FORMATION OF DEFENCE MATERIEL ORGANISATION COMMERCIAL GROUP

Driving commercial reforms in DMO, in partnership with industry, are the primary objectives of the Commercial Group.

Defence Watch Seminar at the National Press Club on Thursday, 16th September 2010.

Speakers:

Commercial Group - Mr Harry Dunstall, General Manager
Mr Dunstall will overview the structure and function of the new Commercial Group

Commercial Enabling Services - MAJGEN Tony Fraser, Division Head
Commercial Enabling Services provides contracting, financial investigation and quality assurance services and coordinates the development of DMO acquisition and support strategies.

Commercial and Industry Programs - Mr Terry Whelan, Head, Export Programs and Industry Engagement
Commercial and Industry Program, headed by Mark Reynolds, will drive the delivery of export and industry programs that enhance the long term viability of industry to support the Australian Defence Force

Office of Special Counsel (OSC) - Mr Harry Dunstall, General Manager, Commercial
OSC provides strategic legal advice to the Chief Executive Officer and the DMO Executive and drives the procurement and contracting reforms, including the simplification and standardisation of DMO’s commercial practice and processes, to reduce the time and cost of procurement for industry and Defence.

The Commercial Group has three key executive teams:

To view a copy of the Commercial Group organisational structure, click here 

a.   Commercial Enabling Services (HCES), headed by Major-General Anthony Fraser, who is currently acting in this position, will oversee the provision of contracting, financial investigation and quality assurance services.  MAJ GEN Fraser will also coordinate the development of DMO acquisition and support strategies to ensure there is earlier and better consideration of cost and industry capacity in the capability development process. MAJ GEN Fraser is currently performing a dual role as Head Program Control & Assurance in addition to Acting HCES.

b.   Commercial and Industry Programs (HCIP), headed by Mr Mark Reynolds, will drive the delivery of export and industry programs that enhance the long term viability of industry to support the Australian Defence Force Mark will also oversee an enhanced capacity to undertake economic modelling, intelligence and analysis of defence industry to better benchmark industry capabilities, performance, profitability and future capacity. Mark will be the focal point for strengthening DMO’s relationship with defence industry.

c.   Office of Special Counsel (OSC), currently headed by Mr Peter Gosling, provides strategic legal advice to the Chief Executive Officer and the DMO Executive.  Additionally, OSC will continue to be responsible for driving the procurement and contracting reforms, including the simplification and standardisation of DMO’s commercial practice and processes, to reduce the time and cost of procurement for industry and Defence.. The new group also incorporates the functionality of the DMO Cost Estimation and Assurance team and the DMO Supplier Quality Assurance Services directorate.

General Manager of the Commercial Group, Harry Dunstall, spoke to the DMO Bulletin about the establishment of the Commercial Group. 

The creation of a General Manager, Commercial position was one of the Defence Procurement and Sustainment Review (Mortimer Review) recommendations agreed by Government in 2009. Mr Mortimer envisaged that the new position would be critical to “achieve a more business-like focus throughout the DMO and to improve the performance of DMO’s business areas”. 

The DMO has taken the opportunity to consolidate existing business units from Industry Division, Office of Special Counsel and the Defence Export Unit within the Commercial Group.  “You can look at the new Commercial Group role in three ways,” Harry said.

“We need to be looking up the line in terms of DMO’s role in the capability development process and in providing high quality advice to Government, and we need to be looking out in terms of our partnership with industry suppliers and our shared responsibility for reform and efficiency. We also need to be looking inwards at our own processes, our skilling programs and strengthening the commercial outlook of the services we provide within DMO and Defence.” 

“The challenge for me and my people is that all of these three views of our business are equally important – none of them can wait while we focus on the others.”

“Consideration of the acquisition strategy options for major projects is a major priority for Government, and yet this is an area that has been under-estimated or not given sufficient attention in the past. We also need to provide more comprehensive advice to Government on the long-term impacts on industry of the various capability options and related acquisition strategies.” 

“Capability delivery support is a strong focus of the new organisation structure, and this will assist DMO to influence early phases of the capability development lifecycle,” Harry said.  

“Cost Estimation and Assurance and Supplier Quality Assurance are vital to the new Commercial Group and will be joined by elements of the Australian Industry Capability Program and Priority Industry Capability Program.”  

“Since its establishment the Office of the Special Counsel (which previously comprised DMO Legal and Procurement and Contracting Branch) has been a strong contributor across a broad range of DMO outcomes including increased leveraging of industry business acumen, maintaining momentum of procurement reform and increased levels of standardisation. The restructured OSC will have a key role to play in the future success of the new Commercial Group,” Harry said.  

Meantime, innovation is the driver behind co-locating policy development and commercial policy guidance to DMO stakeholders. “This brings together the key service areas identified in the Mortimer reforms and provides a common focus – commercial policy,” Harry said. “The aim will be to balance policy requirements, business acumen and commercial realities within the guidance, tools and professional development of DMO and industry.”  The intent of the reorganisation of functions is to enhance the delivery of advice and of programs rather than to reduce total employee numbers.  

“In respect of the delivery of contracting services, the key changes relate to re-shaping the contracting officer workforce to building a more sustainable and balanced structure and to help our people grow the skills needed for a long term career within the procurement and contracting job family. Our aim is to provide appropriate promotional and development opportunities to support officers from a whole-of-career perspective,” Harry said.  

“Professionalisation is a primary enabler of more business-like outcomes across the Commercial Group. Co-location of strategic commercial, legal and policy functions will ensure effective linkages between policy guidance upstream and commercial operations downstream in the capability procurement lifecycle.”  

New Structure now in place:  

The key organisational changes to take effect from 2 August are as follows:  

• Commercial policy and practice has been consolidated into a branch under the Office of Special Counsel (OSC) in recognition of the need to integrate and develop holistic legal and commercial policy and standardised practices. The placement of this function under OSC recognises the need for legal sign off on our procurement, contracting and commercial policy and products.  

• A new SES2 position “Head Commercial Enabling Services” has been established to oversee the development of DMO acquisition strategies throughout the capability development process, and to support the CEO in providing independent advice to Government on costs, schedule, industry capacity and other commercial risks of proposed new military equipment acquisitions.  

• The core of the former Procurement and Contracting Branch, including Financial Investigation Services, will continue to provide contracting services under the Chief Procurement Officer, DMO (formerly DGPCB).  

• A new directorate has been formed to take responsibility for the overall coordination of DMO acquisition and support strategies.  

• The professionalisation function is to be placed inside the Commercial Policy and Practice Branch as the Directorate of Commercial Professionalisation. This will enable the specialist development of new job families and professionalisation pathways across all the Commercial Group functions.  

• Export programs, industry engagement and economic and commercial analysis come together in a Commercial and Industry Program function. This will encompass domestic and international relationships, industry programs and engagement with industry. Priority Industry Capabilities and Strategic Industry Capabilities will be monitored while economic modelling, intelligence and analysis of Defence industry will be undertaken.  

• A new Commercial Innovation and Practice Directorate has been created to explore and drive innovation, while the Defence Export Unit and Industry Division’s international engagement directorates have been brought together in recognition of their common business outcomes and stakeholder alignment.  

• CONDMAT London and DEFMAT Washington will continue their critical roles in liaison and direct procurement activities on behalf of systems divisions.  

• A new Australian Industry Capability Implementation Unit will inject Australian industry requirements and industrial realities into DMO support and acquisition strategies.