Defence projects 405 months late and counting. Good job Australia is not facing an aggressive superpower

Major defence projects are still running more than 20% behind schedule, the Defence Department has no understanding of how many people are working on them, and major recommendations from both the auditor-general and Parliament remain ignored years later, the Australian National Audit Office (ANAO) has found.

Every year at the request of Parliament’s Joint Committee of Public Accounts and Audit, the ANAO checks Defence’s homework on a list of major projects to look at financial performance, schedule performance and risk management. This year, 21 projects worth $58 billion were examined, including the F-35, the now-abandoned submarine project and the dumped MRH90 Taipan helicopters.

The projects in the Major Project Report were a total of 405 months late, or 23%, with the chief offender being the already seven-years-delayed and trouble-plagued Taipan helicopters, which incurred another six-month delay before being abandoned last week.

The MQ-4C Triton unmanned aerial vehicle is more than five years late, after a two-year delay during the reporting period as a result of the United States announcing a production halt until 2023 (not much “sovereign capability” there, then).

As always, the biggest delays occur with Australian-developed projects, while projects that are modified off-the-shelf products, or pure off-the-shelf, incur fewer delays. The ANAO notes that after the 2003 Kinnaird review pointed out off-the-shelf projects were delivered with less delay and fewer problems than modified or fully developed projects, Defence had moved to source more projects off-the-shelf, but that this had been in reverse since 2014, signalling that delays are likely to increase in coming years.

And while cost overruns were kept to a minimum — the major cost increases were due to increases in project scope — the Defence executive doesn’t actually have a complete picture of how much projects are really costing because it doesn’t have a proper handle on the staff costs for each project, and hasn’t been able to establish any system to do that since it was asked by the JCPAA in 2018.

A number of projects don’t have proper risk management software in place, with tracking of issues done by spreadsheets only.

ANAO has also pressured Defence for some years to develop a more coherent framework for the way it identifies and more aggressively manages troubled projects via its Projects of Interest/Projects of Concern list, which still hasn’t been done. The ANAO’s concerns about the somewhat random nature of those lists was confirmed by the absence of the submarines project from either of those lists, despite Prime Minister Scott Morrison reversing himself in November — after being called out for lying by French President Emmanuel Macron — and claiming “there was [sic] a lot of issues in relation to delays in the project and of course, the costs”. Defence had told the ANAO regarding the submarines:

This risk was being remediated as follows: ‘Contracted requirements exist on program performance, behaviours and expectations and are supported by: ongoing engagement with CEOs; bilateral and tripartite governance arrangements; and ongoing independent critical peer review by the Naval Shipbuilding Advisory Board and Submarine Advisory Committee.’ The ANAO was advised by Defence in 2020-21 that the Future Subs project was not considered as a candidate for inclusion as a Project of Concern or Interest because it was already subject to the most senior levels of governance and scrutiny.

So the exact reason why the submarines were abandoned — leaving a colossal hole in Australia’s naval capability in coming decades — remains a mystery.

ANAO is also unhappy about Defence’s tendency to declare that projects had reached major milestones but with “caveats” or “deficiencies” — terms that seem of art, not science. This has been going on since 2014 and the auditors aren’t happy with it. Among the prime examples is the decades-late F-35 plane. “Defence declared IOC on 28 December 2020, acknowledging a number of known acceptable deficiencies with the aircraft and support systems, including some delays to weapons delivery and integration.”

“Known acceptable deficiencies” seems an apt phrase for many of Defence’s major projects, and the process of managing them.