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Improvement Initiatives

Commercial Support Program

The Commercial Support Program is Defence's primary mechanism for undertaking competitive tendering and contracting. The program, which began in 1991, aims to ensure that support services are provided to Defence in the most cost-effective manner. Services are contracted out when it is operationally feasible, a viable market exists and industry can demonstrate better value for money.

The Commercial Support Program includes activities that were carried over from the Defence Reform Program, which officially closed on 30 June 2000. Examples are the Defence Integrated Distribution System and ADF Health Services activities.

The Defence Employees Certified Agreement 2002-2003 facilitates the application of the Commercial Support Program in Defence. The agreement covers all market testing and any other competitive tendering or equivalent processes that may result in the contracting out of a Defence civilian activity.

Table 4.1: Status of the Commercial Support Program as at 30 June 2003
CSP evaluation decisions made 120
Commercial contracts 81 (68%)
In-house options 32 (27%)
Status quo retained 7 (6%)
Number of positions tested 15,935
Mean projected annual savings(1) 31%
Total value of Commercial Contracts and In-house Options(2) $5,935.4m
Notes
  1. Savings, values and positions tested are based on information provided at the time of decision announcement. |
  2. Total value of contracts covers the full term of the contracts.
Table 4.2: Activities Under Way
Activity Name Status
Defence Integrated Distribution System Preferred contractor announced on 30 July 2003, contract negotiation is continuing
ADF Health Services in Victoria Contract negotiations(1)
ADF Health Services in Australian Capital Territory and Southern New South Wales The Commercial Support Program tender evaluation did not recommend a single tenderer, alternative contracting options are being considered to achieve efficiency savings
Note
  1. Contractor subsequently withdrew from negotiations.
Table 4.3: Activities to be Progressed or Considered
Activity Name Status
ADF Health Services in Northern Territory Activity and rationalisation review to be carried out
ADF Health Services in Queensland Activity and rationalisation review to be carried out
ADF Health Services in South Australia Activity and rationalisation review to be carried out
ADF Health Services in Sydney/New South Wales Region Draft activity rationalisation review report pending approval
ADF Health Services in Tasmania Activity and rationalisation review to be carried out
ADF Health Services in Western Australia Activity and rationalisation review to be carried out
ADF Rotary Wing Flying Training Scope under assessment
Anzac Ships - Fully Contracted Integrated Materiel Support Scope under assessment
FFG Ships - Fully Contracted Integrated Materiel Support Draft statement of requirement being developed
Information Technology Infrastructure Support Services - Central Office - Deakin ACT Draft statement of requirement being developed
Navy Technical Training Services Scope under assessment
Personnel Services (Corporate Services and Infrastructure Group) Functions being rationalised/restructured
Routine Pathology Services Scope to be assessed

Table 4.4: Activities not Proceeding under the Commercial Support Program
Activity Name Reason
Army Marine Commercial Support Project Insufficient generation of savings
Catering and Accommodation Services - Anglesea Barracks Hobart Activity contracted out on 14 December 2000; too small for commercial support program
Royal Military College Transport Unit To be included with other garrison support functions when they are reviewed
Amphibious Ships - Fully Contracted Integrated Materiel Support Aggregation of existing contracts