Defence Review Consultation Summary of Submissions
Responses to Submissions Form Questions (continued)
Q9: What is the best way of managing Defence business, especially in respect of procurement, real estate, infrastructure and finance?
Procurement
Procurement was the most significant issue for this question with more than 130 submissions commenting. Opinion varied in respect of the value and suitability of particular acquisitions. However, 73 of these submitters (including individuals, business groups and Defence Force personnel) recommended changes to the current procurement process to achieve better outcomes overall in the management of procurement projects and the selection of acquisitions. The preferred outcome was expressed by some as acquisitions that were fit for purpose at the point of delivery and deployable in the intended military and civilian contexts.
Submissions contained a variety of suggestions as to how they would like to see the procurement process improved. Similar to those covered in Question 7, suggestions included more civilian oversight and involvement such as setting up an independent panel of specialists to review and project manage procurement processes. Others believed the procurement function should be managed entirely by the Defence Force as a single agency 'owning' the project.
"The experience of the Ministry of Defence managing equipment purchases etc has been a failure - they are too distant from the experience of equipment use."
"Look at the Australian model of fostering domestic defence industries to provide capabilities for sustainable defence supply."
"New Zealand businesses can contribute to technical issues by providing practical world beating solutions to problems. NZDF needs to do more research into the sort of capabilities that New Zealand businesses can contribute to."
Nineteen submitters recommended that military equipment be procured directly from allied countries, especially Australia and the United States. This was to ensure the equipment was interoperable and had through-life support. Some pointed to the economies of scale that can be obtained from the Defence Force adding to purchases being undertaken by the Australian Government. The replacements for the frigates were one example mentioned in this context.
Alternatively, a larger group of 36 submitters believed that a greater proportion of procurement should be supplied by New Zealand industries. As well as many individuals, this included organisations such as the New Zealand Defence Industry Association, the Defence Association of New Zealand, the Aviation Industry Association, the Manawatu Defence Hub and the Marlborough Chamber of Commerce.
Some of these submitters suggested that a whole-of-government approach should be tried that involved agencies such as the Foundation for Research, Science and Technology, the Ministry of Research, Science and Technology, New Zealand Trade and Enterprise, research and development organisations and commercial producers. Using an integrated approach was regarded as having the additional benefits of facilitating local innovation and capability. It also provided a basis for commercialising new technology and stimulating the economy. Strategic partnerships between Defence Forces and local defence industry networks were regarded as having worked well in Australia and the United Kingdom.
New Zealand businesses in the marine, aviation, communications, electronics and computer sectors were seen as having greater potential to be part of a defence industry network. Some submitters commented that the current tender process for procurement could be improved so there can be a more 'full and fair opportunity' for domestic suppliers. They wanted to see a streamlined approach with less compliance costs. This approach also needed to be transparent, respect intellectual property contributions from local businesses, and to provide explanations when tenders were not successful. Offshore tenders should have to include the costs for through-life maintenance to enable a better comparison of relative cost effectiveness with locally based tenders.
"The existing arrangements seem to be working well and should be given time to prove themselves."
"Procurement, real estate, infrastructure and finance needs non-Service involvement and control to ensure cost effectiveness. Leasing equipment and facilities to the NZDF and from the NZDF to others should not be out of the question."
"Where opportunities exist to share costs with outside organisations they should be explored so long as security and existing or future operational effectiveness is not compromised."
Managing finance, infrastructure and real estate
Forty submitters supported the use of outside professionals to manage the areas of finance, infrastructure and real estate. Some also included project management and procurement. Outside professionals may be acquired from civilian employees and/or private sector firms as necessary. The opposing view held by 15 submitters was that the Defence Force should manage all its support functions and it should train personnel especially for this purpose. Some observed that the Defence Force would need to have the capability to manage its support services in any major deployment and so it should retain the ability to perform these functions in-house.
Some submitters supported the Defence Force retaining and owning its real estate. Real estate was seen as having strategic value in addition to financial value. Owning real estate permitted the Defence Force to have greater control over its use which allows for realistic training exercises. Real estate suitable for these purposes was seen as being difficult to replace and likely to have greater total life time costs if leased instead of being owned. On the other hand, 49 others believed there were opportunities to rationalise real estate holdings and to consider leasing and 'Public Private Partnership' arrangements with private investors. Submitters such as the Palmerston North City Council, the Upper Hutt City Council, and the Porirua City Council also suggested opportunities for the Defence Force to work with local government to make effective use of available land and facilities.
