture Mutual Obligations

The Naval Materiel Sustainment Agreement should be transformed into an active ‘contract’ that meaningfully captures the mutual obligations of Navy and DMO, supported by business‐like performance measures.

5.3.5

12 More Effective Information Exchange

Navy and DMO must improve their internal reporting by capturing direct, timely and candid, document‐based information that draws on a rigorous set of metrics.

5.3.6

14 Monitor and Audit for Technical Compliance

Chief of Navy should resource Chief Staff Officer (Engineering) to fulfil his responsibility as head of the Fleet’s Authorised Engineering Organisation, to:

• monitor and audit ships for technical regulatory compliance; and

• provide mandatory input into ship's engineer's performance reports.

7.2.6

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15 Instigate Third‐Party Quality Assurance

The Chief of Navy should develop, and direct compliance with, a policy on the use of Classification Societies, or other expert third‐party surveyors, to establish independent quality assurance for all Navy vessels, during design, construction and operation.

7.2.7

16 Control Acceptance into Naval Service

Through an independent, rigorous and transparent evaluation process, the Chief of Navy should exercise his authority as the Capability Manager to accept or reject new Naval capability against the Government approved scope.

7.3

18 Resource the Amphibious and Afloat Support SPO

DMO should increase the engineering and contract management resource base in the Amphibious and Afloat Support SPO to meet the ongoing need, and then further augment the complement to address recovery activities.

7.5.1

19 Foster Engineering Talent

DMO and Navy should develop an innovative and comprehensive through‐life career plan for the recruitment, retention and development of their engineering talent.

7.5.1

20 Rebuild the Fleet Support Units

In line with the Strategic Review of Naval Engineering, the Fleet Commander should rebuild the capability of the Fleet Support Units—using Industry expertise to re‐establish deep technical skills.

7.5.4

22 Quantify Maintenance and Engineering Backlog

To set a firm foundation for remedial action, the Chief of Navy should commission an independent audit to accurately quantify the maintenance and engineering backlog across the fleet.

9.2

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24 Drive the Reform Program

Defence should establish an Implementation Committee to drive early stage delivery of the reforms. There are two important enablers:

• the Committee should consist of Chief of Navy, Chief Executive Officer Defence Materiel Organisation, Deputy Secretary, Strategic Reform and Governance and Mr Paul J Rizzo as the independent chair.

• at the first meeting, Defence and DMO should present the list of proposed responsible officers for the implementation of the recommendations.

10.2.2

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References A. Defence Procurement and Sustainment Review (Mortimer, September 2008)

B. Strategic Review of Naval Engineering (Hammer, November 2009)

C. Helmsman Sustainment Complexity Review (Helmsman, July 2010)

D. Report into Amphibious and Afloat System Program Office (Konekt, August 2010)

E. A Review into the Underlying Causes Leading to the Operational Pause for the LPA Class (HMA Ships Kanimbla and Manoora) (Sander, December 2010)

F. Materiel Sustainment Agreement between DMO and Navy for 1 July 2010 to 30 June 2020.

G. Surface Force Annual CNSAC Status Report (Sept 2010)

H. The Navy Strategic Plan 2010–2015 (30 June 2010)

I. Defence Portfolio Budget Statements 2011–12

J. RAN Integrated Logistic Support Manual (15 Nov 2004)

K. Review of the Capability Reporting Issues for HMAS Manoora, Kanimbla and Tobruk, Audit Task 11‐009 (May 2011)

L. Maintenance Risk Management (CDRE Michael Houghton, May 2011)

M. HMAS Success Material State Technical Investigation (Quain, March 2010)

N. Configuration Management Improvement Project (Ferguson, 9 Sept 2010)

O. Report of the Board of Inquiry into the fire in HMAS Westralia (28 Aug 1998)

P. KPMG Materiel Sustainment Agreement Review (July 2010)

Q. DMO Sustainment Business Model Project Terms of Reference (14 April 2011)

R. Review of Configuration Management in the RAN (Gahan, 16 Aug 1999)

S. Review of Configuration and Maintenance Management (Kildey, 8 Dec 2008)

T. Defence Procurement Review (Kinnaird, 2003)

U. Amphibious Transport Ships (LPA) Modification/refit Phase2 Follow On Audit Status Report (A/Defence Inspector General, 31 Aug 1998)

V. DI(G) LOG 4–5‐004 Defence Policy on Life‐Cycle Costing Analysis (14 Nov 2003)

W. HMS Directive 1/2011: Directive to Mr Alan Evans—Reconstruction of AASSPO Systems and Processes (8 Feb 2011)

X. ABR 6492 Navy Technical Regulations Manual (July 2003)

Y. Navy Engineering Workforce Review (17 Nov 2010)

Z. Seaworthiness Board Report—LPA (22 September 2010)

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Chapter 1 INTRODUCTION

1.1 Terms of Reference The Government appointed an independent Team of experts to develop a plan to reform the repair and maintenance practices that led to the early decommissioning of HMAS Manoora, the extended unavailability of HMAS Kanimbla and the temporary unavailability of HMAS Tobruk. The Causal Factors that led to this situation were to be addressed in the context of reforms already underway. Further, the Team was to consider the impact of its findings on the sustainment of other Navy vessels and the maintenance concepts of the Air Warfare Destroyer (AWD) and Landing Helicopter Dock (LHD).

The full Terms of Reference are provided at Annex A and the Causal Factors are provided at Annex B. A summary of the Causal Factors, including several additional factors identified during the course of this review, is contained in Section 2.3.

1.2 Review Methodology The Team developed a broad engagement strategy to ensure that the Causal Factors were fully understood and to determine what remediation was already underway or planned. Over seventy‐four stakeholders have been interviewed, including the Secretary, the Chief of the Defence Force, the Chief Executive Officer of the Defence Materiel Organisation and senior officers and their staff in Navy, DMO, Strategic Reform and Governance Executive, Audit Division, Academia and Industry. A list of stakeholders interviewed is provided at Annex C.

Submissions were invited from internal and external parties through national and Defence publications. Thirty‐six written submissions were received from a wide cross‐section of stakeholders. A list of individuals who provided submissions is located at Annex D.

Site visits were made to the Amphibious and Afloat Support System Program Office (SPO) and Amphibious and Afloat Support Group at Garden Island, Sydney. Tours of Tobruk and Kanimbla were also conducted, which provided an opportunity to speak with members of the crew and view the condition of the vessels. A visit was made to the AWD project office in Adelaide to consult with members of the AWD Alliance. The Team also consulted with the LHD SPO director, the Joint Amphibious Capability Implementation Team and the AWD Capability Implementation Team in Canberra.

The Team benefited from the participation of two subject matter experts, AVM Neil Smith (retired), who supplied extensive knowledge of Air Force technical regulation and engineering, and RADM Brian Adams (retired) who brought extensive experience in Navy culture, management and operations.

CDRE Michael Houghton provided valuable input throughout the review period, particularly through his contribution on current and future risk management in Navy (See Reference L). Defence Audit Division completed a supporting investigation into sustainment‐related reporting on the Amphibious and Afloat Support fleet.

This plan was developed through analysis of the relevant reform activities already underway and identification of additional work required in addressing the Causal Factors. The Team was struck by the large number of reviews and other activities that are pertinent (see list of

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References at page 17). Many of the changes required to improve Navy maintenance have been identified in these reports, but have not yet been fully realised.

The plan contains a number of recommendations that support or supplement these existing reforms. The number of these additional recommendations has been limited to those that will deliver most benefit to Defence and DMO2. There are also a number of suggestions contained within the text of the plan and summarised in Chapter 10, which if acted upon, will realise further benefits. Whilst the Team’s recommendations have been identified and stand alone, the substantial reform required will not occur unless many changes already identified in some of the previous reviews are also fully delivered. The Team has therefore identified these important existing initiatives and proposes a single governance model to oversee the complete package of measures.

Figure 1: Landing Platform Amphibious

2 Although DMO is part of Defence, for clarity this Plan uses the term ‘Defence and DMO’ to distinguish between DMO and other parts of Defence.

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Chapter 2 CONTEXT

2.1 Historical Context The Navy has undergone major organisational change on at least two occasions in the last fourteen years, as well as a number of minor adjustments. Until 1997 the Royal Australian Navy included the Headquarters in Canberra and Maritime Command and Support Command—Navy located in Sydney. In broad terms, the Maritime Command was responsible for the operation of all Navy ships, submarines and aircraft and the collective training of officers and sailors. Support Command—Navy was responsible for logistics and maintenance of all the operational forces, for the individual training of all Navy officers and sailors, and for the administration of all bases and other shore facilities.

Direct responsibility for the sustainment of maritime capability was transferred from Navy to the joint Support Command Australia in 1997. The Defence Materiel Organisation was formed in 2000 by merging the Defence Acquisition Organisation and Support Command Australia in order to address the interface issues between acquisition and sustainment. Following the Departmental restructure under the Defence Reform Program in 2000, Navy Systems Command was established to undertake the remaining Support Command—Navy functions not transferred to the Defence Materiel Organisation.

In 2009, the Navy organisation was changed substantially again. Navy Systems Command was disbanded and operational forces were placed in ‘forces and groups’ under Maritime Command (the name of which accordingly reverted to the former title of Fleet Command). Fleet Command also assumed responsibility for all individual and collective training, for most Naval activities conducted ashore and for the command of all bases and other shore facilities.

The Navy Technical Regulatory system was formally established in 2002, (in response to the HMAS Westralia disaster Board of Inquiry report), and has remained largely unchanged since that time. It was based on the successful Royal Australian Air Force Technical Regulatory System. The framework was agreed, but Navy assigned considerably fewer resources to its implementation and upkeep than did Air Force. This remains the case today and is considered further in Chapter 7.

2.2 Preparedness Australian Defence Force (ADF) doctrine links a number of concepts to describe how its capability is developed and maintained.

One concept is that of ‘Preparedness’ which is the combination of ‘Readiness’ and ‘Sustainability’ (see Figure 2). Readiness refers to the ability of a capability, or elements thereof, to be committed to operations within a specified time, while Sustainability refers to the provision of all forms of support, including equipment maintenance, that enable capability elements to participate in operations for as long as is required.

The Government’s requirements of the ADF are translated via the Australian Military Strategy, the Chief of the Defence Force Preparedness Directive and the Joint Operations Command Operational Preparedness Requirement into a specific Readiness and Sustainability posture for all elements of the ADF. For the commanding officers of the Navy’s amphibious ships this will ultimately be in the form of a Notice for Sea requirement

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expressed in terms of hours or days and guidance on the amount of stores and spares they must have on‐board.

When a ship is under Notice for Sea, for example, at 24 hours Notice for Sea, all crew members must be able to return on board and take the ship to sea within that period. Any of the ship’s systems or equipment shutdown for defect rectification or planned maintenance must be capable of being repaired, reassembled and made ready within that time. Anything that occurs that will prevent a ship regaining operational capability within the specified time must be reported to Fleet Command. Serious equipment defects are reported and repairs arranged through a prioritised system of Urgent Defect reporting.

Figure 2: The Pillars of Preparedness

The effective and timely completion of planned maintenance is of fundamental importance to both Readiness and Sustainability. In the short‐term, it ensures that ships are capable of doing what the Government requires of them within directed timeframes. In the longer term, it ensures that ships are kept in a condition for employment in their designed roles throughout their operational life.

2.3 The Causal Factors The Causal Factors contributing to the unavailability of Navy’s two Landing Platform Amphibious ships (LPA) and their remediation requirements are well known by Defence and have been communicated, both formally and informally, within the Navy, DMO and contractor community over several years. The Causal Factors that formed the foundation for the Team’s deliberations can be found at Annex B. They are summarised below and were previously advised to the Minister for Defence by the Secretary and the Chief of the Defence Force.

• HMA Ships Manoora and Kanimbla were purchased in 1994 with an inadequate set of logistic support products, including data covering certification, configuration management and planned maintenance. Defence and DMO have been unable to successfully address this shortcoming through lack of resources and pressure to keep the ships running to meet operational requirements.

• The ships were modified quite significantly before introduction into service in 1999. A lack of good Configuration Management documentation covering these modifications further contributed to the certification, configuration and maintenance data failings.

• The ships are now approximately 40 years old and are at the end of their cost effectiveness.

• Navy and DMO have lost critical professional skills to Industry as a result of the drive to outsource deeper maintenance. This has caused substantial technical resource shortages.

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• There is significant aggregated risk associated with the LPAs (see Figure 3) as a result of shortcomings in manning levels, experience, maintenance, Integrated Logistic Support and Configuration Management.

• Non‐conformance to the Navy Technical Regulatory Framework resulted from a ‘can do, make do’ operations orientated attitude (see Figure 4). This was due in part to an inaccurate perception that these were ‘second tier’ ships not subject to the same risks as submarines and aircraft.

• The Strategic Review of Navy Engineering highlighted the need for significant reform, to ensure ’the effectiveness and sustainability of the Royal Australian Navy’s Technical Community and its contribution to good engineering practice and future naval capability’.

• The DMO Amphibious and Afloat Support System Program Office (SPO) competence has fallen well below an acceptable level, resulting in a highly reactive state and the recent removal of its Authorised Engineering Organisation status.

Figure 3: Example of Rust Aboard Kanimbla

Several additional Causal Factors have been identified during the conduct of this review:

• The Navy engineering organisation is under‐resourced and fragmented with complex lines of authority and accountability.

• Navy has not been able to perform its role as the Capability Manager because of under resourcing and ineffective reporting on the Fleet’s condition up the chain of command.

• DMO and Navy do not have a business‐like relationship based on formal, measurable agreements at multiple levels throughout the organisations.

Figure 4: Incorrect Parts Fitted to Kanimbla via Improvised Coupling

• For many years, preventative and corrective maintenance has not been carried out because of the higher priority afforded to operational demands over maintenance requirements. The risks involved in deferring maintenance are not fully appreciated by many non‐engineering officers in the Navy.

• Short‐term, individual contracts for the conduct of External Maintenance are resource intensive and fail to foster Industry investment.

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• The Technical Information Management System has significant shortcomings and is an impediment to good practice.

Many of these issues have been considered in a range of reports, reviews, formal investigations, and Defence internal working papers. They highlight inadequacies in governance, regulation, systems and procedures, relationships, safety, skills and tools. The key reports are:

• The report of the Defence Procurement and Sustainment Review (Mortimer), Reference A, sought the implementation of better Key Performance Indicators within the Materiel Sustainment Agreements between the Capability Managers and DMO and called for a through‐life cost assessment, irrespective of whether funding is budgeted for acquisition or sustainment.

• The Strategic Review of Naval Engineering (Hammer), Reference B, contains numerous recommendations addressing degraded engineering capability in Navy.

• At the operating level, fortnightly reports from the Amphibious and Afloat Support SPO in DMO, between 2009 and 2010, show management trying to highlight the complexity of the task, the overwhelming workload in the program office and the lack of influence, skills and resources to meet the challenge.

• The Helmsman Sustainment Complexity Review, Reference C, and the Konekt Report into the Amphibious and Afloat System Program Office, Reference D, highlight the high level of complexity facing the Amphibious and Afloat Support SPO and the elevated level of work‐related stress exhibited by the staff. The former report, for example, calls for: the development of a Sustainment Manager role similar to that of a Project Manager; the need for an Asset Management Methodology; the creation of business orientated reports; and improved relationships with suppliers.

• The Review into the Underlying Causes Leading to the Operational Pause for the LPA Class (HMA Ships Kanimbla and Manoora), Reference E, states that notwithstanding many dedicated officers and sailors working tirelessly, failure occurred as a result of Navy systems that are inadequate and under‐resourced and cultural difficulties that compromised standards and placed an overwhelming focus on achieving the operational program.

The many reports (those highlighted above and the other reports listed in the References) have added complexity, leading to ‘review fatigue’. Many of the recommendations have not being fully implemented due to loss of momentum, short review cycles and scarcity of resources. Clearly, remediation lies, in part, in committed and tenacious leadership to act on these findings.

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Chapter 3 OVERVIEW OF THE REFORM PLAN

3.1 Introduction The Terms of Reference require the delivery of a plan to reform the Amphibious and Afloat Support repair and maintenance practices. The Team has followed the traditional approach for development of a corporate plan, namely: clarify strategic objectives, assess the environment, identify strengths, weaknesses, opportunities and threats, and develop strategic and operational level actions to achieve the objectives. However, unlike a typical plan, the resource implications have not been assessed. This work should be completed by Defence due to the second‐order effects associated with resource prioritisation.

3.2 Reform Plan Outline In order to develop a meaningful plan in the time allowed, the Team completed a number of stages concurrently. These are outlined below:

Stage 1—Gain a good understanding of the strategic objectives of Navy, the Fleet Command and the Surface Force Command, including the objectives for the Amphibious and Afloat Support ships. The Chief of Navy’s Strategic Intent is:

To deliver truly effective capabilities within our resources as we fundamentally transform Navy today to deliver and sustain Force 2030. Amid these challenges, we will also continue to meet operational obligations3.

Navy’s Strategic objective is:

To provide maritime forces that contribute to the ADF’s capacity to defend Australia, contribute to regional security, support Australia’s global interests, shape the strategic environment and protect our national interests. Navy will maintain sufficient maritime combatant forces to deploy on operations while managing key challenges and capability risks such as the state of the amphibious and aviation forces, shortages of trained personnel and upgrades to a number of major fleets. The amphibious capability will be enhanced in 2011–12 with . . . . the Bay Class Landing Ship Dock. The acquisition will ensure the Navy has the amphibious capability it requires for operations and humanitarian support in the Australian region as part of the overall amphibious capability transition to the Canberra class LHD ships in 20144.

Stage 2—Identify the context in which Navy and DMO currently operate. Gain an understanding of previous reviews (and other work underway) that are relevant to Amphibious and Afloat Support repair and maintenance practices. Evaluate existing practices in this area and the challenges being faced.

Stage 3—Assess the strengths, weaknesses, opportunities and threats associated with the Amphibious and Afloat Support ship repair and maintenance practices.

Stage 4—Engage with a broad cross‐section of stakeholders to develop a plan that includes strategic and tactical actions.

3 Navy Strategic Plan 2010–2015, Reference H 4 Defence Portfolio Budget Statements 2011–2012, Reference I

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Stage 5—Analyse the actions required and determine an appropriate implementation schedule.

In order to achieve Navy’s Strategic Objectives in the current context, a plan of strategic and tactical actions has been developed. As an illustration, the plan is summarised in Figure 5 below.

Figure 5: Reform Plan

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3.3 Reform Themes The Team identified seven main reform themes. These themes are interdependent and overlap to some extent. Each one is an essential component of the overall solution.

LIFE CYCLE MANAGEMENT—Chapter 4

This Chapter highlights the importance of the effective and efficient sustainment of all Navy capability and the need for a practical methodology to deliver this. It argues that decisions taken during acquisition and throughout operations can have a negative impact on whole‐of‐life costs and preparedness. It contains several recommendations to address this risk and identifies the need for more sophisticated sustainment planning to ensure that funding and resources match the through‐life support needs.

ACCOUNTABILITY AND RESPONSIBILITY—Chapter 5

This Chapter considers how to ensure that the Chief of Navy, as the Capability Manager, has clear accountability for through‐life maritime capability. It identifies several weaknesses in the current systems that, if addressed, will increase the authority and therefore accountability of the Fleet Commander and Chief of Navy.

RISK MANAGEMENT FRAMEWORK—Chapter 6

This Chapter reviews the effectiveness of the current risk management framework as it relates to the maintenance of Navy ships. It contains a recommendation that addresses the need to establish risk management at the enterprise level and fully consider the risk‐benefit trade‐off before deferring maintenance and maintenance availability periods.

ENGINEERING FUNCTION—Chapter 7

One of the most important areas of reform is that of the engineering function, especially within Navy, and in particular with respect to compliance and assurance mechanisms. This Chapter addresses the complexity and scarce resources associated with the current Navy and SPO engineering structures and the need to rebuild. It is essential that the current gap between maintenance required and maintenance performed is closed as a matter of priority. Lastly, it reviews the maritime technical data and information management systems.

CULTURE—Chapter 8

There is a cultural norm that allows the Navy and DMO (Maritime) to believe that technical compliance is not essential and accepts massaging of information as it moves up the chain of command. This Chapter considers these issues and provides comment on the successful implementation of a cultural change program.

WIDER IMPLICATIONS—Chapter 9

Many of the reforms underway and the recommendations of this report will deliver substantial benefit across the Fleet. This Chapter considers the status of engineering and maintenance tasks across the fleet and provides an assessment of the maintenance concepts for the LHD, AWD and Largs Bay. It also considers the resource implications of these larger, more complex ships.

PLAN FOR IMPLEMENTATION—Chapter 10

It is important to ensure the recommendations of this plan and of the related reviews are implemented. This Chapter lists the related reviews and identifies the associated actions. It provides the plan for reform, including a governance structure to oversee implementation of the recommendations and delivery schedules for each.

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Chapter 4 LIFE CYCLE MANAGEMENT

4.1 Introduction The Team has identified specific changes to improve the effectiveness and efficiency of the sustainment function for maritime materiel. Effective sustainment will have a direct and positive impact on preparedness and efficient sustainment will help to address the current gap in resourcing.

This Chapter outlines recommendations to deliver the changes. These include taking a whole‐of‐life view, improving sustainment planning, strengthening relationships with Industry and the remediation of shortcomings in Information and Communications Technology (ICT).

The Team recognises that Defence has a policy instruction on life‐cycle costing (see Reference V). However, it is considerably out‐of‐date and compliance is inadequate.

4.2 Life Cycle Methodologies

4.2.1 Asset Management Methodology and Sustainment Methodology The Institute of Asset Management describes Asset Management as:

Systematic and coordinated activities and practices through which an organisation optimally and sustainably manages its assets, their associated performance, risks and expenditures over their life cycles for the purpose of achieving its organisational strategic plan.

Asset Management includes needs definition, requirements development, acquisition, sustainment and disposal, and it covers all fundamental inputs to capability. Asset Management in the Defence context is illustrated in Figure 6.

Figure 6: Asset Management Scope

The Team observed a lack of discipline and rigour in the management of maritime assets. An effective Asset Management methodology would establish the foundation to address several of the identified Causal Factors. It would ensure that:

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• decisions taken during acquisition are based on whole‐of‐life considerations rather than just the acquisition component;

• capability planning activities fully consider the costs of maintaining the existing fleet as an input to the decision on what new capability should be acquired; and

• planning is improved to allocate additional sustainment resources as capabilities age.

One disadvantage with the current informal approach to Asset Management is the lost opportunity to move the whole enterprise to a higher level of maturity. The Carnegie Melon University Capability Maturity Model is regarded as a benchmark for process maturity measurement. It defines five levels of maturity as follows:

• Initial (chaotic, ad hoc, individual heroics)

• Repeatable (process is managed in accordance with agreed metrics)

• Defined (process is defined as a standard business process)

• Managed (management can control through the process)

• Optimizing (process includes continual improvement)

A thorough evaluation has not been possible in the time available, but it is clear that the Maritime Asset Management process maturity would not be in the higher performing levels of the Model.

Sustainment is an important sub‐component of Asset Management and its components are illustrated in light orange in Figure 6. DMO is the main provider of sustainment services to the Capability Managers, but there is significant diversity in process across the organisation. This should be addressed through the development of a Sustainment Management methodology (as recommended in the Helmsman Sustainment Complexity Review, Reference C) with the early and close involvement of the Capability Managers. This involvement is essential as the Capability Managers are not only the owners of the assets, but also deliver some essential sustainment services. Navy also has a key role in the Smart Sustainment component of the Strategic Reform Program.

It should be noted that DMO has work underway to define and develop a Sustainment Management Model (see Reference Q). Whilst the scope of work seems to be appropriate it is of concern that this activity is largely being undertaken in isolation from the Services. It is necessary, for effective working relationships and shared culture that both the Asset Management and Sustainment Methodologies be developed cooperatively by Navy (and ideally all Services) and DMO.

4.2.2 Taking Whole of Life Decisions The LPA purchase was widely regarded as an ‘opportunity buy’. In 1998, the Acting Defence Inspector General, Reference U, found the purchase and conversion lacked clear guidance on the capability sought and any detailed analysis of the capability options. Further, the design standards for the LPAs were neither understood nor agreed and much of the configuration data was not procured during acquisition. As a result, planned maintenance data was incomplete or missing, spares holdings were inadequate or non‐existent and technical documentation was out of date. Although several attempts were made to rectify this shortfall, they were unsuccessful. Without an adequate baseline, an under‐resourced

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SPO had no chance to develop a viable logistics support environment. As a consequence, the LPAs have deteriorated in condition over the last decade.

The Team heard that integrated logistics support products (training, spares, documentation etc.) are sometimes still sacrificed during acquisition in the complex trade‐off between capability and cost. This is a false economy. While the LPAs are considered to be an extreme example, failure to acquire these products and plan for sustainment seriously increases the whole‐of‐life costs and the risk of not achieving operational outcomes over a vessel’s planned life. It is critical that the LHD and AWD continue with their current plan to provide a full suite of logistics support products.

Blanchard5 illustrated this issue in his Iceberg model, shown in Figure 7 below. It depicts the support aspect of projects under the water and invisible to the unwary, who focus on the part that is visible.

Figure 7: Iceberg Model

There is evidence that in Defence and DMO, decisions made during acquisition remain largely focussed on the goal of delivery rather than a whole‐of‐life view. A recommendation

5 Benjamin S. Blanchard, Professor of Engineering (Emeritus) at Virginia Polytechnic Institute and State University

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to Take whole‐of‐life Decisions is included with other recommendations from this chapter at 4.5.

4.2.3 Logistics Support Concept A Logistics Support Concept provides the guidance for engineering support, maintenance support, supply support and training support. Navy’s Logistics Support Concept is shaped by a number of factors, including: technology; the amount of work that can realistically be performed on‐board ships; the relative costs and the strategic necessity of repairing equipment in Australia versus sending it to overseas repair facilities; Australian Industry considerations; and skills required in Navy.

Acquisition sources and technologies employed are quite diverse and therefore separate Logistic Support Concepts may be required for each ship class. However, Logistic Support Concepts need to be coordinated to ensure that both Navy and Australian Industry are allocated a level of work sufficient to maintain and develop the skills of their technical workforces. In the case of Navy, this means a level of work that will be achievable, but challenging, facilitating the retention of tradesmen in the Service to assure a viable technical workforce.

Striking the appropriate balance between Organic Maintenance (performed on board by Navy personnel) and External Maintenance (normally performed in port by Industry) requires considerable guidance from Navy during the project definition stage. However, the Team noted that Navy is ill‐equipped to perform this policy definition task. There are few resources in Navy dedicated to logistics policy issues and as a result there is a risk that projects may implement solutions that will not align with Navy requirements for technical skills development and the manning of ships engineering departments.

A recommendation to address this imbalance and the issues identified earlier by acting to Formalise Asset and Sustainment Methodologies is included with the other recommendations from this chapter at 4.5. The Navy engineering resourcing aspects are considered in Chapter 7.

4.3 Effective Sustainment

4.3.1 Preventative Maintenance Data for LPAs As outlined in Section 4.2.2, the shortfall in logistics products acquired for the LPAs, and the consequent absence of a Class Maintenance Plan, meant that planned maintenance was inadequately defined, scoped and delivered. These shortfalls are a significant factor in the gross deficiency in actual maintenance performed over many years and a consequent degradation in the condition of the ships.

4.3.2 Organic Maintenance Performed on the LPAs The informal Logistic Support Concept for Amphibious and Afloat Support ships consists of both External and Organic Maintenance. Whilst data on the completion of External Maintenance for Kanimbla and Manoora has been provided to the Team, and is considered in Section 4.3.3, Navy was unable to provide reliable information on the percentage of planned Organic Maintenance performed by the LPAs ships’ crews and does not reliably track this data. It is clear though, that much of the required Organic Maintenance has not been completed for the following reasons:

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• insufficient time made available to ship’s technical staff to undertake maintenance due to the distraction of other duties and the impact of minimum manning;

• incomplete maintenance information and slow and cumbersome Integrated Logistic Support tools;

• technical staff skills shortages;

• the age of the ships leading to higher maintenance demands; and

• inadequate tracking of Organic Maintenance performed.

This deficiency has had a significant impact on the condition of the vessels and a flow‐on effect on External Maintenance. The scope of contracts has been changed to address the incomplete Organic Maintenance tasks instead of performing the External Maintenance work that should have been completed in the allocated time period. In addition, the urgency to return the ships to operations has meant that it was often the case that only critical External and corrective maintenance activities were completed.

4.3.3 External Maintenance Performed on the LPAs

As mentioned previously, reduced sustainability has a detrimental effect on preparedness. This is contrary to the belief, which appears to exist in the Navy culture, that strict adherence to maintenance planning adversely impacts (rather than enables) operations.

The practical outcome of this culture in the Amphibious and Afloat Support fleet is that maintenance periods have often been deferred, curtailed or even cancelled, with no rigorous management mechanism put in place to ensure that the work is completed later.

It is important to note that a decision to delay maintenance could be acceptable for operational purposes, but it must be taken within the context of an overarching risk management framework and be accompanied by a rigorous engineering assessment of the impact and a plan to recover the deferred maintenance. The approval authority for deferral of maintenance availability periods should be the Fleet Commander, acting on the formal advice of the Chief Engineer in the SPO. This responsibility should not be delegated.

The Team has analysed the performance of External Maintenance activity for the Manoora and Kanimbla against the agreed requirement, as defined in a maintenance plan called the Usage Upkeep Cycle. Data exists since 2005 and Figure 8 below demonstrates that there has been little discipline in meeting the obligations of Kanimbla and Manoora’s Usage Upkeep Cycle. In fact, in 2005, no External Maintenance was performed on Kanimbla and little for Manoora and in 2009 maintenance performed fell well short of the requirement for both ships. By the time the Seaworthiness Board met to consider the LPAs in September 2010, only corrective maintenance was being performed. As bad as this is, it is a best case assessment as there is no evidence that the scheduled periods were sufficient for the need. It should also be noted that 2010 had extraordinary maintenance repair periods in a belated and unsuccessful attempt to rectify the ships’ condition.

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Figure 8: Maintenance Shortfall—Kanimbla and Manoora

4.3.4 Adherence to the Original Operating Concept A further requirement for effective sustainment is to ensure that equipment is used according to its original operating concept. As an example, the Target Indicating Radar on the ANZAC class ships is a high performance system that has been designed for occasional use in operations or exercises. However, the Team has been informed that it has been used frequently for navigational purposes because of its better range and discrimination

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performance. It has not been designed for this level of use and this is significantly impacting the reliability and longevity of the system. Such a change, from the originally intended use, should only occur after rigorous engineering consideration. The Asset Management methodology needs to include a Statement of Operating Intent that is acknowledged by both the Sustainment Manager and the Commanding Officer and is regularly reviewed.

4.3.5 The Way Forward for HMAS Kanimbla A program of work is underway in the Amphibious and Afloat Support SPO to address the critical data and process deficiencies in Kanimbla. This is of high importance and should be fully resourced by DMO and Navy. In order to assist with the provision of the required resources, and to ensure maximum return on investment, it is recommended that, if Kanimbla is to be retained, only mandatory planned maintenance is conducted and that her operations are restricted to contingency activities and the continued training of Navy personnel until the current capability gap is removed.

A recommendation to Constrain the Operation of Kanimbla is included with the other recommendations from this chapter at 4.5.

4.4 Efficient Sustainment

4.4.1 Plan for Aging Platforms Sustainment of capital assets needs to be cost effective throughout their life cycle. The Team has been unable to find evidence to demonstrate that planning before the acquisition phase of major projects is based on a detailed cost‐benefit analysis of continued sustainment versus replacement. This is despite the existence of a Defence Instruction (General) relating to this subject, Reference V. Decisions seem to be more heavily influenced by the need for increased capability rather than the cost of operating the current capability. Both are essential components.

The Team strongly endorses the Mortimer Review recommendation that ’Decisions to either purchase new equipment or maintain existing systems should be based on the through‐life cost of each option regardless of whether funding is for the acquisition or sustainment budgets’.

Equipment failures are not linear over time but in fact, rise at an ever increasing rate towards the end of life. This is demonstrated by the Bathtub Curve in Figure 9 below. This has a direct impact on maintenance requirements and costs. At present, the sustainment budgets for the Amphibious and Afloat Support ships are basically flat‐lined. The time to effect new maritime capability delivery is typically in excess of ten years. It is therefore important to determine the Wearout Failure Period well in advance, in order to plan for both the replacement capability and the increase in sustainment required for the aging capability, in terms of people and funding. This has not occurred for the LPAs even though these ships have progressed well into their Wearout Failure Periods—with replacements urgently required and operational demands remaining high.

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Figure 9: The Bathtub Curve

There is a similar pattern across the fleet. The Team has analysed the actual and planned expenditure for each class of ship across the period 2005–06 to 2020–21 and there is little evidence that the effect of the Bathtub Curve has been considered in budget or staffing plans. Several budget examples (constant dollars) are shown in Figure 10 below. It is clear that rising funding requirements as ships approach end‐of‐life have not been considered and, inexplicably, budget provision continues beyond these dates6. A mature approach would have a clearly defined end‐of‐life date and adjust personnel numbers and budget allocations appropriately.

Figure 10: Fleet Maintenance Budget Estimates

6 The dates shown above are the end‐of‐life for the first ship in each fleet, but there is some confusion in the data.

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A recommendation to Plan for the Aging of Vessels is included with the other recommendations from this chapter at 4.5.

4.4.2 Contracting Strategies The Review found that significant inefficiencies exist in the contracting methods employed by the Amphibious and Afloat Support SPO. When planning a ship’s maintenance availability, outstanding engineering tasks are described in a work package that is put out to tender as the Statement of Work. The subsequent tenders are evaluated and the contract awarded on a best value for money basis. Although this appears to be a sound strategy, it is inefficient when applied to frequently recurring maintenance work and has resourcing consequences in the SPO. In addition, it creates a short‐term approach from Industry that does not encourage investment.

Ship maintenance is a long‐term need and warrants long‐term partnerships with Industry, ideally for the life of the ship. As a general rule, ship maintenance contracts should be in place for five years, with a rolling extension option for successful delivery. The Team recognises that it will take some time to transition in an orderly manner from the current three or four year arrangements. These longer contracts will encourage Industry to build a knowledge‐base of the ships, invest in workforce skills and infrastructure and, as a result of incentives to innovate and a greater level of certainty, assist with lowering the cost of ownership of Navy’s platforms.

A difference in approach across DMO is demonstrated through analysis of the contracting data for Aerospace Systems Division compared to Maritime Systems Division since July 2008. The total contract value over the period for both organisations is similar. Aerospace Systems Division let a total of 965 contracts for 224 platforms across 13 types, whereas Maritime Systems Division let 2,829 contracts for 69 platforms across 11 types. This much greater number of contracts in Maritime would have required significantly more administrative effort.

It is acknowledged that some Navy platforms have transferred, or are currently in the process of transferring from transactional to longer‐term support arrangements, such as the Group Maintenance Contract to be let for the Anzac fleet. The Amphibious and Afloat Support SPO have yet to make this transition.

A recommendation to Strengthen Partnerships with Industry is included with the other recommendations from this chapter at 4.5.

The Team believes that an arrangement whereby Navy Groups, industry and SPOs are co‐located, share information management systems, and have common goals and metrics, should increase efficiency and effectiveness through improved communication. These alliance contracts are usually complex and demand sophisticated advice and high‐order negotiating skills. Therefore, it may be necessary for DMO to draw on external expertise to assist in this work. The newly established partnership for the Wedgetail Airborne Early Warning and Control Aircraft project is an example of this arrangement and whilst the contract has only recently been established, the arrangement is working well to date.

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4.4.3 Integrated Information Management Systems Management of the condition of a modern naval ship requires an effective integrated information management system, through which platform configuration can be monitored and recorded, maintenance planned and recorded, and spares holdings controlled. In this context the Team refers to the information management system as the application software, the host and server computing environment, the network infrastructure and the data.

The information management system for the Amphibious and Afloat Support ships consists of the maintenance planning system (AMPS), the configuration management system (CMT), the spares management system (NAVALLOW), the Information and Communication Technology (ICT) infrastructure on which they operate, and the configuration and maintenance data. The current maritime system is not fully effective for a number of reasons, including:

• System usability is cumbersome and slow.

• Data integrity and management of changes in configuration are poor.

• Data exchange between the systems is manual and prone to error.

• No overall system owner could be identified.

Consequently, there was a lack of user confidence in the quality of data and, anecdotally, claims of data being ‘lost’ during transmission between the ship and onshore support agencies.

While acknowledging recent initiatives such as the Configuration Management Improvement Plan, the Configuration Data Remediation Program and improvements in training and documentation, a systems approach is urgently required to address these issues. Navy should lead work to define and then drive remediation of the information management systems for maritime engineering and maintenance.

A recommendation to Remediate ICT System Shortcomings is included with the other recommendations from this chapter at 4.5.

4.5 Recommendations The following recommendations will establish a rigorous and formalised process to ensure that decisions taken during planning and acquisition include the impact on whole‐of‐life costs. They will also increase attention on changing resource requirements over the life of ships and deliver effective information management systems. Lastly, they will increase contracting efficiency and improve relationships with Industry through the development of lasting partnerships.

Recommendation 1 Formalise Asset and Sustainment Methodologies

Navy and DMO should jointly establish practical methodologies for integrated through‐life Asset and Sustainment Management.

Recommendation 2 Take Whole‐of‐Life Decisions

Defence and DMO should ensure that decisions made during acquisition fully consider whole‐of‐life costs and capability, through a rigorous and formalised Asset Management process.

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Recommendation 3 Constrain the Operation of Kanimbla

If Kanimbla is to be retained, Navy should constrain its use to contingency operations and training of Navy personnel. Resources should be assigned to the ship commensurate with safe operation in this restricted role, until the risk of a capability gap is removed.

Recommendation 4 Plan for the Aging of Vessels

DMO and Navy should have joint plans for vessels approaching the end of life, which:

• ensure that resource allocation and Fleet activity scheduling allow for the increasing sustainment needs; and

• consider the growing cost of ownership (budget and people) when making capability replacement decisions with Capability Development Group.

Recommendation 5 Strengthen Partnerships with Industry

Whilst retaining competitive tension, the Defence Materiel Organisation should implement maritime contracts that are broader in scope and longer in term, to build deeper and continuing relationships with Industry.

Recommendation 6 Remediate ICT System Shortcomings

Navy should lead work to define and then drive remediation of the information management systems for maritime engineering and maintenance.

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Chapter 5 ACCOUNTABILITY AND RESPONSIBILITY

5.1 Introduction Strong accountability is an essential component of high performing organisations as it denotes ownership of a result or action. Ensuring strong accountability can be a challenge within any organisation, but even more so within one as large and complex as Defence. Many accountability mechanisms, such as personal performance agreements, job specifications and organisational level agreements are already in place in Defence, but they are not always used to the extent required to be fully effective. Furthermore, the many committees involved, and their different modes of operation, lead to fragmented ownership of the issues and the associated accountability.

In particular, the Team has considered how to best ensure that the Chief of Navy, as the Capability Manager, can accept clear accountability for Navy capability7. The Materiel Sustainment Agreement between Navy and DMO is critical in this regard, but is currently poorly defined and weak.

5.2 Complex Relationships Cloud Accountability Organisational complexity is a significant factor impacting accountability. A complex organisation demands that sophisticated agreements, with clear performance measures, are in place to ensure that personal accountabilities are unambiguous. Reducing organisational complexity reduces the required management sophistication and makes it easier to provide clear accountability. But in an organisation of the size and breadth of Defence, a level of complexity cannot be avoided.

The Chief of Navy, as the Capability Manager, has responsibility for the delivery of maritime capability outputs, but in practice has only loose control over several of the fundamental input functions. One method to address this uncertainty would be to transfer full control and resources for sustainment of maritime capability back to Navy, as it was prior to 1997. A second, and preferable option, is to significantly tighten the agreements between Navy and DMO to clearly define the requirements and responsibilities, with associated performance measures and reporting. These two options are considered more fully in Section 5.3.

The engineering and command organisational structures within Navy are overly complex and distribute scarce personnel thinly across several reporting chains. This is clouding engineering decision making and accountability.

As an example, the diagram at Figure 11 illustrates the decision tree for the deferral of a ship’s maintenance availability period due to an operational change. Such a decision can be highly significant from an engineering viewpoint and yet Chief Staff Officer—Engineering (the fleet engineer) or Head Navy Engineering would be engaged only if engineers, who are not within their direct management control, decide to escalate advice about significant issues (shown by red arrows). However, the likelihood of them providing such advice is reduced because those engineers are obliged to report up the Operational Chain of Command (shown by blue arrows) which is subject to the ‘can do’ pressure as outlined in Section 8.2. Executive (or Command) authority ultimately must have primacy over technical

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authority, but Navy executive authorities need to fully and transparently consider technical advice in order to fulfil their broader responsibilities.

Figure 11: Deferral of Maintenance Availability Periods

The natural conflict between the Executive focus on operational imperatives and the engineering focus on technical integrity appears to lack balance, because the Head Navy Engineering has little direct management control over a large proportion of the Navy engineering workforce. He exercises engineering control via the Navy Technical Regulatory System by delegating engineering authority to engineers who head Authorised Engineering Organisations in both Navy and DMO. He is authorised to withdraw a delegation from a person or an organisation. In theory, he is able to monitor the performance of chief engineers so authorised, by regular review of performance indicators and by physical on‐site audits. However, in practice, he does not have the resources to either monitor performance or ensure compliance.

It was clear to the Team that there are shortcomings in the operation of these organisational arrangements, primarily caused by the lack of resources applied to compliance monitoring, but also related to Navy culture. Chapters 7 and 8 explore these causes further.

5.3 Taking Responsibility and Being Accountable

5.3.1 Balancing Acquisition, Sustainment and Operations In order to maximise the effectiveness and efficiency of a capability throughout its life cycle, acquisition, sustainment and operational demands need to be balanced. The dominance of any one of these components would lead to a reduction in long‐term organisational

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effectiveness and/or efficiency. An imbalance in favour of acquisition may lead to under‐funded sustainment, reducing the capability to support operations. An imbalance in favour of sustainment could reduce operational effectiveness and prevent capabilities from meeting Government needs. An imbalance in favour of operations could lead to an under‐maintained fleet and reduced availability and operational life, and heightened risk to the safety of personnel.

Prior to the creation of the Support Command Australia and then DMO, Navy had sole responsibility for the sustainment and operation of all naval assets. Acquisition responsibility resided in the Defence Acquisition Organisation. Whilst this provided clear accountability for both the operation and sustainment of maritime systems after transition into service, it created a significant organisational barrier at the point of capability delivery. The result was that capabilities were transitioned from the Defence Acquisition Organisation to Navy with deficient support elements. It also increased the likelihood that costs would be transferred from acquisition to sustainment. It is important to note that the LPAs were acquired under the former system, when sustainment was performed by Navy.

One of the prime aims of joining acquisition and sustainment together within the one organisation (DMO) was to mitigate this risk. On the downside, this created an organisation with a matrix management structure that had the undesired effect of blurring accountabilities and reducing Navy’s control over sustainment.

5.3.2 Accountability Through Capability Management The Defence Procurement Review in 2003 (Kinnaird Review) identified the importance of the role of Capability Management in balancing the demands between acquisition, sustainment and operations. This arrangement was reliant upon strong matrix management and business‐like agreements (akin to contracts). In order to achieve this, Kinnaird recommended that Capability Managers be made accountable for monitoring and reporting on capability from acquisition to retirement.

The effectiveness of this construct was considered further by the Defence Procurement and Sustainment Review in 2008 (Mortimer Review). Mortimer concluded that a mature customer‐supplier relationship between Defence and DMO did not exist, resulting in Capability Managers and DMO both exhibiting a ‘can‐do’ culture. It made a number of recommendations to strengthen the Capability Management role and clarify accountability.

A number of submissions to the Team have proposed transferring sustainment responsibility and resources from DMO back to Navy. Whilst this would simplify the responsibility for sustainment of capabilities, it would merely shift the challenges back to the point of capability delivery. There would be increased temptation to make short‐sighted decisions during acquisition, which would adversely impact sustainment. This would lead to higher through‐life costs and/or reduced operational effectiveness and availability.

Of course, the argument only holds true if the existing link between acquisition and sustainment is strong and the two components are held in equal balance within DMO. Whilst approximately seventy percent of the DMO workforce is engaged on sustainment activities, there is evidence to suggest that acquisition still attracts much more attention and priority because of its very high political, media and industry profile. As an example, the AWD project design and delivery contract does not yet include a provision to transition acquisition products (spares, documentation, training etc.) through to sustainment.

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Moreover, the funding for the sustainment transition activities was not included in the Direct Costs of the project, but held in Management Reserve, and is vulnerable to consumption through acquisition cost pressures. These factors are indicative of a disproportionate focus on acquisition over sustainment that results in ineffective outcomes, as recently experienced in the Amphibious and Afloat Support fleet. This cultural problem needs to be addressed internally within Defence and DMO, and externally through improved sustainment‐related reporting to Government.

On balance, the Team has concluded that the benefit to be gained through the retention of acquisition and sustainment in the same organisation is significant. But clearer accountability must be established through effective Materiel Sustainment Agreements (and Materiel Acquisition Agreements), as outlined in Section 5.3.5.

However, having a Materiel Sustainment Agreement in place is not enough. To be effective, a significant strengthening of Navy Capability Management is necessary. As an example, the Amphibious and Afloat Support Group Capability Manager is responsible for eleven ships in five Classes across four States, but has just nine staff. Due to a lack of resources and skilled personnel he is unable to manage the deferral of Organic (on board) Maintenance, or to assess and manage the aggregated risk associated with the ships. He is unable to effectively oversee or report on sustainment activities being performed by the SPO on behalf of the Capability Manager. Navy needs to provide significantly more resources to this critical function.

A recommendation to Increase Resources for Capability Management is included with the other recommendations from this chapter at 5.4.

5.3.3 The Defence – DMO Relationship The relationship between Defence and DMO is highly interdependent. It is in need of improvement, as the two organisations operate with significant autonomy and, on occasions, with insufficient recognition of the essential role the other has to play. Several examples have been identified:

• DMO is developing a methodology for Sustainment Management (see Section 4.2.1). This work is being completed largely in isolation from Navy, Army and Air Force, even though they play a vital role as Capability Managers, and users and maintainers of systems. Without intervention it is likely that the methodology would be developed to just include the DMO responsibilities, requiring duplicate work from Navy, Army and Air Force and resulting in an unsatisfactory and possibly disjointed solution.

• Chapter 6 identifies the need for an integrated risk management system between DMO and Navy (and ideally the whole of Defence). DMO has recently developed a draft Risk Management Plan but, once again, it is focussed narrowly on its own business and does not provide a whole of Defence view.

• There is confusion between the role and responsibilities of the Fleet engineer (Chief Staff Officer – Engineering) and the SPO Chief Engineer. They both head organisations authorised by Head Navy Engineering to make maritime engineering decisions (i.e., Authorised Engineering Organisations) but their engineering authorities appear to overlap. This has led to Fleet deferring external maintenance without reference to the SPO Chief Engineer.

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• Chapter 7 identifies a critical shortage of maritime engineering talent both in Navy and DMO. At present the two organisations manage their engineering workforces quite separately with no joint consideration of how best to sustain them. There would be benefits and efficiencies in managing this workforce more holistically.

As outlined, the current Defence and DMO construct means that the two organisations do not always operate closely together and there is a ‘them and us’ feel about the relationship. Further structural separation, as originally recommended in the Defence Procurement and Sustainment Review (Reference A), would make the situation worse.

The Terms of Reference have not required the Team to look beyond the maritime sector, but there is evidence to suggest that improvements are necessary in other areas of the Defence ‐DMO relationship. In order to improve the overall outcomes for Defence and since so many of the recommendations require joint action, the Team has included a recommendation to develop Closer Working Arrangements between Defence and DMO in Section 5.4.

5.3.4 Other Factors Influencing Accountability It is important to ensure that staff have the skills and knowledge required to perform their respective roles and be accountable. The short Navy posting cycle and workforce planning mechanisms do not adequately prepare officers for some of the more complex DMO roles. For example, a SPO Director must have well developed skills in contract management, sustainment and project management, people management and technical regulation. It is clear that Navy does not currently have an effective program in place to ensure officers appointed to a SPO have the prerequisite skills and knowledge before commencing in these roles.

In addition, the short posting cycle of approximately two years further impacts the ability of staff to perform in these complex roles. This stands in stark contrast when compared to Industry counterparts, many of whom have extensive experience as they have been undertaking similar work for their whole career. One possible solution—though difficult to implement—would be to increase the length of the Navy posting cycle.

A recommendation to Establish Effective Navy Workforce Planning is included with the other recommendations from this chapter at 5.4.

At present the Fleet Commander has responsibility for all the Navy's ships, aircraft, submarines, collective and individual training organisations and shore bases. This is virtually the entire Navy, apart from the relatively small number of personnel in Strategic Command in Canberra and in Joint Service positions. In the Team's view, this span of command is far too wide and a serious distraction from the Fleet Commander's principal responsibility of ensuring that Navy ships, submarines and aircraft are in good condition and the officers and sailors who crew them are appropriately trained for their combat and other operational tasks. In terms of maintenance, the span is such that it places several management layers between him and his senior engineering advisers and between him and the ships and other assets for which he is responsible.

A recommendation to Refocus Fleet Command is included with the other recommendations from this chapter at 5.4.

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5.3.5 The Inadequacy of the Materiel Sustainment Agreements The Materiel Sustainment Agreement is the prime mechanism by which the Capability Manager (customer) and DMO (supplier) measure sustainment performance against an agreed price and delivery schedule. Navy, not DMO, needs to transform the maritime Materiel Sustainment Agreement, and associated Product Schedules, into a more business‐like ‘contract’ that is actively monitored in consultation with DMO. One telling comment made to the Team was that “the Materiel Sustainment Agreements are so strategic that they are useless”. In 2008, the Mortimer Review made a similar observation that “DMO and Defence need to further develop the key performance indicators in Materiel Sustainment Agreements . . .” The pre‐Mortimer and current Product Schedules for the Tobruk, Kanimbla and Manoora have been analysed. There have only been minor changes since 2008, with no changes of substance in the important area of Key Performance Indicators. Each current Product Schedule has inadequate Key Performance Indicators. Five or six cover DMO’s obligations and two or three are Navy’s. They only include a small subset of the ‘contractual’ measures that should be placed on each party and there are no consequences associated with non‐compliance. At worst, non‐delivery will result in a red traffic light status in DMO Sustainment Overview Reports which, it seems that few stakeholders read.

Additional realistic performance indicators are required to clearly set the targets and enable effective measurement, reporting and control. Each indicator must define the consequences of non‐delivery. As an example, if Navy fails to deliver the required level of Organic Maintenance, then this would normally result in additional contractor based maintenance, arranged through DMO. The additional costs and lost operational time associated with this work should be borne by Navy, as a consequence of non‐delivery. A certain tolerance level could be set, so that substantial non‐delivery would result in the product being added to the existing ’Product of Concern‘ list for additional attention and support.

There are a few metrics that measure shortfalls in maintenance and engineering activity. Measures need to be incorporated that address the overall status of the vessels, the clearance of Urgent Defects, performance of planned and corrective External Maintenance, and the management of temporary deviations and engineering changes.

The Key Performance Indicators tend to be short‐term in nature and do not focus on the importance of maintaining and operating the capability for the whole‐of‐life. The scope is also often limited instead of covering the breadth of logistics support. Importantly, they need to include a balance of lead and lag indicators.

In order to achieve this improvement, Navy and DMO must treat the Agreement as a critical accountability mechanism. Navy, in particular, should dedicate significantly more resources to this role and ensure that they have the requisite skills and experience to develop and manage complex contractual agreements.

In addition, the Materiel Sustainment Agreement should be used by DMO to clearly define the obligations of Navy. Whilst it already provides this to a limited extent, it falls well short of what is required. As an example, the support costs and longevity of a capability is impacted by the way it is used. A capability that is worked hard will require more maintenance, leading to higher costs or increased unreliability. There are no such obligations or performance measures in the Product Schedules for Tobruk, Kanimbla or Manoora, Reference F.

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A recommendation to Capture Mutual Obligations in the Materiel Sustainment Agreements is included with the other recommendations from this chapter at 5.4.

5.3.6 The Importance of Effective Reporting Day‐to‐day responsibility for Capability Management is delegated by the Chief of Navy, through the Fleet Commander, to Group Capability Managers for a ship Class or Classes. Previously, formal regular reporting up the Chain of Command through the Capability Overview Reports formed an important mechanism to inform the Fleet Commander on the condition of the Fleet. These Reports have not been prepared for at least eighteen months. This has led to informal and ad hoc reporting, as the Group Capability Managers have no mechanism to routinely raise their concerns.

An independent investigation into the reporting associated with Amphibious and Afloat Support was conducted by Defence Audit Division at the request of the Team. It identified the following findings (summarised) with full details being available at Reference K:

• The Navy Scorecard Reports provided to the monthly Chief of Navy Senior Advisory Committee were optimistic and did not adequately identify the key issues and risks.

• There is no regular, formal reporting on capability management. As a result there is no assurance of the capability risk and issue reporting to senior command. Navy Directed Level of Capability reports on preparedness are not an effective mechanism to identify and track issues of unavailability due to their highly summarised nature.

• There was effective reporting of sustainment issues and capability problems in DMO Fortnightly Reports, but the higher level DMO Sustainment Overview Reports did not adequately capture the issues.

• DMO does not maintain an audit trail of changes to the Sustainment Overview Reports as they progress through management.

• Combined Navy Scorecard and Navy Directed Level of Capability reports masked the aggregated risk associated with the condition of the fleet.

This reporting gap was clearly illustrated in the advice provided to the Chief of Navy Senior Advisory Committee in September 2010. Immediately before the Seaworthiness Board made its damning findings, the Committee received a report on the LPA ships, Reference G, which praised Kanimbla’s “solid materiel state” and Manoora’s “strong materiel state”, and set an expectation that the Seaworthiness Board will conclude that these ships enjoyed a “positive risk management approach”. The view expressed was highly optimistic and did not align with concerns about the condition of the ships that were well known within the Navy Amphibious and Afloat Support Group and DMO.

Navy Group Capability Managers should pass up the chain of command direct, timely and candid monthly reporting against measurable performance indicators. This should be established as a matter of priority. These performance indicators should be based on the Materiel Sustainment Agreement, so that both DMO and Navy are working towards the same goals.

The DMO Sustainment Overview Reports form part of DMO’s external reporting mechanism. They often present an overly optimistic view of the condition of the Amphibious and Afloat Support ships. They are in a form that is not well suited to quick identification and tracking

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of issues, are difficult to read and take many hours to prepare each month through the DMO Monthly Reporting System. Little feedback has been received from stakeholders by the Amphibious and Afloat Support SPO Director. Conversely, the internal Fortnightly Reports from the Amphibious and Afloat Support SPO Director to the Chief Executive Officer DMO were found to be informative and candid with some feedback being provided. However, these reports are not provided to the Capability Manager. It would seem that the Fortnightly Reports provide a more useful reporting mechanism than the Sustainment Overview Reports and DMO should investigate combining the two by adopting the most useful aspects of each. It is critical to maintain the candid nature of the Fortnightly Reports.

A recommendation for More effective Information Exchange is included with the other recommendations from this chapter at 5.4.

Further, in 2003 the Defence Procurement and Sustainment Review (Mortimer) found that SPO Directors should be empowered through greater delegation to deliver the performance levels set in the Materiel Sustainment Agreements, and where necessary, to negotiate changes with Defence. Recommendation 4.6 of that report reads “The authority, responsibility and accountability of the Systems Program Office Directors should be formally set out in a Product Charter. They should be held to account for meeting the financial and non‐financial performance targets detailed in their Charter”.

The Chief Executive Officer DMO rightly views these Product Charters as an important accountability mechanism and regularly mentions them in his biannual Business Plan Review. However, the Team found shortcomings in their implementation. The DMO Policy on Project and Product Charters8 only mandates Product Charters for activities in the top two of four Sustainment Product Level rankings (i.e. MS‐CAT A and MS‐CAT B). For Naval Vessels, only the Guided Missile Frigates (FFG), the ANZAC class Frigates and Submarines are ranked in those top two categories. Surprisingly, none of the Amphibious and Afloat Support vessels have been ranked any higher than MS‐CAT C and this classification was not reviewed after the Seaworthiness Board in Sept 2010. The Team could not identify a responsible authority for Sustainment Product Level classification or review.

5.4 Recommendations The following recommendations will strengthen the role and resourcing of the Capability Manager and increase accountability through this and other improvements. They will also provide more effective reporting by the Capability Manager and DMO. Lastly, they will identify opportunities to further strengthen cooperation between Defence and DMO.

Recommendation 7 Closer Working Arrangements between Defence and DMO

Whilst retaining the benefits of specialisation, Defence should commission a review to achieve better integration of critical interdependent activities between itself and DMO.

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Recommendation 8 Increase Resources for Capability Management

Navy should enhance capability management by:

• creating a dedicated cell to analyse, evaluate, and continually assess the state of the Fleet against the Materiel Sustainment Agreement;

• increasing the resources assigned to Capability Management; and

• changing the Workforce Posting Priority to ‘Three’ for Navy staff appointed to sustainment, in line with that of acquisition.

Recommendation 9 Establish Effective Navy Workforce Planning

Navy should establish an effective workforce planning system to ensure staff have the skills and experience required for complex sustainment roles.

Recommendation 10 Refocus Fleet Command

The Chief of Navy should review the structure of Fleet Command to allow the Fleet Commander to better focus on his core function, which is the operational preparedness of vessels and crew.

Recommendation 11 Capture Mutual Obligations

The Naval Materiel Sustainment Agreement should be transformed into an active ‘contract’ that meaningfully captures the mutual obligations of Navy and DMO, supported by business like performance measures.

Recommendation 12 More effective Information Exchange

Navy and DMO must improve their internal reporting by capturing direct, timely and candid, document‐based information that draws on a rigorous set of metrics.

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Chapter 6 RISK MANAGEMENT FRAMEWORK

6.1 Introduction The Causal Factors identify a ‘significant level of aggregated risk for the LPAs’. This chapter reviews the effectiveness of the current risk management framework and details improvements that are necessary to ensure full consideration of the accumulated, holistic risk‐benefit trade‐off before deferring maintenance and making other capability decisions. Improvements are considered from a Vertical Perspective (from the enterprise level to the workforce) and a Horizontal Perspective (at each step in the process across Navy and DMO).

6.2 Vertical Perspective Risk management is a central function as it directly addresses obstacles that prevent the achievement of planned outcomes within an organisation.

The concept of risk management is known, documented and, to some extent, practised in Defence and DMO. However, the implementation is not best practice. It is neither fully embedded across the enterprise nor adequately accepted and valued within the workforce.

This is especially the case in some parts of Navy and DMO where the concept and practice appear weakened by inadequate data, organisational complexity and a culture that blurs accountability. For example, the Navy Technical Regulatory Framework reflects an inherent risk appetite adopted by Navy, but, as discussed in Chapter 7, inadequate implementation, compliance and assurance result in poor outcomes.

For risk management to be effective, it must be based on defined accountabilities and controls, and supported by a comprehensive compliance and assurance framework. The management of risk is not about being risk averse, it is about ensuring that risk is identified, assessed, mitigated to acceptable levels and monitored for any correction needed. Risk management needs to be lived. It has to be part of everyday life in the organisation.

Without clear ownership, as reflected in accountability and proactive leadership, the management of risk cannot be fully successful. Accountabilities are blurred, not only within Navy and DMO but between them (refer to Chapter 5). Some individuals with key roles expressed a lack of empowerment as a result of the organisational structure and a lack of focus on technical integrity.

As the Capability Manager, Chief of Navy should be the accountable authority for maritime risk management with the obvious need to take advice from a variety of sources, perhaps the most significant being SPO engineering.

Best practice risk management has well established and logical characteristics.

• The enterprise (in this case ‐ Navy) leadership must develop and articulate a conscious ‘Risk Posture’. This is a very high‐level expression of how it sees its interaction with the world in which it operates. It has an important influence on strategy.

• The leadership group must then formulate its ‘Risk Appetite’. This is a set of parameters within which the organisation must operate. Namely, the constraints accepted for the benefits to be achieved with acceptable risks. The Risk Appetite and the Risk Posture will change from time‐to‐time dependent upon external and internal

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factors. For example, the appetite for risk is likely to be quite different at a time of war than at a time of peace. It is not only true for such diverse factors as war and peace, other factors will impact the stance, such as Government preferences, urgency for new capabilities, disaster situations, etc.

• Risk Settings then need to be identified and cascaded throughout the organisation to guide the allocation of priorities, resources and activities. These are practical metrics that guide decision‐making throughout the whole organisation.

• Independent compliance and assurance complete the loop to ensure that the decisions taken in the Risk Appetite statement are adhered to.

In this overall framework, it is critical that risk is integrated into planning, decision‐making and execution. This process enables the leadership to exercise strategic control of the enterprise; ensuring open, rigorous and continuing discussion about the relationship between the external environment and the capacity of the organisation to achieve its objectives.

The fundamental Risk Management framework is illustrated in Figure 12.

Figure 12: Fundamental Risk Management Framework for Sustainment

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Figure 13 captures the key elements of how the Fundamental Risk Management Framework of Figure 12 would apply to maritime sustainment and maintenance.

Figure 13: Navy‐DMO Risk Framework

The degree of difficulty in applying this best practice framework in a unified way to Navy and DMO is appreciated, given the seamless coordination required for each step, at each horizontal level and throughout the vertical organisation structure of both enterprises.

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It needs to be recognised that in 2010 DMO produced a draft of its Risk Management Plan. It contains a full description of its purpose and priorities and outlines a risk management framework. It refers to separate manuals that provide risk assessment criteria for projects and sustainment. If this was integrated across DMO and Navy it would set a good foundation for improvement in this area.

The central issues identified by the Team are that:

• there is little use of dynamic statements of enterprise risk appetite;

• there is insufficient risk‐related coordination between Navy and DMO; and

• whilst risk plans and regulations may be written, there is insufficient compliance.

The discussion that follows identifies risk related elements that need attention throughout the working levels of the two organisations.

6.3 Horizontal Perspective

6.3.1 Risk Management in Navy—Theory The technical integrity of ADF maritime material is achieved through a risk‐based approach towards fitness for service, safety and environmental compliance. The level of technical risk acceptable to the organisation, and the management processes for limiting technical risks to these levels, are defined within the Navy Technical Regulatory Framework. This framework is put into effect through policies, procedures, guidance and organisational responsibilities articulated in the Navy Technical Regulations Manual, Reference X. The principles upon which this technical risk is managed9 are sound, namely:

• Don’t accept unnecessary risk.

• Accept risk only where the benefits outweigh the cost.

• Make risk decisions at the appropriate level.

While the technical risk management framework within Navy is well defined and constructed, there are a number of areas requiring improvement. The supporting documents need to be updated, as they do not reference the most current guidance or standards, nor reflect the organisational changes that have occurred since the introduction of the New Generation Navy program in 2009. Perhaps the most significant change required is to make clear reference to the need for risk assessments to occur in an holistic manner. It is not sufficient to just consider technical risk in isolation. Strategic, operational, safety, business, reputational and environmental factors must all be considered and decisions taken in that context. There is evidence that this is not occurring. The framework and associated training must be amended to bring about the required improvement.

6.3.2 Risk Management in Navy—Practice

6.3.2.1 Accuracy of Risk Assessments As a general statement, the Team found that the Navy risk assessments and acceptances appear to have a more optimistic view than that of the designer. For example, the engineer

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designs redundancy into systems to increase the level of system reliability (if one system fails a backup system takes over the role). The Team learnt of several instances where the LPA ships sailed with only one of two systems operational. The Team suspects that decisions to accept such levels of risk were based on achieving the immediate operational objective rather than a thorough analysis of risk.

The assessment of risk should fully consider the context in which the capability is required to operate. Without this, there is likelihood that risk assessments may be overly optimistic and resulting actions inadequate. A recent example involving Tobruk demonstrates this point. It concerns a risk assessment that was completed on the thinness of the shell plating in the vicinity of the engine room. The assessment was based upon advice that some remedial action had been completed and that this had stabilised the situation. The risk was then downgraded to ‘acceptable subject to continuous review’. The assessment had failed to take into account that the remedial action was simply a temporary repair, only sufficient for a short ocean passage in calm seas, while travelling to a place where the full repair could occur. The risk assessment had been downgraded without considering the overall impact—a loss of operational capability. As a result, the focus moved off this risk and when the context changed, the ship was not in a fit state to deploy if required for Operation Yasi Assist.

6.3.2.2 Cumulative Risk Assessment Navy technical risk assessments tend to be made in isolation and do not always account for pre‐existing technical deficiencies. The main assumption when identifying and assessing the risk seems to be that the remainder of the ship has received preventative maintenance as scheduled and is functioning as expected. This simplified approach is inadequate to deal with a wide range of interdependent risks across the physical and organisational systems. According to the Navy Technical Regulations Manual, there is a requirement to conduct cumulative risk assessments10, but there is little evidence that this occurs in a structured and repeatable manner.

The Manual also states that Navy is responsible for the management of maintenance on‐board its vessels and to ensure that all necessary maintenance is conducted and risks identified11. This is to be achieved through the vessel’s engineering officers. However, in order to assess the cumulative risk presented by the deferral of maintenance, it is necessary to know the full extent of the shortfall. There was little evidence to suggest that upon completion of External Maintenance periods, a consolidated view of the condition of the ship is established. In order to address this problem, a maintenance close‐out meeting involving senior operations and technical staff must occur prior to the ship sailing. This meeting should assess the condition of the ship, the level of risk associated with its technical integrity, and its readiness to complete the next period of operational availability. The operational program must be adjusted for all this to occur.

The assessment of risk should be carried out by a subject matter expert, and in the case of technical risks, this is the engineer. In the maritime context, as deferral of maintenance is an engineering (rather than a maintenance) decision, the technical risk must be assessed by the Chief Engineer in the SPO (or his delegate). Such assessments must be made based on design and performance data held in the SPO as well as condition reports from the ship’s

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engineer. Of course, this is only the technical risk assessment and, as mentioned previously, is simply one input to the holistic risk assessment.

6.3.2.3 Risk Assessment in an Operational Context Once a technical risk assessment has been carried out by a qualified and authorised engineer, where such risks affect the operation of the ship, it is up to the executive chain of command to accept or reject the risk as quantified. This should be completed in a formal manner and the decision recorded. The Team has been unable to find evidence that this is occurring and the change will be difficult, as an underlying cultural attitude in the Navy is that the achievement of the mission at sea is sacrosanct.

A particular example of such behaviour relates to the management of the risk to the technical integrity of the LPAs from systemic deficiencies in the configuration data (known as Fleet Hazard 986). Fleet Hazard 986 was identified in 2008, but the problem has been known at least since the receipt of a report from the Acting Inspector General on the LPA refit in 1998, Reference U. It has been assessed with a Hazard Risk Index of six (a hazard of critical consequence with a likelihood of occurring occasionally). The Navy Technical regulation Manual provides the following guidance: Exposure to a hazard rating of 6 to 9 would normally be discontinued as soon as reasonably practicable. Continued exposure would only be considered in exceptional circumstances, and the decision to do so would normally be made at senior levels after due consideration of the cost/benefit12. The risk associated with Fleet Hazard 986 was accepted as ‘tolerable with continuous review’. The documentation makes no mention of any extenuating circumstances, or benefits, that justified taking such a risk.

This was found to be symptomatic of the poor application of risk management principles in that there was an inadequate assessment of the risks being taken compared to the benefits to be gained. If they were considered, then they have not been recorded.

6.4 Recommendation In summary, risk management for maritime materiel is immature and in need of significant improvement. The Risk Posture and Risk Appetite should be set by the Executive, be dynamic, and applied to the day‐to‐day decisions of the whole sustainment workforce. Risk decisions must be based on the full breadth of relevant factors and these decisions must be formalised, recorded and taken at appropriate levels. Navy and DMO must perform risk management in an integrated manner within a single methodology.

Recommendation 13 Establish an Integrated Risk Management System

Navy and DMO should develop an integrated risk management system for maintenance of maritime capability. This must emphasise:

• the vertical link between risk appetite at the enterprise level and its application at the workface; and

• the horizontal processes necessary to capture the full risk‐benefit trade‐off.

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Chapter 7 ENGINEERING FUNCTION

7.1 Introduction A number, but not all, of the Causal Factors relate to the engineering functions that are performed in both Navy and DMO. Thus a key requirement for the review was to understand the engineering issues that led to the unsatisfactory condition and subsequent operational pause of the amphibious ships. Of concern was the technical regulatory system that had allowed the ships to deteriorate, and in particular its system of compliance assurance. Also critical to the regulatory and engineering functions are the resourcing and skill levels of engineers and technicians in DMO and Navy.

7.2 Regulation and Assurance

7.2.1 The Navy Technical Regulatory System Head Navy Engineering is the maritime Technical Regulatory Authority13, responsible to the Chief of Navy, who is in turn responsible to Chief of the Defence Force14, for the technical integrity of all ADF maritime materiel, including that being managed by the DMO and its contractors. He discharges this responsibility by means of a system of regulations and authorisations embodied in the Navy Technical Regulatory System, which provides him with the necessary control over the standard of engineering and maintenance that should be performed.

Organisations that carry out engineering and maintenance need to assure Head Navy Engineering that:

• they have sufficient personnel with the required competencies;

• they have adequate and auditable processes to control work flows;

• their technical data is adequate and up to date; and

• the organisation has an adequate quality management system, including the assurance of the quality of products and maintenance received from suppliers.

When these elements can be demonstrated, the organisations receive accreditation from Head Navy Engineering as Authorised Engineering Organisations15.

Having established the regulations and accredited organisations, the third and equally important element in regulation is the assurance that the bases for authorisations continue to be valid and that regulations are being complied with. This should be done on a continuous basis by monitoring performance of Authorised Engineering Organisations, including regular audits of process and product.

7.2.2 Assessment of the current Navy Technical Regulatory System In evaluating the Navy Technical Regulatory System, the Team was naturally led to comparisons with the model on which it was based and which is generally considered best‐

13 Defence Instruction (Navy) LOG 47‐3, Regulation of Technical Integrity of ADF Maritime Materiel 10 Jan 2009 14 Defence Instruction (General) LOG 4‐5‐012, Regulation of Technical Integrity of ADF Materiel 10 Sept 2010 15 ABR 6492 Vol 1 Sect 1 Chap 4 Para 4.14

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in‐class within Defence—the aerospace sector. It was suggested that a comparison with the Airworthiness Technical Regulatory System was not valid because the issues associated with technical failure generally present a far greater safety risk for aviation than they do in a maritime environment. While the Team agrees that aviation involves a greater level of inherent risk, it is also apparent that the tighter technical regulation of the aviation sector has associated benefits in mission reliability and asset preservation. Lack of attention to the basic technical integrity processes has led Navy to focus far too much on assessing and treating the risks to safety that arise through inadequate ship maintenance (that is, the symptoms) rather than treating the origin of the risk, namely poor attention to maintaining overall technical integrity.

The Team also noted that the Strategic Review of Naval Engineering assessed the Navy Technical Regulatory System as being sound, but with some deficiencies in its practice. The condition of the LPAs and the evidence reviewed on HMAS Success (Reference M), indicates that this conclusion was optimistic. The Team found that the Navy Technical Regulatory System was simply not being adhered to in the Amphibious and Afloat Support Group, and that there were indications of shortcomings in other Groups in the Fleet. These included the effectiveness of the information management systems and the provision of timely quality evidence to support completion of maintenance work.

To determine a cause for the Navy Technical Regulatory System failure, the four basic elements have been considered: engineering authorisations, the regulations themselves, compliance with them and assurance of that compliance.

7.2.3 Authorisations The Navy Technical Regulatory System has established Authorised Engineering Organisations in each of the SPOs, specialist directorates (e.g. Directorate of Navy Warfare Systems) and the centres of excellence (e.g. Centre for Maritime Engineering). However, unlike the aerospace sector, no Authorised Engineering Organisations have been established in Industry, relying instead on contract provisions to assure quality of work performed.

Also, unlike the aerospace sector, the Navy Technical Regulatory System has no Authorised Maintenance Organisations. In ADF aviation, aircraft maintenance is carried out in flying squadrons, with each squadron being accredited as an Authorised Maintenance Organisation. In Navy, the Engineering Division in Fleet Command is an Authorised Engineering Organisation16 and all Navy ships operate under this authorisation. In other words, ships (or their engineering departments) are not separately certified as Authorised Engineering Organisations.

Although considering that the aerospace model probably had more rigour, the Team did not explore in any detail which arrangements might provide better oversight of engineering and maintenance standards. With suitable governance in place, either system should produce the required level of technical integrity.

16 Note a difference in terminology. The ADF air environment makes a distinction between engineering (design change) and maintenance, whereas the term ‘engineering’ in the ADF maritime environment can include both engineering and maintenance.

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7.2.4 Regulations The Defence and Navy Instructions covering the policy aspects of the Navy Technical Regulatory System and the Navy Technical Regulatory Standards were written in 2002. The standards are ‘principles based’, however, much of the information is out of date, spread across many documents, and requires review. While the policies, standards and supporting books of reference are generally sound, they require revising and re‐organising to form a concise set of orders that are easy to comprehend, and facilitate compliance. Head Navy Engineering’s initiative to capture Naval engineering policy, technical regulations, instructions and guidance in a single web‐based Body of Knowledge, under the auspices of Project Storm, is supported.

7.2.5 Compliance While the regulations are reasonably comprehensive, compliance with them was found to be lacking. Reasons for non‐compliance in Navy (other than the complexity of the orders themselves) include minimum manning of ships, changes in training regimes, poor configuration management data, and ongoing issues with information management systems, which place significant strain on ships’ maintenance teams.

The Maritime SPOs of the DMO are under similar stress. The Amphibious and Afloat Support SPO is struggling with an inadequate configuration baseline for a number of its platforms, an immature information management system, disruption caused by frequent organisational change, insufficient skilled personnel and inefficient contracting mechanisms. All these factors have combined to produce a backlog of engineering and maintenance tasks, and a consequent reduced focus on compliance with technical regulatory requirements.

7.2.6 Assurance When a system is under stress, people will endeavour to meet targets by using workarounds and short cuts. When these tendencies are present, compliance assurance is even more important.

It was clear to the Team that these assurance activities have been inadequate. The Authorised Engineering Organisations in Navy and DMO (Maritime) are audited only once every three years to renew their formal accreditation from Head Navy Engineering. There was little evidence that the performance of Authorised Engineering Organisations was regularly monitored by the Director of Technical Regulation (Navy) or that any risk assessment of the Authorised Engineering Organisation’s ability to adequately discharge its assigned functions is carried out. A regular review of the backlog of engineering and maintenance work should have been providing Head Navy Engineering with some indication that the condition of the Fleet, for which he is ultimately responsible, was at risk.

The basic cause of this shortcoming is the lack of resources being applied. When a broad comparison was made with the aviation sector, it was found that the Director General of Technical Airworthiness performs the regulatory function for aviation materiel with a staff of seventy‐four people; ten writing and maintaining regulations and another sixty‐four performing the assurance function. In comparison, the same two tasks are performed in Navy by just eleven full‐time people, together with some part‐time, ‘borrowed’, personnel to augment audit teams. The Directorate of Technical Regulation—Navy requires significantly more staff to properly maintain technical regulations and provide an appropriate level of

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assurance. Some other re‐organisation of Navy engineering is also needed, and this is discussed in Section 7.4.

Section 7.2.3 noted that ships (or their engineering departments) are not separately certified as Authorised Engineering Organisations. This arrangement is workable, provided that suitable governance was in place. The main issue is that the Chief Staff Officer (Engineering) has not been able to assure himself of the level of compliance and quality assurance in all of the ships that operate within his Authorised Engineering Organisation.

In the past, Chief Staff Officer (Engineering) and his team conducted regular Departmental Management Audits of individual ships in order to assess their condition and the competence of their engineering departments. These were thorough and demanding audits that would quickly expose any management and materiel deficiencies. Departmental Management Audits were also a subset of rigorous annual inspections conducted by the Fleet Commander and his staff, which assessed each department in the ship and the ship as a whole.

As a consequence of the many organisational changes in Defence and Navy over the last decade, the Engineering Division in Fleet Command has been stripped of staff and specialist technical cells, thereby initially reducing the focus of Departmental Management Audits to ships deploying on operations. These audits have now been replaced by self‐assessments conducted by ship’s staff. Annual Inspections have disappeared altogether.

Whilst self‐assessment or self‐auditing is an essential internal quality assurance activity, a regular external review is vital to avoid what has been termed ’Normalised Deviance‘, whereby acceptance of otherwise unacceptable standards becomes routine. External engineering surveillance should be restored throughout the Fleet. As a minimum, annual inspections and Departmental Management Audits should be reinstated to focus on compliance with technical regulations and maintaining the condition of ships. Additional resourcing of Engineering Division in Fleet Command will be needed to enable Chief Staff Officer (Engineering) to conduct ongoing monitoring of ship maintenance and to resume this Departmental Management Audit role.

A recommendation to Monitor and Audit for Technical Compliance is included with the other recommendations from this chapter at 7.6.

7.2.7 The Role of Classification Societies Classification Societies are independent, self‐regulating bodies that have developed maritime engineering rule‐sets over the last two hundred and fifty years. These cover such aspects as the ship’s hull, the propulsion and steering systems, power generation and other critical systems.

Once a ship has received a ‘Certificate of Class’ from a Classification Society, it is said to be ’In Class‘. Thereafter, the relevant Classification Society will conduct periodic surveys of the condition of the ship. Where defects are found, the Classification Society will issue instructions and a due date for the rectification of the defect. Defects of a serious nature are advised via a notice termed a ’Condition of Class’.

Navy has been considering the use of Classification Societies for a number of years. A policy has not been published, although a Defence Instruction—Navy is currently being prepared.

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At present, a number of ships are under survey by Classification Societies and have been issued with a Certificate of Class.

Whether or not Classification Societies are engaged by Navy, a survey by an independent third party is valuable, as it provides assurance about the ship’s through‐life maintenance program and of the condition of the ships.

A recommendation to Instigate Third Party Quality Assurance is included with the other recommendations from this chapter at 7.6.

7.2.8 Licensing Navy has debated the need to license its surface ships for many years. In its very basic form, such licensing would provide assurance to the Fleet Commander that a minimum safety standard has been achieved prior to a ship proceeding to sea, and would include the ship having:

• an agreed state of materiel;

• all critical systems fully available;

• a crew with the minimum skills nominated for all critical categories, and the defined minimum numbers and skills for credible emergency scenarios;

• an assessment as ‘unit ready’ without exception; and

• a release for general duties within its seagoing design constraints.

The Team considers that such a licensing system would provide greater levels of assurance of condition and therefore preparedness.

7.3 Certification of Standards In the aviation sector, an aircraft cannot enter service with the ADF until it is awarded an Australian Military Type Certificate and Service Release by the Airworthiness Authority. Qualification for the award of an Australian Military Type Certificate requires DMO to demonstrate compliance with a certification basis that has been determined at the start of the project. In addition, a type record must be available that includes the configuration (configuration record) and all data required to enable the aircraft to be maintained to the designed standard, including a full suite of servicing schedules and maintenance publications. Before a Service Release can be issued, DMO (and the operating service) must also demonstrate that all the arrangements to operate and support the aircraft and its systems are in place.

Navy has a similar process for ships. However, it does not have the rigour that is applied to the issuing of an Australian Military Type Certificate/Service Release in aviation. This is evidenced by the fact that the LPAs have yet to be granted a Royal Australian Navy Structural Maintenance Certificate, a mandatory and critical certification requirement. Further, the platforms have been operated for many years, but have yet to achieve formal Operational Release. Much more rigour and attention to regulatory compliance needs to be applied to the certification of fitness for service of new vessels, and of those returning to service following refits and modernisations. As an independent review and safety net, the Seaworthiness Board could be used in the same way as the Airworthiness Board, in that it advises the Airworthiness Authority on Certification and Service Release. Moreover, in the

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case of vessels returning to service following refits, the Chief of Navy and the Fleet Commander should have the prerogative to accept or reject the vessel based on recommendations of the Seaworthiness Board.

A recommendation to Control Acceptance into Naval Service is included with the other recommendations from this chapter at 7.6.

7.4 Engineering Organisation As described in Section 5.2, in reviewing the engineering organisational structure within Navy and DMO, the Team was struck by its apparent complexity and the lack of clear engineering authority and reporting lines. When this is coupled with the operational chain of command, there is room for confusion about who to refer to for engineering decision‐making.

Through the large number of organisational changes and reviews over the last decade, Navy engineering has been seriously ’hollowed out‘, removing some organisations (for example, the Fleet In Service Trials Unit and the Fleet Condition Assessing Unit) and dispersing the remaining across Navy, DMO and more widely across Defence. As a consequence, Naval engineering policy is often out of date and technical regulatory compliance and assurance is well below that required. Further, in making operational decisions, the Fleet Commander and his non‐engineering staff have not received adequate information about the condition of the Fleet, as evidenced by the situation with the LPAs and the lack of reporting on capability from the Groups within Fleet Command.

Navy Engineering also needs to provide opportunities for the recognition of professional status at both the sailor and officer levels. This should be achieved through more structured career paths and more deliberate focus on improving skills and qualifications. DMO should assist through the placement of recent Navy graduates to ensure they obtain professional experience and challenging work.

The Team did not undertake a detailed review of Navy’s engineering organisation due to the recent Strategic Review of Naval Engineering. However, it is clear that Navy should provide Head Navy Engineering with an organisation that can assure the ongoing technical integrity of maritime materiel and take control of Navy maintenance policy to address the issues raised in Section 7.2.

7.4.1 Engineering Status and Leadership During a number of briefings and informal conversations, the Team gained the impression that engineering is not prominent in Navy, and especially not amongst Seamen Officers. Navy culture appears to relegate engineering to a second tier activity, and this is probably a factor contributing to the dispersed engineering organisation and the lack of resources being applied to engineering policy and regulation. This requires cultural change that would be better facilitated if Navy engineering was headed by a suitably qualified and experienced engineering officer of Rear Admiral rank. Given the importance of rank in the Services, a Rear Admiral would exert the level of influence and leadership required. Importantly, the appointment of a Rear Admiral would be a clear indicator of the importance of the engineering function to Navy and to its operational success. It would ensure that engineering had both a ‘champion’ and a sufficiently authoritative voice.

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A recommendation to Rebuild Navy Engineering Capability is included with the other recommendations from this chapter at 7.6.

7.5 Engineering Skills and Resource Levels

7.5.1 System Program Offices DMO System Program Offices are responsible for the ongoing sustainment of capital assets. Included in this task are the investigation of defects, the processing of engineering changes and establishment of contracts for External Maintenance.

To undertake these activities, SPOs require core skills in engineering, logistics and contract preparation and management. The number of experts required is determined by the number and complexity of the vessels and the number of ship classes under management.

The Amphibious and Afloat Support SPO is responsible for four classes of ship, requiring significant numbers of people with the core skills outlined above. A comparison of raw numbers between the Amphibious and Afloat Support SPO and other maritime SPOs indicates that the Amphibious and Afloat Support SPO is significantly under‐resourced. Exacerbating the situation is the advanced age of the ships (with the exception of HMAS Sirius), the number of unique ship types where Australia has prime engineering responsibility and the significant amount of configuration data that has been missing since acquisition. The end result is a SPO that is hopelessly overloaded, as evidenced by the backlog of engineering and maintenance tasks (see Section 9.2). This has been partly addressed through the temporary supplementation of seventeen industry personnel in the SPO and additional external support. Whilst this is a reasonable emergency measure it should be followed by a more sustainable arrangement. A review of the staffing numbers in the Amphibious and Afloat Support SPO is currently being undertaken by the Maritime Systems Division in DMO and the findings should be implemented as a matter of urgency.

A recommendation to Resource the Amphibious and Afloat Support SPO is included with the other recommendations from this chapter at 7.6.

Recruiting personnel with the core skills required by the SPO in the Sydney area is a very difficult task, given the unattractiveness of Australian Public Service salary levels in that market. Although the Defence Enterprise Collective Agreement provides the flexibility required to pay market level salaries, this flexibility is not well‐known and the current approval mechanisms seem overly bureaucratic.

The DMO must use all means at its disposal to recruit and retain these skilled personnel, looking at Navy Reserve personnel, Continuous Full‐Time Service (re‐engagement of former ADF personnel), Building Defence Capability Payments and Industry support.

A recommendation to Foster Engineering Talent is included with the other recommendations from this chapter at 7.6.

7.5.2 Proactive Engineering Planned maintenance schedules are generated during the design and acquisition phases in a process called Maintenance Requirements Determination. This ensures that the platform, system or equipment will continue to meet its designed performance and availability criteria. When an appropriate history of use has been established and the material

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condition has been monitored over time, it is often possible to extend maintenance intervals or progress from time‐based maintenance, to condition‐based maintenance, thereby saving time and reducing through‐life costs.

The shortage of engineering resources in SPOs has resulted in low priority being ascribed to ongoing maintenance requirements determination. Programs such as: Failure Modes and Effects Analysis (FMEA); Reliability, Availability and Maintainability (RAM); and Reliability Centred Maintenance (RCM) have all but disappeared. These programs, coupled with a rolling program of hull surveys and other condition monitoring practices, would reduce ownership costs and inform decisions to defer maintenance.

The Strategic Review of Naval Engineering also noted the lack of Reliability, Availability and Maintainability and Reliability Centred Maintenance programs. The Team supports the Strategic Review of Naval Engineering recommendations to re‐establish these programs. Recent moves by Navy and DMO in this field are acknowledged and supported.

7.5.3 Organic (Shipboard) Maintenance Changes in ship technology have led to gradual changes in Navy technical workforce training. Primarily, there has been a shift away from the core hand skills displayed by artificers and tradespersons. Where a deep level of planned and corrective maintenance was formerly undertaken, now technicians often undertake repair by replacement. Further, whereas older vessels carried personnel to operate the plant machinery in conjunction with those embarked to maintain the plant, modern vessels have combined the two functions, so that the technicians now both operate and maintain the plant. This philosophy enables ships to carry fewer technical personnel, contributing to a practice referred to as ‘minimum manning’.

Unfortunately, the downside to this minimum manning concept is that many Navy technicians spend considerable time achieving operator qualifications at the expense of performing planned maintenance. When combined with time lost to Naval exercises and whole‐of‐ship tasks, such as boarding or flying operations, technicians are unable to develop their technical skills and satisfy their maintenance obligations. They lose confidence in their ability to undertake repairs, planned maintenance is deferred or simply not completed and the vessel’s condition deteriorates.

In addition, there is confusion about the delineation between what corrective maintenance can be undertaken at sea and what is considered the preserve of contractors. Corrective maintenance that could be undertaken by ship’s staff (notwithstanding the issues outlined above) is sometimes left to be arranged by the SPO, further increasing the SPO’s workload, delaying lower priority maintenance and adding to the cost of ownership of the platform.

The Strategic Review of Naval Engineering made similar findings, concluding that:

….change was probably inevitable, however, the cumulative impact of second order effects [on the workforce] appears not to have been fully comprehended. The real concern is not that practices are changing, rather they are changing in an apparently uncoordinated manner….

In other words, there is a lack of maintenance policy that addresses, among other things, the skills required by technical sailors on board and the associated training needed for

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development of those skills. The Strategic Review of Naval Engineering made the following recommendation, which is strongly supported by the Team:

Strategic Review of Naval Engineering Recommendation 2.2: A clear policy should be established as to the levels of repair or maintenance Navy ships must be capable of conducting at sea, without recourse to external resources, and the degree to which support will be provided from external organisations in an area of operations. This policy should be reflected in strategic doctrine and should inform training of naval technical personnel, maintenance practices and logistic policy and planning.

The Team notes that this is an ongoing activity. As discussed at 7.4, in order to action this recommendation, the maintenance policy area of Navy needs strengthening to enable it to influence logistics support concepts in the project definition and acquisition phases and to manage the impact of new technology on maintenance policies and technical training.

7.5.4 Fleet Support Units In the main, when Navy technicians complete their initial technical training and are awaiting a position at sea, or when those at sea come ashore for respite, they will often be posted to a Fleet Support Unit in one of four locations. The Strategic Review of Naval Engineering detailed significant issues with employment of technicians in the Fleet Support Units. A combination of factors, including workforce turnover, shortages of supervisors and places at sea, and a lack of meaningful work, has resulted in disillusionment and high separation rates amongst technicians.

Fleet Support Units, if properly staffed and managed, can provide a pool of expertise that can be used to supplement Organic and External Maintenance activities and improve retention of technical sailors by using and developing their trade skills. The Strategic Review of Naval Engineering addressed these issues in detail and proposed a number of recommendations seeking to develop and better use this valuable resource.

The Team strongly supports this set of Strategic Review of Naval Engineering recommendations, but is concerned that implementation may be constrained by the current paradigm of work allocation between Organic and External Maintenance. In order to transform the Fleet Support Units into viable organisations with the essential role of developing individual skills, some changes may be required in the relationship and work allocation between Australian Industry and Navy.

The Fleet Support Units must be given a significant and formal role in the conduct of maintenance in the Fleet, ahead of the arrival of the LHD.

A recommendation to Rebuild the Fleet Support Units is included with the other recommendations from this chapter at 7.6.

7.6 Recommendations The following recommendations will improve technical regulatory compliance and assurance for maritime materiel and re‐establish the Chief of Navy’s control over new capability entering service. They will rebuild naval engineering capability through a number of linked initiatives.

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Recommendation 14 Monitor and Audit for Technical Compliance

Chief of Navy should resource Chief Staff Officer (Engineering) to fulfil his responsibility as head of the Fleet’s Authorised Engineering Organisation, to:

• monitor and audit ships for technical regulatory compliance; and

• provide mandatory input into ship's engineer's performance reports.

Recommendation 15 Instigate Third Party Quality Assurance

The Chief of Navy should develop, and direct compliance with, a policy on the use of Classification Societies, or other expert third‐party surveyors, to establish independent quality assurance for all Navy vessels, during design, construction and operation.

Recommendation 16 Control Acceptance into Naval Service

Through an independent, rigorous and transparent evaluation process, the Chief of Navy should exercise his authority as the Capability Manager to accept or reject new Naval capability against the Government approved scope.

Recommendation 17 Rebuild Navy Engineering Capability

Navy engineering should be rebuilt and reorganised to reduce fragmentation, increase authority, clarify accountability and enable the Head Navy Engineering to fulfil his role as the Technical Regulatory Authority. It should be led by a 2‐star Navy officer to give weight to this important technical and compliance function.

Recommendation 18 Resource the Amphibious and Afloat Support SPO

DMO should increase the engineering and contract management resource base in the Amphibious and Afloat Support SPO to meet the ongoing need, and then further augment the complement to address recovery activities.

Recommendation 19 Foster Engineering Talent

DMO and Navy should develop an innovative and comprehensive through‐life career plan for the recruitment, retention and development of their engineering talent.

Recommendation 20 Rebuild the Fleet Support Units

In line with the Strategic Review of Naval Engineering, the Fleet Commander should rebuild the capability of the Fleet Support Units—using Industry expertise to re‐establish deep technical skills.

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Chapter 8 CULTURE

8.1 Introduction In undertaking this Review, it has become clear to the Team that a number of deep‐seated cultural issues have contributed to the current situation with the LPAs. These issues are not confined to staff working with or on that class of ship and can be found more broadly across the maritime community in Navy and DMO.

In its most fundamental form, the culture of Navy and DMO (maritime) must value the maintenance of technical integrity of vessels. That is not to say that some, or even many, do not already do so, but the Team believes that the organisations as a whole do not place technical integrity at the same level of importance as short‐term operational imperatives.

8.2 Cultural Issues The Team found that Navy experienced a challenge in accountability similar to that felt more broadly across Defence and DMO. This challenge flows from a lack of clarity in objectives, overlapping and blurred responsibilities, a lack of continuity in position and inadequately developed skill sets. The head of the Team has access to the unpublished Accountability and Governance Review of the Department of Defence (Black Review) and supports the broad thrust of its findings and recommendations. Early implementation of them will assist with the resolution of this cultural issue. There is a further cultural issue within Defence and DMO that is demonstrated by unresponsiveness to the large number of reviews and reports relevant to this situation.

However, there are some aspects specific to the maritime culture that should be noted and addressed. These are the ‘can do, make do’ attitude, the assumption that a ship is ‘safe to sail’ unless proven otherwise and ‘the management of bad news’.

Can do, make do—With the best of intentions, Navy has had an intense focus on the importance of meeting the immediate operational demands above all else, except the safety of personnel. Whilst immediate operational imperatives should have a strong influence during critical events (such as situations of imminent threat), this view needs to be balanced against the importance of maintaining technical integrity. This balance is clearly demonstrated in the Air Force.

The severe shortage of resources, increased operational tempo, and the dire state of the logistics support data and systems associated with the LPAs have driven the behaviour within the Amphibious and Afloat Support Group. For example, incorrect and unapproved parts have sometimes been fitted because specifications are incomplete, or correct parts cannot be immediately sourced and there is pressure to return the ship to operations. A second example is that maintenance cannot be completed because of a lack of instructions, or a lack of skilled staff, or time pressures. These, and other longstanding factors, when accompanied by a weak assurance function, have resulted in the development of a workaround culture and acceptance of deficiencies.

• Safe to Sail—This issue is closely associated with the can do, make do attitude but has a subtle and important difference. There is a culture amongst many Navy operators

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(not universal —submarines are a clear exception) that a ship is safe to sail unless proven otherwise (negative assurance). This is in direct contrast to the view in the Air Force where an aircraft is unfit to fly unless proven otherwise (positive assurance). Several factors have led to this situation. These include: a view that a ship is likely to continue to float even after failure of equipment or infrastructure, the magnitude of the technical problems at hand and the remediation they require, and a weak assurance function.

• The Management of Bad News—To avoid being seen to fail personally, there is a danger (especially in the can do, make do environment) that staff will choose to not raise bad news. This can result in bad news remaining at lower levels in the organisation, increasing enterprise risk and only becoming apparent when recovery is expensive, difficult or even impossible.

8.3 Recommendations These undesirable cultural attitudes, developed over many years, will not be changed quickly. The Team is reliant upon implementation of the unpublished Accountability and Governance Review of the Department of Defence (Black Review) to address issues associated with accountability and ‘the management of bad news’. However, the Team has made one recommendation to address the specific cultural attitudes associated with maritime technical integrity.

Recommendation 21 Reinstate the Cultural Importance of Technical Integrity

Navy, in collaboration with DMO, should introduce a cultural change program that promotes technical integrity as a key enabler of operations.

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Chapter 9 WIDER IMPLICATIONS

9.1 Introduction This chapter considers the applicability of the existing reforms and this plan to the remainder of the Fleet. It also comments on the suitability of the maintenance concepts being developed for future capabilities—namely the LHD, AWD, and the most recent acquisition, the ex‐British Royal Fleet Auxiliary ship Largs Bay.

9.2 Other Current Vessels The Team has found that many of the underlying issues that led to the operational pause of the LPAs are present across the remainder of Navy and the DMO (maritime), although possibly to a lesser extent. In particular, the under resourcing of the SPOs and Capability Management Groups, shortcomings in the technical information management system, the can do, make do culture, and the loose application of the Navy Technical Regulatory System are all factors that apply more broadly.

This view is supported by the unrefined data on Open Engineering Changes and the Deferred or Open Maintenance Tasks across the Fleet in April 2011. Figure 14 and Figure 15 provide an approximate illustration of the engineering and maintenance liability across the Fleet.

Figure 14 shows the relative magnitude of Open Engineering Changes in each SPO. An Open Engineering Change consists of:

• an open (non‐permanent) deviation from the agreed Configuration Baseline; or

• an engineering change proposal awaiting processing by an engineer; or

• an approved engineering change awaiting incorporation on the platform; or

• a technical documentation change awaiting processing.

Figure 14: Open Engineering Changes by SPO

Figure 15 shows the relative magnitude of Deferred or Open Maintenance Tasks per platform. A Deferred or Open Maintenance Task consists of:

• deferred or open planned or corrective Organic Maintenance; or

• deferred or open planned or corrective External Maintenance.

Figure 15: Deferred or Open Maintenance Tasks by Platform

(average per ship or aircraft)

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This data was not readily available as it is not adequately tracked or reported by Navy or the DMO and not easily extracted from the Information Management System. Whilst the diagrams are only approximate, they drew the Team’s attention sufficiently for it to recommend that a comprehensive and independent audit of the engineering and maintenance liability should be undertaken. The audit should accurately scope the problem from which recovery action can be measured, planned and executed.

A recommendation to Quantify Maintenance and Engineering Backlog is included with other recommendations from the chapter at 9.4.

9.3 Future Vessels

9.3.1 Landing Helicopter Dock

9.3.1.1 Current Status The Joint Amphibious Capability Implementation Team was formed in 2006 for Navy to plan and manage the processes for final acceptance of the LHDs into service. In addition, to prepare for sustainment through the life‐of‐type, DMO formed the LHD SPO in early 2011; although it is awaiting the provision of eighteen uniformed personnel.

The LHD project seeks to maximise Organic Maintenance to increase operational availability and reduce the cost of ownership. The level of on‐board Organic preventative and corrective maintenance will require all technical sailors below the rank of Chief Petty Officer

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to work up to five hours per working day on maintenance. This will present a challenge and may not be practical in conjunction with the other demands on their time.

Maintenance tasks beyond the capacity of LHD crew members will be undertaken by external organisations (uniformed personnel and/or civilian contractors) at multiple locations. This concept is sound, but is a change to the current practice in which such work is done in a ship’s home port during External Maintenance availabilities that are scheduled by Fleet Command.

Some shore‐based sailors will be embedded in contractor workforces. This is designed to: meet the expected high demand for External Maintenance; transfer skills between contractors and Navy personnel; and offer sailors challenging and meaningful work during their periods of shore service and sea respite. Early development of the Fleet Support Units, in line with the Strategic Review of Naval Engineering, will ensure that these sailors are adequately prepared for participating with Industry in these hybrid External Maintenance teams.

The LHDs will be maintained in accordance with the rules and regulations of a civilian Classification Society. Essentially, this offers the Navy third‐party assurance of a vessel’s fitness for service and the safety of the hull and associated operating systems.

Several of the important issues that led to the extended unavailability of Kanimbla and the early de‐commissioning of Manoora are being addressed for the LHDs. Based on discussions with LHD sustainment staff and review of the acquisition contract, it is assessed that the project will provide a full suite of integrated logistics support products, as detailed in the Navy’s Materiel Requirement Set.17 However, a full audit of the contract deliverables was not undertaken. The LHDs will have a documented Certification Basis and Product Baseline to determine maintenance requirements. Configuration management and associated logistics support products are being developed and the Technical and Integrated Logistic Support Certification Plan have been approved. The ships will utilise Reliability Centred Maintenance, Condition Based Maintenance, and other similar obsolescence programs that will aid engineering decision‐making and reduce the cost of ownership.

Figure 16: Landing Helicopter Dock

17 (DEF (AUST) 5000 – Volume 2 Part 17‐Issue 03 – Integrated Logistic Support Requirements)

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The work undertaken to date is a positive step towards appropriate sustainment of this new capability. It will help prepare Navy and DMO for what will be a substantial change in operating concept and an enormous maintenance challenge. The arrangements should also provide assurance, through an independent and rigorous evaluation process, that the new capability is ready for acceptance into naval service (as per Recommendation 16 of this plan).

The concept contained in the LHD Sustainment Strategy is innovative and, if implemented in accordance with the Navy Technical and Regulatory Framework, will constitute a sound basis for ship maintenance.

9.3.1.2 Areas for Attention Despite the formation of Joint Amphibious Capability Implementation Team, it does not appear that Defence and DMO (maritime) have fully grasped the changes needed to sustain this new capability. Whilst the Sustainment Strategy is discussed at the six‐monthly LHD/AWD Sustainment Board, it is approximately two years since the more senior Navy Capability Committee has considered this issue. The change in maintenance practices for this large ship must be fully addressed if a repeat of the unsatisfactory situation with the LPAs is to be avoided.

The concept of continuous maintenance, as proposed for the LHDs, is supported and should be considered for other ship classes. However, it is not clear whether the Navy is preparing for the significant change to its operational practices and maintenance procedures.

Figure 17: LHD Compared to LPA

The LHDs are complex vessels and considerably larger than the LPAs (as can be seen in Figure 17 above). They will have significant Organic Maintenance requirements. Consequently, the numbers of technicians proposed for these ships may be insufficient when compared to the experience of other Navies. While maximising Organic Maintenance activity will optimise ship availability, the workload may overwhelm ship staff, especially when skills shortages, whole ship evolutions, operator training and exercises are considered.

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The Maintenance Task Analysis, which is not due for completion until late 2012, is a crucial activity and must be completed on schedule, ideally earlier.

There is a risk that the training facilities for LHD crews will be inadequate, as the project funding for training has been based on the incorrect assumption that the current training infrastructure would suffice. In view of the intensity of the Organic Maintenance task, it is important that the ship’s crews are properly trained to both operate and maintain the ship. The provision of training facilities should be revisited to avoid the risk of an Organic Maintenance shortfall, such as has been seen on the LPAs. In particular, the LHD and Largs Bay contain very high voltage electrical equipment that requires special skills. Navy does not currently possess these skills and this issue should be given early attention, since Largs Bay is soon to enter service.

9.3.2 Air Warfare Destroyer

9.3.2.1 Current Status To assess the maintenance concept being developed for the AWD the Team visited the AWD project office in Adelaide and also held discussions with the AWD Capability Implementation Team, which was first established in 2006. As with the LHD, an initial assessment is that the acquisition contract will supply a full suite of integrated logistics support products, although a full audit of the contract deliverables was not undertaken.

Unlike the LHDs, the AWD maintenance concept seeks to minimise Organic Maintenance, which will reduce the number of technicians on board and limit the quantity of test equipment and spares that need to be carried. This concept increases the amount of External Maintenance required over the life of the ship and decreases the competencies required by technical sailors on‐board.

Figure 18: Air Warfare Destroyer

In contrast to current maintenance practice, Navy will seize the opportunity to conduct External Maintenance often, when the AWD is in port. This is designed to reduce the need for prolonged External Maintenance periods and therefore increase availability for

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operations. The stark contrast between the LHD and AWD maintenance concepts will present a workforce management challenge for Navy. This is considered further in Section 9.3.2.2.

As with the LHD, several of the important sustainment issues associated with Kanimbla and Manoora are being addressed. The AWD will have a documented Certification Basis and Product Baseline, configuration management products and logistics support products. The ship will use Reliability Centred Maintenance, Condition Based Maintenance, and other similar obsolescence programs that will aid engineering decision‐making and reduce the cost of ownership.

Although there has been some early Classification Society involvement with the Project, the extent of involvement throughout the capability life cycle is not yet agreed.

The current plan will help deliver appropriate sustainment of the AWD and prepare Navy and DMO for the new operating concept.

9.3.2.2 Areas for Attention The plan to acquire the necessary logistics support products is satisfactory. However, the AWD Project was not funded to establish the support system, repair contracts and SPO support processes. The current workaround is to draw funding from the management reserve for this crucial activity. This is a risk because other priorities may place conflicting demands on this funding.

The Maintenance Task Analysis for the AWD is not due for completion until late 2012. As with the LHD, this is a crucial activity and must be completed on schedule, ideally earlier.

The AWD project initially did not plan to engage a Classification Society for independent third‐party audit. Some preliminary engagement is now occurring, but in line with Recommendation 15 of this plan, the project should establish a mechanism for independent third‐party quality audit.

Maintenance of the AWD will primarily consist of “….failure diagnostics, corrective maintenance and limited preventative maintenance tasks. Organic preventative maintenance will be minimised. Corrective maintenance is achieved by unit assembly replacement strategies rather than replacement of components”. While there are obvious advantages in this strategy, it conflicts with Navy’s policy of providing technical trade qualifications to its technicians. Unless meaningful, trade‐based work is provided when technicians are ashore, frustration and dissatisfaction are likely outcomes. This is already evident among the Navy Frigate community, which is also subject to minimised Organic Maintenance. The practice of providing trade qualifications as a recruiting tool should either be revisited or meaningful work should be provided ashore, as recommended in the Strategic Review of Naval Engineering.

9.3.3 Largs Bay The Government has recently purchased Largs Bay to fill the capability gap created by the early decommissioning of Manoora. The Team considered that this procurement falls within the intent of the Terms of Reference and therefore sought information from both the DMO Project staff and the Defence Joint Amphibious Capability Implementation Team.

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At this stage the Largs Bay project is primarily focussed on the acquisition process. The logistic support concept and maintenance concept are yet to be finalised and agreed. However, it seems that the issues that affected the long‐term support of the LPAs are not evident in the procurement of Largs Bay.

The ship will undergo re‐certification to confirm its adherence to UK Ministry of Defence standards before delivery. Initial observation by Australian Navy staff indicates that configuration management, planned maintenance and logistics support data is current and readily available through the ship’s Information Management System. The ship is In‐Class with Lloyds Register.

Initial analysis shows that the ship’s crew will have the capacity to complete all Organic Maintenance within the time allocated. The first crew has been identified and is currently being posted for training ahead of joining the ship.

While in‐service support arrangements have yet to be established, the proposed support methods align with this plan.

Figure 19: Largs Bay

The sustainment of Largs Bay will not be the responsibility of Amphibious and Afloat Support SPO. This is an appropriate decision whilst that SPO is being rebuilt, but it should be redressed at a later date with the allocation of appropriate resources.

9.3.4 Combined Resource Effect of New Capabilities The transition of the LHDs and AWDs into service will have substantial resource implications on Navy and DMO. This is not only because of the parallel operation with the fleet in being, but also because of the much higher resource requirements on these larger and more complex replacements. The estimated increase in resource demand for Navy and DMO (maritime) over the period 2011–12 to 2017–18 is in the order of 400. Whilst this is only three percent of the combined maritime workforce, there are a number of additional

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pressure points that, when considered holistically, mean that the Team is not confident that Navy and DMO has the capacity to manage the transition period. These factors include:

• The need for Navy to fully deliver on its recruitment and retention targets to meet the existing demand.

• The additional resources required:

for the LHD, AWD, Largs Bay and new submarines;

to address the Causal Factors in the Amphibious and Afloat Support SPO, see Section 7.5.1;

to address the ‘hollowed‐out’ Navy engineering function, see Section 7.4;

to improve capability management by the Groups, see Section 5.3.2;

to reduce the backlog of maintenance and engineering tasks for other parts of the fleet, see Section 9.2; and

to fill all Navy positions in DMO over the transition period18.

In addition, the Team is also not confident that Navy and DMO (maritime) will have the required skills and experience required. This is particularly the case at the ranks of petty officer, chief petty officer, lieutenant and lieutenant commander. This will not be resolved in the short‐term.

As a result of these factors above, the Team has included a recommendation to Confirm Defence Capability Plan (DCP) (Maritime) Resourcing with the other recommendations from this chapter at 9.4. It is important to note that slowing down delivery of the Defence Capability Plan (DCP) would degrade capability and exacerbate the sustainment challenges and therefore, alternative offsets may need to be identified.

9.4 Recommendations The recommendations below will quantify the current engineering and maintenance backlog for other vessels in the Fleet and ensure that Defence has sufficient resources to meet the demands of the maritime component of the Defence Capability Plan.

Recommendation 22 Quantify Maintenance and Engineering Backlog

To set a firm foundation for remedial action, the Chief of Navy should commission an independent audit to accurately quantify the maintenance and engineering backlog across the fleet.

Recommendation 23 Confirm DCP (Maritime) Resourcing

Given the evident strains of today, Defence and DMO should confirm to Government that they will have sufficient resources and skills to operate and maintain materiel that is committed for naval service over the next ten years.

18 As of 31 May 2011, there is a predicted supply shortage by Navy of up to 36 positions in DMO.

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Chapter 10 PLAN FOR IMPLEMENTATION

10.1 Reforms Already Underway The Terms of Reference require the Team to develop a ‘plan to reform the practices that led to the early decommissioning of Manoora and the extended unavailability of Kanimbla’. Successful implementation of the recommendations of this plan and other related reviews will significantly reduce the likelihood that a similar situation will occur with other ships in the Fleet.

In order to resolve the long‐standing issues identified, personal commitment will be required from senior stakeholders, additional resources must be assigned and strong governance arrangements established. These must endure beyond the current leadership.

Table 2 lists several of the reviews and reports that are relevant to the Causal Factors. The table also provides guidance on which recommendations were most relevant to the findings of this review. A responsible authority to coordinate the findings of each has been identified. However, there is a need for an overarching governance arrangement to ensure that the findings are given momentum in the short to medium term. This is proposed in Section 10.2.

In the specific case of the Strategic Reform Program, the results required from that reform may conflict with the increase in resources needed to address this plan. Defence will therefore need to make the resource trade‐off decisions necessary.

Table 2: Relevant Reviews and Reports

Review Relevant Recommendations Responsible Authority

Strategic Review of Naval Engineering

12 Nov 2009

Recommendations that relate to:

• Navy maintenance and engineering policy

• Navy Integrated Logistic Support policy

• Navy risk management

• Configuration management in Navy and DMO

• Fleet Support Units

• Navy technical training

• Classification Societies

Head Navy Engineering

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Helmsman Sustainment Complexity Review

July 2010


• Performance based contracts

• Sustainment Manager roles in DMO

• Asset Management methodology and skills

• Improved information management systems

General Manager Systems (DMO)

HMAS Success Material State Technical Investigation

March 2010


• Navy and SPO resourcing

• Approval of deviations

• Rapid approval of engineering changes

• Navy technical education and training

• Maintenance Requirements Analysis

• Importance of Preventative Maintenance

• System condition assessments

• Certification processes and resourcing

• Engineering culture

Surface Force Commander (Proposed)

Configuration Management Improvement Project

9 Sept 2010


• Data alignment and accuracy

• Common Information Management systems

• Standard Operating Procedures

• Configuration management training

Director‐General Maritime Support (DMO)

Navy Engineering Workforce Review

17 November 2010

Recommendations related to:

• Navy civilian engineering workforce resourcing

• Navy engineering workforce training

• Navy engineering 2 star appointment

• Reinvigorating maritime standard DEF Aust 5000

Head Navy Engineering

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Report into Amphibious and Afloat Support System Project Office

Aug 2010


• Additional resourcing for Amphibious and Afloat Support SPO

• Career management in Amphibious and Afloat Support SPO

Head Maritime Systems (DMO)

KPMG Materiel Sustainment Agreement Review

July 2010

The creation of more effective Key Performance Indicators for Materiel Sustainment Agreements

Director‐General Governance & Assurance (DMO)

DMO Sustainment Business Model Project Terms of Reference

14 April 2011

Delivery of a formal sustainment methodology for DMO and Navy

General Manager Systems (DMO)

HMS Directive 1/2011: Directive to Mr Alan Evans—Reconstruction of AASSPO Systems and Processes

8 Feb 2011

Amphibious and Afloat Support SPO business process reengineering and regeneration of the business unit

Head Maritime Systems (DMO)

Review of Configuration and Maintenance Management

8 Dec 08


• Configuration baseline for amphibious ships

• Common maritime Integrated Logistic Support information management systems

• Pool of Navy and Navy Reserve personnel with good condition monitoring skills

• Update to Navy Technical Regulatory System

Director‐General Maritime Support (DMO)

Seaworthiness Board Report—LPA

22 September 2010

All outstanding LPA Seaworthiness Corrective Action Requirements

Head Navy Personnel and Reputation

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A Review into the Underlying Causes leading to the Operational Pause for the LPA Class (HMA Ships Kanimbla and Manoora)

Dec 2010


• Navy regulatory compliance

• Licensing and assurance

• Cultural change in Navy

Head Navy Personnel and Reputation

Defence Procurement and Sustainment Review (Mortimer)

18 Sept 2008

Recommendations related to:

• NPOC estimates should be reviewed annually

• Further develop KPIs in Materiel Sustainment Agreements

• Base procurement decisions on through‐life costs

Senior Advisor Review & Analysis (DMO)

10.2 How to Effect the Recommendations of this and other Relevant Reviews

10.2.1 Timeline and Accountable Authorities The plan is presented in a modular form, picking up major themes for change. Resource requirements and impacts have not been scoped due to second order consequences and the trade‐off decisions necessary for resource allocation.

Implementing this plan will require substantial change in Navy and, to a lesser extent, DMO. It will not be easy and will need strong, committed and enduring leadership accompanied by effective oversight.

Whilst Chief of Navy and Chief Executive Officer DMO will have ownership of many of the actions identified, one prerequisite for delivering this change is to identify responsible and accountable authorities for the successful delivery of individual recommendations. Recommendation 24 in Section 10.3 addresses this requirement, which needs to be supplemented with an oversight arrangement, as described in Section 10.2.2.

As displayed in Figure 20 below, indicative timelines have been developed for each recommendation (based on urgency and dependency). In this context, short‐term is defined as less than six months, medium‐term is between six and eighteen months and long‐term is over eighteen months.

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Figure 20: Reform Implementation Timeline

10.2.2 Driving the Implementation The Terms of Reference require oversight of the early stages of implementation. The Team has examined existing boards and committees within Defence to identify a suitable forum. Amongst others, the Defence Strategic Reform Advisory Board and the Defence Audit and Risk Committee were both considered, but neither have the appropriate membership or focus to provide the best oversight. Therefore it is recommended that a temporary, Implementation Committee be established with a sunset life of eighteen months, with Mr Paul J Rizzo appointed as the independent chair to ensure continuity and delivery (see Section 10.3). The Committee will oversee implementation of the recommendations in this plan and the existing reform activities outlined in Section 10.1. The membership should comprise the Chief of Navy, and Chief Executive Officer DMO as the primary owners of the outcome, and Deputy Secretary, Strategic Reform and Governance as the responsible authority for the Strategic Reform Program. The Committee should report to the Secretary, and the Chief of the Defence Force through updates following each meeting. The Secretary and Chief of the Defence Force should, in turn, provide six‐monthly updates to the Minister for Defence and Minister for Defence Materiel on progress against this plan. Secretariat support should be provided by the Strategic Reform and Governance Executive, with assistance as required from Chief of Staff, Maritime Systems Division. After eighteen

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months, Deputy Secretary, Strategic Reform and Governance will continue the oversight function.

10.3 Recommendation The following recommendation will help ensure that Defence and DMO implement the early stages of this plan and other related outstanding actions.

Recommendation 24 Drive the Reform Program

Defence should establish an Implementation Committee to drive early‐stage delivery of the reforms. There are two important enablers:

• the Committee should consist of Chief of Navy, Chief Executive Officer Defence Materiel Organisation, Deputy Secretary, Strategic Reform and Governance and Mr Paul J Rizzo as the independent chair.

• at the first meeting, Defence and DMO should present the list of proposed responsible officers for the implementation of the recommendations.

10.3.1 Supplementary Suggestions In addition to the formal recommendations contained in this review, the Team also made several observations that if addressed will deliver further benefits. These are summarised in the following table.

Table 3: Supplementary Suggestions

No Reference / Section

Suggestions

1 4.3.3 Develop a process whereby the approval authority for the deferral of a maintenance availability period is the Fleet Commander, acting on the advice of the Chief Engineer in the SPO. This responsibility should not be delegated.

2 5.3.4 One important but difficult change would be to increase the length of the Navy posting cycle in order to increase skills and knowledge for some of the more complex DMO roles.

2 5.3.5 Develop metrics within the Materiel Sustainment Agreements and other Service Level Agreements that address the clearance of Urgent Defects, planned and corrective External Maintenance, temporary deviations and engineering changes. Importantly they should contain a mix of both lag and lead indicators.

3 6.3.1 Update documentation supporting Navy Technical Regulations. This needs to make clear reference to the need for risk assessment to occur in an holistic manner.

4 6.3.2.2 Initiate a maintenance close‐out meeting involving senior operations and technical staff prior to the ship sailing. The ship's operational program needs to be amended to accommodate this.

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No Reference / Section

Suggestions

5 7.2.8 Develop and deploy a ship licensing system to provide greater levels of assurance of a ship’s condition and preparedness.

6 7.4 Review the workforce requirements of the following organisations:

• Directorate of Navy Engineering Policy,

• Directorate of Technical Regulation—Navy,

• Directorate of Navy Platform Systems,

• Directorate of Navy Warfare Systems, and

• Engineering Division in Fleet Command.

7 7.5.2 Re‐establish proactive engineering practices to deliver condition‐based maintenance and reduce through‐life costs.

8 9.3 Navy to provide eighteen uniformed personnel to the LHD SPO as agreed.

9 9.3.1.2 In preparation for the delivery of Largs Bay and the LHD, Navy and DMO should provide training and education in the maintenance of High Voltage equipment.

10 9.3.1.2 DMO to review the provision of LHD training facilities to avoid the risk of an Organic Maintenance shortfall.

11 9.3.2.2 Navy to closely monitor the progress of ongoing operator and maintenance task analysis of both the LHD and AWD to ensure that crewing numbers are optimal.

12 9.3.3 When the Amphibious and Afloat Support SPO has been rebuilt, it should assume responsibility for the sustainment of Largs Bay.

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Annex A—Terms of Reference Advice on the Landing Platform, Amphibious (LPA) Class of Ships, HMAS Ships Manoora and Kanimbla of 9 February 2011, provided to the Minister for Defence by the Secretary of Defence and the Chief of the Defence Force, identified a number of causal factors that led to the early decommissioning of the Manoora and the extended unavailability of Kanimbla.

The factors identified may also have contributed to temporary unavailability of the Tobruk in February 2011, and may have also adversely affected the maintenance and sustainment of the other support units (The amphibious and afloat support ship component comprises five ships—HMA Ships Manoora, Kanimbla, Tobruk, Success and Sirius).

To implement essential change in the management and repair of the units, an Independent Team headed by Mr Paul Rizzo will develop a plan to reform these practices, and oversee early stage implementation of those reforms.

Mr Rizzo will be supported by Air Vice Marshall Neil Smith (rtd) and Rear Admiral Brian Adams (rtd) who have relevant experience in Defence administration, engineering, maintenance, logistics, systems engineering, safety certification and the operation and support of amphibious ships.

Many of the causal factors identified have been, or are being, addressed by substantial reform initiatives underway in the Australian Defence Organisation as a result of:

• the Strategic Review of Naval Engineering;

• the operation of the new Seaworthiness Board; and

• the Strategic Reform Program.

Mr Rizzo’s Team will address the causes of the problems facing the availability of the amphibious and support ships, in the context of reforms already underway.

The Team will also consider how these reforms should be applied to the maintenance and sustainment of other naval vessels.

The Team will also consider the maintenance concept being developed for the new Air Warfare Destroyer and the Landing Helicopter Dock, to ensure its suitability to sustain these vessels for whole‐of‐life.

The Team will focus on the causal factors already identified and any other factors it considered played an influence in the current condition of amphibious and afloat support ships.

The Team will consult with relevant members of the Australian Defence Organisation, the ship maintenance community and the contracting community.

An initial report will be prepared for consideration by the Minister for Defence and the Minister for Defence Materiel within three months of commencing work. At that time, Mr Rizzo will recommend whether further reports are required.

The Team will be supported by a small secretariat located in the Office of the Secretary and the CDF in the Department of Defence.

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Annex B—Causal Factors Contributing to the Unavailability of the Navy’s Two LPAs

1. This report reviews the contributing factors leading to the early decommissioning of HMAS Manoora and the extended unavailability of HMAS Kanimbla. The two ships were purchased from the US in 1994, after a $500m project to acquire a dedicated training and helicopter support ship was cancelled. Both ships subsequently undertook further modifications in a lengthy and problematic Conversion Project between 1996 – 1999. Since commissioning into the Royal Australian Navy, the ships have been used in support of operations in the Persian Gulf in 2001‐2003, support to the Indonesian Tsunami response effort and contingent operations off Fiji in 2006. They are now 40 years old.

2. When the LPAs were purchased a complete set of logistics products was not acquired. It is likely it did not exist within the US Navy. Accordingly the baseline to manage maintenance and configuration was inconsistent and not readily usable. During the conversion Project this proved problematic and on completion an updated set of logistic products still did not exist and the foundation for future maintenance support and configuration management was weakened. Today’s problem thus stemmed, in part, from the initial purchase of the vessels in a poor state. Efforts to remediate this shortcoming have, over the years, never properly succeeded through lack of resources or pressure to keep the ships running to meet emerging operational requirements.

3. The drive for efficiency and caps on APS and uniform staffing levels in Defence over many years has meant a greater need to outsource many critical functions to Industry. The drive for greater Defence efficiency is essential, but in some cases the resulting outsourcing of deeper maintenance requiring high level skills and experience has been outsourced, resulting in a loss of professional skills within Navy and Defence Materiel Organisation (and possibly more broadly across Defence), an inability to internalise the knowledge of some critical components of our business, and in some cases greater cost. This has worked to the detriment of technical skills and competencies.

4. In 2009 the Chief of Navy initiated a new concept called the Seaworthiness Board, a concept modelled on the successful Airworthiness Board implemented by RAAF some years ago. It serves as a long overdue means of providing an independent review of maritime systems outside the dedicated Safety Management System. This review provides the Chief of Navy, in his role as the ADF Sea Worthiness authority, with an independent verification that he can safely operate a ship in its intended role, contributing directly therefore to the safety of our people. The current state of the ships came to light in September 2010 when the Seaworthiness Board reviewed the LPAs.

5. The Seaworthiness Board revealed a significant level of aggregated risk for the LPAs as a result of shortcomings in areas including manning levels, training loads, experience, maintenance, integrated logistics support and configuration management. Subsequent to that board the Chief of Navy directed that the ships enter an operational pause in late September 2010.

6. A review of the factors resulting in that decision identified systematic and cultural problems. This was evidence of a ‘can do’ and ‘make do’ culture, a lack of conformance to assurance processes, a perception that surface ships are not subject to the same level of risk

Original Signed by

I J Watt

Secretary

9 February 2011

Page 88 of 96

as submarines and aircraft, a perception that LPAs were second tier ships and that there were insufficient resources to address shortcomings.

7. In 2009 a Strategic Review of Navy Engineering commissioned by the Chief of Navy and led by AVM Julie Hammer (Ret), immediate past president of the Institute of Engineers Australia, highlighted a number of organisational shortcomings and recognised the need for reform in the Naval Engineering Sector. A remediation plan was initiated in early 2010 and, combined with the New Generation Navy’s cultural change program, reform is underway.

8. In the DMO, competence in the Systems Program Office (SPO) had fallen well beyond an acceptable level. Staffing levels and expertise in the SPO have varied significantly across the last 10 years. In December 2006 the Naval Technical Regulating Authority removed the authorised engineering certification from the SPO on the basis that adequate processes to ensure conformance with regulatory requirements were not in place. Certification was reissued in May 2008 but it is now evident that the SPO is once again unable to meet all of its technical regulatory requirements through a lack of resources. Action is now underway to rebuild business processes and review organisational structure. A maintenance remediation program focused on critical high‐risk maintenance activities has also been ongoing since early 2010.

9. Constant change in much of Defence has inadvertently helped to mask, rather than highlight the indicative signs that all was not well with the LPA Class. The recent Seaworthiness Board provided a focus on the situation that was not previously evident through the complex Naval operating and regulatory systems. The awareness of the situation, the ability to resolve the deficiencies within the life of the LPA Class and Navy’s governance obligations led swiftly to a decision to cease any further investment in Manoora and concentrate all efforts and resources on Kanimbla.

10. The LPA story is a protracted and not always happy one. Many of the seeds of the problems now faced were sown long ago. While the current situation is unpalatable, the decision to invoke an operational pause was correct and necessary. Had this not occurred it would not be unreasonable to predict an increased risk of a repeat of a Sea King sort of accident in 2005, which killed 9 of our ADF people. Navy has learnt from that accident, understands the enormous challenges of cultural reform, and Defence has a number of initiatives underway to remediate current shortcomings.

Original Signed by

A.G. HOUSTON

ACM

CDF

9 February 2011

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Annex C—Stakeholders Consulted DEFENCE

Air Chief Marshall Angus Houston Chief of the Defence Force

Dr Ian Watt Secretary, Department of Defence

Mr Brendan Sargeant Deputy Secretary, Strategic Reform and Governance

Mr Phil Minns Deputy Secretary, People Strategies & Policy

Mr Geoffrey Brown Chief Audit Executive

VADM Russell Crane Chief of Navy

RADM Stephen Gilmore Commander, Australian Fleet

AIRCDRE Anker Brodersen Director General, Defence Preparedness Branch, VCDF Group

CDRE Stephen McDowall Commander, Surface Force

CAPT‐RAN Michael Finlayson Acting Head Navy Engineering

CAPT‐RAN Andrew Fysh Amphibious & Afloat Support Group Capability Manager

CAPT‐RAN Stephen Basley Director Strategic Reform of Naval Engineering

CAPT‐RAN Colin Dagg Chief Staff Officer (Engineering)

CAPT‐RAN Jacqui King Director General, Navy Certification and Safety

CAPT‐RAN Mark Kellam Director RAN Test Evaluation and Analysis Authority

CAPT‐RAN Braddon Wheeler Director Air Warfare Destroyer Capability Implementation Team

CAPT‐RAN Brad White Director Joint Amphibious Capability Implementation Team

Mr John Colquhoun Executive Director Navy Platform Systems

Mr Gary O’Donnell Director, Navy Safety and Regulatory Program

Ms Lynne Peever Audit Director

Mr Garry Duck Principal Systems Engineer

Mr David Brinton Director – Audit Central

Mr Shaun Carmichael Operational Risk Manager, Amphibious & Afloat Support Group

Ms Gaye Lindfield Audit Manager

Ms Theresa Jones Senior Auditor

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CMDR Graeme Pedley Chief of Staff to Commander of Mine Warfare, Clearance Diving, Hydrographic, Meteorological and Patrol Force (COS MHPFOR)

CMDR Paul Scott Commanding Officer HMAS Tobruk

CMDR Brendon Zilko Commanding Officer (CO) HMAS Kanimbla

CMDR Greg Swinden Supply Officer, HMAS Kanimbla

CMDR Colin Pryde Director Seaworthiness Co‐ordination

CMDR Graham Williams Fleet Marine Engineering Officer (FMEO)

CMDR John Renwick Commander, Test & Evaluation

CMDR Ben Favelle Deputy Director Air Warfare Destroyer Capability Implementation Team

CMDR Stuart Taylor Deputy Director Landing Ship Dock Capability Implementation Team

Mr David Page Assistant Director, Certification Policy and Requirements

Mr Frankie Lum Senior Auditor

LCDR Ben Hissink Executive Officer (XO), HMAS Kanimbla

LCDR Stephen Langridge Engineering Officer (EO), HMAS Kanimbla

LCDR Sean Feenan Engineering Officer HMAS Tobruk.

DMO

Dr Stephen Gumley Chief Executive Officer

Mr Warren King Deputy Chief Executive Officer

Ms Shireane McKinnie General Manager Systems

Ms Jane Wolfe General Manager Reform and Special Projects

RADM Peter Marshall Head Maritime Systems Division

AVM Chris Deeble Program Manager Collins and Wedgetail

Mr Peter Lambert Head Human Resources & Corporate Services, DMO

Mr Andrew Cawley Program Manager, Air Warfare Destroyer

CDRE Michael Houghton Director General Major Surface Ships Branch

CDRE Mark Sander Director General Future Submarines Program

CDRE Bob Richards Director General Maritime Support

CDRE Steve Tiffen Air Warfare Destroyer Deputy Program Manager ‐Materiel

AIRCDRE Brendan Betchley Director General Logistics Information Systems Branch

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Mr Alan Evans Director General Specialist Ships Branch

Ms Wendy Messer Senior Advisor Review and Analysis

CAPT‐RAN Adam Grunsell Director Amphibious & Afloat Support SPO

CAPT‐RAN Katherine Richards LHD Sustainment Director

CAPT‐RAN Steve Pearson Air Warfare Destroyer Capability Development Director

GPCAPT James Hood Officer Commanding Airborne Early Warning Control Systems Program Officer

Mr Jonathan Anglin Director Smart Sustainment Partnering

Mr Peter Priddle Director Logistics Systems Project Office

CMDR Tim Mahony Director, Maritime Sustainment Support

Ms Loreena Wootton Acting Director, Systems Group Improvement Team

LCDR Mark Stone‐Tolcher Manager, Maintenance Systems

INDUSTRY

Mr Robin Madders Program Manager, Amphibious and Afloat Support SPO – Integrated Materiel Support (Rolls Royce Australia Services)

Mr Phil Baldwin Engineering Manager , Amphibious and Afloat Support SPO – Integrated Materiel Support (Rolls Royce Australia Services)

Mr Chris Edwards Global Vice President, Business Development and Channels (Mincom)

Mr Chris Lloyd Vice President, Naval (Thales Australia)

Ms Hellen Georgopoulos Senior Advisor to the Vice President, Naval (Thales Australia)

Mr Mark Thomson Program Director, Budget and Management Program (ASPI)

Mr Ian Peacock Principal Surveyor Manager Sydney Maritime, Det Norske Veritas (DNV)

Mr Rodney Humphrey Business Development Manager, Det Norske Veritas (DNV)

Mr Don Polman Air Warfare Destroyer Platform System Support Manager, ASC Shipbuilding

Mr Eugene Librandi Air Warfare Destroyer Integrated Logistics Support Manager, ASC Shipbuilding

Mr Mick Edwards Air Warfare Destroyer Combat System Technical Specialist, Raytheon Australia

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Annex D—Submissions Received

Jason Carter FSU Sydney Fire Control, Fleet Support Unit, HMAS Kuttabul

William Doran Australian Super Hornet Project

CDRE Grant Ferguson Support for Wounded Injured or Ill Project SWIIP Occupational Health Safety and Compensation

CMDR Philip Gregory Capability Integration, SURFORCOM

Peter Hodel Senior Contracts Officer, Corporate Management Branch Headquarters Forces Command, Victoria Barracks

RADM Peter Jones Head ICT Operations, Capability Development Group

Stephen Langridge Engineer Officer, HMAS Kanimbla

David Narula Program Manager SRP, Centre for Maritime Engineering

CMDR Ramon Rees Asst Production Manager, HMAS Success IMO Project

Stephen Sharp Technology Manager Control and Navigation, NAVSTRATCOM

Ted Walsh Preparedness and Compliance Manager, SURFORCOM

PO Brendan Wilson Royal Australian Navy Diesel Inspector, Fleet Support Unit

Mark Gairey PD Future Submarine, Future Submarine Program Office

CMDR Mark Proctor Deputy Director, LHD Systems Program Office

David York Director, Centre for Maritime Engineering, Maritime Support Branch, Maritime Systems Division

Arthur Boyd Director, Forward Horizons

Brent Clark Head of Business Development, BAE Systems Australia

Philip Clark Warrandyte, VIC

Andrew Fazel Defence Systems Manager, UGL Infrastructure

Bevan Gardner Senior Electrical Consultant, Burness Corlett Three Keys Australia

Greg Hodge Chief Executive Officer, DMS Maritime

Zoran Jaksic General Manager, Burness Corlett Three Quays Australia

Bruce James Chief Executive, Resources and Energy Transfield Services Australia Pty Ltd

Craig Lockhart Chief Executive Officer, Babcock Pty Ltd

Bev Lyttle Executive Manager, Beak Engineering

Michael McLean Managing Director, McLean Management Consultants

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Gary Moran Manager, Gryphon International Australia

David Parmeter Managing Director, Teekay Shipping Australia

Doug Roser Chairman, Australian Society for Defence Engineering

John Simmons Kambah, ACT

Robert Simpson Global Lead—Naval Ships, Lloyd's Register

Chris Williams Director, H I Fraser Group

LEUT Andrew McNeill Land Systems Division, DMO

Noting that public submissions were to be treated as In‐Confidence, the above individuals/organisations have agreed to have their details disclosed in the report. In addition, three submissions have been received from undisclosed individuals.

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Annex E—Acronyms

ADF Australian Defence Force

AWD Air Warfare Destroyer

DCP Defence Capability Plan

DMO Defence Materiel Organisation

ICT Information and Communications Technology

LHD Landing Helicopter Dock

LPA Landing Platform Amphibious

SPO System Program Office

plantoplanto reform supportship repair and management practices paul j rizzo—july 2011 "it is...

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