Appendix B - Consultancies and contracts : Appendixes : Department of Defence

Appendix B: Consultancies and contracts

Overview

Defence engages consultants where it lacks specialist expertise or when independent research and assessment are required. The process for selecting consultants is consistent with Defence procurement policies and the Commonwealth Procurement Rules.

Consulting contracts

In 2013–14, Defence (including the Defence Materiel Organisation) entered into 487 new consultancy contracts (359 with a value greater than $10,000) involving total actual expenditure of $33.3 million (including GST). In addition, 271 consultancy contracts remained active, involving total actual expenditure of $10.6 million (including GST).

This annual report contains information about actual expenditure on contracts for consultancies. Information on the value of individual contracts and consultancies is available on the AusTender website. Table B.1 records total expenditure in-year for consulting contracts rather than the full value of the contract.

Table B.1: Total expenditure on consulting contracts, 2011–12 to 2013–14

	2011–12 $m	2012–13 $m	2013–14 $m
Defence	61.5	37.8	38.3
DMO	5.1	2.9	5.6

Table B.2: Consultancies let greater than $10,000, by Group, 2013–14

Group	Number of contracts let	Total contract value ($)
Office of the Secretary and CDF	0	0
Vice Chief of the Defence Force Group	1	34,640
Joint Operations Command	2	94,244
Navy	1	142,808
Army	5	1,186,798
Air Force	1	528,730
Capability Development Group	0	0
Chief Finance Officer Group	3	595,500
Chief Information Officer Group	15	2,161,215
Defence Science and Technology Organisation	2	126,170
Defence Support and Reform Group	270	33,412,798
Intelligence and Security Group	15	2,592,375
People Strategies and Policy Group	17	1,770,974
Defence Materiel Organisation	27	9,226,424
Total	359	51,872,676

Contracts exempt from the AusTender

In 2013–14, Defence (including the DMO) reported a total of 173 contracts, standing offers or variations, with a total value of $273.7 million, which were subject to an exemption under the Freedom of Information Act 1982. These exemptions were generally applied under the national security provisions of the Act.

Australian National Audit Office access clauses

The Defence contracting templates include standard clauses providing for Auditor-General access to contractors’ and major subcontractors’ premises, records and accounts. Defence has identified the following contracts that were exempt from the requirement to provide Auditor-General access, totalling just over $1.9 billion.

Defence utilises the United States Department of Defense’s Foreign Military Sales program, which facilitates sales of US arms, defence equipment, defence services and military training to foreign governments. The standard terms and conditions for Foreign Military Sales do not contain ANAO access provisions.

Table B.3: Contracts that do not include the ANAO access clause

Group and company	2013–14 ($)	Purpose
Navy
Egeria Pty Ltd	201,200	Program and project management services in support of Navy information management^[1]
Egeria Pty Ltd	111,273	Information management objective and Navy management diary training^[1]
Egeria Pty Ltd	116,800	Information Management Services Group drive management^[1]
Institution of Engineers Australia	200,088	Memberships^[1]
United Kingdom Hydrographic Office	295,694	Navigation charts^[2]
Randstad Pty Limited	108,180	Business process analyst^[1]
Aquila Marine	164,455	Inflatable sailing boats^[1]
Mr Paul Rizzo	156,141	Chair, Rizzo Reform Implementation Committee^[1]
Total for the Navy	1,353,831
Army
Abco Water Systems	182,985	Hire—wastewater treatment plant^[3,4]
United States Department of Defense	13,386,840	Provision of training by the US Army^[5]
Myriad Technologies Pty Ltd	603,493	Specialist engineering support^[3,4]
BAE Systems Australia Limited	169,403	Provision of services to deliver gateway^[3,4]
Cistech Solutions	824,800	Core networking^[3,4]
G.H. Varley Pty Ltd	3,224,685	Mounted SATCOM terminal^[3,4]
M5 Networks Australia Pty Ltd	3,248,896	Research and development^[3,4]
MRB Communications Pty Ltd	281,728	Radios and equipment^[3,4]
Myriad Technologies Pty Ltd	406,588	Specialist engineering support^[3,4]
Myriad Technologies Pty Ltd	840,864	Specialist engineering^[3,4]
Saab Systems Pty Ltd	471,167	Software support services^[3,4]
Elbit Systems of Australia Pty Ltd	9,250,000	Training^[3,4]
Calytrix Technologies Pty Ltd	990,000	Radio desk-top training system^[3,4]
Georgiou Group Pty Ltd	452,985	Construction services^[3,4]
Adelaide Metal Fabrication Pty LTd	122,452	Construction of metal cubes^[3,4]
Rentokil Pest Control (Qld) Pty Ltd	200,741	Bird-proofing^[3,4]
Weymouth Sporting Solutions	125,300	Anti-gravity running machine warranty^[3,4]
Madang Resort and Kalibobo Village	318,690	Accommodation^[3,4]
Boeing Information Space and Defence	395,975	Specialist maintenance training^[3,4]
GATR Technologies Inc.	299,746	Equipment^[3,4]
Total for the Army	35,797,338
Vice Chief of the Defence Force Group
Georgiou Group Pty Ltd	1,483,250	Construction of health facilities^[1]
Georgiou Group Pty Ltd	347,336	Construction of health facilities^[1]
Australian Centre for Posttraumatic Mental Health	262,735	Mental health screening^[6]
Oakton Services Pty Ltd	714,428	Project support and reporting^[7]
Total for the Vice Chief of the Defence Force Group	2,807,749
Defence Materiel Organisation
Foreign Military Sale	112,803	Technical support services
Foreign Military Sale	154,939	Component improvement program
Foreign Military Sale	205,600	Supply and support of climate prediction software
Foreign Military Sale	219,356	Cryptographic computers
Foreign Military Sale	264,158	Foreign Liaison Office USAF office administration
Foreign Military Sale	441,669	Foreign Liaison Officer support
Foreign Military Sale	518,617	Explosive ordnance
Foreign Military Sale	607,054	Torpedo repairs
Foreign Military Sale	685,635	Explosive ordnance
Foreign Military Sale	802,292	MOVER software
Foreign Military Sale	910,885	Testing radar warning receiver
Foreign Military Sale	949,490	Procurement of various munitions for MH-60R Seahawk
Foreign Military Sale	993,778	Explosive ordnance
Foreign Military Sale	1,071,175	Specialist system training
Foreign Military Sale	1,400,094	Training missiles
Foreign Military Sale	1,899,413	Procurement of high-grade crypto equipment
Foreign Military Sale	2,019,515	Explosive ordnance
Foreign Military Sale	2,190,951	Follow-on support for AIM-9M Sidewinder
Foreign Military Sale	2,233,640	Aircraft support equipment
Foreign Military Sale	2,688,095	Electronic equipment
Foreign Military Sale	3,479,626	Repairable items and ground support equipment
Foreign Military Sale	3,993,022	Aircraft components, parts and accessories
Foreign Military Sale	4,331,018	Procurement of cryptographic equipment
Foreign Military Sale	10,162,257	Follow-on support case
Foreign Military Sale	10,442,267	In-service support services
Foreign Military Sale	14,671,796	Equipment and support for Standard Missile-2 for Guided Missile Test Set modifications
Foreign Military Sale	15,635,480	Aircraft spares and components
Foreign Military Sale	16,752,300	Missile support
Foreign Military Sale	16,778,784	Spares and support equipment
Foreign Military Sale	20,149,920	RAN fleet sustainment
Foreign Military Sale	22,358,800	Technical support services
Foreign Military Sale	26,120,125	Aircraft software system configuration set
Foreign Military Sale	27,342,290	Inventory
Foreign Military Sale	29,349,438	Explosive ordnance
Foreign Military Sale	53,221,133	Large aircraft infrared countermeasure system
Foreign Military Sale	64,130,598	Torpedoes
Foreign Military Sale	1,519,162,839	Aircraft and support
Total for Defence Materiel Organisation	1,878,450,852
Total for Defence	1,918,409,770

Notes

Contract template did not provide for access specific to audit purposes and was not manually adjusted.
Purchase of goods under MOU with an overseas agency that does not contain an ANAO access clause.
The statement, relating to templates, at the top of this disclosure only applies to the long-form contracts.
Purpose extracted from AusTender description.
Vendor controlled contract.
DVA Standing Offer panel deed did not include access provision and was not manually adjusted.
ASDEFCON contract template did not provide for access specific to audit purposes and was not manually adjusted.

Advertising and market research

During 2013–14, Universal McCann Australia conducted the following advertising campaigns: Planning and placement of campaign advertising for Defence Force recruiting including dissemination and other fees; International Fleet Review; and Naval Heritage Collection. Further information on the advertising campaigns is available at www.defence.gov.au/Publications and in the reports on Australian Government advertising prepared by the Department of Finance. Those reports are available at www.finance.gov.au/advertising/index.html.

Table B.4: Total advertising and market research expenditure, by type of agency

Type	2011–12 ($)	2012–13 ($)	2013–14 ($)
Advertising	15,471,366	11,229,656	12,436,522
Market research	1,196,990	1,260,844	2,189,402
Polling	–	–	–
Direct mail	–	11,754	22,633
Media advertising	26,491,700	21,907,228	46,929,604
Total	43,160,056	34,409,482	61,578,161

Table B.5: Total advertising and market research expenditure, by Group

Group	2011–12 ($)	2012–13 ($)	2013–14 ($)
Office of the Secretary and CDF	39,011	40,334	33,443
Navy	78,372	81,836	738,163^[1]
Army	65,411	40,969	70,044
Air Force	174,617	147,617	265,158
Intelligence and Security Group	778,748	92,640	39,185
Chief Operating Officer	80,626	–	108,806
Defence Support and Reform Group	1,222,359	458,333	128,467
Chief Information Officer Group	373,904	315,766	323,995
Defence People Group	38,827,678	32,933,303	59,606,036^[2]
Defence Science and Technology Organisation	62,618	25,985	23,068
Vice Chief of the Defence Force Group	917,068	228,675	204,036
Joint Operations Command	–	–	–
Capability Development Group	22,251	–	–
Chief Finance Officer Group	40,444	728^[3]	–
Defence Materiel Organisation	476,949	44,024	37,759
Total	43,160,056	34,409,482	61,578,161

Notes

Expenditure increased significantly in 2013–14 due to the International Fleet Review.
The change in expenditure in 2013–14 compared to 2011–12 and 2012–13 is primarily due to increased media advertising to enable Defence Force Recruiting to better compete in the Australian recruiting marketplace. The increased expenditure was funded by Defence internally.
The amount relates to recruitment advertising and was erroneously omitted in the Defence Annual Report 2012–13.

Details of the organisations paid are provided only for payments of more than $12,400 (including GST).

Table B.6: Total advertising and market research expenditure by Group

Group, type and company	2013–14 ($)	Purpose
Navy
Advertising
Spatchurst Design Associates	13,710	Advertising on banners and panels—Naval Heritage Collection
Media advertising
Universal McCann Australia	663,901	Media advertising for International Fleet Review campaign and Naval Heritage Collection
George Patterson Y&R	33,869	Media advertising for International Fleet Review campaign
Air Force
Advertising
Adcorp Australia Pty Ltd	103,841	Centenary of Military Aviation advertising
Adcorp Australia Pty Ltd	45,968	Recruitment advertising
Media advertising
Last Minute Multimedia Pty Ltd	17,394	Royal Australian Air Force Museum advertising
Intelligence and Security
Advertising
Adcorp Australia Pty Ltd	18,861	Recruitment advertising
Chief Operating Officer
Advertising
Adcorp Australia Pty Ltd	108,806	Support to the operation of the Honours and Awards Tribunal through advertisement of matters to be considered and recruitment of the Chair and Tribunal members
Defence Support and Reform Group
Media advertising
Adcorp Australia Pty Ltd	12,737	Range safety warning public notices
Chief Information Officer
Advertising
Sensis Pty Ltd	322,081	Defence directory listing in White Pages
Defence People
Advertising
George Patterson Y&R	4,576,916	ADF recruitment advertising
Young & Rubicom Brands	2,999,709	ADF recruitment advertising
Havas Worldwide Australia Pty Ltd	1,765,519	ADF recruitment advertising
Australian Public Service Commission	89,063	APS recruitment
Market research
GfK Australia Pty Ltd	665,353	Qualitative and quantitative research to maximise ADF recruitment targets
Open Mind/Hall & Partners	773,305	Qualitative and quantitative research to maximise ADF recruitment targets
Horizon Research	582,569	Qualitative and quantitative research to maximise ADF recruitment targets
Media advertising
Universal McCann Australia	38,444,900	Planning and placement of campaign advertising including dissemination and other fees
Adcorp Australia Pty Ltd	7,522,105	Planning and placement of non-campaign advertising
Defence Science and Technology Organisation
Advertising
Adcorp Australia Pty Ltd	14,141	Capability and Technology Demonstrator Program
Vice Chief of the Defence Force Group
Advertising
Adcorp Australia Pty Ltd	20,518	Non-campaign ad placement (Live Firing Range Notices)
Adcorp Australia Pty Ltd	15,344	Recruitment advertising (civilian)
Market research
Newspoll	54,225	Employer research to measure the level of awareness among employers of Reserves and Reserve Service
Newspoll	99,100	Reserve research on attitude of Reservists and their employers
University of Melbourne	14,850	Market research for the development of the Australian Defence Force Cadets Youth Development Framework
Defence Materiel Organisation
Advertising
Adcorp Australia Pty Ltd	16,132	Promote conferences
Adcorp Australia Pty Ltd	14,224	Recruitment advertising

Legal expenses—Defence

Expenditure on internal and external legal services in 2013–14 is shown in tables B.7 to B.9. Internal expenses include salaries for military and civilian staff, divisional operating costs and military justice reimbursements. External expenses are professional fees, disbursements and legal assistance at Commonwealth expense. All figures are GST inclusive.

Table B.7: Estimated expenditure on internal and external legal services, 2012–13 and 2013–14

Type of legal expenditure	2012–13 $m	2013–14 $m
Internal	41.3	41.8
External	22.2	21.3
Total	63.5	63.1

Type of legal expenditure

2012–13

2013–14

Internal

41.3

41.8

External

22.2

21.3

Total

63.5

63.1

Table B.8: Estimated cost breakdown of internal legal expenses, 2012–13 and 2013–14

Items	2012–13 $m	2013–14 $m
Salaries for military lawyers	16.3	18.5
Salaries for APS staff	13.8	13.3
ADF Reserve legal officers	7.6	6.8
Operating costs of the division	3.3	2.9
Military justice disbursements	0.3	0.3
Total	41.3	41.8

Table B.9: Estimated cost breakdown of external legal expenses, 2012–13 and 2013–14

Items	2012–13 $m	2013–14 $m
Professional fees—Defence legal panel	20.3	19.7
Disbursements	1.6	1.6
Legal assistance at Commonwealth expense	0.3	0.0
Total	22.2	21.3

Legal expenses—Defence Materiel Organisation

DMO expenditure on internal and external legal services is shown in tables B.10 to B.12. Internal expenditure includes salaries for civilian staff and operating costs that are directly related to the provision of legal services by DMO. External expenditure includes professional fees, disbursements and other legal expenditure incurred principally through the Strategic Commercial Legal Panel.

Table B.10: Estimated expenditure on internal and external legal services, 2012–13 and 2013–14

Type of legal expenditure	2012–13 $m	2013–14 $m
Internal	3.5	3.1
External	11.7	11.0
Total	15.2	14.1

Type of legal expenditure

2012–13

2013–14

Internal

3.5

3.1

External

11.7

11.0

Total

15.2

14.1

Table B.11: Estimated cost breakdown of internal legal expenses, 2012–13 and 2013–14

Items	2012–13 $m	2013–14 $m
Salaried legal staff costs	3.2	3.0
Operating costs attributable to legal services	0.3	0.2
Total	3.5	3.2

Items

2012–13

2013–14

Salaried legal staff costs

3.2

3.0

Operating costs attributable to legal services

0.3

0.2

Total

3.5

3.2

Table B.12: Expenditure external legal services, 2012–13 and 2013–14

Items	2012–13 $m	2013–14 $m
Professional fees—Defence legal panel	12.9	11.0
Professional fees—Attorney-General’s Department	–	–
Legal expenditure—other	1.0	–
Payments pursuant to licence arrangements with collecting societies	–	–
Total	13.9	11.0

Annual Report 2013-14

Chapter 3

Chapter 4

Chapter 6