The Defence Portfolio
Briefing to the Incoming Government 2002
Votes: Defence & Defence Force
Purchase Agreements
The Secretary and the CDF each negotiate a Purchase Agreement annually with the Minister. Estimates of Appropriations and Departmental Forecast Reports are also provided. The Ministry's Purchase Agreement is similar to that entered into between other chief executives and government Ministers. For the financial year 2003/2004, the Ministry and NZDF will be required to produce a Statement of Intent (SOI) in lieu of the current Departmental Forecast Reports.
The Minister purchases from the Ministry: defence policy and force structure advice, management of defence relations, auditing and assessment of the NZDF, management of NZDF equipment procurement, and defence industry advice. The Minister purchases from the NZDF: military policy advice, and the operational capabilities of the Navy, Army and Air Force. The fifteen NZDF Output Classes purchased by the Minister are detailed in the NZDF Purchase Agreement. Both the Secretary and the CDF provide quarterly reports and an annual report to the Minister on output performance and progress on key priorities.
Purchase Agreement - Ministry of Defence
The Purchase Agreement between the Minster of Defence (the 'purchaser') and the Secretary of Defence (the 'supplier') provides the Minister with information to assess the importance and value of Ministry outputs and to make comparisons with similar outputs across the public and private sectors. It sets out in broad terms the Ministry's activities for the forthcoming twelve months in the form of the Ministry's three output classes. These are:
- Output Class 1 - Policy Advice;
- Output Class 2 - Audit and Assessment of Performance; and
- Output Class 3 - Management of Equipment Procurement.
Each output class carries a description of what is being purchased by the Minister, the monetary cost of the resources linked to the output, and the work programme, targets, quantity and quality standards and timeliness associated with meeting the output class. Progress on delivering the output classes is subject to quarterly reporting.
The agreement specifies the accountability of the Secretary. The Secretary is accountable to the Minister of Defence for the delivery of the specified outputs to the quality, quantity and cost specified, and is accountable for the delivery of any part of an output class that has been sub-contracted to a third party.2 The agreement provides guidance for the Departmental Forecast Report (DFR) and the Annual Report, and also provides guidance for the Ministry's internal activities (policy and planning, acquisitions, evaluation and so on). It also provides information for the annual performance measurement exercise conducted by the SSC.
Vote: Defence
Departmental Appropriations (GST inclusive)
| Appropriations | 2002/03 Vote |
Description of 2002/03 Appropriations | |
|---|---|---|---|
| Annual $000 |
Other $000 |
||
| Departmental Output Classes (Mode B Gross) | |||
| D1 Policy Advice | 3,303 | - | Policy advice, strategic planning and the management of international defence relationships. |
| D2 Audit and Assessment of Performance | 1,877 | - | Independent evaluations of the New Zealand Defence Force, internal audits and reviews of Ministry acquisition, policy and corporate activities. |
| D3 Management of Equipment Procurement | 6,539 | - | Managing procurement or refurbishment, on behalf of the Crown, of various items of equipment contributing to a capability of the New Zealand Defence Force. |
| Total Appropriations for Departmental Output Classes (Mode B Gross) | 11,719 | - | |
In the financial year 2002/2003, the departmental appropriation of $11.719 million will be spent in the following areas:
| $(000) | % of total Vote | |
|---|---|---|
| Personnel costs | 4,371 | 37 |
| Operating costs | 5,914 | 51 |
| Capital charge | 132 | 1 |
| GST | 1,302 | 11 |
| Total | 11,719 | 100 |
Funding for this expenditure will be $8.271 million from the Crown, and $2.146 million from the NZDF for final costs on the C-130 Hercules Life of Type Study.
Crown Appropriations (GST inclusive)
| Appropriations | 2002/03 Vote |
Description of 2002/03 Appropriations | |
|---|---|---|---|
| Annual $000 |
Other $000 |
||
| Purchase or Development of Capital Assets by the Crown | |||
| Defence Equipment | 200,693 | - | Purchase of defence equipment for the New Zealand Defence Force. |
| GST on Defence Equipment | 11,718 | - | Input GST on purchase of defence equipment for the New Zealand Defence Force. |
| Total Appropriations for Purchase or Development of Capital Assets by the Crown | 212,411 | - | |
Until a NZDF capital equipment project is approved by Cabinet, no funding is included in the Estimates. The financial year 2002/2003 Crown appropriation for Purchase or Development of Capital Assets is for the following significant projects:
| $(000) | |
|---|---|
| Continuation of ANZAC Ship project | 16,012 |
| Maritime helicopters | 6,331 |
| Tactical communications | 8,532 |
| Light armoured vehicles | 169,790 |
| Other projects | 28 |
| GST on defence equipmen | 11,718 |
| Total | 212,411 |
- Para 4, 2002-2003 Purchase Agreement between the Minister of Defence and the Ministry of Defence.
