PlantoReform SupportShipRepairand ManagementPractices

PaulJRizzoJuly2011 "Itisthecapacityformaintenancethatisthebesttestforthe vigourandstaminaofasociety.Anysocietycangalvanisefora whiletobuildsomething,butthewillandtheskilltokeepthings ingoodrepair,dayinanddayout,arefairlyrare." EricHoffer

2011CommonwealthofAustralia Thisworkiscopyright.ApartfromanyuseaspermittedundertheCopyrightAct1968,no partmaybereproducedbyanyprocesswithoutpriorwrittenpermissionfromthe Commonwealth,whichisavailablethroughtheDepartmentofDefence.Requestsand enquiriesconcerningreproductionandrightsshouldbeaddressedto: MinisterialandExecutiveCoordinationandCommunicationDivision Defence RussellOffices,R1GC052 CanberraACT2600

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Contents
Foreword ............................................................................................................................ 5
ExecutiveSummary ............................................................................................................ 7
Recommendations............................................................................................................ 12
References........................................................................................................................ 17
Chapter1 INTRODUCTION.......................................................................................... 19
1.1 TermsofReference .................................................................................................. 19
1.2 ReviewMethodology ............................................................................................... 19
Chapter2 CONTEXT.................................................................................................... 21
2.1 HistoricalContext ..................................................................................................... 21
2.2 Preparedness............................................................................................................ 21
2.3 TheCausalFactors.................................................................................................... 22
Chapter3 OVERVIEWOFTHEREFORMPLAN ............................................................. 25
3.1 Introduction.............................................................................................................. 25
3.2 ReformPlanOutline ................................................................................................. 25
3.3 ReformThemes ........................................................................................................ 27
Chapter4 LIFECYCLEMANAGEMENT ......................................................................... 29
4.1 Introduction.............................................................................................................. 29
4.2 LifeCycleMethodologies ......................................................................................... 29
4.3 EffectiveSustainment .............................................................................................. 32
4.4 EfficientSustainment ............................................................................................... 35
4.5 Recommendations ................................................................................................... 38
Chapter5 ACCOUNTABILITYANDRESPONSIBILITY ..................................................... 41
5.1 Introduction.............................................................................................................. 41
5.2 ComplexRelationshipsCloudAccountability........................................................... 41
5.3 TakingResponsibilityandBeingAccountable.......................................................... 42
5.4 Recommendations ................................................................................................... 48
Chapter6 RISKMANAGEMENTFRAMEWORK ............................................................ 51
6.1 Introduction.............................................................................................................. 51
6.2 VerticalPerspective.................................................................................................. 51
6.3 HorizontalPerspective ............................................................................................. 54
6.4 Recommendation ..................................................................................................... 56
Chapter7 ENGINEERINGFUNCTION ........................................................................... 57
7.1 Introduction.............................................................................................................. 57
7.2 RegulationandAssurance........................................................................................ 57
CertificationofStandards ........................................................................................ 61
7.3 7.4 EngineeringOrganisation ......................................................................................... 62
7.5 EngineeringSkillsandResourceLevels .................................................................... 63
7.6 Recommendations ................................................................................................... 65
Chapter8 CULTURE .................................................................................................... 67
8.1 Introduction.............................................................................................................. 67
8.2 CulturalIssues .......................................................................................................... 67
8.3 Recommendations ................................................................................................... 68
Chapter9 WIDERIMPLICATIONS ................................................................................ 69
9.1 Introduction.............................................................................................................. 69
9.2 OtherCurrentVessels .............................................................................................. 69

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9.3 FutureVessels .......................................................................................................... 70

9.4 Recommendations ................................................................................................... 76
Chapter10 PLANFORIMPLEMENTATION..................................................................... 77
10.1 ReformsAlreadyUnderway ..................................................................................... 77
10.2 HowtoEffecttheRecommendationsofthisandotherRelevantReviews............. 80
10.3 Recommendation ..................................................................................................... 82
AnnexATermsofReference ............................................................................................. 85
AnnexBCausalFactorsContributingtotheUnavailabilityoftheNavysTwoLPAs ........ 87
AnnexCStakeholdersConsulted....................................................................................... 89
AnnexDSubmissionsReceived ......................................................................................... 93
AnnexEAcronyms ............................................................................................................. 95

ListofFigures
Figure1:LandingPlatformAmphibious............................................................................... 20
Figure2:ThePillarsofPreparedness................................................................................... 22
Figure3:ExampleofRustAboardKanimbla........................................................................ 23
Figure4:IncorrectPartsFittedtoKanimblaviaImprovisedCoupling ................................ 23
Figure5:ReformPlan........................................................................................................... 26
Figure6:AssetManagementScope..................................................................................... 29
Figure7:IcebergModel ....................................................................................................... 31
Figure8:MaintenanceShortfallKanimblaandManoora................................................. 34
Figure9:TheBathtubCurve ................................................................................................ 36
Figure10:FleetMaintenanceBudgetEstimates ................................................................. 36
Figure11:DeferralofMaintenanceAvailabilityPeriods ..................................................... 42
Figure12:FundamentalRiskManagementFrameworkforSustainment........................... 52
Figure13:NavyDMORiskFramework ................................................................................ 53
Figure14:OpenEngineeringChangesbySPO ..................................................................... 69
Figure15:DeferredorOpenMaintenanceTasksbyPlatform ............................................ 70
Figure16:LandingHelicopterDock ..................................................................................... 71
Figure17:LHDComparedtoLPA ......................................................................................... 72
Figure18:AirWarfareDestroyer......................................................................................... 73
Figure19:LargsBay ............................................................................................................. 75
Figure20:ReformImplementationTimeline....................................................................... 81

ListofTables
Table1:SummaryofRecommendations ............................................................................. 12
Table2:RelevantReviewsandReports ............................................................................... 77
Table3:SupplementarySuggestions ................................................................................... 82

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Foreword
AsIworkedonthisproject,IwasheartenedbythepositivereceptionIreceivedinNavy,the DefenceMaterielOrganisation(DMO)andfromIndustry.Manyindividualsareworking underconsiderablestressandareconcernedabouttheunsatisfactorymanagementofthe repairandmaintenanceofmaritimemateriel.Theyarelookingforthisplantodelivera solutiontothecurrentunacceptablesituationandforDefenceleadershiptoshowthe commitmentandtenacitytodelivertheresults. IamgratefulforthecontributionmadebythosewhoengagedwiththeTeamandIexpect theplanIproposewillimprovethedeficienciesIhavefoundanddiscussed. Whilstnotrequiredtoreportonindividualaccountability,inviewofwidespread apprehensioninDefenceovertheoutcomeofthisreport,Iwouldlikeittobenotedthatthe systemicbreakdowndescribedinthisplanevolvedoveralongperiod.Itisaresultof institutionalfailuresratherthanacontemporaryfailurebyindividuals. Ofnecessity,thisplanisdetailed.Thecontentscapturemanyconclusionsandsuggestions, butitsrecommendationsfocusonthosecoreactionsthatcanmakeapracticaldifference. Indeed,theTeamespeciallynotedthemanypreviousreportsthatproposeremediationon thematteroftechnicalintegrity,andunsatisfactorymaintenanceandengineeringpractices. AnimportantquestionisWhyhasntallthisworkresolvedtheproblemsapparentinthe maintenanceofvessels? TheplanisbuiltaroundsevenmajorReformThemes,whichareoutlinedinSection3.3.The resourcerequirementsandimpactshavenotbeenscopedduetosecondorder consequences.IamalsoconsciousthattheStrategicReformProgramismovingto streamlinetheuseofresourcesandthereforeDefencewillneedtomakethetradeoff decisionsnecessarytofullyresourcetheimplementationofthisplan.Inaddition,Ihave recommendedonefurtherreviewtoidentifyopportunitiestoachievebetterintegrationof criticalinterdependentactivitiesbetweenDefenceandDMO. Ifmyconclusionsareaccepted,andtherecommendationsimplemented,theywillmakea significantimprovementtotherepairandmaintenanceofallmaritimemateriel.Further, theywillbegreatlycomplimentedbythefullandtimelyimplementationofthe recommendationsfrompreviousrelatedreports.

PaulJRizzo IndependentTeamLead 5July2011

SubjectMatterExperts RADMBrianAdams(retired) AVMNeilSmith(retired)

Secretariat SpecialContribution Mr.LeeWalton CDREMichaelHoughton Ms.MariaCrncevic CAPT(RANR)RobertHorsnell

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ExecutiveSummary
Introduction TherecentearlydecommissioningofHMASManoora,theextendedunavailabilityofHMAS KanimblaandthetemporaryunavailabilityofHMASTobrukwerethecatalystsforthe commissioningofthisreport,buttheproblemsthatledtothisactionarelongstanding,well knowntoDefenceandDMO1,andthesubjectofmanypriorreports.This,coupledwiththe factthatpriorfindingsremainbroadlyvalidandthatremediationactiontodatehashad littlepracticaleffect,isreflectiveofongoingsystemicfailure. Recentreformsunderway(forexampletheStrategicReviewofNavalEngineering,Strategic ReformProgramandthenewSeaworthinessBoard)shouldassistintheremediationof maritimemaintenanceandsustainmentpractices,butwillnotbesufficient,andmaybein dangerofthesameunderachievementaspastactions.Indeed,inthespecificcaseofthe StrategicReformProgram,theresultsrequiredfromthatreformmayconflictwiththe increaseinresourcesneededtoaddressthisplan.Defencewillthereforeneedtomakethe resourcetradeoffdecisionsnecessary. Theinadequatemaintenanceandsustainmentpracticeshavemanycausalfactors.They includepoorwholeoflifeassetmanagement,organisationalcomplexityandblurred accountabilities,inadequateriskmanagement,poorcomplianceandassurance,a'hollowed out'Navyengineeringfunction,resourceshortagesintheSystemProgramOfficeinDMO, andaculturethatplacestheshorttermoperationalmissionabovetheneedfortechnical integrity.Inaddition,NavyandDMOneedtoimprovecoordinationandintegratetheir interdependentactivitiesmoreeffectively.Whilsttheoveralloutcomeisapoorreflection onDefenceandDMO,actionsbyindividualsweretaken,inthemain,tomeetthe operationaldemandsofthedaywithinadequateresourcesandtools. TheplanconsiderstheobjectivesofNavyandDMOandtheconstructwithinwhichNavyand DMOcurrentlyoperate.Itnominatesthestrategicandtacticalactionswhich,if implementedeffectively,willensurethatthetechnicalintegrityofmaritimematerielis achievedandthereforeimproveoperationalavailabilityandoutcomes.Theseactionswill alsoassistinthefurtherdevelopmentofthemaintenanceconceptforthesustainmentof theAirWarfareDestroyerandtheLandingHelicopterDock.TheTeammakestwentyfour recommendations.Ofthese,thefollowingsevenarestrategicinscope,becausetheir impactisgreaterandlongerlasting.
1

Formaliseassetandsustainmentmethodologies. Takewholeoflifedecisions. EstablishcloserworkingarrangementsbetweenDefenceandDMO. Establishanintegratedriskmanagementsystem. RebuildNavyengineeringcapability. Reinstatetheculturalimportanceoftechnicalintegrity.

AlthoughDMOispartofDefence,forclaritythisplanusesthetermDefenceandDMOtodistinguish betweenDMOandotherpartsofDefence.

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ConfirmDefenceCapabilityPlan(Maritime)Resourcing.

OverarchingObservations Inadditiontotherecommendations,theTeamhasmadethefollowingoverarching observations,whichitconsiderstobeofequalimportance: TheinterdependencyofNavy,DMOandIndustryiscritical.However,themeansto bringtheserelationshipstobestpracticeareeithernotwellunderstoodorpoorly practicedbecauseofculturaldifferences,orskilldeficiencies,oralackoftime,ora shortageofresourcestofocusonthechallenge. CooperationbetweenDefenceandDMOmustbeofthehighestordertoachievethe commoncapabilitygoals.Atpresentthereisanusandthemfeeltothis relationship. TheneedforthesustainmentofassetsisunderstoodinDefenceandDMO,butitis notgiventhesamerigorousattentionasassetacquisition.Sustainmentcostscan exceedthoseoftheoriginalprocurementandthechallengescanbemorecomplex. TheimportanceofoperationalobjectivesiscleartoNavybuttheequalimportance ofthetechnicalintegrityofitsassets,bothfortheshorttermoperationaltaskandfor theiroperationallife,isnot. Decisionsaddressingtheriskofdeferringmaintenancearesometimesmadewithout consideringthebenefittobegainedfromacceptingthatrisk,withoutclearand contemporaryrisksettingsandwithoutcompleteinformation. TheTeamwantstoensurethattherecommendationsdonotfallpreytoinertiaor changingpriorities,asseemstohaveoccurredwithmanypreviousreports. Manyofthecausalfactorsrelatenotjusttoengineering,butalsotooperations, operationalplanningandculture.Iftheremediationdoesnotspantheentiretyof theNavyandDMO(Maritime)business,thensuccessisunlikely. Eachoftheinfluencingfactorsisexploredindetailinthebodyofthereportwiththekey pointsbeingsummarisedbelow. LifeCycleManagementChapter4 Duringtheplanningandacquisitionofnewcapabilitythereisatendencytofocuson deliveryaboveallelse.Theintensepolitical,mediaandleadershipattentiononacquisition meansthatthereisafocusonschedule,budgetandspecification.Asaconsequence,this meansthattheprojectmanagerhasonlylimitedoptionsifpressureorconstraintsarise.As aresult,sustainmentisneglectedinpriority,whichleadstoinadequatelogisticsupport productsandincreasedsustainmentrequirements,oftentothedetrimentofwholeoflife capabilityandcosts.Thisriskwastobeaddressedthroughthejoiningofacquisitionand sustainmentintoasingleorganisationtheDefenceMaterielOrganisation.Butthe continuingfocusonacquisitionandinsufficientattentiontothroughlifecostshasreduced theimpactofthissensibleinitiative. Amethodologytomanageactivitiesandpracticesoverthewholelifecycleofassetsis necessary,thatis,anAssetManagementMethodology.Elementsofthemethodologyexist, butarescatteredandlackcohesion.Ifimplementedcorrectly,itwillensurethatdecisions

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madearebasedonwholeoflifeconsiderationsandwilldeliverthegovernance arrangementstomonitoradherence.Implementingsuchamechanismwillprovideagood foundationtoaddresstheproblemsidentified. Sustainmentisasubcomponentofassetmanagementandconsistsofsuchaspectsas engineeringandmaintenance,training,sparesandinventorymanagement,and managementoftheconfiguration.Amethodologyisalsorequiredtounifyandfullydevelop thisimportantandcomplexfunctionwithinNavyandDMO. Reducedsustainabilityhasadirectimpactonpreparedness,andyetNavyoperatorsoftendo notconsidermaintenanceplanningasanenablerofoperations.Thepracticaloutcomeof thiscultureisthatmaintenanceactivitiesundertakenbyshipscrewsandbyexternal organisationshaveoftenbeencurtailed,postponedorevencancelledwithlittleornoaction takentorecoverthesituation.Thishasresultedinthecurrentdegradedstateofthe AmphibiousandAfloatSupportships. ThereisalsoaneedforincreasedefficiencyincontractingmechanismsusedbyDMOacross muchofthefleet.ThecurrentshorttermandnarrowapproachtoIndustryengagementin AmphibiousandAfloatSupporthasresultedinsignificantbureaucraticandadministrative overheads.ThisisinstarkcontrasttotheDefenceaviationsector,whichusesfewer contractsthatengageIndustryinlongertermrelationships. AccountabilityandResponsibilityChapter5 Strongaccountabilityisanimportantcomponentofanyhighperformingorganisation,asit denotesownershipofaresultoraction.ItisessentialthattheChiefofNavy,asthe CapabilityManager,hasclearaccountabilityforNavythroughlifecapabilityandhasthe correspondingresources.TheMaterielSustainmentAgreementbetweenNavyandDMOis criticalinthisregard,butiscurrentlypoorlydefinedandweak.Thisagreementshouldbe transformedintoanactivecontractthatclearlydefinestheobligationsofbothNavyand DMOandissupportedbybusinesslikeperformancemeasures.Inordertoachievethis,and tobeaninformeduser,Navyshouldsubstantiallyincreasetheresourcescommittedtothe capabilitymanagementrole. TheMaterielSustainmentAgreementsmustbeaccompaniedbyimprovedreportingwithin NavyandDMO.Itisimportanttocapturedirect,timelyandcandidremarksina documentedformandinconjunctionwitharigoroussetofmetrics.Thisdoesnotcurrently occurinaconsistentmanner,andconsequently,hasledtosomedysfunctional communication. Organisationalcomplexityisasignificantfactorimpactingaccountability.Inanorganisation ofthesizeandbreadthofDefence,alevelofcomplexitycannotbeavoided.However,the structureoftheengineeringorganisation,asitrelatestoNavy,isoverlycomplexand distributesscarcepersonnelacrossseveralreportingchains.HeadNavyEngineeringhas littledirectmanagementcontroloveralargeproportionoftheNavyengineeringworkforce. Inadditiontobeingfragmented,ithasbeenhollowedoutovermanyyearsasaresultof changeuponchangeinDefenceandanunduefocusonshorttermoperationaldemands. ThevoiceofNavyengineeringisoftennotheard,orunderstood,furtherreducing accountability.

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RiskManagementFrameworkChapter6 ThemanagementofriskshouldbeacentralfunctioninDefence.Likeallorganisations, Defenceisinfluencedbyexternalfactorsthatimpactontheorganisationsappetiteforrisk. Defenceisbeginningtodevelopmechanismstoquantifythecontemporaryappetiteforrisk inaformalwayandtopromulgatethisverticallythroughtheorganisation.Thisiscrucialas itwillenabletheexecutivetocontrolorganisationalbehaviourinresponsetobothexternal andinternalinfluences.Itisimportanttonotethatthemechanismalonewillnotbe sufficient,astheconceptalsoneedstobeinternalised.Thatis,itneedstobecomepartof everydaylifeinDefence,witheffectiveriskmanagementbeingbothadoptedandlinked throughout. Riskdecisionsmadeattheenterpriselevel(e.g.Navy)needtobeaccompaniedbyarobust mechanismforriskmanagementspreadhorizontallythroughouttheorganisation.Asan exampleofcurrentpoorpractice,individualtechnicalriskassessmentsassociatedwiththe deferralofmaintenanceoracceptanceoftechnicaldefectsareoftenmadeinisolation.This issuebecameapparentattheLandingPlatformAmphibious(LPA)SeaworthinessBoardin September2010.Itisessentialthatdecisionsaremadethroughconsiderationofthefull rangeofriskstotheplatformandcrew,aggregatingtheinformationtoprovideacomplete view. Theassessmentofriskmustalsoconsiderthebenefitstobegainedandthecurrentcontext. Forexample,technicalrisksassociatedwithreducedmaintenancemaybeacceptableata timeofimminentthreat,butaccordingprioritytoaroutineoperationalmissionorexercise, aheadofseriouscumulativeshortfallsinmaintenance,isnot. EngineeringFunctionChapter7 PerhapstheareathatneedsmostattentionisthatoftheengineeringfunctionwithinNavy andDMO.Thetechnicalregulatoryframeworkhasbeenestablishedformanyyearsandis basedonthatofAirForce.Butitisnotadequatelyimplementedinthemaritimedomain. Thisisduetoanumberofcomplexissues,includingalossofengineeringinfluence, longstandingpersonnelandskillsshortages,aweakandineffectivecomplianceand assurancefunction,workforcefragmentationandoverlappingresponsibilities.Allofthese, andmore,haveresultedinaculturethatmakesdoandissubservienttoshortterm operationalimperatives. ItisclearthatcomplianceandassuranceisinadequateinNavyengineering.Director GeneralofTechnicalAirworthinessinAirForcehasalmostseventimestheworkforce dedicatedtothisimportantrole. TheTeamwasstruckbytheapparentcomplexityoftheNavyengineeringorganisationand thescarcityofresourcesapplied.Asaconsequence,althoughsoundinprinciple,Naval engineeringpolicyisoutofdateandcomplianceisineffective.Navyengineeringneedsto berebuiltandreorganisedtofunctionproperly,increaseauthority,improveaccountability andsustaintheworkforce.ItshouldbeledbyatwostarNavyofficertogivethenecessary weighttothisimportantfunction. CultureChapter8 Inthecourseofthiswork,severalculturalproblemsinNavy,andtoalesserextentDMO, becameapparent.Thesecanbecategorisedas:cando,makedo;anassumptionthata

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shipissafetosailunlessprovenotherwise;andthemanagementofbadnews.Theseareall factorsinthecurrentconditionoftheAmphibiousandAfloatSupportships. ImplementationofthefindingsoftheunpublishedReviewintoAccountabilityand GovernanceinDefence(BlackReview)shouldaddresssomeoftheseissues,butan additionalculturalchangeprogramisrequiredtoaddressthespecificchallengesrelatedto maritimetechnicalintegrity. WiderImplicationsChapter9 SeveralofthefactorsrelatedtothecurrentsituationwiththeAmphibiousandAfloat Supportshipsarerelevantacrossthefleet,althoughtoalesserextent.Thereisalsoa backlogofengineeringchangeandmaintenanceworkinothervesselsandaclearshortage ofengineeringresources.Thisisofconcerninitself,butespeciallywhenconsideredinthe contextoftheimpendingacquisitionofthesignificantlymorecomplexLandingHelicopter DockandAirWarfareDestroyer.NavyandDMOshouldconfirmwhethertheywillhave sufficientresourcesandskillstooperateandmaintainmaterielthatiscommittedfornaval serviceoverthenexttenyears. TheconceptsinthesustainmentstrategiesfortheAirWarfareDestroyerandLanding HelicopterDockformasoundbasisforthroughlifemanagementofthesevessels.However, oneimportantcaveatremains;itisessentialthatthesestrategiesareimplementedwith rigourandthattheyarenotdilutedaspressuresemergeduringacquisition. Manyoftheproposedactionswithinthisplanwillhaveanimpactacrossthecurrentand futurefleet.Successfulimplementation,althoughchallenging,willimprovethecurrent unacceptablesituation. PlanforImplementationChapter10 TheTermsofReferencerequiredthedevelopmentofaplanforreform.Thisplanidentifies theactionsrequiredandproposestimelinesforthiswork.Inordertoensuredeliveryonthe actions,anImplementationCommitteeshouldbeestablishedtodrivethechangesrequired. TheCommitteeshouldreporttotheSecretaryandtheChiefofDefenceForceaftereach meeting.Inturn,theSecretaryandtheChiefoftheDefenceForceshouldprovidesix monthlyupdatestotheMinisterforDefenceandtheMinisterforDefenceMaterielon progressagainstthisplan.

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Recommendations
Therecommendationsaresummarisedbelowforquickreference.Theyarenumberedin theorderinwhichtheyarepresentedinthedocument.Crossreferencestothelocationin thereportarealsoprovided,asitisimportanttoconsidertherecommendationsinthe contextofthesupportingtext.
Table1:SummaryofRecommendations

Title

Description

Report Location

StrategicActions
1 FormaliseAsset andSustainment Methodologies NavyandDMOshouldjointlyestablishpractical methodologiesforintegratedthroughlifeAsset andSustainmentManagement. 4.2.3

TakeWholeofLife DefenceandDMOshouldensurethatdecisions Decisions madeduringacquisitionfullyconsiderwholeof lifecostsandcapability,througharigorousand formalisedAssetManagementprocess. CloserWorking Arrangements betweenDefence andDMO Whilstretainingthebenefitsofspecialisation, Defenceshouldcommissionareviewtoachieve betterintegrationofcriticalinterdependent activitiesbetweenitselfandDMO. NavyandDMOshoulddevelopanintegrated riskmanagementsystemformaintenanceof maritimecapability.Thismustemphasise: theverticallinkbetweenriskappetiteat theenterpriselevelanditsapplicationat theworkface;and thehorizontalprocessesnecessaryto capturethefullriskbenefittradeoff.

4.2.2

5.3.3

13 Establishan IntegratedRisk Management System

6.4

17 RebuildNavy Engineering Capability

Navyengineeringshouldberebuiltand reorganisedtoreducefragmentation,increase authority,clarifyaccountabilityandenablethe HeadNavyEngineeringtofulfilhisroleasthe TechnicalRegulatoryAuthority.Itshouldbeled bya2starNavyofficertogiveweighttothis importanttechnicalandcompliancefunction. Navy,incollaborationwithDMO,should introduceaculturalchangeprogramthat promotestechnicalintegrityasakeyenablerof operations.

7.4.1

21 Reinstatethe Cultural Importanceof TechnicalIntegrity

8.3

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Title

Description Giventheevidentstrainsoftoday,Defenceand DMOshouldconfirmtoGovernmentthatthey willhavesufficientresourcesandskillsto operateandmaintainmaterielthatis committedfornavalserviceoverthenextten years.

Report Location 9.3.4

23 ConfirmDCP (Maritime) Resourcing

TacticalActions
3 Constrainthe Operationof Kanimbla IfKanimblaistoberetained,Navyshould 4.3.5 constrainitsusetocontingencyoperationsand trainingofNavypersonnel.Resourcesshouldbe assignedtotheshipcommensuratewithsafe operationinthisrestrictedrole,untiltheriskof acapabilitygapisremoved. DMOandNavyshouldhavejointplansfor vesselsapproachingtheendoflife,which: ensurethatresourceallocationandFleet activityschedulingallowforthe increasingsustainmentneeds;and considerthegrowingcostofownership (budgetandpeople)whenmaking capabilityreplacementdecisionswith CapabilityDevelopmentGroup. 4.4.1

PlanfortheAging ofVessels

Strengthen Partnershipswith Industry

Whilstretainingcompetitivetension,the 4.4.2 DefenceMaterielOrganisationshould implementmaritimecontractsthatarebroader inscopeandlongerinterm,tobuilddeeperand continuingrelationshipswithIndustry. Navyshouldleadworktodefineandthendrive remediationoftheinformationmanagement systemsformaritimeengineeringand maintenance. 4.4.3

RemediateICT System Shortcomings

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Title

Description

Report Location

IncreaseResources Navyshouldenhancecapabilitymanagement 5.3.2 forCapability by: Management creatingadedicatedcelltoanalyse, evaluate,andcontinuallyassessthestate oftheFleetagainsttheMateriel SustainmentAgreement; increasingtheresourcesassignedto CapabilityManagement;and changingtheWorkforcePostingPriority toThreeforNavystaffappointedto sustainment,inlinewiththatof acquisition. 5.3.3

EstablishEffective NavyWorkforce Planning

Navyshouldestablishaneffectiveworkforce planningsystemtoensurestaffhavetheskills andexperiencerequiredforcomplex sustainmentroles.

10 RefocusFleet Command

TheChiefofNavyshouldreviewthestructureof 5.3.4 FleetCommandtoallowtheFleetCommander tobetterfocusonhiscorefunction,whichisthe operationalpreparednessofvesselsandcrew. TheNavalMaterielSustainmentAgreement shouldbetransformedintoanactivecontract thatmeaningfullycapturesthemutual obligationsofNavyandDMO,supportedby businesslikeperformancemeasures. 5.3.5

11 CaptureMutual Obligations

12 MoreEffective Information Exchange 14 MonitorandAudit forTechnical Compliance

NavyandDMOmustimprovetheirinternal 5.3.6 reportingbycapturingdirect,timelyandcandid, documentbasedinformationthatdrawsona rigoroussetofmetrics. ChiefofNavyshouldresourceChiefStaffOfficer 7.2.6 (Engineering)tofulfilhisresponsibilityashead oftheFleetsAuthorisedEngineering Organisation,to: monitorandauditshipsfortechnical regulatorycompliance;and providemandatoryinputintoship's engineer'sperformancereports.

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Title

Description TheChiefofNavyshoulddevelop,anddirect compliancewith,apolicyontheuseof ClassificationSocieties,orotherexpertthird partysurveyors,toestablishindependent qualityassuranceforallNavyvessels,during design,constructionandoperation.

Report Location 7.2.7

15 InstigateThird PartyQuality Assurance

16 ControlAcceptance Throughanindependent,rigorousand intoNavalService transparentevaluationprocess,theChiefof Navyshouldexercisehisauthorityasthe CapabilityManagertoacceptorrejectnew NavalcapabilityagainsttheGovernment approvedscope.

7.3

18 Resourcethe DMOshouldincreasetheengineeringand 7.5.1 Amphibiousand contractmanagementresourcebaseinthe AfloatSupportSPO AmphibiousandAfloatSupportSPOtomeetthe ongoingneed,andthenfurtheraugmentthe complementtoaddressrecoveryactivities. 19 FosterEngineering Talent DMOandNavyshoulddevelopaninnovative andcomprehensivethroughlifecareerplanfor therecruitment,retentionanddevelopmentof theirengineeringtalent. InlinewiththeStrategicReviewofNaval Engineering,theFleetCommandershould rebuildthecapabilityoftheFleetSupport UnitsusingIndustryexpertisetoreestablish deeptechnicalskills. 7.5.1

20 RebuildtheFleet SupportUnits

7.5.4

22 Quantify Maintenanceand Engineering Backlog

Tosetafirmfoundationforremedialaction,the 9.2 ChiefofNavyshouldcommissionan independentaudittoaccuratelyquantifythe maintenanceandengineeringbacklogacrossthe fleet.

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Title

Description DefenceshouldestablishanImplementation Committeetodriveearlystagedeliveryofthe reforms.Therearetwoimportantenablers: theCommitteeshouldconsistofChiefof Navy,ChiefExecutiveOfficerDefence MaterielOrganisation,DeputySecretary, StrategicReformandGovernanceandMr PaulJRizzoastheindependentchair. atthefirstmeeting,DefenceandDMO shouldpresentthelistofproposed responsibleofficersforthe implementationofthe recommendations.

Report Location 10.2.2

24 DrivetheReform Program

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References

A. DefenceProcurementandSustainmentReview(Mortimer,September2008) B. StrategicReviewofNavalEngineering(Hammer,November2009) C. HelmsmanSustainmentComplexityReview(Helmsman,July2010) D. ReportintoAmphibiousandAfloatSystemProgramOffice(Konekt,August2010) E. AReviewintotheUnderlyingCausesLeadingtotheOperationalPausefortheLPAClass (HMAShipsKanimblaandManoora)(Sander,December2010) F. MaterielSustainmentAgreementbetweenDMOandNavyfor1July2010to30June 2020. G. SurfaceForceAnnualCNSACStatusReport(Sept2010) H. TheNavyStrategicPlan20102015(30June2010) I. DefencePortfolioBudgetStatements201112 J. RANIntegratedLogisticSupportManual(15Nov2004) K. ReviewoftheCapabilityReportingIssuesforHMASManoora,KanimblaandTobruk, AuditTask11009(May2011) L. MaintenanceRiskManagement(CDREMichaelHoughton,May2011) M. HMASSuccessMaterialStateTechnicalInvestigation(Quain,March2010) N. ConfigurationManagementImprovementProject(Ferguson,9Sept2010) O. ReportoftheBoardofInquiryintothefireinHMASWestralia(28Aug1998) P. KPMGMaterielSustainmentAgreementReview(July2010) Q. DMOSustainmentBusinessModelProjectTermsofReference(14April2011) R. ReviewofConfigurationManagementintheRAN(Gahan,16Aug1999) S. ReviewofConfigurationandMaintenanceManagement(Kildey,8Dec2008) T. DefenceProcurementReview(Kinnaird,2003) U. AmphibiousTransportShips(LPA)Modification/refitPhase2FollowOnAuditStatus Report(A/DefenceInspectorGeneral,31Aug1998) V. DI(G)LOG45004DefencePolicyonLifeCycleCostingAnalysis(14Nov2003) W. HMSDirective1/2011:DirectivetoMrAlanEvansReconstructionofAASSPOSystems andProcesses(8Feb2011) X. ABR6492NavyTechnicalRegulationsManual(July2003) Y. NavyEngineeringWorkforceReview(17Nov2010) Z. SeaworthinessBoardReportLPA(22September2010)

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Chapter1
1.1 TermsofReference

INTRODUCTION

TheGovernmentappointedanindependentTeamofexpertstodevelopaplantoreformthe repairandmaintenancepracticesthatledtotheearlydecommissioningofHMASManoora, theextendedunavailabilityofHMASKanimblaandthetemporaryunavailabilityofHMAS Tobruk.TheCausalFactorsthatledtothissituationweretobeaddressedinthecontextof reformsalreadyunderway.Further,theTeamwastoconsidertheimpactofitsfindingson thesustainmentofotherNavyvesselsandthemaintenanceconceptsoftheAirWarfare Destroyer(AWD)andLandingHelicopterDock(LHD). ThefullTermsofReferenceareprovidedatAnnexAandtheCausalFactorsareprovidedat AnnexB.AsummaryoftheCausalFactors,includingseveraladditionalfactorsidentified duringthecourseofthisreview,iscontainedinSection2.3.

1.2

ReviewMethodology

TheTeamdevelopedabroadengagementstrategytoensurethattheCausalFactorswere fullyunderstoodandtodeterminewhatremediationwasalreadyunderwayorplanned. Overseventyfourstakeholdershavebeeninterviewed,includingtheSecretary,theChiefof theDefenceForce,theChiefExecutiveOfficeroftheDefenceMaterielOrganisationand seniorofficersandtheirstaffinNavy,DMO,StrategicReformandGovernanceExecutive, AuditDivision,AcademiaandIndustry.Alistofstakeholdersinterviewedisprovidedat AnnexC. SubmissionswereinvitedfrominternalandexternalpartiesthroughnationalandDefence publications.Thirtysixwrittensubmissionswerereceivedfromawidecrosssectionof stakeholders.AlistofindividualswhoprovidedsubmissionsislocatedatAnnexD. SitevisitsweremadetotheAmphibiousandAfloatSupportSystemProgramOffice(SPO) andAmphibiousandAfloatSupportGroupatGardenIsland,Sydney.ToursofTobrukand Kanimblawerealsoconducted,whichprovidedanopportunitytospeakwithmembersof thecrewandviewtheconditionofthevessels.AvisitwasmadetotheAWDprojectoffice inAdelaidetoconsultwithmembersoftheAWDAlliance.TheTeamalsoconsultedwiththe LHDSPOdirector,theJointAmphibiousCapabilityImplementationTeamandtheAWD CapabilityImplementationTeaminCanberra. TheTeambenefitedfromtheparticipationoftwosubjectmatterexperts,AVMNeilSmith (retired),whosuppliedextensiveknowledgeofAirForcetechnicalregulationand engineering,andRADMBrianAdams(retired)whobroughtextensiveexperienceinNavy culture,managementandoperations. CDREMichaelHoughtonprovidedvaluableinputthroughoutthereviewperiod,particularly throughhiscontributiononcurrentandfutureriskmanagementinNavy(SeeReferenceL). DefenceAuditDivisioncompletedasupportinginvestigationintosustainmentrelated reportingontheAmphibiousandAfloatSupportfleet. Thisplanwasdevelopedthroughanalysisoftherelevantreformactivitiesalreadyunderway andidentificationofadditionalworkrequiredinaddressingtheCausalFactors.TheTeam wasstruckbythelargenumberofreviewsandotheractivitiesthatarepertinent(seelistof

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Referencesatpage17).ManyofthechangesrequiredtoimproveNavymaintenancehave beenidentifiedinthesereports,buthavenotyetbeenfullyrealised. Theplancontainsanumberofrecommendationsthatsupportorsupplementtheseexisting reforms.Thenumberoftheseadditionalrecommendationshasbeenlimitedtothosethat willdelivermostbenefittoDefenceandDMO2.Therearealsoanumberofsuggestions containedwithinthetextoftheplanandsummarisedinChapter10,whichifactedupon, willrealisefurtherbenefits.WhilsttheTeamsrecommendationshavebeenidentifiedand standalone,thesubstantialreformrequiredwillnotoccurunlessmanychangesalready identifiedinsomeofthepreviousreviewsarealsofullydelivered.TheTeamhastherefore identifiedtheseimportantexistinginitiativesandproposesasinglegovernancemodelto overseethecompletepackageofmeasures.

Figure1:LandingPlatformAmphibious AlthoughDMOispartofDefence,forclaritythisPlanusesthetermDefenceandDMOtodistinguish betweenDMOandotherpartsofDefence.

2

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Chapter2
2.1 HistoricalContext

CONTEXT

TheNavyhasundergonemajororganisationalchangeonatleasttwooccasionsinthelast fourteenyears,aswellasanumberofminoradjustments.Until1997theRoyalAustralian NavyincludedtheHeadquartersinCanberraandMaritimeCommandandSupport CommandNavylocatedinSydney.Inbroadterms,theMaritimeCommandwas responsiblefortheoperationofallNavyships,submarinesandaircraftandthecollective trainingofofficersandsailors.SupportCommandNavywasresponsibleforlogisticsand maintenanceofalltheoperationalforces,fortheindividualtrainingofallNavyofficersand sailors,andfortheadministrationofallbasesandothershorefacilities. DirectresponsibilityforthesustainmentofmaritimecapabilitywastransferredfromNavyto thejointSupportCommandAustraliain1997.TheDefenceMaterielOrganisationwas formedin2000bymergingtheDefenceAcquisitionOrganisationandSupportCommand Australiainordertoaddresstheinterfaceissuesbetweenacquisitionandsustainment. FollowingtheDepartmentalrestructureundertheDefenceReformProgramin2000,Navy SystemsCommandwasestablishedtoundertaketheremainingSupportCommandNavy functionsnottransferredtotheDefenceMaterielOrganisation. In2009,theNavyorganisationwaschangedsubstantiallyagain.NavySystemsCommand wasdisbandedandoperationalforceswereplacedinforcesandgroupsunderMaritime Command(thenameofwhichaccordinglyrevertedtotheformertitleofFleetCommand). FleetCommandalsoassumedresponsibilityforallindividualandcollectivetraining,formost Navalactivitiesconductedashoreandforthecommandofallbasesandothershore facilities. TheNavyTechnicalRegulatorysystemwasformallyestablishedin2002,(inresponsetothe HMASWestraliadisasterBoardofInquiryreport),andhasremainedlargelyunchangedsince thattime.ItwasbasedonthesuccessfulRoyalAustralianAirForceTechnicalRegulatory System.Theframeworkwasagreed,butNavyassignedconsiderablyfewerresourcestoits implementationandupkeepthandidAirForce.Thisremainsthecasetodayandis consideredfurtherinChapter7.

2.2

Preparedness

AustralianDefenceForce(ADF)doctrinelinksanumberofconceptstodescribehowits capabilityisdevelopedandmaintained. OneconceptisthatofPreparednesswhichisthecombinationofReadinessand Sustainability(seeFigure2).Readinessreferstotheabilityofacapability,orelements thereof,tobecommittedtooperationswithinaspecifiedtime,whileSustainabilityrefersto theprovisionofallformsofsupport,includingequipmentmaintenance,thatenable capabilityelementstoparticipateinoperationsforaslongasisrequired. TheGovernmentsrequirementsoftheADFaretranslatedviatheAustralianMilitary Strategy,theChiefoftheDefenceForcePreparednessDirectiveandtheJointOperations CommandOperationalPreparednessRequirementintoaspecificReadinessand SustainabilitypostureforallelementsoftheADF.Forthecommandingofficersofthe NavysamphibiousshipsthiswillultimatelybeintheformofaNoticeforSearequirement

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expressedintermsofhoursordaysandguidanceontheamountofstoresandsparesthey musthaveonboard. WhenashipisunderNoticeforSea,forexample,at24 hoursNoticeforSea,allcrewmembersmustbeableto returnonboardandtaketheshiptoseawithinthat period.Anyoftheshipssystemsorequipment shutdownfordefectrectificationorplanned maintenancemustbecapableofbeingrepaired, reassembledandmadereadywithinthattime.Anything thatoccursthatwillpreventashipregainingoperational capabilitywithinthespecifiedtimemustbereportedto FleetCommand.Seriousequipmentdefectsare reportedandrepairsarrangedthroughaprioritised systemofUrgentDefectreporting.
Figure2:ThePillarsofPreparedness

Theeffectiveandtimelycompletionofplannedmaintenanceisoffundamentalimportance tobothReadinessandSustainability.Intheshortterm,itensuresthatshipsarecapableof doingwhattheGovernmentrequiresofthemwithindirectedtimeframes.Inthelonger term,itensuresthatshipsarekeptinaconditionforemploymentintheirdesignedroles throughouttheiroperationallife.

2.3

TheCausalFactors

TheCausalFactorscontributingtotheunavailabilityofNavystwoLandingPlatform Amphibiousships(LPA)andtheirremediationrequirementsarewellknownbyDefenceand havebeencommunicated,bothformallyandinformally,withintheNavy,DMOand contractorcommunityoverseveralyears.TheCausalFactorsthatformedthefoundation fortheTeamsdeliberationscanbefoundatAnnexB.Theyaresummarisedbelowandwere previouslyadvisedtotheMinisterforDefencebytheSecretaryandtheChiefoftheDefence Force. HMAShipsManooraandKanimblawerepurchasedin1994withaninadequatesetof logisticsupportproducts,includingdatacoveringcertification,configuration managementandplannedmaintenance.DefenceandDMOhavebeenunableto successfullyaddressthisshortcomingthroughlackofresourcesandpressuretokeep theshipsrunningtomeetoperationalrequirements. Theshipsweremodifiedquitesignificantlybeforeintroductionintoservicein1999. AlackofgoodConfigurationManagementdocumentationcoveringthese modificationsfurthercontributedtothecertification,configurationandmaintenance datafailings. Theshipsarenowapproximately40yearsoldandareattheendoftheircost
effectiveness.

NavyandDMOhavelostcriticalprofessionalskillstoIndustryasaresultofthedrive tooutsourcedeepermaintenance.Thishascausedsubstantialtechnicalresource shortages.

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ThereissignificantaggregatedriskassociatedwiththeLPAs(seeFigure3)asaresult ofshortcomingsinmanninglevels,experience,maintenance,IntegratedLogistic SupportandConfigurationManagement. NonconformancetotheNavyTechnicalRegulatoryFrameworkresultedfromacan do,makedooperationsorientatedattitude(seeFigure4).Thiswasdueinparttoan inaccurateperceptionthattheseweresecondtiershipsnotsubjecttothesame risksassubmarinesandaircraft. TheStrategicReviewofNavyEngineeringhighlightedtheneedforsignificantreform, toensuretheeffectivenessand sustainabilityoftheRoyalAustralian NavysTechnicalCommunityandits contributiontogoodengineering practiceandfuturenavalcapability. TheDMOAmphibiousandAfloat
SupportSystemProgramOffice(SPO)
competencehasfallenwellbelowan
acceptablelevel,resultinginahighly
reactivestateandtherecentremoval
ofitsAuthorisedEngineering
Organisationstatus.

Figure3:ExampleofRustAboardKanimbla

SeveraladditionalCausalFactorshavebeenidentifiedduringtheconductofthisreview: TheNavyengineeringorganisationisunderresourcedandfragmentedwithcomplex linesofauthorityandaccountability. Navyhasnotbeenabletoperformitsrole

astheCapabilityManagerbecauseof
underresourcingandineffectivereporting
ontheFleetsconditionupthechainof
command.
DMOandNavydonothaveabusinesslike
relationshipbasedonformal,measurable
agreementsatmultiplelevelsthroughout
theorganisations.

Figure4:IncorrectPartsFittedto KanimblaviaImprovisedCoupling

Formanyyears,preventativeandcorrectivemaintenancehasnotbeencarriedout becauseofthehigherpriorityaffordedtooperationaldemandsovermaintenance requirements.Therisksinvolvedindeferringmaintenancearenotfullyappreciated bymanynonengineeringofficersintheNavy. Shortterm,individualcontractsfortheconductofExternalMaintenanceare resourceintensiveandfailtofosterIndustryinvestment.

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TheTechnicalInformationManagementSystemhassignificantshortcomingsandis animpedimenttogoodpractice.

Manyoftheseissueshavebeenconsideredinarangeofreports,reviews,formal investigations,andDefenceinternalworkingpapers.Theyhighlightinadequaciesin governance,regulation,systemsandprocedures,relationships,safety,skillsandtools.The keyreportsare: ThereportoftheDefenceProcurementandSustainmentReview(Mortimer), ReferenceA,soughttheimplementationofbetterKeyPerformanceIndicatorswithin theMaterielSustainmentAgreementsbetweentheCapabilityManagersandDMO andcalledforathroughlifecostassessment,irrespectiveofwhetherfundingis budgetedforacquisitionorsustainment.

TheStrategicReviewofNavalEngineering(Hammer),ReferenceB,contains numerousrecommendationsaddressingdegradedengineeringcapabilityinNavy. Attheoperatinglevel,fortnightlyreportsfromtheAmphibiousandAfloatSupport SPOinDMO,between2009and2010,showmanagementtryingtohighlightthe complexityofthetask,theoverwhelmingworkloadintheprogramofficeandthelack ofinfluence,skillsandresourcestomeetthechallenge. TheHelmsmanSustainmentComplexityReview,ReferenceC,andtheKonektReport intotheAmphibiousandAfloatSystemProgramOffice,ReferenceD,highlightthe highlevelofcomplexityfacingtheAmphibiousandAfloatSupportSPOandthe elevatedlevelofworkrelatedstressexhibitedbythestaff.Theformerreport,for example,callsfor:thedevelopmentofaSustainmentManagerrolesimilartothatof aProjectManager;theneedforanAssetManagementMethodology;thecreationof businessorientatedreports;andimprovedrelationshipswithsuppliers. TheReviewintotheUnderlyingCausesLeadingtotheOperationalPausefortheLPA Class(HMAShipsKanimblaandManoora),ReferenceE,statesthatnotwithstanding manydedicatedofficersandsailorsworkingtirelessly,failureoccurredasaresultof Navysystemsthatareinadequateandunderresourcedandculturaldifficultiesthat compromisedstandardsandplacedanoverwhelmingfocusonachievingthe operationalprogram.

Themanyreports(thosehighlightedaboveandtheotherreportslistedintheReferences) haveaddedcomplexity,leadingtoreviewfatigue.Manyoftherecommendationshavenot beingfullyimplementedduetolossofmomentum,shortreviewcyclesandscarcityof resources.Clearly,remediationlies,inpart,incommittedandtenaciousleadershiptoacton thesefindings.

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Chapter3
3.1 Introduction

OVERVIEWOFTHEREFORMPLAN

TheTermsofReferencerequirethedeliveryofaplantoreformtheAmphibiousandAfloat Supportrepairandmaintenancepractices.TheTeamhasfollowedthetraditionalapproach fordevelopmentofacorporateplan,namely:clarifystrategicobjectives,assessthe environment,identifystrengths,weaknesses,opportunitiesandthreats,anddevelop strategicandoperationallevelactionstoachievetheobjectives.However,unlikeatypical plan,theresourceimplicationshavenotbeenassessed.Thisworkshouldbecompletedby Defenceduetothesecondordereffectsassociatedwithresourceprioritisation.

3.2

ReformPlanOutline

Inordertodevelopameaningfulplaninthetimeallowed,theTeamcompletedanumberof stagesconcurrently.Theseareoutlinedbelow: Stage1GainagoodunderstandingofthestrategicobjectivesofNavy,theFleetCommand andtheSurfaceForceCommand,includingtheobjectivesfortheAmphibiousandAfloat Supportships.TheChiefofNavysStrategicIntentis: Todelivertrulyeffectivecapabilitieswithinourresourcesaswefundamentally transformNavytodaytodeliverandsustainForce2030.Amidthese challenges,wewillalsocontinuetomeetoperationalobligations3. NavysStrategicobjectiveis: ToprovidemaritimeforcesthatcontributetotheADFscapacitytodefend Australia,contributetoregionalsecurity,supportAustraliasglobalinterests, shapethestrategicenvironmentandprotectournationalinterests.Navywill maintainsufficientmaritimecombatantforcestodeployonoperationswhile managingkeychallengesandcapabilityriskssuchasthestateofthe amphibiousandaviationforces,shortagesoftrainedpersonnelandupgrades toanumberofmajorfleets.Theamphibiouscapabilitywillbeenhancedin 201112with....theBayClassLandingShipDock.Theacquisitionwill ensuretheNavyhastheamphibiouscapabilityitrequiresforoperationsand humanitariansupportintheAustralianregionaspartoftheoverall amphibiouscapabilitytransitiontotheCanberraclassLHDshipsin20144. Stage2IdentifythecontextinwhichNavyandDMOcurrentlyoperate.Gainan understandingofpreviousreviews(andotherworkunderway)thatarerelevantto AmphibiousandAfloatSupportrepairandmaintenancepractices.Evaluateexisting practicesinthisareaandthechallengesbeingfaced. Stage3Assessthestrengths,weaknesses,opportunitiesandthreatsassociatedwiththe AmphibiousandAfloatSupportshiprepairandmaintenancepractices. Stage4Engagewithabroadcrosssectionofstakeholderstodevelopaplanthatincludes strategicandtacticalactions.
3 4

NavyStrategicPlan20102015,ReferenceH DefencePortfolioBudgetStatements20112012,ReferenceI

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Stage5Analysetheactionsrequiredanddetermineanappropriateimplementation schedule. InordertoachieveNavysStrategicObjectivesinthecurrentcontext,aplanofstrategicand tacticalactionshasbeendeveloped.Asanillustration,theplanissummarisedinFigure5 below.

Figure5:ReformPlan

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3.3

ReformThemes

TheTeamidentifiedsevenmainreformthemes.Thesethemesareinterdependentand overlaptosomeextent.Eachoneisanessentialcomponentoftheoverallsolution. LIFECYCLEMANAGEMENTChapter4 ThisChapterhighlightstheimportanceoftheeffectiveandefficientsustainmentofallNavy capabilityandtheneedforapracticalmethodologytodeliverthis.Itarguesthatdecisions takenduringacquisitionandthroughoutoperationscanhaveanegativeimpactonwholeof lifecostsandpreparedness.Itcontainsseveralrecommendationstoaddressthisriskand identifiestheneedformoresophisticatedsustainmentplanningtoensurethatfundingand resourcesmatchthethroughlifesupportneeds. ACCOUNTABILITYANDRESPONSIBILITYChapter5 ThisChapterconsidershowtoensurethattheChiefofNavy,astheCapabilityManager,has clearaccountabilityforthroughlifemaritimecapability.Itidentifiesseveralweaknessesin thecurrentsystemsthat,ifaddressed,willincreasetheauthorityandtherefore accountabilityoftheFleetCommanderandChiefofNavy. RISKMANAGEMENTFRAMEWORKChapter6 ThisChapterreviewstheeffectivenessofthecurrentriskmanagementframeworkasit relatestothemaintenanceofNavyships.Itcontainsarecommendationthataddressesthe needtoestablishriskmanagementattheenterpriselevelandfullyconsidertheriskbenefit tradeoffbeforedeferringmaintenanceandmaintenanceavailabilityperiods. ENGINEERINGFUNCTIONChapter7 Oneofthemostimportantareasofreformisthatoftheengineeringfunction,especially withinNavy,andinparticularwithrespecttocomplianceandassurancemechanisms.This ChapteraddressesthecomplexityandscarceresourcesassociatedwiththecurrentNavy andSPOengineeringstructuresandtheneedtorebuild.Itisessentialthatthecurrentgap betweenmaintenancerequiredandmaintenanceperformedisclosedasamatterofpriority. Lastly,itreviewsthemaritimetechnicaldataandinformationmanagementsystems. CULTUREChapter8 ThereisaculturalnormthatallowstheNavyandDMO(Maritime)tobelievethattechnical complianceisnotessentialandacceptsmassagingofinformationasitmovesupthechainof command.ThisChapterconsiderstheseissuesandprovidescommentonthesuccessful implementationofaculturalchangeprogram. WIDERIMPLICATIONSChapter9 Manyofthereformsunderwayandtherecommendationsofthisreportwilldeliver substantialbenefitacrosstheFleet.ThisChapterconsidersthestatusofengineeringand maintenancetasksacrossthefleetandprovidesanassessmentofthemaintenanceconcepts fortheLHD,AWDandLargsBay.Italsoconsiderstheresourceimplicationsoftheselarger, morecomplexships. PLANFORIMPLEMENTATIONChapter10 Itisimportanttoensuretherecommendationsofthisplanandoftherelatedreviewsare implemented.ThisChapterliststherelatedreviewsandidentifiestheassociatedactions.It providestheplanforreform,includingagovernancestructuretooverseeimplementationof therecommendationsanddeliveryschedulesforeach.

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Chapter4
4.1 Introduction

LIFECYCLEMANAGEMENT

TheTeamhasidentifiedspecificchangestoimprovetheeffectivenessandefficiencyofthe sustainmentfunctionformaritimemateriel.Effectivesustainmentwillhaveadirectand positiveimpactonpreparednessandefficientsustainmentwillhelptoaddressthecurrent gapinresourcing. ThisChapteroutlinesrecommendationstodeliverthechanges.Theseincludetakinga wholeoflifeview,improvingsustainmentplanning,strengtheningrelationshipswith IndustryandtheremediationofshortcomingsinInformationandCommunications Technology(ICT). TheTeamrecognisesthatDefencehasapolicyinstructiononlifecyclecosting(see ReferenceV).However,itisconsiderablyoutofdateandcomplianceisinadequate.

4.2
4.2.1

LifeCycleMethodologies
AssetManagementMethodologyandSustainmentMethodology
Systematicandcoordinatedactivitiesandpracticesthroughwhichan organisationoptimallyandsustainablymanagesitsassets,theirassociated performance,risksandexpendituresovertheirlifecyclesforthepurposeof achievingitsorganisationalstrategicplan.

TheInstituteofAssetManagementdescribesAssetManagementas:

AssetManagementincludesneedsdefinition,requirementsdevelopment,acquisition, sustainmentanddisposal,anditcoversallfundamentalinputstocapability.Asset ManagementintheDefencecontextisillustratedinFigure6.

Figure6:AssetManagementScope

TheTeamobservedalackofdisciplineandrigourinthemanagementofmaritimeassets.An effectiveAssetManagementmethodologywouldestablishthefoundationtoaddressseveral oftheidentifiedCausalFactors.Itwouldensurethat:

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decisionstakenduringacquisitionarebasedonwholeoflifeconsiderationsrather thanjusttheacquisitioncomponent; capabilityplanningactivitiesfullyconsiderthecostsofmaintainingtheexistingfleet asaninputtothedecisiononwhatnewcapabilityshouldbeacquired;and planningisimprovedtoallocateadditionalsustainmentresourcesascapabilitiesage. OnedisadvantagewiththecurrentinformalapproachtoAssetManagementisthelost opportunitytomovethewholeenterprisetoahigherlevelofmaturity.TheCarnegieMelon UniversityCapabilityMaturityModelisregardedasabenchmarkforprocessmaturity measurement.Itdefinesfivelevelsofmaturityasfollows: Initial(chaotic,adhoc,individualheroics) Repeatable(processismanagedinaccordancewithagreedmetrics) Defined(processisdefinedasastandardbusinessprocess) Managed(managementcancontrolthroughtheprocess) Optimizing(processincludescontinualimprovement)

Athoroughevaluationhasnotbeenpossibleinthetimeavailable,butitisclearthatthe MaritimeAssetManagementprocessmaturitywouldnotbeinthehigherperforminglevels oftheModel. SustainmentisanimportantsubcomponentofAssetManagementanditscomponentsare illustratedinlightorangeinFigure6.DMOisthemainproviderofsustainmentservicesto theCapabilityManagers,butthereissignificantdiversityinprocessacrosstheorganisation. ThisshouldbeaddressedthroughthedevelopmentofaSustainmentManagement methodology(asrecommendedintheHelmsmanSustainmentComplexityReview, ReferenceC)withtheearlyandcloseinvolvementoftheCapabilityManagers.This involvementisessentialastheCapabilityManagersarenotonlytheownersoftheassets, butalsodeliversomeessentialsustainmentservices.NavyalsohasakeyroleintheSmart SustainmentcomponentoftheStrategicReformProgram. ItshouldbenotedthatDMOhasworkunderwaytodefineanddevelopaSustainment ManagementModel(seeReferenceQ).Whilstthescopeofworkseemstobeappropriateit isofconcernthatthisactivityislargelybeingundertakeninisolationfromtheServices.Itis necessary,foreffectiveworkingrelationshipsandsharedculturethatboththeAsset ManagementandSustainmentMethodologiesbedevelopedcooperativelybyNavy(and ideallyallServices)andDMO.

4.2.2

TakingWholeofLifeDecisions

TheLPApurchasewaswidelyregardedasanopportunitybuy.In1998,theActingDefence InspectorGeneral,ReferenceU,foundthepurchaseandconversionlackedclearguidance onthecapabilitysoughtandanydetailedanalysisofthecapabilityoptions.Further,the designstandardsfortheLPAswereneitherunderstoodnoragreedandmuchofthe configurationdatawasnotprocuredduringacquisition.Asaresult,plannedmaintenance datawasincompleteormissing,sparesholdingswereinadequateornonexistentand technicaldocumentationwasoutofdate.Althoughseveralattemptsweremadetorectify thisshortfall,theywereunsuccessful.Withoutanadequatebaseline,anunderresourced

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SPOhadnochancetodevelopaviablelogisticssupportenvironment.Asaconsequence, theLPAshavedeterioratedinconditionoverthelastdecade. TheTeamheardthatintegratedlogisticssupportproducts(training,spares,documentation etc.)aresometimesstillsacrificedduringacquisitioninthecomplextradeoffbetween capabilityandcost.Thisisafalseeconomy.WhiletheLPAsareconsideredtobean extremeexample,failuretoacquiretheseproductsandplanforsustainmentseriously increasesthewholeoflifecostsandtheriskofnotachievingoperationaloutcomesovera vesselsplannedlife.ItiscriticalthattheLHDandAWDcontinuewiththeircurrentplanto provideafullsuiteoflogisticssupportproducts. Blanchard5illustratedthisissueinhisIcebergmodel,showninFigure7below.Itdepictsthe supportaspectofprojectsunderthewaterandinvisibletotheunwary,whofocusonthe partthatisvisible.

Figure7:IcebergModel

ThereisevidencethatinDefenceandDMO,decisionsmadeduringacquisitionremain largelyfocussedonthegoalofdeliveryratherthanawholeoflifeview.Arecommendation
BenjaminS.Blanchard,ProfessorofEngineering(Emeritus)atVirginiaPolytechnicInstituteandState University

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toTakewholeoflifeDecisionsisincludedwithotherrecommendationsfromthischapterat 4.5.

4.2.3

LogisticsSupportConcept

ALogisticsSupportConceptprovidestheguidanceforengineeringsupport,maintenance support,supplysupportandtrainingsupport.NavysLogisticsSupportConceptisshapedby anumberoffactors,including:technology;theamountofworkthatcanrealisticallybe performedonboardships;therelativecostsandthestrategicnecessityofrepairing equipmentinAustraliaversussendingittooverseasrepairfacilities;AustralianIndustry considerations;andskillsrequiredinNavy. Acquisitionsourcesandtechnologiesemployedarequitediverseandthereforeseparate LogisticSupportConceptsmayberequiredforeachshipclass.However,LogisticSupport ConceptsneedtobecoordinatedtoensurethatbothNavyandAustralianIndustryare allocatedalevelofworksufficienttomaintainanddeveloptheskillsoftheirtechnical workforces.InthecaseofNavy,thismeansalevelofworkthatwillbeachievable,but challenging,facilitatingtheretentionoftradesmenintheServicetoassureaviabletechnical workforce. StrikingtheappropriatebalancebetweenOrganicMaintenance(performedonboardby Navypersonnel)andExternalMaintenance(normallyperformedinportbyIndustry) requiresconsiderableguidancefromNavyduringtheprojectdefinitionstage.However,the TeamnotedthatNavyisillequippedtoperformthispolicydefinitiontask.Therearefew resourcesinNavydedicatedtologisticspolicyissuesandasaresultthereisariskthat projectsmayimplementsolutionsthatwillnotalignwithNavyrequirementsfortechnical skillsdevelopmentandthemanningofshipsengineeringdepartments. Arecommendationtoaddressthisimbalanceandtheissuesidentifiedearlierbyactingto FormaliseAssetandSustainmentMethodologiesisincludedwiththeother recommendationsfromthischapterat4.5.TheNavyengineeringresourcingaspectsare consideredinChapter7.

4.3
4.3.1

EffectiveSustainment
PreventativeMaintenanceDataforLPAs

AsoutlinedinSection4.2.2,theshortfallinlogisticsproductsacquiredfortheLPAs,andthe consequentabsenceofaClassMaintenancePlan,meantthatplannedmaintenancewas inadequatelydefined,scopedanddelivered.Theseshortfallsareasignificantfactorinthe grossdeficiencyinactualmaintenanceperformedovermanyyearsandaconsequent degradationintheconditionoftheships.

4.3.2

OrganicMaintenancePerformedontheLPAs

TheinformalLogisticSupportConceptforAmphibiousandAfloatSupportshipsconsistsof bothExternalandOrganicMaintenance.WhilstdataonthecompletionofExternal MaintenanceforKanimblaandManoorahasbeenprovidedtotheTeam,andisconsidered inSection4.3.3,Navywasunabletoprovidereliableinformationonthepercentageof plannedOrganicMaintenanceperformedbytheLPAsshipscrewsanddoesnotreliably trackthisdata.Itisclearthough,thatmuchoftherequiredOrganicMaintenancehasnot beencompletedforthefollowingreasons:

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insufficienttimemadeavailabletoshipstechnicalstafftoundertakemaintenance duetothedistractionofotherdutiesandtheimpactofminimummanning; incompletemaintenanceinformationandslowandcumbersomeIntegratedLogistic Supporttools; technicalstaffskillsshortages; theageoftheshipsleadingtohighermaintenancedemands;and inadequatetrackingofOrganicMaintenanceperformed. Thisdeficiencyhashadasignificantimpactontheconditionofthevesselsandaflowon effectonExternalMaintenance.Thescopeofcontractshasbeenchangedtoaddressthe incompleteOrganicMaintenancetasksinsteadofperformingtheExternalMaintenance workthatshouldhavebeencompletedintheallocatedtimeperiod.Inaddition,the urgencytoreturntheshipstooperationshasmeantthatitwasoftenthecasethatonly criticalExternalandcorrectivemaintenanceactivitieswerecompleted.

4.3.3

ExternalMaintenancePerformedontheLPAs

Asmentionedpreviously,reducedsustainabilityhasadetrimentaleffectonpreparedness. Thisiscontrarytothebelief,whichappearstoexistintheNavyculture,thatstrict adherencetomaintenanceplanningadverselyimpacts(ratherthanenables)operations. ThepracticaloutcomeofthiscultureintheAmphibiousandAfloatSupportfleetisthat maintenanceperiodshaveoftenbeendeferred,curtailedorevencancelled,withno rigorousmanagementmechanismputinplacetoensurethattheworkiscompletedlater. Itisimportanttonotethatadecisiontodelaymaintenancecouldbeacceptablefor operationalpurposes,butitmustbetakenwithinthecontextofanoverarchingrisk managementframeworkandbeaccompaniedbyarigorousengineeringassessmentofthe impactandaplantorecoverthedeferredmaintenance.Theapprovalauthorityfordeferral ofmaintenanceavailabilityperiodsshouldbetheFleetCommander,actingontheformal adviceoftheChiefEngineerintheSPO.Thisresponsibilityshouldnotbedelegated. TheTeamhasanalysedtheperformanceofExternalMaintenanceactivityfortheManoora andKanimblaagainsttheagreedrequirement,asdefinedinamaintenanceplancalledthe UsageUpkeepCycle.Dataexistssince2005andFigure8belowdemonstratesthattherehas beenlittledisciplineinmeetingtheobligationsofKanimblaandManoorasUsageUpkeep Cycle.Infact,in2005,noExternalMaintenancewasperformedonKanimblaandlittlefor Manooraandin2009maintenanceperformedfellwellshortoftherequirementforboth ships.BythetimetheSeaworthinessBoardmettoconsidertheLPAsinSeptember2010, onlycorrectivemaintenancewasbeingperformed.Asbadasthisis,itisabestcase assessmentasthereisnoevidencethatthescheduledperiodsweresufficientfortheneed. Itshouldalsobenotedthat2010hadextraordinarymaintenancerepairperiodsinabelated andunsuccessfulattempttorectifytheshipscondition.

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Figure8:MaintenanceShortfallKanimblaandManoora

4.3.4

AdherencetotheOriginalOperatingConcept

Afurtherrequirementforeffectivesustainmentistoensurethatequipmentisused accordingtoitsoriginaloperatingconcept.Asanexample,theTargetIndicatingRadaron theANZACclassshipsisahighperformancesystemthathasbeendesignedforoccasional useinoperationsorexercises.However,theTeamhasbeeninformedthatithasbeenused frequentlyfornavigationalpurposesbecauseofitsbetterrangeanddiscrimination

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performance.Ithasnotbeendesignedforthislevelofuseandthisissignificantlyimpacting thereliabilityandlongevityofthesystem.Suchachange,fromtheoriginallyintendeduse, shouldonlyoccurafterrigorousengineeringconsideration.TheAssetManagement methodologyneedstoincludeaStatementofOperatingIntentthatisacknowledgedbyboth theSustainmentManagerandtheCommandingOfficerandisregularlyreviewed.

4.3.5

TheWayForwardforHMASKanimbla

AprogramofworkisunderwayintheAmphibiousandAfloatSupportSPOtoaddressthe criticaldataandprocessdeficienciesinKanimbla.Thisisofhighimportanceandshouldbe fullyresourcedbyDMOandNavy.Inordertoassistwiththeprovisionoftherequired resources,andtoensuremaximumreturnoninvestment,itisrecommendedthat,if Kanimblaistoberetained,onlymandatoryplannedmaintenanceisconductedandthather operationsarerestrictedtocontingencyactivitiesandthecontinuedtrainingofNavy personneluntilthecurrentcapabilitygapisremoved. ArecommendationtoConstraintheOperationofKanimblaisincludedwiththeother recommendationsfromthischapterat4.5.

4.4
4.4.1

EfficientSustainment
PlanforAgingPlatforms

Sustainmentofcapitalassetsneedstobecosteffectivethroughouttheirlifecycle.The Teamhasbeenunabletofindevidencetodemonstratethatplanningbeforetheacquisition phaseofmajorprojectsisbasedonadetailedcostbenefitanalysisofcontinued sustainmentversusreplacement.ThisisdespitetheexistenceofaDefenceInstruction (General)relatingtothissubject,ReferenceV.Decisionsseemtobemoreheavily influencedbytheneedforincreasedcapabilityratherthanthecostofoperatingthecurrent capability.Bothareessentialcomponents. TheTeamstronglyendorsestheMortimerReviewrecommendationthatDecisionstoeither purchasenewequipmentormaintainexistingsystemsshouldbebasedonthethroughlife costofeachoptionregardlessofwhetherfundingisfortheacquisitionorsustainment budgets. Equipmentfailuresarenotlinearovertimebutinfact,riseataneverincreasingrate towardstheendoflife.ThisisdemonstratedbytheBathtubCurveinFigure9below.This hasadirectimpactonmaintenancerequirementsandcosts.Atpresent,thesustainment budgetsfortheAmphibiousandAfloatSupportshipsarebasicallyflatlined.Thetimeto effectnewmaritimecapabilitydeliveryistypicallyinexcessoftenyears.Itistherefore importanttodeterminetheWearoutFailurePeriodwellinadvance,inordertoplanforboth thereplacementcapabilityandtheincreaseinsustainmentrequiredfortheagingcapability, intermsofpeopleandfunding.ThishasnotoccurredfortheLPAseventhoughtheseships haveprogressedwellintotheirWearoutFailurePeriodswithreplacementsurgently requiredandoperationaldemandsremaininghigh.

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Figure9:TheBathtubCurve

Thereisasimilarpatternacrossthefleet.TheTeamhasanalysedtheactualandplanned expenditureforeachclassofshipacrosstheperiod200506to202021andthereislittle evidencethattheeffectoftheBathtubCurvehasbeenconsideredinbudgetorstaffing plans.Severalbudgetexamples(constantdollars)areshowninFigure10below.Itisclear thatrisingfundingrequirementsasshipsapproachendoflifehavenotbeenconsidered and,inexplicably,budgetprovisioncontinuesbeyondthesedates6.Amatureapproach wouldhaveaclearlydefinedendoflifedateandadjustpersonnelnumbersandbudget allocationsappropriately.

Figure10:FleetMaintenanceBudgetEstimates Thedatesshownabovearetheendoflifeforthefirstshipineachfleet,butthereissomeconfusioninthe data.

6

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ArecommendationtoPlanfortheAgingofVesselsisincludedwiththeother recommendationsfromthischapterat4.5.

4.4.2

ContractingStrategies

TheReviewfoundthatsignificantinefficienciesexistinthecontractingmethodsemployed bytheAmphibiousandAfloatSupportSPO.Whenplanningashipsmaintenance availability,outstandingengineeringtasksaredescribedinaworkpackagethatisputoutto tenderastheStatementofWork.Thesubsequenttendersareevaluatedandthecontract awardedonabestvalueformoneybasis.Althoughthisappearstobeasoundstrategy,itis inefficientwhenappliedtofrequentlyrecurringmaintenanceworkandhasresourcing consequencesintheSPO.Inaddition,itcreatesashorttermapproachfromIndustrythat doesnotencourageinvestment. ShipmaintenanceisalongtermneedandwarrantslongtermpartnershipswithIndustry, ideallyforthelifeoftheship.Asageneralrule,shipmaintenancecontractsshouldbein placeforfiveyears,witharollingextensionoptionforsuccessfuldelivery.TheTeam recognisesthatitwilltakesometimetotransitioninanorderlymannerfromthecurrent threeorfouryeararrangements.TheselongercontractswillencourageIndustrytobuilda knowledgebaseoftheships,investinworkforceskillsandinfrastructureand,asaresultof incentivestoinnovateandagreaterlevelofcertainty,assistwithloweringthecostof ownershipofNavysplatforms. AdifferenceinapproachacrossDMOisdemonstratedthroughanalysisofthecontracting dataforAerospaceSystemsDivisioncomparedtoMaritimeSystemsDivisionsinceJuly2008. Thetotalcontractvalueovertheperiodforbothorganisationsissimilar.AerospaceSystems Divisionletatotalof965contractsfor224platformsacross13types,whereasMaritime SystemsDivisionlet2,829contractsfor69platformsacross11types.Thismuchgreater numberofcontractsinMaritimewouldhaverequiredsignificantlymoreadministrative effort. ItisacknowledgedthatsomeNavyplatformshavetransferred,orarecurrentlyinthe processoftransferringfromtransactionaltolongertermsupportarrangements,suchasthe GroupMaintenanceContracttobeletfortheAnzacfleet.TheAmphibiousandAfloat SupportSPOhaveyettomakethistransition. ArecommendationtoStrengthenPartnershipswithIndustryisincludedwiththeother recommendationsfromthischapterat4.5. TheTeambelievesthatanarrangementwherebyNavyGroups,industryandSPOsareco located,shareinformationmanagementsystems,andhavecommongoalsandmetrics, shouldincreaseefficiencyandeffectivenessthroughimprovedcommunication.These alliancecontractsareusuallycomplexanddemandsophisticatedadviceandhighorder negotiatingskills.Therefore,itmaybenecessaryforDMOtodrawonexternalexpertiseto assistinthiswork.ThenewlyestablishedpartnershipfortheWedgetailAirborneEarly WarningandControlAircraftprojectisanexampleofthisarrangementandwhilstthe contracthasonlyrecentlybeenestablished,thearrangementisworkingwelltodate.

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4.4.3

IntegratedInformationManagementSystems

Managementoftheconditionofamodernnavalshiprequiresaneffectiveintegrated informationmanagementsystem,throughwhichplatformconfigurationcanbemonitored andrecorded,maintenanceplannedandrecorded,andsparesholdingscontrolled.Inthis contexttheTeamreferstotheinformationmanagementsystemastheapplicationsoftware, thehostandservercomputingenvironment,thenetworkinfrastructureandthedata. TheinformationmanagementsystemfortheAmphibiousandAfloatSupportshipsconsists ofthemaintenanceplanningsystem(AMPS),theconfigurationmanagementsystem(CMT), thesparesmanagementsystem(NAVALLOW),theInformationandCommunication Technology(ICT)infrastructureonwhichtheyoperate,andtheconfigurationand maintenancedata.Thecurrentmaritimesystemisnotfullyeffectiveforanumberof reasons,including: Systemusabilityiscumbersomeandslow. Dataintegrityandmanagementofchangesinconfigurationarepoor. Dataexchangebetweenthesystemsismanualandpronetoerror. Nooverallsystemownercouldbeidentified.

Consequently,therewasalackofuserconfidenceinthequalityofdataand,anecdotally, claimsofdatabeinglostduringtransmissionbetweentheshipandonshoresupport agencies. WhileacknowledgingrecentinitiativessuchastheConfigurationManagementImprovement Plan,theConfigurationDataRemediationProgramandimprovementsintrainingand documentation,asystemsapproachisurgentlyrequiredtoaddresstheseissues.Navy shouldleadworktodefineandthendriveremediationoftheinformationmanagement systemsformaritimeengineeringandmaintenance. ArecommendationtoRemediateICTSystemShortcomingsisincludedwiththeother recommendationsfromthischapterat4.5.

4.5

Recommendations

Thefollowingrecommendationswillestablisharigorousandformalisedprocesstoensure thatdecisionstakenduringplanningandacquisitionincludetheimpactonwholeoflife costs.Theywillalsoincreaseattentiononchangingresourcerequirementsoverthelifeof shipsanddelivereffectiveinformationmanagementsystems.Lastly,theywillincrease contractingefficiencyandimproverelationshipswithIndustrythroughthedevelopmentof lastingpartnerships. Recommendation1 FormaliseAssetandSustainmentMethodologies

NavyandDMOshouldjointlyestablishpracticalmethodologiesforintegrated throughlifeAssetandSustainmentManagement.

Recommendation2

TakeWholeofLifeDecisions

DefenceandDMOshouldensurethatdecisionsmadeduringacquisitionfully considerwholeoflifecostsandcapability,througharigorousandformalised AssetManagementprocess.

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Recommendation3

ConstraintheOperationofKanimbla

IfKanimblaistoberetained,Navyshouldconstrainitsusetocontingency operationsandtrainingofNavypersonnel.Resourcesshouldbeassignedto theshipcommensuratewithsafeoperationinthisrestrictedrole,untiltherisk ofacapabilitygapisremoved.

Recommendation4

PlanfortheAgingofVessels

DMOandNavyshouldhavejointplansforvesselsapproachingtheendoflife, which: ensurethatresourceallocationandFleetactivityschedulingallowfor theincreasingsustainmentneeds;and considerthegrowingcostofownership(budgetandpeople)when makingcapabilityreplacementdecisionswithCapabilityDevelopment Group. StrengthenPartnershipswithIndustry

Recommendation5

Whilstretainingcompetitivetension,theDefenceMaterielOrganisation shouldimplementmaritimecontractsthatarebroaderinscopeandlongerin term,tobuilddeeperandcontinuingrelationshipswithIndustry.

Recommendation6

RemediateICTSystemShortcomings

Navyshouldleadworktodefineandthendriveremediationoftheinformation managementsystemsformaritimeengineeringandmaintenance.

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Chapter5
5.1 Introduction

ACCOUNTABILITYANDRESPONSIBILITY

Strongaccountabilityisanessentialcomponentofhighperformingorganisationsasit denotesownershipofaresultoraction.Ensuringstrongaccountabilitycanbeachallenge withinanyorganisation,butevenmoresowithinoneaslargeandcomplexasDefence. Manyaccountabilitymechanisms,suchaspersonalperformanceagreements,job specificationsandorganisationallevelagreementsarealreadyinplaceinDefence,butthey arenotalwaysusedtotheextentrequiredtobefullyeffective.Furthermore,themany committeesinvolved,andtheirdifferentmodesofoperation,leadtofragmentedownership oftheissuesandtheassociatedaccountability. Inparticular,theTeamhasconsideredhowtobestensurethattheChiefofNavy,asthe CapabilityManager,canacceptclearaccountabilityforNavycapability7.TheMateriel SustainmentAgreementbetweenNavyandDMOiscriticalinthisregard,butiscurrently poorlydefinedandweak.

5.2

ComplexRelationshipsCloudAccountability

Organisationalcomplexityisasignificantfactorimpactingaccountability.Acomplex organisationdemandsthatsophisticatedagreements,withclearperformancemeasures,are inplacetoensurethatpersonalaccountabilitiesareunambiguous.Reducingorganisational complexityreducestherequiredmanagementsophisticationandmakesiteasiertoprovide clearaccountability.ButinanorganisationofthesizeandbreadthofDefence,alevelof complexitycannotbeavoided. TheChiefofNavy,astheCapabilityManager,hasresponsibilityforthedeliveryofmaritime capabilityoutputs,butinpracticehasonlyloosecontroloverseveralofthefundamental inputfunctions.Onemethodtoaddressthisuncertaintywouldbetotransferfullcontrol andresourcesforsustainmentofmaritimecapabilitybacktoNavy,asitwaspriorto1997.A second,andpreferableoption,istosignificantlytightentheagreementsbetweenNavyand DMOtoclearlydefinetherequirementsandresponsibilities,withassociatedperformance measuresandreporting.ThesetwooptionsareconsideredmorefullyinSection5.3. TheengineeringandcommandorganisationalstructureswithinNavyareoverlycomplexand distributescarcepersonnelthinlyacrossseveralreportingchains.Thisisclouding engineeringdecisionmakingandaccountability. Asanexample,thediagramatFigure11illustratesthedecisiontreeforthedeferralofa shipsmaintenanceavailabilityperiodduetoanoperationalchange.Suchadecisioncanbe highlysignificantfromanengineeringviewpointandyetChiefStaffOfficerEngineering (thefleetengineer)orHeadNavyEngineeringwouldbeengagedonlyifengineers,whoare notwithintheirdirectmanagementcontrol,decidetoescalateadviceaboutsignificant issues(shownbyredarrows).However,thelikelihoodofthemprovidingsuchadviceis reducedbecausethoseengineersareobligedtoreportuptheOperationalChainof Command(shownbybluearrows)whichissubjecttothecandopressureasoutlinedin Section8.2.Executive(orCommand)authorityultimatelymusthaveprimacyovertechnical
7

DI(G)LOG45012RegulationoftheTechnicalIntegrityofAustralianDefenceForceMateriel,10Sept2010

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authority,butNavyexecutiveauthoritiesneedtofullyandtransparentlyconsidertechnical adviceinordertofulfiltheirbroaderresponsibilities.

Figure11:DeferralofMaintenanceAvailabilityPeriods

ThenaturalconflictbetweentheExecutivefocusonoperationalimperativesandthe engineeringfocusontechnicalintegrityappearstolackbalance,becausetheHeadNavy EngineeringhaslittledirectmanagementcontroloveralargeproportionoftheNavy engineeringworkforce.HeexercisesengineeringcontrolviatheNavyTechnicalRegulatory SystembydelegatingengineeringauthoritytoengineerswhoheadAuthorisedEngineering OrganisationsinbothNavyandDMO.Heisauthorisedtowithdrawadelegationfroma personoranorganisation.Intheory,heisabletomonitortheperformanceofchief engineerssoauthorised,byregularreviewofperformanceindicatorsandbyphysicalonsite audits.However,inpractice,hedoesnothavetheresourcestoeithermonitorperformance orensurecompliance. ItwascleartotheTeamthatthereareshortcomingsintheoperationoftheseorganisational arrangements,primarilycausedbythelackofresourcesappliedtocompliancemonitoring, butalsorelatedtoNavyculture.Chapters7and8explorethesecausesfurther.

5.3
5.3.1

TakingResponsibilityandBeingAccountable
BalancingAcquisition,SustainmentandOperations

Inordertomaximisetheeffectivenessandefficiencyofacapabilitythroughoutitslifecycle, acquisition,sustainmentandoperationaldemandsneedtobebalanced.Thedominanceof anyoneofthesecomponentswouldleadtoareductioninlongtermorganisational

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effectivenessand/orefficiency.Animbalanceinfavourofacquisitionmayleadtounder fundedsustainment,reducingthecapabilitytosupportoperations.Animbalanceinfavour ofsustainmentcouldreduceoperationaleffectivenessandpreventcapabilitiesfrom meetingGovernmentneeds.Animbalanceinfavourofoperationscouldleadtoanunder maintainedfleetandreducedavailabilityandoperationallife,andheightenedrisktothe safetyofpersonnel. PriortothecreationoftheSupportCommandAustraliaandthenDMO,Navyhadsole responsibilityforthesustainmentandoperationofallnavalassets.Acquisition responsibilityresidedintheDefenceAcquisitionOrganisation.Whilstthisprovidedclear accountabilityforboththeoperationandsustainmentofmaritimesystemsaftertransition intoservice,itcreatedasignificantorganisationalbarrieratthepointofcapabilitydelivery. TheresultwasthatcapabilitiesweretransitionedfromtheDefenceAcquisitionOrganisation toNavywithdeficientsupportelements.Italsoincreasedthelikelihoodthatcostswouldbe transferredfromacquisitiontosustainment.ItisimportanttonotethattheLPAswere acquiredundertheformersystem,whensustainmentwasperformedbyNavy. Oneoftheprimeaimsofjoiningacquisitionandsustainmenttogetherwithintheone organisation(DMO)wastomitigatethisrisk.Onthedownside,thiscreatedanorganisation withamatrixmanagementstructurethathadtheundesiredeffectofblurring accountabilitiesandreducingNavyscontroloversustainment.

5.3.2

AccountabilityThroughCapabilityManagement

TheDefenceProcurementReviewin2003(KinnairdReview)identifiedtheimportanceofthe roleofCapabilityManagementinbalancingthedemandsbetweenacquisition,sustainment andoperations.Thisarrangementwasreliantuponstrongmatrixmanagementand businesslikeagreements(akintocontracts).Inordertoachievethis,Kinnaird recommendedthatCapabilityManagersbemadeaccountableformonitoringandreporting oncapabilityfromacquisitiontoretirement. TheeffectivenessofthisconstructwasconsideredfurtherbytheDefenceProcurementand SustainmentReviewin2008(MortimerReview).Mortimerconcludedthatamature customersupplierrelationshipbetweenDefenceandDMOdidnotexist,resultingin CapabilityManagersandDMObothexhibitingacandoculture.Itmadeanumberof recommendationstostrengthentheCapabilityManagementroleandclarifyaccountability. AnumberofsubmissionstotheTeamhaveproposedtransferringsustainmentresponsibility andresourcesfromDMObacktoNavy.Whilstthiswouldsimplifytheresponsibilityfor sustainmentofcapabilities,itwouldmerelyshiftthechallengesbacktothepointof capabilitydelivery.Therewouldbeincreasedtemptationtomakeshortsighteddecisions duringacquisition,whichwouldadverselyimpactsustainment.Thiswouldleadtohigher throughlifecostsand/orreducedoperationaleffectivenessandavailability. Ofcourse,theargumentonlyholdstrueiftheexistinglinkbetweenacquisitionand sustainmentisstrongandthetwocomponentsareheldinequalbalancewithinDMO. WhilstapproximatelyseventypercentoftheDMOworkforceisengagedonsustainment activities,thereisevidencetosuggestthatacquisitionstillattractsmuchmoreattentionand prioritybecauseofitsveryhighpolitical,mediaandindustryprofile.Asanexample,the AWDprojectdesignanddeliverycontractdoesnotyetincludeaprovisiontotransition acquisitionproducts(spares,documentation,trainingetc.)throughtosustainment.

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Moreover,thefundingforthesustainmenttransitionactivitieswasnotincludedinthe DirectCostsoftheproject,butheldinManagementReserve,andisvulnerableto consumptionthroughacquisitioncostpressures.Thesefactorsareindicativeofa disproportionatefocusonacquisitionoversustainmentthatresultsinineffectiveoutcomes, asrecentlyexperiencedintheAmphibiousandAfloatSupportfleet.Thisculturalproblem needstobeaddressedinternallywithinDefenceandDMO,andexternallythroughimproved sustainmentrelatedreportingtoGovernment. Onbalance,theTeamhasconcludedthatthebenefittobegainedthroughtheretentionof acquisitionandsustainmentinthesameorganisationissignificant.Butclearer accountabilitymustbeestablishedthrougheffectiveMaterielSustainmentAgreements(and MaterielAcquisitionAgreements),asoutlinedinSection5.3.5. However,havingaMaterielSustainmentAgreementinplaceisnotenough.Tobeeffective, asignificantstrengtheningofNavyCapabilityManagementisnecessary.Asanexample,the AmphibiousandAfloatSupportGroupCapabilityManagerisresponsibleforelevenshipsin fiveClassesacrossfourStates,buthasjustninestaff.Duetoalackofresourcesandskilled personnelheisunabletomanagethedeferralofOrganic(onboard)Maintenance,orto assessandmanagetheaggregatedriskassociatedwiththeships.Heisunabletoeffectively overseeorreportonsustainmentactivitiesbeingperformedbytheSPOonbehalfofthe CapabilityManager.Navyneedstoprovidesignificantlymoreresourcestothiscritical function. ArecommendationtoIncreaseResourcesforCapabilityManagementisincludedwiththe otherrecommendationsfromthischapterat5.4.

5.3.3

TheDefenceDMORelationship

TherelationshipbetweenDefenceandDMOishighlyinterdependent.Itisinneedof improvement,asthetwoorganisationsoperatewithsignificantautonomyand,on occasions,withinsufficientrecognitionoftheessentialroletheotherhastoplay.Several exampleshavebeenidentified: DMOisdevelopingamethodologyforSustainmentManagement(seeSection4.2.1). ThisworkisbeingcompletedlargelyinisolationfromNavy,ArmyandAirForce,even thoughtheyplayavitalroleasCapabilityManagers,andusersandmaintainersof systems.Withoutinterventionitislikelythatthemethodologywouldbedeveloped tojustincludetheDMOresponsibilities,requiringduplicateworkfromNavy,Army andAirForceandresultinginanunsatisfactoryandpossiblydisjointedsolution. Chapter6identifiestheneedforanintegratedriskmanagementsystembetween DMOandNavy(andideallythewholeofDefence).DMOhasrecentlydevelopeda draftRiskManagementPlanbut,onceagain,itisfocussednarrowlyonitsown businessanddoesnotprovideawholeofDefenceview. ThereisconfusionbetweentheroleandresponsibilitiesoftheFleetengineer(Chief StaffOfficerEngineering)andtheSPOChiefEngineer.Theybothheadorganisations authorisedbyHeadNavyEngineeringtomakemaritimeengineeringdecisions(i.e., AuthorisedEngineeringOrganisations)buttheirengineeringauthoritiesappearto overlap.ThishasledtoFleetdeferringexternalmaintenancewithoutreferenceto theSPOChiefEngineer.

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Chapter7identifiesacriticalshortageofmaritimeengineeringtalentbothinNavy andDMO.Atpresentthetwoorganisationsmanagetheirengineeringworkforces quiteseparatelywithnojointconsiderationofhowbesttosustainthem.There wouldbebenefitsandefficienciesinmanagingthisworkforcemoreholistically. Asoutlined,thecurrentDefenceandDMOconstructmeansthatthetwoorganisationsdo notalwaysoperatecloselytogetherandthereisathemandusfeelabouttherelationship. Furtherstructuralseparation,asoriginallyrecommendedintheDefenceProcurementand SustainmentReview(ReferenceA),wouldmakethesituationworse. TheTermsofReferencehavenotrequiredtheTeamtolookbeyondthemaritimesector,but thereisevidencetosuggestthatimprovementsarenecessaryinotherareasoftheDefence DMOrelationship.InordertoimprovetheoveralloutcomesforDefenceandsincesomany oftherecommendationsrequirejointaction,theTeamhasincludedarecommendationto developCloserWorkingArrangementsbetweenDefenceandDMOinSection5.4.

5.3.4

OtherFactorsInfluencingAccountability

Itisimportanttoensurethatstaffhavetheskillsandknowledgerequiredtoperformtheir respectiverolesandbeaccountable.TheshortNavypostingcycleandworkforceplanning mechanismsdonotadequatelyprepareofficersforsomeofthemorecomplexDMOroles. Forexample,aSPODirectormusthavewelldevelopedskillsincontractmanagement, sustainmentandprojectmanagement,peoplemanagementandtechnicalregulation.Itis clearthatNavydoesnotcurrentlyhaveaneffectiveprograminplacetoensureofficers appointedtoaSPOhavetheprerequisiteskillsandknowledgebeforecommencinginthese roles. Inaddition,theshortpostingcycleofapproximatelytwoyearsfurtherimpactstheabilityof stafftoperforminthesecomplexroles.Thisstandsinstarkcontrastwhencomparedto Industrycounterparts,manyofwhomhaveextensiveexperienceastheyhavebeen undertakingsimilarworkfortheirwholecareer.Onepossiblesolutionthoughdifficultto implementwouldbetoincreasethelengthoftheNavypostingcycle. ArecommendationtoEstablishEffectiveNavyWorkforcePlanningisincludedwiththeother recommendationsfromthischapterat5.4. AtpresenttheFleetCommanderhasresponsibilityforalltheNavy'sships,aircraft, submarines,collectiveandindividualtrainingorganisationsandshorebases.Thisisvirtually theentireNavy,apartfromtherelativelysmallnumberofpersonnelinStrategicCommand inCanberraandinJointServicepositions.IntheTeam'sview,thisspanofcommandisfar toowideandaseriousdistractionfromtheFleetCommander'sprincipalresponsibilityof ensuringthatNavyships,submarinesandaircraftareingoodconditionandtheofficersand sailorswhocrewthemareappropriatelytrainedfortheircombatandotheroperational tasks.Intermsofmaintenance,thespanissuchthatitplacesseveralmanagementlayers betweenhimandhisseniorengineeringadvisersandbetweenhimandtheshipsandother assetsforwhichheisresponsible. ArecommendationtoRefocusFleetCommandisincludedwiththeotherrecommendations fromthischapterat5.4.

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5.3.5

TheInadequacyoftheMaterielSustainmentAgreements

TheMaterielSustainmentAgreementistheprimemechanismbywhichtheCapability Manager(customer)andDMO(supplier)measuresustainmentperformanceagainstan agreedpriceanddeliveryschedule.Navy,notDMO,needstotransformthemaritime MaterielSustainmentAgreement,andassociatedProductSchedules,intoamorebusiness likecontractthatisactivelymonitoredinconsultationwithDMO.Onetellingcomment madetotheTeamwasthattheMaterielSustainmentAgreementsaresostrategicthatthey areuseless.In2008,theMortimerReviewmadeasimilarobservationthatDMOand DefenceneedtofurtherdevelopthekeyperformanceindicatorsinMaterielSustainment Agreements...ThepreMortimerandcurrentProductSchedulesfortheTobruk,Kanimbla andManoorahavebeenanalysed.Therehaveonlybeenminorchangessince2008,withno changesofsubstanceintheimportantareaofKeyPerformanceIndicators.Eachcurrent ProductSchedulehasinadequateKeyPerformanceIndicators.FiveorsixcoverDMOs obligationsandtwoorthreeareNavys.Theyonlyincludeasmallsubsetofthecontractual measuresthatshouldbeplacedoneachpartyandtherearenoconsequencesassociated withnoncompliance.Atworst,nondeliverywillresultinaredtrafficlightstatusinDMO SustainmentOverviewReportswhich,itseemsthatfewstakeholdersread. Additionalrealisticperformanceindicatorsarerequiredtoclearlysetthetargetsandenable effectivemeasurement,reportingandcontrol.Eachindicatormustdefinetheconsequences ofnondelivery.Asanexample,ifNavyfailstodelivertherequiredlevelofOrganic Maintenance,thenthiswouldnormallyresultinadditionalcontractorbasedmaintenance, arrangedthroughDMO.Theadditionalcostsandlostoperationaltimeassociatedwiththis workshouldbebornebyNavy,asaconsequenceofnondelivery.Acertaintolerancelevel couldbeset,sothatsubstantialnondeliverywouldresultintheproductbeingaddedtothe existingProductofConcernlistforadditionalattentionandsupport. Thereareafewmetricsthatmeasureshortfallsinmaintenanceandengineeringactivity. Measuresneedtobeincorporatedthataddresstheoverallstatusofthevessels,the clearanceofUrgentDefects,performanceofplannedandcorrectiveExternalMaintenance, andthemanagementoftemporarydeviationsandengineeringchanges. TheKeyPerformanceIndicatorstendtobeshortterminnatureanddonotfocusonthe importanceofmaintainingandoperatingthecapabilityforthewholeoflife.Thescopeis alsooftenlimitedinsteadofcoveringthebreadthoflogisticssupport.Importantly,they needtoincludeabalanceofleadandlagindicators. Inordertoachievethisimprovement,NavyandDMOmusttreattheAgreementasacritical accountabilitymechanism.Navy,inparticular,shoulddedicatesignificantlymoreresources tothisroleandensurethattheyhavetherequisiteskillsandexperiencetodevelopand managecomplexcontractualagreements. Inaddition,theMaterielSustainmentAgreementshouldbeusedbyDMOtoclearlydefine theobligationsofNavy.Whilstitalreadyprovidesthistoalimitedextent,itfallswellshort ofwhatisrequired.Asanexample,thesupportcostsandlongevityofacapabilityis impactedbythewayitisused.Acapabilitythatisworkedhardwillrequiremore maintenance,leadingtohighercostsorincreasedunreliability.Therearenosuch obligationsorperformancemeasuresintheProductSchedulesforTobruk,Kanimblaor Manoora,ReferenceF.

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ArecommendationtoCaptureMutualObligationsintheMaterielSustainmentAgreements isincludedwiththeotherrecommendationsfromthischapterat5.4.

5.3.6

TheImportanceofEffectiveReporting

DaytodayresponsibilityforCapabilityManagementisdelegatedbytheChiefofNavy, throughtheFleetCommander,toGroupCapabilityManagersforashipClassorClasses. Previously,formalregularreportinguptheChainofCommandthroughtheCapability OverviewReportsformedanimportantmechanismtoinformtheFleetCommanderonthe conditionoftheFleet.TheseReportshavenotbeenpreparedforatleasteighteenmonths. Thishasledtoinformalandadhocreporting,astheGroupCapabilityManagershaveno mechanismtoroutinelyraisetheirconcerns. AnindependentinvestigationintothereportingassociatedwithAmphibiousandAfloat SupportwasconductedbyDefenceAuditDivisionattherequestoftheTeam.Itidentified thefollowingfindings(summarised)withfulldetailsbeingavailableatReferenceK: TheNavyScorecardReportsprovidedtothemonthlyChiefofNavySeniorAdvisory Committeewereoptimisticanddidnotadequatelyidentifythekeyissuesandrisks. Thereisnoregular,formalreportingoncapabilitymanagement.Asaresultthereis noassuranceofthecapabilityriskandissuereportingtoseniorcommand.Navy DirectedLevelofCapabilityreportsonpreparednessarenotaneffectivemechanism toidentifyandtrackissuesofunavailabilityduetotheirhighlysummarisednature. TherewaseffectivereportingofsustainmentissuesandcapabilityproblemsinDMO FortnightlyReports,butthehigherlevelDMOSustainmentOverviewReportsdidnot adequatelycapturetheissues. DMOdoesnotmaintainanaudittrailofchangestotheSustainmentOverview
Reportsastheyprogressthroughmanagement.
CombinedNavyScorecardandNavyDirectedLevelofCapabilityreportsmaskedthe aggregatedriskassociatedwiththeconditionofthefleet.

ThisreportinggapwasclearlyillustratedintheadviceprovidedtotheChiefofNavySenior AdvisoryCommitteeinSeptember2010.ImmediatelybeforetheSeaworthinessBoard madeitsdamningfindings,theCommitteereceivedareportontheLPAships,ReferenceG, whichpraisedKanimblassolidmaterielstateandManoorasstrongmaterielstate,and setanexpectationthattheSeaworthinessBoardwillconcludethattheseshipsenjoyeda positiveriskmanagementapproach.Theviewexpressedwashighlyoptimisticanddidnot alignwithconcernsabouttheconditionoftheshipsthatwerewellknownwithintheNavy AmphibiousandAfloatSupportGroupandDMO. NavyGroupCapabilityManagersshouldpassupthechainofcommanddirect,timelyand candidmonthlyreportingagainstmeasurableperformanceindicators.Thisshouldbe establishedasamatterofpriority.Theseperformanceindicatorsshouldbebasedonthe MaterielSustainmentAgreement,sothatbothDMOandNavyareworkingtowardsthe samegoals. TheDMOSustainmentOverviewReportsformpartofDMOsexternalreportingmechanism. TheyoftenpresentanoverlyoptimisticviewoftheconditionoftheAmphibiousandAfloat Supportships.Theyareinaformthatisnotwellsuitedtoquickidentificationandtracking

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ofissues,aredifficulttoreadandtakemanyhourstoprepareeachmonththroughtheDMO MonthlyReportingSystem.Littlefeedbackhasbeenreceivedfromstakeholdersbythe AmphibiousandAfloatSupportSPODirector.Conversely,theinternalFortnightlyReports fromtheAmphibiousandAfloatSupportSPODirectortotheChiefExecutiveOfficerDMO werefoundtobeinformativeandcandidwithsomefeedbackbeingprovided.However, thesereportsarenotprovidedtotheCapabilityManager.Itwouldseemthatthe FortnightlyReportsprovideamoreusefulreportingmechanismthantheSustainment OverviewReportsandDMOshouldinvestigatecombiningthetwobyadoptingthemost usefulaspectsofeach.ItiscriticaltomaintainthecandidnatureoftheFortnightlyReports. ArecommendationforMoreeffectiveInformationExchangeisincludedwiththeother recommendationsfromthischapterat5.4. Further,in2003theDefenceProcurementandSustainmentReview(Mortimer)foundthat SPODirectorsshouldbeempoweredthroughgreaterdelegationtodelivertheperformance levelssetintheMaterielSustainmentAgreements,andwherenecessary,tonegotiate changeswithDefence.Recommendation4.6ofthatreportreadsTheauthority, responsibilityandaccountabilityoftheSystemsProgramOfficeDirectorsshouldbeformally setoutinaProductCharter.Theyshouldbeheldtoaccountformeetingthefinancialand nonfinancialperformancetargetsdetailedintheirCharter. TheChiefExecutiveOfficerDMOrightlyviewstheseProductChartersasanimportant accountabilitymechanismandregularlymentionstheminhisbiannualBusinessPlan Review.However,theTeamfoundshortcomingsintheirimplementation.TheDMOPolicy onProjectandProductCharters8onlymandatesProductChartersforactivitiesinthetop twooffourSustainmentProductLevelrankings(i.e.MSCATAandMSCATB).ForNaval Vessels,onlytheGuidedMissileFrigates(FFG),theANZACclassFrigatesandSubmarinesare rankedinthosetoptwocategories.Surprisingly,noneoftheAmphibiousandAfloatSupport vesselshavebeenrankedanyhigherthanMSCATCandthisclassificationwasnotreviewed aftertheSeaworthinessBoardinSept2010.TheTeamcouldnotidentifyaresponsible authorityforSustainmentProductLevelclassificationorreview.

5.4

Recommendations

ThefollowingrecommendationswillstrengthentheroleandresourcingoftheCapability Managerandincreaseaccountabilitythroughthisandotherimprovements.Theywillalso providemoreeffectivereportingbytheCapabilityManagerandDMO.Lastly,theywill identifyopportunitiestofurtherstrengthencooperationbetweenDefenceandDMO. Recommendation7 CloserWorkingArrangementsbetweenDefenceand DMO

Whilstretainingthebenefitsofspecialisation,Defenceshouldcommissiona reviewtoachievebetterintegrationofcriticalinterdependentactivities betweenitselfandDMO.

DMI(A&S)140005ProjectandProductCharters3August2010

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Recommendation8

IncreaseResourcesforCapabilityManagement

Navyshouldenhancecapabilitymanagementby: creatingadedicatedcelltoanalyse,evaluate,andcontinuallyassessthe stateoftheFleetagainsttheMaterielSustainmentAgreement; increasingtheresourcesassignedtoCapabilityManagement;and changingtheWorkforcePostingPrioritytoThreeforNavystaff appointedtosustainment,inlinewiththatofacquisition. EstablishEffectiveNavyWorkforcePlanning

Recommendation9

Navyshouldestablishaneffectiveworkforceplanningsystemtoensurestaff havetheskillsandexperiencerequiredforcomplexsustainmentroles.

Recommendation10 RefocusFleetCommand TheChiefofNavyshouldreviewthestructureofFleetCommandtoallowthe FleetCommandertobetterfocusonhiscorefunction,whichistheoperational preparednessofvesselsandcrew.

Recommendation11 CaptureMutualObligations TheNavalMaterielSustainmentAgreementshouldbetransformedintoan activecontractthatmeaningfullycapturesthemutualobligationsofNavyand DMO,supportedbybusinesslikeperformancemeasures.

Recommendation12 MoreeffectiveInformationExchange NavyandDMOmustimprovetheirinternalreportingbycapturingdirect, timelyandcandid,documentbasedinformationthatdrawsonarigorousset ofmetrics.

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Chapter6
6.1 Introduction

RISKMANAGEMENTFRAMEWORK

TheCausalFactorsidentifyasignificantlevelofaggregatedriskfortheLPAs.Thischapter reviewstheeffectivenessofthecurrentriskmanagementframeworkanddetails improvementsthatarenecessarytoensurefullconsiderationoftheaccumulated,holistic riskbenefittradeoffbeforedeferringmaintenanceandmakingothercapabilitydecisions. ImprovementsareconsideredfromaVerticalPerspective(fromtheenterpriseleveltothe workforce)andaHorizontalPerspective(ateachstepintheprocessacrossNavyandDMO).

6.2

VerticalPerspective

Riskmanagementisacentralfunctionasitdirectlyaddressesobstaclesthatpreventthe achievementofplannedoutcomeswithinanorganisation. Theconceptofriskmanagementisknown,documentedand,tosomeextent,practisedin DefenceandDMO.However,theimplementationisnotbestpractice.Itisneitherfully embeddedacrosstheenterprisenoradequatelyacceptedandvaluedwithintheworkforce. ThisisespeciallythecaseinsomepartsofNavyandDMOwheretheconceptandpractice appearweakenedbyinadequatedata,organisationalcomplexityandaculturethatblurs accountability.Forexample,theNavyTechnicalRegulatoryFrameworkreflectsaninherent riskappetiteadoptedbyNavy,but,asdiscussedinChapter7,inadequateimplementation, complianceandassuranceresultinpooroutcomes. Forriskmanagementtobeeffective,itmustbebasedondefinedaccountabilitiesand controls,andsupportedbyacomprehensivecomplianceandassuranceframework.The managementofriskisnotaboutbeingriskaverse,itisaboutensuringthatriskisidentified, assessed,mitigatedtoacceptablelevelsandmonitoredforanycorrectionneeded.Risk managementneedstobelived.Ithastobepartofeverydaylifeintheorganisation. Withoutclearownership,asreflectedinaccountabilityandproactiveleadership,the managementofriskcannotbefullysuccessful.Accountabilitiesareblurred,notonlywithin NavyandDMObutbetweenthem(refertoChapter5).Someindividualswithkeyroles expressedalackofempowermentasaresultoftheorganisationalstructureandalackof focusontechnicalintegrity. AstheCapabilityManager,ChiefofNavyshouldbetheaccountableauthorityformaritime riskmanagementwiththeobviousneedtotakeadvicefromavarietyofsources,perhaps themostsignificantbeingSPOengineering. Bestpracticeriskmanagementhaswellestablishedandlogicalcharacteristics. Theenterprise(inthiscase Navy)leadershipmustdevelopandarticulatea consciousRiskPosture.Thisisaveryhighlevelexpressionofhowitseesits interactionwiththeworldinwhichitoperates.Ithasanimportantinfluenceon strategy. TheleadershipgroupmustthenformulateitsRiskAppetite.Thisisasetof parameterswithinwhichtheorganisationmustoperate.Namely,theconstraints acceptedforthebenefitstobeachievedwithacceptablerisks.TheRiskAppetiteand theRiskPosturewillchangefromtimetotimedependentuponexternalandinternal

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factors.Forexample,theappetiteforriskislikelytobequitedifferentatatimeof warthanatatimeofpeace.Itisnotonlytrueforsuchdiversefactorsaswarand peace,otherfactorswillimpactthestance,suchasGovernmentpreferences,urgency fornewcapabilities,disastersituations,etc. RiskSettingsthenneedtobeidentifiedandcascadedthroughouttheorganisationto guidetheallocationofpriorities,resourcesandactivities.Thesearepracticalmetrics thatguidedecisionmakingthroughoutthewholeorganisation. Independentcomplianceandassurancecompletethelooptoensurethatthe

decisionstakenintheRiskAppetitestatementareadheredto.
Inthisoverallframework,itiscriticalthatriskisintegratedintoplanning,decisionmaking andexecution.Thisprocessenablestheleadershiptoexercisestrategiccontrolofthe enterprise;ensuringopen,rigorousandcontinuingdiscussionabouttherelationship betweentheexternalenvironmentandthecapacityoftheorganisationtoachieveits objectives. ThefundamentalRiskManagementframeworkisillustratedinFigure12.

Figure12:FundamentalRiskManagementFrameworkforSustainment

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Figure13capturesthekeyelementsofhowtheFundamentalRiskManagementFramework ofFigure12wouldapplytomaritimesustainmentandmaintenance.

Figure13:NavyDMORiskFramework

ThedegreeofdifficultyinapplyingthisbestpracticeframeworkinaunifiedwaytoNavyand DMOisappreciated,giventheseamlesscoordinationrequiredforeachstep,ateach horizontallevelandthroughouttheverticalorganisationstructureofbothenterprises.

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Itneedstoberecognisedthatin2010DMOproducedadraftofitsRiskManagementPlan. Itcontainsafulldescriptionofitspurposeandprioritiesandoutlinesariskmanagement framework.Itreferstoseparatemanualsthatprovideriskassessmentcriteriaforprojects andsustainment.IfthiswasintegratedacrossDMOandNavyitwouldsetagood foundationforimprovementinthisarea. ThecentralissuesidentifiedbytheTeamarethat: thereislittleuseofdynamicstatementsofenterpriseriskappetite; thereisinsufficientriskrelatedcoordinationbetweenNavyandDMO;and whilstriskplansandregulationsmaybewritten,thereisinsufficientcompliance.

Thediscussionthatfollowsidentifiesriskrelatedelementsthatneedattentionthroughout theworkinglevelsofthetwoorganisations.

6.3
6.3.1

HorizontalPerspective
RiskManagementinNavyTheory

ThetechnicalintegrityofADFmaritimematerialisachievedthroughariskbasedapproach towardsfitnessforservice,safetyandenvironmentalcompliance.Theleveloftechnicalrisk acceptabletotheorganisation,andthemanagementprocessesforlimitingtechnicalrisksto theselevels,aredefinedwithintheNavyTechnicalRegulatoryFramework.Thisframework isputintoeffectthroughpolicies,procedures,guidanceandorganisationalresponsibilities articulatedintheNavyTechnicalRegulationsManual,ReferenceX.Theprinciplesupon whichthistechnicalriskismanaged9aresound,namely:

Dontacceptunnecessaryrisk. Acceptriskonlywherethebenefitsoutweighthecost. Makeriskdecisionsattheappropriatelevel.

WhilethetechnicalriskmanagementframeworkwithinNavyiswelldefinedand constructed,thereareanumberofareasrequiringimprovement.Thesupporting documentsneedtobeupdated,astheydonotreferencethemostcurrentguidanceor standards,norreflecttheorganisationalchangesthathaveoccurredsincetheintroduction oftheNewGenerationNavyprogramin2009.Perhapsthemostsignificantchangerequired istomakeclearreferencetotheneedforriskassessmentstooccurinanholisticmanner.It isnotsufficienttojustconsidertechnicalriskinisolation.Strategic,operational,safety, business,reputationalandenvironmentalfactorsmustallbeconsideredanddecisionstaken inthatcontext.Thereisevidencethatthisisnotoccurring.Theframeworkandassociated trainingmustbeamendedtobringabouttherequiredimprovement.

6.3.2 6.3.2.1

RiskManagementinNavyPractice AccuracyofRiskAssessments

Asageneralstatement,theTeamfoundthattheNavyriskassessmentsandacceptances appeartohaveamoreoptimisticviewthanthatofthedesigner.Forexample,theengineer
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designsredundancyintosystemstoincreasethelevelofsystemreliability(ifonesystemfails abackupsystemtakesovertherole).TheTeamlearntofseveralinstanceswheretheLPA shipssailedwithonlyoneoftwosystemsoperational.TheTeamsuspectsthatdecisionsto acceptsuchlevelsofriskwerebasedonachievingtheimmediateoperationalobjective ratherthanathoroughanalysisofrisk. Theassessmentofriskshouldfullyconsiderthecontextinwhichthecapabilityisrequiredto operate.Withoutthis,thereislikelihoodthatriskassessmentsmaybeoverlyoptimisticand resultingactionsinadequate.ArecentexampleinvolvingTobrukdemonstratesthispoint.It concernsariskassessmentthatwascompletedonthethinnessoftheshellplatinginthe vicinityoftheengineroom.Theassessmentwasbaseduponadvicethatsomeremedial actionhadbeencompletedandthatthishadstabilisedthesituation.Theriskwasthen downgradedtoacceptablesubjecttocontinuousreview.Theassessmenthadfailedto takeintoaccountthattheremedialactionwassimplyatemporaryrepair,onlysufficientfor ashortoceanpassageincalmseas,whiletravellingtoaplacewherethefullrepaircould occur.Theriskassessmenthadbeendowngradedwithoutconsideringtheoverallimpacta lossofoperationalcapability.Asaresult,thefocusmovedoffthisriskandwhenthecontext changed,theshipwasnotinafitstatetodeployifrequiredforOperationYasiAssist.

6.3.2.2

CumulativeRiskAssessment

Navytechnicalriskassessmentstendtobemadeinisolationanddonotalwaysaccountfor preexistingtechnicaldeficiencies.Themainassumptionwhenidentifyingandassessingthe riskseemstobethattheremainderoftheshiphasreceivedpreventativemaintenanceas scheduledandisfunctioningasexpected.Thissimplifiedapproachisinadequatetodeal withawiderangeofinterdependentrisksacrossthephysicalandorganisationalsystems. AccordingtotheNavyTechnicalRegulationsManual,thereisarequirementtoconduct cumulativeriskassessments10,butthereislittleevidencethatthisoccursinastructuredand repeatablemanner. TheManualalsostatesthatNavyisresponsibleforthemanagementofmaintenanceon boarditsvesselsandtoensurethatallnecessarymaintenanceisconductedandrisks identified11.Thisistobeachievedthroughthevesselsengineeringofficers.However,in ordertoassessthecumulativeriskpresentedbythedeferralofmaintenance,itisnecessary toknowthefullextentoftheshortfall.Therewaslittleevidencetosuggestthatupon completionofExternalMaintenanceperiods,aconsolidatedviewoftheconditionofthe shipisestablished.Inordertoaddressthisproblem,amaintenancecloseoutmeeting involvingsenioroperationsandtechnicalstaffmustoccurpriortotheshipsailing.This meetingshouldassesstheconditionoftheship,thelevelofriskassociatedwithitstechnical integrity,anditsreadinesstocompletethenextperiodofoperationalavailability.The operationalprogrammustbeadjustedforallthistooccur. Theassessmentofriskshouldbecarriedoutbyasubjectmatterexpert,andinthecaseof technicalrisks,thisistheengineer.Inthemaritimecontext,asdeferralofmaintenanceisan engineering(ratherthanamaintenance)decision,thetechnicalriskmustbeassessedbythe ChiefEngineerintheSPO(orhisdelegate).Suchassessmentsmustbemadebasedon designandperformancedataheldintheSPOaswellasconditionreportsfromtheships
10 11

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engineer.Ofcourse,thisisonlythetechnicalriskassessmentand,asmentionedpreviously, issimplyoneinputtotheholisticriskassessment.

6.3.2.3

RiskAssessmentinanOperationalContext

Onceatechnicalriskassessmenthasbeencarriedoutbyaqualifiedandauthorised engineer,wheresuchrisksaffecttheoperationoftheship,itisuptotheexecutivechainof commandtoacceptorrejecttheriskasquantified.Thisshouldbecompletedinaformal mannerandthedecisionrecorded.TheTeamhasbeenunabletofindevidencethatthisis occurringandthechangewillbedifficult,asanunderlyingculturalattitudeintheNavyis thattheachievementofthemissionatseaissacrosanct. Aparticularexampleofsuchbehaviourrelatestothemanagementoftherisktothe technicalintegrityoftheLPAsfromsystemicdeficienciesintheconfigurationdata(knownas FleetHazard986).FleetHazard986wasidentifiedin2008,buttheproblemhasbeen knownatleastsincethereceiptofareportfromtheActingInspectorGeneralontheLPA refitin1998,ReferenceU.IthasbeenassessedwithaHazardRiskIndexofsix(ahazardof criticalconsequencewithalikelihoodofoccurringoccasionally).TheNavyTechnical regulationManualprovidesthefollowingguidance:Exposuretoahazardratingof6to9 wouldnormallybediscontinuedassoonasreasonablypracticable.Continuedexposure wouldonlybeconsideredinexceptionalcircumstances,andthedecisiontodosowould normallybemadeatseniorlevelsafterdueconsiderationofthecost/benefit12.Therisk associatedwithFleetHazard986wasacceptedastolerablewithcontinuousreview.The documentationmakesnomentionofanyextenuatingcircumstances,orbenefits,that justifiedtakingsucharisk. Thiswasfoundtobesymptomaticofthepoorapplicationofriskmanagementprinciplesin thattherewasaninadequateassessmentoftherisksbeingtakencomparedtothebenefits tobegained.Iftheywereconsidered,thentheyhavenotbeenrecorded.

6.4

Recommendation

Insummary,riskmanagementformaritimematerielisimmatureandinneedofsignificant improvement.TheRiskPostureandRiskAppetiteshouldbesetbytheExecutive,be dynamic,andappliedtothedaytodaydecisionsofthewholesustainmentworkforce.Risk decisionsmustbebasedonthefullbreadthofrelevantfactorsandthesedecisionsmustbe formalised,recordedandtakenatappropriatelevels.NavyandDMOmustperformrisk managementinanintegratedmannerwithinasinglemethodology. Recommendation13 EstablishanIntegratedRiskManagementSystem NavyandDMOshoulddevelopanintegratedriskmanagementsystemfor maintenanceofmaritimecapability.Thismustemphasise: theverticallinkbetweenriskappetiteattheenterpriselevelandits applicationattheworkface;and thehorizontalprocessesnecessarytocapturethefullriskbenefittradeoff.

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Chapter7
7.1 Introduction

ENGINEERINGFUNCTION

Anumber,butnotall,oftheCausalFactorsrelatetotheengineeringfunctionsthatare performedinbothNavyandDMO.Thusakeyrequirementforthereviewwasto understandtheengineeringissuesthatledtotheunsatisfactoryconditionandsubsequent operationalpauseoftheamphibiousships.Ofconcernwasthetechnicalregulatorysystem thathadallowedtheshipstodeteriorate,andinparticularitssystemofcompliance assurance.Alsocriticaltotheregulatoryandengineeringfunctionsaretheresourcingand skilllevelsofengineersandtechniciansinDMOandNavy.

7.2
7.2.1

RegulationandAssurance
TheNavyTechnicalRegulatorySystem

HeadNavyEngineeringisthemaritimeTechnicalRegulatoryAuthority13,responsibletothe ChiefofNavy,whoisinturnresponsibletoChiefoftheDefenceForce14,forthetechnical integrityofallADFmaritimemateriel,includingthatbeingmanagedbytheDMOandits contractors.Hedischargesthisresponsibilitybymeansofasystemofregulationsand authorisationsembodiedintheNavyTechnicalRegulatorySystem,whichprovideshimwith thenecessarycontroloverthestandardofengineeringandmaintenancethatshouldbe performed. OrganisationsthatcarryoutengineeringandmaintenanceneedtoassureHeadNavy Engineeringthat: theyhavesufficientpersonnelwiththerequiredcompetencies; theyhaveadequateandauditableprocessestocontrolworkflows; theirtechnicaldataisadequateanduptodate;and theorganisationhasanadequatequalitymanagementsystem,includingthe
assuranceofthequalityofproductsandmaintenancereceivedfromsuppliers.
Whentheseelementscanbedemonstrated,theorganisationsreceiveaccreditationfrom HeadNavyEngineeringasAuthorisedEngineeringOrganisations15. Havingestablishedtheregulationsandaccreditedorganisations,thethirdandequally importantelementinregulationistheassurancethatthebasesforauthorisationscontinue tobevalidandthatregulationsarebeingcompliedwith.Thisshouldbedoneona continuousbasisbymonitoringperformanceofAuthorisedEngineeringOrganisations, includingregularauditsofprocessandproduct.

7.2.2

AssessmentofthecurrentNavyTechnicalRegulatorySystem

InevaluatingtheNavyTechnicalRegulatorySystem,theTeamwasnaturallyledto comparisonswiththemodelonwhichitwasbasedandwhichisgenerallyconsideredbest
13 14

DefenceInstruction(Navy)LOG473,RegulationofTechnicalIntegrityofADFMaritimeMateriel10Jan2009 DefenceInstruction(General)LOG45012,RegulationofTechnicalIntegrityofADFMateriel10Sept2010 15 ABR6492Vol1Sect1Chap4Para4.14

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inclasswithinDefencetheaerospacesector.Itwassuggestedthatacomparisonwiththe AirworthinessTechnicalRegulatorySystemwasnotvalidbecausetheissuesassociatedwith technicalfailuregenerallypresentafargreatersafetyriskforaviationthantheydoina maritimeenvironment.WhiletheTeamagreesthataviationinvolvesagreaterlevelof inherentrisk,itisalsoapparentthatthetightertechnicalregulationoftheaviationsector hasassociatedbenefitsinmissionreliabilityandassetpreservation.Lackofattentiontothe basictechnicalintegrityprocesseshasledNavytofocusfartoomuchonassessingand treatingtheriskstosafetythatarisethroughinadequateshipmaintenance(thatis,the symptoms)ratherthantreatingtheoriginoftherisk,namelypoorattentiontomaintaining overalltechnicalintegrity. TheTeamalsonotedthattheStrategicReviewofNavalEngineeringassessedtheNavy TechnicalRegulatorySystemasbeingsound,butwithsomedeficienciesinitspractice.The conditionoftheLPAsandtheevidencereviewedonHMASSuccess(ReferenceM),indicates thatthisconclusionwasoptimistic.TheTeamfoundthattheNavyTechnicalRegulatory SystemwassimplynotbeingadheredtointheAmphibiousandAfloatSupportGroup,and thattherewereindicationsofshortcomingsinotherGroupsintheFleet.Theseincludedthe effectivenessoftheinformationmanagementsystemsandtheprovisionoftimelyquality evidencetosupportcompletionofmaintenancework. TodetermineacausefortheNavyTechnicalRegulatorySystemfailure,thefourbasic elementshavebeenconsidered:engineeringauthorisations,theregulationsthemselves, compliancewiththemandassuranceofthatcompliance.

7.2.3

Authorisations

TheNavyTechnicalRegulatorySystemhasestablishedAuthorisedEngineeringOrganisations ineachoftheSPOs,specialistdirectorates(e.g.DirectorateofNavyWarfareSystems)and thecentresofexcellence(e.g.CentreforMaritimeEngineering).However,unlikethe aerospacesector,noAuthorisedEngineeringOrganisationshavebeenestablishedin Industry,relyinginsteadoncontractprovisionstoassurequalityofworkperformed. Also,unliketheaerospacesector,theNavyTechnicalRegulatorySystemhasnoAuthorised MaintenanceOrganisations.InADFaviation,aircraftmaintenanceiscarriedoutinflying squadrons,witheachsquadronbeingaccreditedasanAuthorisedMaintenance Organisation.InNavy,theEngineeringDivisioninFleetCommandisanAuthorised EngineeringOrganisation16andallNavyshipsoperateunderthisauthorisation.Inother words,ships(ortheirengineeringdepartments)arenotseparatelycertifiedasAuthorised EngineeringOrganisations. Althoughconsideringthattheaerospacemodelprobablyhadmorerigour,theTeamdidnot exploreinanydetailwhicharrangementsmightprovidebetteroversightofengineeringand maintenancestandards.Withsuitablegovernanceinplace,eithersystemshouldproduce therequiredleveloftechnicalintegrity.

Noteadifferenceinterminology.TheADFairenvironmentmakesadistinctionbetweenengineering(design change)andmaintenance,whereasthetermengineeringintheADFmaritimeenvironmentcanincludeboth engineeringandmaintenance.

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7.2.4

Regulations

TheDefenceandNavyInstructionscoveringthepolicyaspectsoftheNavyTechnical RegulatorySystemandtheNavyTechnicalRegulatoryStandardswerewrittenin2002.The standardsareprinciplesbased,however,muchoftheinformationisoutofdate,spread acrossmanydocuments,andrequiresreview.Whilethepolicies,standardsandsupporting booksofreferencearegenerallysound,theyrequirerevisingandreorganisingtoforma concisesetofordersthatareeasytocomprehend,andfacilitatecompliance.HeadNavy EngineeringsinitiativetocaptureNavalengineeringpolicy,technicalregulations, instructionsandguidanceinasinglewebbasedBodyofKnowledge,undertheauspicesof ProjectStorm,issupported.

7.2.5

Compliance

Whiletheregulationsarereasonablycomprehensive,compliancewiththemwasfoundtobe lacking.ReasonsfornoncomplianceinNavy(otherthanthecomplexityoftheorders themselves)includeminimummanningofships,changesintrainingregimes,poor configurationmanagementdata,andongoingissueswithinformationmanagementsystems, whichplacesignificantstrainonshipsmaintenanceteams. TheMaritimeSPOsoftheDMOareundersimilarstress.TheAmphibiousandAfloatSupport SPOisstrugglingwithaninadequateconfigurationbaselineforanumberofitsplatforms,an immatureinformationmanagementsystem,disruptioncausedbyfrequentorganisational change,insufficientskilledpersonnelandinefficientcontractingmechanisms.Allthese factorshavecombinedtoproduceabacklogofengineeringandmaintenancetasks,anda consequentreducedfocusoncompliancewithtechnicalregulatoryrequirements.

7.2.6

Assurance

Whenasystemisunderstress,peoplewillendeavourtomeettargetsbyusingworkarounds andshortcuts.Whenthesetendenciesarepresent,complianceassuranceisevenmore important. ItwascleartotheTeamthattheseassuranceactivitieshavebeeninadequate.The AuthorisedEngineeringOrganisationsinNavyandDMO(Maritime)areauditedonlyonce everythreeyearstorenewtheirformalaccreditationfromHeadNavyEngineering.There waslittleevidencethattheperformanceofAuthorisedEngineeringOrganisationswas regularlymonitoredbytheDirectorofTechnicalRegulation(Navy)orthatanyrisk assessmentoftheAuthorisedEngineeringOrganisationsabilitytoadequatelydischargeits assignedfunctionsiscarriedout.Aregularreviewofthebacklogofengineeringand maintenanceworkshouldhavebeenprovidingHeadNavyEngineeringwithsomeindication thattheconditionoftheFleet,forwhichheisultimatelyresponsible,wasatrisk. Thebasiccauseofthisshortcomingisthelackofresourcesbeingapplied.Whenabroad comparisonwasmadewiththeaviationsector,itwasfoundthattheDirectorGeneralof TechnicalAirworthinessperformstheregulatoryfunctionforaviationmaterielwithastaffof seventyfourpeople;tenwritingandmaintainingregulationsandanothersixtyfour performingtheassurancefunction.Incomparison,thesametwotasksareperformedin Navybyjustelevenfulltimepeople,togetherwithsomeparttime,borrowed,personnelto augmentauditteams.TheDirectorateofTechnicalRegulationNavyrequiressignificantly morestafftoproperlymaintaintechnicalregulationsandprovideanappropriatelevelof

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assurance.SomeotherreorganisationofNavyengineeringisalsoneeded,andthisis discussedinSection7.4. Section7.2.3notedthatships(ortheirengineeringdepartments)arenotseparatelycertified asAuthorisedEngineeringOrganisations.Thisarrangementisworkable,providedthat suitablegovernancewasinplace.ThemainissueisthattheChiefStaffOfficer(Engineering) hasnotbeenabletoassurehimselfofthelevelofcomplianceandqualityassuranceinallof theshipsthatoperatewithinhisAuthorisedEngineeringOrganisation. Inthepast,ChiefStaffOfficer(Engineering)andhisteamconductedregularDepartmental ManagementAuditsofindividualshipsinordertoassesstheirconditionandthe competenceoftheirengineeringdepartments.Thesewerethoroughanddemandingaudits thatwouldquicklyexposeanymanagementandmaterieldeficiencies.Departmental ManagementAuditswerealsoasubsetofrigorousannualinspectionsconductedbythe FleetCommanderandhisstaff,whichassessedeachdepartmentintheshipandtheshipas awhole. AsaconsequenceofthemanyorganisationalchangesinDefenceandNavyoverthelast decade,theEngineeringDivisioninFleetCommandhasbeenstrippedofstaffandspecialist technicalcells,therebyinitiallyreducingthefocusofDepartmentalManagementAuditsto shipsdeployingonoperations.Theseauditshavenowbeenreplacedbyselfassessments conductedbyshipsstaff.AnnualInspectionshavedisappearedaltogether. Whilstselfassessmentorselfauditingisanessentialinternalqualityassuranceactivity,a regularexternalreviewisvitaltoavoidwhathasbeentermedNormalisedDeviance, wherebyacceptanceofotherwiseunacceptablestandardsbecomesroutine.External engineeringsurveillanceshouldberestoredthroughouttheFleet.Asaminimum,annual inspectionsandDepartmentalManagementAuditsshouldbereinstatedtofocuson compliancewithtechnicalregulationsandmaintainingtheconditionofships.Additional resourcingofEngineeringDivisioninFleetCommandwillbeneededtoenableChiefStaff Officer(Engineering)toconductongoingmonitoringofshipmaintenanceandtoresumethis DepartmentalManagementAuditrole. ArecommendationtoMonitorandAuditforTechnicalComplianceisincludedwiththeother recommendationsfromthischapterat7.6.

7.2.7

TheRoleofClassificationSocieties

ClassificationSocietiesareindependent,selfregulatingbodiesthathavedeveloped maritimeengineeringrulesetsoverthelasttwohundredandfiftyyears.Thesecoversuch aspectsastheshipshull,thepropulsionandsteeringsystems,powergenerationandother criticalsystems. OnceashiphasreceivedaCertificateofClassfromaClassificationSociety,itissaidtobe InClass.Thereafter,therelevantClassificationSocietywillconductperiodicsurveysofthe conditionoftheship.Wheredefectsarefound,theClassificationSocietywillissue instructionsandaduedatefortherectificationofthedefect.Defectsofaseriousnature areadvisedviaanoticetermedaConditionofClass. NavyhasbeenconsideringtheuseofClassificationSocietiesforanumberofyears.Apolicy hasnotbeenpublished,althoughaDefenceInstructionNavyiscurrentlybeingprepared.

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Atpresent,anumberofshipsareundersurveybyClassificationSocietiesandhavebeen issuedwithaCertificateofClass. WhetherornotClassificationSocietiesareengagedbyNavy,asurveybyanindependent thirdpartyisvaluable,asitprovidesassuranceabouttheshipsthroughlifemaintenance programandoftheconditionoftheships. ArecommendationtoInstigateThirdPartyQualityAssuranceisincludedwiththeother recommendationsfromthischapterat7.6.

7.2.8

Licensing

Navyhasdebatedtheneedtolicenseitssurfaceshipsformanyyears.Initsverybasicform, suchlicensingwouldprovideassurancetotheFleetCommanderthataminimumsafety standardhasbeenachievedpriortoashipproceedingtosea,andwouldincludetheship having: anagreedstateofmateriel; allcriticalsystemsfullyavailable; acrewwiththeminimumskillsnominatedforallcriticalcategories,andthedefined minimumnumbersandskillsforcredibleemergencyscenarios; anassessmentasunitreadywithoutexception;and areleaseforgeneraldutieswithinitsseagoingdesignconstraints. TheTeamconsidersthatsuchalicensingsystemwouldprovidegreaterlevelsofassurance ofconditionandthereforepreparedness.

7.3

CertificationofStandards

Intheaviationsector,anaircraftcannotenterservicewiththeADFuntilitisawardedan AustralianMilitaryTypeCertificateandServiceReleasebytheAirworthinessAuthority. QualificationfortheawardofanAustralianMilitaryTypeCertificaterequiresDMOto demonstratecompliancewithacertificationbasisthathasbeendeterminedatthestartof theproject.Inaddition,atyperecordmustbeavailablethatincludestheconfiguration (configurationrecord)andalldatarequiredtoenabletheaircrafttobemaintainedtothe designedstandard,includingafullsuiteofservicingschedulesandmaintenance publications.BeforeaServiceReleasecanbeissued,DMO(andtheoperatingservice)must alsodemonstratethatallthearrangementstooperateandsupporttheaircraftandits systemsareinplace. Navyhasasimilarprocessforships.However,itdoesnothavetherigourthatisappliedto theissuingofanAustralianMilitaryTypeCertificate/ServiceReleaseinaviation.Thisis evidencedbythefactthattheLPAshaveyettobegrantedaRoyalAustralianNavyStructural MaintenanceCertificate,amandatoryandcriticalcertificationrequirement.Further,the platformshavebeenoperatedformanyyears,buthaveyettoachieveformalOperational Release.Muchmorerigourandattentiontoregulatorycomplianceneedstobeappliedto thecertificationoffitnessforserviceofnewvessels,andofthosereturningtoservice followingrefitsandmodernisations.Asanindependentreviewandsafetynet,the SeaworthinessBoardcouldbeusedinthesamewayastheAirworthinessBoard,inthatit advisestheAirworthinessAuthorityonCertificationandServiceRelease.Moreover,inthe

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caseofvesselsreturningtoservicefollowingrefits,theChiefofNavyandtheFleet Commandershouldhavetheprerogativetoacceptorrejectthevesselbasedon recommendationsoftheSeaworthinessBoard. ArecommendationtoControlAcceptanceintoNavalServiceisincludedwiththeother recommendationsfromthischapterat7.6.

7.4

EngineeringOrganisation

AsdescribedinSection5.2,inreviewingtheengineeringorganisationalstructurewithin NavyandDMO,theTeamwasstruckbyitsapparentcomplexityandthelackofclear engineeringauthorityandreportinglines.Whenthisiscoupledwiththeoperationalchain ofcommand,thereisroomforconfusionaboutwhotorefertoforengineeringdecision making. Throughthelargenumberoforganisationalchangesandreviewsoverthelastdecade,Navy engineeringhasbeenseriouslyhollowedout,removingsomeorganisations(forexample, theFleetInServiceTrialsUnitandtheFleetConditionAssessingUnit)anddispersingthe remainingacrossNavy,DMOandmorewidelyacrossDefence.Asaconsequence,Naval engineeringpolicyisoftenoutofdateandtechnicalregulatorycomplianceandassuranceis wellbelowthatrequired.Further,inmakingoperationaldecisions,theFleetCommander andhisnonengineeringstaffhavenotreceivedadequateinformationaboutthecondition oftheFleet,asevidencedbythesituationwiththeLPAsandthelackofreportingon capabilityfromtheGroupswithinFleetCommand. NavyEngineeringalsoneedstoprovideopportunitiesfortherecognitionofprofessional statusatboththesailorandofficerlevels.Thisshouldbeachievedthroughmorestructured careerpathsandmoredeliberatefocusonimprovingskillsandqualifications.DMOshould assistthroughtheplacementofrecentNavygraduatestoensuretheyobtainprofessional experienceandchallengingwork. TheTeamdidnotundertakeadetailedreviewofNavysengineeringorganisationduetothe recentStrategicReviewofNavalEngineering.However,itisclearthatNavyshouldprovide HeadNavyEngineeringwithanorganisationthatcanassuretheongoingtechnicalintegrity ofmaritimematerielandtakecontrolofNavymaintenancepolicytoaddresstheissues raisedinSection7.2.

7.4.1

EngineeringStatusandLeadership

Duringanumberofbriefingsandinformalconversations,theTeamgainedtheimpression thatengineeringisnotprominentinNavy,andespeciallynotamongstSeamenOfficers. Navycultureappearstorelegateengineeringtoasecondtieractivity,andthisisprobablya factorcontributingtothedispersedengineeringorganisationandthelackofresourcesbeing appliedtoengineeringpolicyandregulation.Thisrequiresculturalchangethatwouldbe betterfacilitatedifNavyengineeringwasheadedbyasuitablyqualifiedandexperienced engineeringofficerofRearAdmiralrank.GiventheimportanceofrankintheServices,a RearAdmiralwouldexertthelevelofinfluenceandleadershiprequired.Importantly,the appointmentofaRearAdmiralwouldbeaclearindicatoroftheimportanceofthe engineeringfunctiontoNavyandtoitsoperationalsuccess.Itwouldensurethat engineeringhadbothachampionandasufficientlyauthoritativevoice.

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ArecommendationtoRebuildNavyEngineeringCapabilityisincludedwiththeother recommendationsfromthischapterat7.6.

7.5
7.5.1

EngineeringSkillsandResourceLevels
SystemProgramOffices

DMOSystemProgramOfficesareresponsiblefortheongoingsustainmentofcapitalassets. Includedinthistaskaretheinvestigationofdefects,theprocessingofengineeringchanges andestablishmentofcontractsforExternalMaintenance. Toundertaketheseactivities,SPOsrequirecoreskillsinengineering,logisticsandcontract preparationandmanagement.Thenumberofexpertsrequiredisdeterminedbythe numberandcomplexityofthevesselsandthenumberofshipclassesundermanagement. TheAmphibiousandAfloatSupportSPOisresponsibleforfourclassesofship,requiring significantnumbersofpeoplewiththecoreskillsoutlinedabove.Acomparisonofraw numbersbetweentheAmphibiousandAfloatSupportSPOandothermaritimeSPOs indicatesthattheAmphibiousandAfloatSupportSPOissignificantlyunderresourced. Exacerbatingthesituationistheadvancedageoftheships(withtheexceptionofHMAS Sirius),thenumberofuniqueshiptypeswhereAustraliahasprimeengineeringresponsibility andthesignificantamountofconfigurationdatathathasbeenmissingsinceacquisition. TheendresultisaSPOthatishopelesslyoverloaded,asevidencedbythebacklogof engineeringandmaintenancetasks(seeSection9.2).Thishasbeenpartlyaddressed throughthetemporarysupplementationofseventeenindustrypersonnelintheSPOand additionalexternalsupport.Whilstthisisareasonableemergencymeasureitshouldbe followedbyamoresustainablearrangement.Areviewofthestaffingnumbersinthe AmphibiousandAfloatSupportSPOiscurrentlybeingundertakenbytheMaritimeSystems DivisioninDMOandthefindingsshouldbeimplementedasamatterofurgency. ArecommendationtoResourcetheAmphibiousandAfloatSupportSPOisincludedwiththe otherrecommendationsfromthischapterat7.6. RecruitingpersonnelwiththecoreskillsrequiredbytheSPOintheSydneyareaisavery difficulttask,giventheunattractivenessofAustralianPublicServicesalarylevelsinthat market.AlthoughtheDefenceEnterpriseCollectiveAgreementprovidestheflexibility requiredtopaymarketlevelsalaries,thisflexibilityisnotwellknownandthecurrent approvalmechanismsseemoverlybureaucratic. TheDMOmustuseallmeansatitsdisposaltorecruitandretaintheseskilledpersonnel, lookingatNavyReservepersonnel,ContinuousFullTimeService(reengagementofformer ADFpersonnel),BuildingDefenceCapabilityPaymentsandIndustrysupport. ArecommendationtoFosterEngineeringTalentisincludedwiththeotherrecommendations fromthischapterat7.6.

7.5.2

ProactiveEngineering

Plannedmaintenanceschedulesaregeneratedduringthedesignandacquisitionphasesina processcalledMaintenanceRequirementsDetermination.Thisensuresthattheplatform, systemorequipmentwillcontinuetomeetitsdesignedperformanceandavailability criteria.Whenanappropriatehistoryofusehasbeenestablishedandthematerial

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conditionhasbeenmonitoredovertime,itisoftenpossibletoextendmaintenanceintervals orprogressfromtimebasedmaintenance,toconditionbasedmaintenance,therebysaving timeandreducingthroughlifecosts. TheshortageofengineeringresourcesinSPOshasresultedinlowprioritybeingascribedto ongoingmaintenancerequirementsdetermination.Programssuchas:FailureModesand EffectsAnalysis(FMEA);Reliability,AvailabilityandMaintainability(RAM);andReliability CentredMaintenance(RCM)haveallbutdisappeared.Theseprograms,coupledwitha rollingprogramofhullsurveysandotherconditionmonitoringpractices,wouldreduce ownershipcostsandinformdecisionstodefermaintenance. TheStrategicReviewofNavalEngineeringalsonotedthelackofReliability,Availabilityand MaintainabilityandReliabilityCentredMaintenanceprograms.TheTeamsupportsthe StrategicReviewofNavalEngineeringrecommendationstoreestablishtheseprograms. RecentmovesbyNavyandDMOinthisfieldareacknowledgedandsupported.

7.5.3

Organic(Shipboard)Maintenance

ChangesinshiptechnologyhaveledtogradualchangesinNavytechnicalworkforcetraining. Primarily,therehasbeenashiftawayfromthecorehandskillsdisplayedbyartificersand tradespersons.Whereadeeplevelofplannedandcorrectivemaintenancewasformerly undertaken,nowtechniciansoftenundertakerepairbyreplacement.Further,whereas oldervesselscarriedpersonneltooperatetheplantmachineryinconjunctionwiththose embarkedtomaintaintheplant,modernvesselshavecombinedthetwofunctions,sothat thetechniciansnowbothoperateandmaintaintheplant.Thisphilosophyenablesshipsto carryfewertechnicalpersonnel,contributingtoapracticereferredtoasminimum manning. Unfortunately,thedownsidetothisminimummanningconceptisthatmanyNavy techniciansspendconsiderabletimeachievingoperatorqualificationsattheexpenseof performingplannedmaintenance.WhencombinedwithtimelosttoNavalexercisesand wholeofshiptasks,suchasboardingorflyingoperations,techniciansareunabletodevelop theirtechnicalskillsandsatisfytheirmaintenanceobligations.Theyloseconfidenceintheir abilitytoundertakerepairs,plannedmaintenanceisdeferredorsimplynotcompletedand thevesselsconditiondeteriorates. Inaddition,thereisconfusionaboutthedelineationbetweenwhatcorrectivemaintenance canbeundertakenatseaandwhatisconsideredthepreserveofcontractors.Corrective maintenancethatcouldbeundertakenbyshipsstaff(notwithstandingtheissuesoutlined above)issometimeslefttobearrangedbytheSPO,furtherincreasingtheSPOsworkload, delayinglowerprioritymaintenanceandaddingtothecostofownershipoftheplatform. TheStrategicReviewofNavalEngineeringmadesimilarfindings,concludingthat: .changewasprobablyinevitable,however,thecumulativeimpactofsecond ordereffects[ontheworkforce]appearsnottohavebeenfully comprehended.Therealconcernisnotthatpracticesarechanging,rather theyarechanginginanapparentlyuncoordinatedmanner. Inotherwords,thereisalackofmaintenancepolicythataddresses,amongotherthings,the skillsrequiredbytechnicalsailorsonboardandtheassociatedtrainingneededfor

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developmentofthoseskills.TheStrategicReviewofNavalEngineeringmadethefollowing recommendation,whichisstronglysupportedbytheTeam: StrategicReviewofNavalEngineeringRecommendation2.2:Aclearpolicy shouldbeestablishedastothelevelsofrepairormaintenanceNavyships mustbecapableofconductingatsea,withoutrecoursetoexternalresources, andthedegreetowhichsupportwillbeprovidedfromexternalorganisations inanareaofoperations.Thispolicyshouldbereflectedinstrategicdoctrine andshouldinformtrainingofnavaltechnicalpersonnel,maintenance practicesandlogisticpolicyandplanning. TheTeamnotesthatthisisanongoingactivity.Asdiscussedat7.4,inordertoactionthis recommendation,themaintenancepolicyareaofNavyneedsstrengtheningtoenableitto influencelogisticssupportconceptsintheprojectdefinitionandacquisitionphasesandto managetheimpactofnewtechnologyonmaintenancepoliciesandtechnicaltraining.

7.5.4

FleetSupportUnits

Inthemain,whenNavytechnicianscompletetheirinitialtechnicaltrainingandareawaiting apositionatsea,orwhenthoseatseacomeashoreforrespite,theywilloftenbepostedto aFleetSupportUnitinoneoffourlocations.TheStrategicReviewofNavalEngineering detailedsignificantissueswithemploymentoftechniciansintheFleetSupportUnits.A combinationoffactors,includingworkforceturnover,shortagesofsupervisorsandplacesat sea,andalackofmeaningfulwork,hasresultedindisillusionmentandhighseparationrates amongsttechnicians. FleetSupportUnits,ifproperlystaffedandmanaged,canprovideapoolofexpertisethat canbeusedtosupplementOrganicandExternalMaintenanceactivitiesandimprove retentionoftechnicalsailorsbyusinganddevelopingtheirtradeskills.TheStrategicReview ofNavalEngineeringaddressedtheseissuesindetailandproposedanumberof recommendationsseekingtodevelopandbetterusethisvaluableresource. TheTeamstronglysupportsthissetofStrategicReviewofNavalEngineering recommendations,butisconcernedthatimplementationmaybeconstrainedbythecurrent paradigmofworkallocationbetweenOrganicandExternalMaintenance.Inorderto transformtheFleetSupportUnitsintoviableorganisationswiththeessentialroleof developingindividualskills,somechangesmayberequiredintherelationshipandwork allocationbetweenAustralianIndustryandNavy. TheFleetSupportUnitsmustbegivenasignificantandformalroleintheconductof maintenanceintheFleet,aheadofthearrivaloftheLHD. ArecommendationtoRebuildtheFleetSupportUnitsisincludedwiththeother recommendationsfromthischapterat7.6.

7.6

Recommendations

Thefollowingrecommendationswillimprovetechnicalregulatorycomplianceandassurance formaritimematerielandreestablishtheChiefofNavyscontrolovernewcapability enteringservice.Theywillrebuildnavalengineeringcapabilitythroughanumberoflinked initiatives.

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Recommendation14 MonitorandAuditforTechnicalCompliance ChiefofNavyshouldresourceChiefStaffOfficer(Engineering)tofulfilhis responsibilityasheadoftheFleetsAuthorisedEngineeringOrganisation,to:

monitorandauditshipsfortechnicalregulatorycompliance;and providemandatoryinputintoship'sengineer'sperformancereports.

Recommendation15 InstigateThirdPartyQualityAssurance TheChiefofNavyshoulddevelop,anddirectcompliancewith,apolicyonthe useofClassificationSocieties,orotherexpertthirdpartysurveyors,to establishindependentqualityassuranceforallNavyvessels,duringdesign, constructionandoperation.

Recommendation16 ControlAcceptanceintoNavalService Throughanindependent,rigorousandtransparentevaluationprocess,the ChiefofNavyshouldexercisehisauthorityastheCapabilityManagertoaccept orrejectnewNavalcapabilityagainsttheGovernmentapprovedscope.

Recommendation17 RebuildNavyEngineeringCapability Navyengineeringshouldberebuiltandreorganisedtoreducefragmentation, increaseauthority,clarifyaccountabilityandenabletheHeadNavyEngineering tofulfilhisroleastheTechnicalRegulatoryAuthority.Itshouldbeledbya2 starNavyofficertogiveweighttothisimportanttechnicalandcompliance function.

Recommendation18 ResourcetheAmphibiousandAfloatSupportSPO DMOshouldincreasetheengineeringandcontractmanagementresourcebase intheAmphibiousandAfloatSupportSPOtomeettheongoingneed,andthen furtheraugmentthecomplementtoaddressrecoveryactivities.

Recommendation19 FosterEngineeringTalent DMOandNavyshoulddevelopaninnovativeandcomprehensivethroughlife careerplanfortherecruitment,retentionanddevelopmentoftheir engineeringtalent.

Recommendation20 RebuildtheFleetSupportUnits InlinewiththeStrategicReviewofNavalEngineering,theFleetCommander shouldrebuildthecapabilityoftheFleetSupportUnitsusingIndustry expertisetoreestablishdeeptechnicalskills.

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Chapter8
8.1 Introduction

CULTURE

InundertakingthisReview,ithasbecomecleartotheTeamthatanumberofdeepseated culturalissueshavecontributedtothecurrentsituationwiththeLPAs.Theseissuesarenot confinedtostaffworkingwithoronthatclassofshipandcanbefoundmorebroadlyacross themaritimecommunityinNavyandDMO. Initsmostfundamentalform,thecultureofNavyandDMO(maritime)mustvaluethe maintenanceoftechnicalintegrityofvessels.Thatisnottosaythatsome,orevenmany,do notalreadydoso,buttheTeambelievesthattheorganisationsasawholedonotplace technicalintegrityatthesamelevelofimportanceasshorttermoperationalimperatives.

8.2

CulturalIssues

TheTeamfoundthatNavyexperiencedachallengeinaccountabilitysimilartothatfeltmore broadlyacrossDefenceandDMO.Thischallengeflowsfromalackofclarityinobjectives, overlappingandblurredresponsibilities,alackofcontinuityinpositionandinadequately developedskillsets.TheheadoftheTeamhasaccesstotheunpublishedAccountabilityand GovernanceReviewoftheDepartmentofDefence(BlackReview)andsupportsthebroad thrustofitsfindingsandrecommendations.Earlyimplementationofthemwillassistwith theresolutionofthisculturalissue.ThereisafurtherculturalissuewithinDefenceand DMOthatisdemonstratedbyunresponsivenesstothelargenumberofreviewsandreports relevanttothissituation. However,therearesomeaspectsspecifictothemaritimeculturethatshouldbenotedand addressed.Thesearethecando,makedoattitude,theassumptionthatashipissafeto sailunlessprovenotherwiseandthemanagementofbadnews. Cando,makedoWiththebestofintentions,Navyhashadanintensefocusonthe importanceofmeetingtheimmediateoperationaldemandsaboveallelse,exceptthe safetyofpersonnel.Whilstimmediateoperationalimperativesshouldhaveastrong influenceduringcriticalevents(suchassituationsofimminentthreat),thisview needstobebalancedagainsttheimportanceofmaintainingtechnicalintegrity.This balanceisclearlydemonstratedintheAirForce. Thesevereshortageofresources,increasedoperationaltempo,andthedirestateof thelogisticssupportdataandsystemsassociatedwiththeLPAshavedriventhe behaviourwithintheAmphibiousandAfloatSupportGroup.Forexample,incorrect andunapprovedpartshavesometimesbeenfittedbecausespecificationsare incomplete,orcorrectpartscannotbeimmediatelysourcedandthereispressureto returntheshiptooperations.Asecondexampleisthatmaintenancecannotbe completedbecauseofalackofinstructions,oralackofskilledstaff,ortime pressures.These,andotherlongstandingfactors,whenaccompaniedbyaweak assurancefunction,haveresultedinthedevelopmentofaworkaroundcultureand acceptanceofdeficiencies. SafetoSailThisissueiscloselyassociatedwiththecando,makedoattitudebuthas asubtleandimportantdifference.ThereisacultureamongstmanyNavyoperators

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(notuniversalsubmarinesareaclearexception)thatashipissafetosailunless provenotherwise(negativeassurance).ThisisindirectcontrasttotheviewintheAir Forcewhereanaircraftisunfittoflyunlessprovenotherwise(positiveassurance). Severalfactorshaveledtothissituation.Theseinclude:aviewthatashipislikelyto continuetofloatevenafterfailureofequipmentorinfrastructure,themagnitudeof thetechnicalproblemsathandandtheremediationtheyrequire,andaweak assurancefunction. TheManagementofBadNewsToavoidbeingseentofailpersonally,thereisa danger(especiallyinthecando,makedoenvironment)thatstaffwillchoosetonot raisebadnews.Thiscanresultinbadnewsremainingatlowerlevelsinthe organisation,increasingenterpriseriskandonlybecomingapparentwhenrecoveryis expensive,difficultorevenimpossible.

8.3

Recommendations

Theseundesirableculturalattitudes,developedovermanyyears,willnotbechanged quickly.TheTeamisreliantuponimplementationoftheunpublishedAccountabilityand GovernanceReviewoftheDepartmentofDefence(BlackReview)toaddressissues associatedwithaccountabilityandthemanagementofbadnews.However,theTeamhas madeonerecommendationtoaddressthespecificculturalattitudesassociatedwith maritimetechnicalintegrity.

Recommendation21 ReinstatetheCulturalImportanceofTechnical Integrity Navy,incollaborationwithDMO,shouldintroduceaculturalchangeprogram thatpromotestechnicalintegrityasakeyenablerofoperations.

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Chapter9
9.1 Introduction

WIDERIMPLICATIONS

Thischapterconsiderstheapplicabilityoftheexistingreformsandthisplantothe remainderoftheFleet.Italsocommentsonthesuitabilityofthemaintenanceconcepts beingdevelopedforfuturecapabilitiesnamelytheLHD,AWD,andthemostrecent acquisition,theexBritishRoyalFleetAuxiliaryshipLargsBay.

9.2

OtherCurrentVessels

TheTeamhasfoundthatmanyoftheunderlyingissuesthatledtotheoperationalpauseof theLPAsarepresentacrosstheremainderofNavyandtheDMO(maritime),although possiblytoalesserextent.Inparticular,theunderresourcingoftheSPOsandCapability ManagementGroups,shortcomingsinthetechnicalinformationmanagementsystem,the cando,makedoculture,andthelooseapplicationoftheNavyTechnicalRegulatorySystem areallfactorsthatapplymorebroadly. ThisviewissupportedbytheunrefineddataonOpenEngineeringChangesandtheDeferred orOpenMaintenanceTasksacrosstheFleetinApril2011.Figure14andFigure15provide anapproximateillustrationoftheengineeringandmaintenanceliabilityacrosstheFleet. Figure14showstherelativemagnitudeofOpenEngineeringChangesineachSPO.AnOpen EngineeringChangeconsistsof: anopen(nonpermanent)deviationfromtheagreedConfigurationBaseline;or anengineeringchangeproposalawaitingprocessingbyanengineer;or anapprovedengineeringchangeawaitingincorporationontheplatform;or atechnicaldocumentationchangeawaitingprocessing.

Figure14:OpenEngineeringChangesbySPO

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Figure15showstherelativemagnitudeofDeferredorOpenMaintenanceTasksper platform.ADeferredorOpenMaintenanceTaskconsistsof:

deferredoropenplannedorcorrectiveOrganicMaintenance;or deferredoropenplannedorcorrectiveExternalMaintenance.

Figure15:DeferredorOpenMaintenanceTasksbyPlatform (averagepershiporaircraft)

ThisdatawasnotreadilyavailableasitisnotadequatelytrackedorreportedbyNavyorthe DMOandnoteasilyextractedfromtheInformationManagementSystem.Whilstthe diagramsareonlyapproximate,theydrewtheTeamsattentionsufficientlyforitto recommendthatacomprehensiveandindependentauditoftheengineeringand maintenanceliabilityshouldbeundertaken.Theauditshouldaccuratelyscopetheproblem fromwhichrecoveryactioncanbemeasured,plannedandexecuted. ArecommendationtoQuantifyMaintenanceandEngineeringBacklogisincludedwithother recommendationsfromthechapterat9.4.

9.3
9.3.1 9.3.1.1

FutureVessels
LandingHelicopterDock CurrentStatus

TheJointAmphibiousCapabilityImplementationTeamwasformedin2006forNavytoplan andmanagetheprocessesforfinalacceptanceoftheLHDsintoservice.Inaddition,to prepareforsustainmentthroughthelifeoftype,DMOformedtheLHDSPOinearly2011; althoughitisawaitingtheprovisionofeighteenuniformedpersonnel. TheLHDprojectseekstomaximiseOrganicMaintenancetoincreaseoperationalavailability andreducethecostofownership.ThelevelofonboardOrganicpreventativeand correctivemaintenancewillrequirealltechnicalsailorsbelowtherankofChiefPettyOfficer

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toworkuptofivehoursperworkingdayonmaintenance.Thiswillpresentachallengeand maynotbepracticalinconjunctionwiththeotherdemandsontheirtime. MaintenancetasksbeyondthecapacityofLHDcrewmemberswillbeundertakenby externalorganisations(uniformedpersonneland/orciviliancontractors)atmultiple locations.Thisconceptissound,butisachangetothecurrentpracticeinwhichsuchwork isdoneinashipshomeportduringExternalMaintenanceavailabilitiesthatarescheduled byFleetCommand. Someshorebasedsailorswillbeembeddedincontractorworkforces.Thisisdesignedto: meettheexpectedhighdemandforExternalMaintenance;transferskillsbetween contractorsandNavypersonnel;andoffersailorschallengingandmeaningfulworkduring theirperiodsofshoreserviceandsearespite.EarlydevelopmentoftheFleetSupportUnits, inlinewiththeStrategicReviewofNavalEngineering,willensurethatthesesailorsare adequatelypreparedforparticipatingwithIndustryinthesehybridExternalMaintenance teams. TheLHDswillbemaintainedinaccordancewiththerulesandregulationsofacivilian ClassificationSociety.Essentially,thisofferstheNavythirdpartyassuranceofavessels fitnessforserviceandthesafetyofthehullandassociatedoperatingsystems. SeveraloftheimportantissuesthatledtotheextendedunavailabilityofKanimblaandthe earlydecommissioningofManooraarebeingaddressedfortheLHDs.Basedondiscussions withLHDsustainmentstaffandreviewoftheacquisitioncontract,itisassessedthatthe projectwillprovideafullsuiteofintegratedlogisticssupportproducts,asdetailedinthe NavysMaterielRequirementSet.17However,afullauditofthecontractdeliverableswas notundertaken.TheLHDswillhaveadocumentedCertificationBasisandProductBaseline todeterminemaintenancerequirements.Configurationmanagementandassociated logisticssupportproductsarebeingdevelopedandtheTechnicalandIntegratedLogistic SupportCertificationPlanhavebeenapproved.TheshipswillutiliseReliabilityCentred Maintenance,ConditionBasedMaintenance,andothersimilarobsolescenceprogramsthat willaidengineeringdecisionmakingandreducethecostofownership.

Figure16:LandingHelicopterDock

17

(DEF(AUST)5000Volume2Part17Issue03IntegratedLogisticSupportRequirements)

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Theworkundertakentodateisapositivesteptowardsappropriatesustainmentofthisnew capability.ItwillhelpprepareNavyandDMOforwhatwillbeasubstantialchangein operatingconceptandanenormousmaintenancechallenge.Thearrangementsshouldalso provideassurance,throughanindependentandrigorousevaluationprocess,thatthenew capabilityisreadyforacceptanceintonavalservice(asperRecommendation16ofthis plan). TheconceptcontainedintheLHDSustainmentStrategyisinnovativeand,ifimplementedin accordancewiththeNavyTechnicalandRegulatoryFramework,willconstituteasoundbasis forshipmaintenance.

9.3.1.2

AreasforAttention

DespitetheformationofJointAmphibiousCapabilityImplementationTeam,itdoesnot appearthatDefenceandDMO(maritime)havefullygraspedthechangesneededtosustain thisnewcapability.WhilsttheSustainmentStrategyisdiscussedatthesixmonthly LHD/AWDSustainmentBoard,itisapproximatelytwoyearssincethemoreseniorNavy CapabilityCommitteehasconsideredthisissue.Thechangeinmaintenancepracticesfor thislargeshipmustbefullyaddressedifarepeatoftheunsatisfactorysituationwiththe LPAsistobeavoided. Theconceptofcontinuousmaintenance,asproposedfortheLHDs,issupportedandshould beconsideredforothershipclasses.However,itisnotclearwhethertheNavyispreparing forthesignificantchangetoitsoperationalpracticesandmaintenanceprocedures.

Figure17:LHDComparedtoLPA

TheLHDsarecomplexvesselsandconsiderablylargerthantheLPAs(ascanbeseenin Figure17above).TheywillhavesignificantOrganicMaintenancerequirements. Consequently,thenumbersoftechniciansproposedfortheseshipsmaybeinsufficient whencomparedtotheexperienceofotherNavies.WhilemaximisingOrganicMaintenance activitywilloptimiseshipavailability,theworkloadmayoverwhelmshipstaff,especially whenskillsshortages,wholeshipevolutions,operatortrainingandexercisesareconsidered.

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TheMaintenanceTaskAnalysis,whichisnotdueforcompletionuntillate2012,isacrucial activityandmustbecompletedonschedule,ideallyearlier. ThereisariskthatthetrainingfacilitiesforLHDcrewswillbeinadequate,astheproject fundingfortraininghasbeenbasedontheincorrectassumptionthatthecurrenttraining infrastructurewouldsuffice.InviewoftheintensityoftheOrganicMaintenancetask,itis importantthattheshipscrewsareproperlytrainedtobothoperateandmaintaintheship. TheprovisionoftrainingfacilitiesshouldberevisitedtoavoidtheriskofanOrganic Maintenanceshortfall,suchashasbeenseenontheLPAs.Inparticular,theLHDandLargs Baycontainveryhighvoltageelectricalequipmentthatrequiresspecialskills.Navydoesnot currentlypossesstheseskillsandthisissueshouldbegivenearlyattention,sinceLargsBayis soontoenterservice.

9.3.2 9.3.2.1

AirWarfareDestroyer CurrentStatus

ToassessthemaintenanceconceptbeingdevelopedfortheAWDtheTeamvisitedtheAWD projectofficeinAdelaideandalsohelddiscussionswiththeAWDCapabilityImplementation Team,whichwasfirstestablishedin2006.AswiththeLHD,aninitialassessmentisthatthe acquisitioncontractwillsupplyafullsuiteofintegratedlogisticssupportproducts,although afullauditofthecontractdeliverableswasnotundertaken. UnliketheLHDs,theAWDmaintenanceconceptseekstominimiseOrganicMaintenance, whichwillreducethenumberoftechniciansonboardandlimitthequantityoftest equipmentandsparesthatneedtobecarried.Thisconceptincreasestheamountof ExternalMaintenancerequiredoverthelifeoftheshipanddecreasesthecompetencies requiredbytechnicalsailorsonboard.

Figure18:AirWarfareDestroyer

Incontrasttocurrentmaintenancepractice,Navywillseizetheopportunitytoconduct ExternalMaintenanceoften,whentheAWDisinport.Thisisdesignedtoreducetheneed forprolongedExternalMaintenanceperiodsandthereforeincreaseavailabilityfor

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operations.ThestarkcontrastbetweentheLHDandAWDmaintenanceconceptswill presentaworkforcemanagementchallengeforNavy.ThisisconsideredfurtherinSection 9.3.2.2. AswiththeLHD,severaloftheimportantsustainmentissuesassociatedwithKanimblaand Manooraarebeingaddressed.TheAWDwillhaveadocumentedCertificationBasisand ProductBaseline,configurationmanagementproductsandlogisticssupportproducts.The shipwilluseReliabilityCentredMaintenance,ConditionBasedMaintenance,andother similarobsolescenceprogramsthatwillaidengineeringdecisionmakingandreducethecost ofownership. AlthoughtherehasbeensomeearlyClassificationSocietyinvolvementwiththeProject,the extentofinvolvementthroughoutthecapabilitylifecycleisnotyetagreed. ThecurrentplanwillhelpdeliverappropriatesustainmentoftheAWDandprepareNavy andDMOforthenewoperatingconcept.

9.3.2.2

AreasforAttention

Theplantoacquirethenecessarylogisticssupportproductsissatisfactory.However,the AWDProjectwasnotfundedtoestablishthesupportsystem,repaircontractsandSPO supportprocesses.Thecurrentworkaroundistodrawfundingfromthemanagement reserveforthiscrucialactivity.Thisisariskbecauseotherprioritiesmayplaceconflicting demandsonthisfunding. TheMaintenanceTaskAnalysisfortheAWDisnotdueforcompletionuntillate2012.As withtheLHD,thisisacrucialactivityandmustbecompletedonschedule,ideallyearlier. TheAWDprojectinitiallydidnotplantoengageaClassificationSocietyforindependent thirdpartyaudit.Somepreliminaryengagementisnowoccurring,butinlinewith Recommendation15ofthisplan,theprojectshouldestablishamechanismforindependent thirdpartyqualityaudit. MaintenanceoftheAWDwillprimarilyconsistof.failurediagnostics,corrective maintenanceandlimitedpreventativemaintenancetasks.Organicpreventative maintenancewillbeminimised.Correctivemaintenanceisachievedbyunitassembly replacementstrategiesratherthanreplacementofcomponents.Whilethereareobvious advantagesinthisstrategy,itconflictswithNavyspolicyofprovidingtechnicaltrade qualificationstoitstechnicians.Unlessmeaningful,tradebasedworkisprovidedwhen techniciansareashore,frustrationanddissatisfactionarelikelyoutcomes.Thisisalready evidentamongtheNavyFrigatecommunity,whichisalsosubjecttominimisedOrganic Maintenance.Thepracticeofprovidingtradequalificationsasarecruitingtoolshouldeither berevisitedormeaningfulworkshouldbeprovidedashore,asrecommendedinthe StrategicReviewofNavalEngineering.

9.3.3

LargsBay

TheGovernmenthasrecentlypurchasedLargsBaytofillthecapabilitygapcreatedbythe earlydecommissioningofManoora.TheTeamconsideredthatthisprocurementfallswithin theintentoftheTermsofReferenceandthereforesoughtinformationfromboththeDMO ProjectstaffandtheDefenceJointAmphibiousCapabilityImplementationTeam.

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AtthisstagetheLargsBayprojectisprimarilyfocussedontheacquisitionprocess.The logisticsupportconceptandmaintenanceconceptareyettobefinalisedandagreed. However,itseemsthattheissuesthataffectedthelongtermsupportoftheLPAsarenot evidentintheprocurementofLargsBay. TheshipwillundergorecertificationtoconfirmitsadherencetoUKMinistryofDefence standardsbeforedelivery.InitialobservationbyAustralianNavystaffindicatesthat configurationmanagement,plannedmaintenanceandlogisticssupportdataiscurrentand readilyavailablethroughtheshipsInformationManagementSystem.TheshipisInClass withLloydsRegister. InitialanalysisshowsthattheshipscrewwillhavethecapacitytocompleteallOrganic Maintenancewithinthetimeallocated.Thefirstcrewhasbeenidentifiedandiscurrently beingpostedfortrainingaheadofjoiningtheship. Whileinservicesupportarrangementshaveyettobeestablished,theproposedsupport methodsalignwiththisplan.

Figure19:LargsBay

ThesustainmentofLargsBaywillnotbetheresponsibilityofAmphibiousandAfloatSupport SPO.ThisisanappropriatedecisionwhilstthatSPOisbeingrebuilt,butitshouldbe redressedatalaterdatewiththeallocationofappropriateresources.

9.3.4

CombinedResourceEffectofNewCapabilities

ThetransitionoftheLHDsandAWDsintoservicewillhavesubstantialresourceimplications onNavyandDMO.Thisisnotonlybecauseoftheparalleloperationwiththefleetinbeing, butalsobecauseofthemuchhigherresourcerequirementsontheselargerandmore complexreplacements.TheestimatedincreaseinresourcedemandforNavyandDMO (maritime)overtheperiod201112to201718isintheorderof400.Whilstthisisonly threepercentofthecombinedmaritimeworkforce,thereareanumberofadditional

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pressurepointsthat,whenconsideredholistically,meanthattheTeamisnotconfidentthat NavyandDMOhasthecapacitytomanagethetransitionperiod.Thesefactorsinclude: TheneedforNavytofullydeliveronitsrecruitmentandretentiontargetstomeet theexistingdemand. Theadditionalresourcesrequired: fortheLHD,AWD,LargsBayandnewsubmarines; toaddresstheCausalFactorsintheAmphibiousandAfloatSupportSPO,see Section7.5.1; toaddressthehollowedoutNavyengineeringfunction,seeSection7.4; toimprovecapabilitymanagementbytheGroups,seeSection5.3.2; toreducethebacklogofmaintenanceandengineeringtasksforotherpartsofthe fleet,seeSection9.2;and tofillallNavypositionsinDMOoverthetransitionperiod18. Inaddition,theTeamisalsonotconfidentthatNavyandDMO(maritime)willhavethe requiredskillsandexperiencerequired.Thisisparticularlythecaseattheranksofpetty officer,chiefpettyofficer,lieutenantandlieutenantcommander.Thiswillnotberesolved intheshortterm. Asaresultofthesefactorsabove,theTeamhasincludedarecommendationtoConfirm DefenceCapabilityPlan(DCP)(Maritime)Resourcingwiththeotherrecommendationsfrom thischapterat9.4.ItisimportanttonotethatslowingdowndeliveryoftheDefence CapabilityPlan(DCP)woulddegradecapabilityandexacerbatethesustainmentchallenges andtherefore,alternativeoffsetsmayneedtobeidentified.

9.4

Recommendations

Therecommendationsbelowwillquantifythecurrentengineeringandmaintenancebacklog forothervesselsintheFleetandensurethatDefencehassufficientresourcestomeetthe demandsofthemaritimecomponentoftheDefenceCapabilityPlan. Recommendation22 QuantifyMaintenanceandEngineeringBacklog

Tosetafirmfoundationforremedialaction,theChiefofNavyshould commissionanindependentaudittoaccuratelyquantifythemaintenanceand engineeringbacklogacrossthefleet.

Recommendation23 ConfirmDCP(Maritime)Resourcing Giventheevidentstrainsoftoday,DefenceandDMOshouldconfirmto Governmentthattheywillhavesufficientresourcesandskillstooperateand maintainmaterielthatiscommittedfornavalserviceoverthenexttenyears.

18

Asof31May2011,thereisapredictedsupplyshortagebyNavyofupto36positionsinDMO.

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Chapter10
10.1

PLANFORIMPLEMENTATION

ReformsAlreadyUnderway

TheTermsofReferencerequiretheTeamtodevelopaplantoreformthepracticesthatled totheearlydecommissioningofManooraandtheextendedunavailabilityofKanimbla. Successfulimplementationoftherecommendationsofthisplanandotherrelatedreviews willsignificantlyreducethelikelihoodthatasimilarsituationwilloccurwithothershipsin theFleet. Inordertoresolvethelongstandingissuesidentified,personalcommitmentwillberequired fromseniorstakeholders,additionalresourcesmustbeassignedandstronggovernance arrangementsestablished.Thesemustendurebeyondthecurrentleadership. Table2listsseveralofthereviewsandreportsthatarerelevanttotheCausalFactors.The tablealsoprovidesguidanceonwhichrecommendationsweremostrelevanttothefindings ofthisreview.Aresponsibleauthoritytocoordinatethefindingsofeachhasbeen identified.However,thereisaneedforanoverarchinggovernancearrangementtoensure thatthefindingsaregivenmomentumintheshorttomediumterm.Thisisproposedin Section10.2. InthespecificcaseoftheStrategicReformProgram,theresultsrequiredfromthatreform mayconflictwiththeincreaseinresourcesneededtoaddressthisplan.Defencewill thereforeneedtomaketheresourcetradeoffdecisionsnecessary.
Table2:RelevantReviewsandReports

Review StrategicReviewof NavalEngineering 12Nov2009

RelevantRecommendations Recommendationsthatrelateto: Navymaintenanceandengineering policy NavyIntegratedLogisticSupportpolicy Navyriskmanagement ConfigurationmanagementinNavyand DMO FleetSupportUnits Navytechnicaltraining ClassificationSocieties

Responsible Authority HeadNavy Engineering

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Review HelmsmanSustainment ComplexityReview July2010

RelevantRecommendations Recommendationsthatrelateto: Performancebasedcontracts SustainmentManagerrolesinDMO AssetManagementmethodologyand skills Improvedinformationmanagement systems

Responsible Authority General Manager Systems (DMO)

HMASSuccessMaterial StateTechnical Investigation March2010

Recommendationsthatrelateto: NavyandSPOresourcing Approvalofdeviations Rapidapprovalofengineeringchanges Navytechnicaleducationandtraining MaintenanceRequirementsAnalysis ImportanceofPreventative Maintenance Systemconditionassessments Certificationprocessesandresourcing Engineeringculture

SurfaceForce Commander (Proposed)

Configuration Management ImprovementProject 9Sept2010

Recommendationsthatrelateto: Dataalignmentandaccuracy CommonInformationManagement systems StandardOperatingProcedures Configurationmanagementtraining

Director General Maritime Support (DMO)

NavyEngineering WorkforceReview 17November2010

Recommendationsrelatedto: Navycivilianengineeringworkforce resourcing Navyengineeringworkforcetraining Navyengineering2starappointment ReinvigoratingmaritimestandardDEF Aust5000

HeadNavy Engineering

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Review ReportintoAmphibious andAfloatSupport SystemProjectOffice Aug2010

RelevantRecommendations Recommendationsthatrelateto: AdditionalresourcingforAmphibious andAfloatSupportSPO CareermanagementinAmphibiousand AfloatSupportSPO

Responsible Authority HeadMaritime Systems (DMO)

KPMGMateriel SustainmentAgreement Review July2010 DMOSustainment BusinessModelProject TermsofReference 14April2011 HMSDirective1/2011: DirectivetoMrAlan EvansReconstruction ofAASSPOSystemsand Processes 8Feb2011 ReviewofConfiguration andMaintenance Management 8Dec08

ThecreationofmoreeffectiveKey PerformanceIndicatorsforMateriel SustainmentAgreements

Director General Governance& Assurance (DMO)

Deliveryofaformalsustainmentmethodology General forDMOandNavy Manager Systems (DMO) AmphibiousandAfloatSupportSPObusiness HeadMaritime processreengineeringandregenerationofthe Systems businessunit (DMO)

Recommendationsthatrelateto: Configurationbaselineforamphibious ships CommonmaritimeIntegratedLogistic Supportinformationmanagement systems PoolofNavyandNavyReserve personnelwithgoodcondition monitoringskills UpdatetoNavyTechnicalRegulatory System

Director General Maritime Support (DMO)

SeaworthinessBoard ReportLPA 22September2010

AlloutstandingLPASeaworthinessCorrective ActionRequirements

HeadNavy Personneland Reputation

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Review AReviewintothe UnderlyingCauses leadingtothe OperationalPausefor theLPAClass(HMA ShipsKanimblaand Manoora) Dec2010

RelevantRecommendations Recommendationsthatrelateto: Navyregulatorycompliance Licensingandassurance CulturalchangeinNavy

Responsible Authority HeadNavy Personneland Reputation

DefenceProcurement Recommendationsrelatedto: andSustainmentReview NPOCestimatesshouldbereviewed (Mortimer) annually 18Sept2008 FurtherdevelopKPIsinMateriel SustainmentAgreements Baseprocurementdecisionson throughlifecosts

SeniorAdvisor Review& Analysis (DMO)

10.2
10.2.1

HowtoEffecttheRecommendationsofthisandotherRelevant Reviews
TimelineandAccountableAuthorities

Theplanispresentedinamodularform,pickingupmajorthemesforchange.Resource requirementsandimpactshavenotbeenscopedduetosecondorderconsequencesandthe tradeoffdecisionsnecessaryforresourceallocation. ImplementingthisplanwillrequiresubstantialchangeinNavyand,toalesserextent,DMO. Itwillnotbeeasyandwillneedstrong,committedandenduringleadershipaccompaniedby effectiveoversight. WhilstChiefofNavyandChiefExecutiveOfficerDMOwillhaveownershipofmanyofthe actionsidentified,oneprerequisitefordeliveringthischangeistoidentifyresponsibleand accountableauthoritiesforthesuccessfuldeliveryofindividualrecommendations. Recommendation24inSection10.3addressesthisrequirement,whichneedstobe supplementedwithanoversightarrangement,asdescribedinSection10.2.2. AsdisplayedinFigure20below,indicativetimelineshavebeendevelopedforeach recommendation(basedonurgencyanddependency).Inthiscontext,shorttermisdefined aslessthansixmonths,mediumtermisbetweensixandeighteenmonthsandlongtermis overeighteenmonths.

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Figure20:ReformImplementationTimeline

10.2.2

DrivingtheImplementation

TheTermsofReferencerequireoversightoftheearlystagesofimplementation.TheTeam hasexaminedexistingboardsandcommitteeswithinDefencetoidentifyasuitableforum. Amongstothers,theDefenceStrategicReformAdvisoryBoardandtheDefenceAuditand RiskCommitteewerebothconsidered,butneitherhavetheappropriatemembershipor focustoprovidethebestoversight.Thereforeitisrecommendedthatatemporary, ImplementationCommitteebeestablishedwithasunsetlifeofeighteenmonths,withMr PaulJRizzoappointedastheindependentchairtoensurecontinuityanddelivery(see Section10.3).TheCommitteewilloverseeimplementationoftherecommendationsinthis planandtheexistingreformactivitiesoutlinedinSection10.1.Themembershipshould comprisetheChiefofNavy,andChiefExecutiveOfficerDMOastheprimaryownersofthe outcome,andDeputySecretary,StrategicReformandGovernanceastheresponsible authorityfortheStrategicReformProgram.TheCommitteeshouldreporttotheSecretary, andtheChiefoftheDefenceForcethroughupdatesfollowingeachmeeting.TheSecretary andChiefoftheDefenceForceshould,inturn,providesixmonthlyupdatestotheMinister forDefenceandMinisterforDefenceMaterielonprogressagainstthisplan.Secretariat supportshouldbeprovidedbytheStrategicReformandGovernanceExecutive,with assistanceasrequiredfromChiefofStaff,MaritimeSystemsDivision.Aftereighteen

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months,DeputySecretary,StrategicReformandGovernancewillcontinuetheoversight function.

10.3

Recommendation

ThefollowingrecommendationwillhelpensurethatDefenceandDMOimplementtheearly stagesofthisplanandotherrelatedoutstandingactions.

Recommendation24 DrivetheReformProgram DefenceshouldestablishanImplementationCommitteetodriveearlystagedelivery ofthereforms.Therearetwoimportantenablers: theCommitteeshouldconsistofChiefofNavy,ChiefExecutiveOfficer DefenceMaterielOrganisation,DeputySecretary,StrategicReformand GovernanceandMrPaulJRizzoastheindependentchair. atthefirstmeeting,DefenceandDMOshouldpresentthelistofproposed responsibleofficersfortheimplementationoftherecommendations.

10.3.1

SupplementarySuggestions

Inadditiontotheformalrecommendationscontainedinthisreview,theTeamalsomade severalobservationsthatifaddressedwilldeliverfurtherbenefits.Thesearesummarisedin thefollowingtable.

Table3:SupplementarySuggestions

No 1

Reference/ Section 4.3.3

Suggestions Developaprocesswherebytheapprovalauthorityforthe deferralofamaintenanceavailabilityperiodistheFleet Commander,actingontheadviceoftheChiefEngineerinthe SPO.Thisresponsibilityshouldnotbedelegated. Oneimportantbutdifficultchangewouldbetoincreasethe lengthoftheNavypostingcycleinordertoincreaseskillsand knowledgeforsomeofthemorecomplexDMOroles. DevelopmetricswithintheMaterielSustainmentAgreements andotherServiceLevelAgreementsthataddresstheclearanceof UrgentDefects,plannedandcorrectiveExternalMaintenance, temporarydeviationsandengineeringchanges.Importantlythey shouldcontainamixofbothlagandleadindicators. UpdatedocumentationsupportingNavyTechnicalRegulations. Thisneedstomakeclearreferencetotheneedforrisk assessmenttooccurinanholisticmanner. Initiateamaintenancecloseoutmeetinginvolvingsenior operationsandtechnicalstaffpriortotheshipsailing.Theship's operationalprogramneedstobeamendedtoaccommodatethis.

5.3.4

5.3.5

6.3.1

6.3.2.2

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No 5 6

Reference/ Section 7.2.8 7.4

Suggestions Developanddeployashiplicensingsystemtoprovidegreater levelsofassuranceofashipsconditionandpreparedness. Reviewtheworkforcerequirementsofthefollowing organisations: DirectorateofNavyEngineeringPolicy, DirectorateofTechnicalRegulationNavy, DirectorateofNavyPlatformSystems, DirectorateofNavyWarfareSystems,and EngineeringDivisioninFleetCommand.

7 8 9

7.5.2 9.3 9.3.1.2

Reestablishproactiveengineeringpracticestodelivercondition basedmaintenanceandreducethroughlifecosts. NavytoprovideeighteenuniformedpersonneltotheLHDSPOas agreed. InpreparationforthedeliveryofLargsBayandtheLHD,Navy andDMOshouldprovidetrainingandeducationinthe maintenanceofHighVoltageequipment. DMOtoreviewtheprovisionofLHDtrainingfacilitiestoavoid theriskofanOrganicMaintenanceshortfall. Navytocloselymonitortheprogressofongoingoperatorand maintenancetaskanalysisofboththeLHDandAWDtoensure thatcrewingnumbersareoptimal. WhentheAmphibiousandAfloatSupportSPOhasbeenrebuilt, itshouldassumeresponsibilityforthesustainmentofLargsBay.

10 11

9.3.1.2 9.3.2.2

12

9.3.3

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AnnexATermsofReference

AdviceontheLandingPlatform,Amphibious(LPA)ClassofShips,HMASShipsManooraand Kanimblaof9February2011,providedtotheMinisterforDefencebytheSecretaryof DefenceandtheChiefoftheDefenceForce,identifiedanumberofcausalfactorsthatledto theearlydecommissioningoftheManooraandtheextendedunavailabilityofKanimbla. ThefactorsidentifiedmayalsohavecontributedtotemporaryunavailabilityoftheTobrukin February2011,andmayhavealsoadverselyaffectedthemaintenanceandsustainmentof theothersupportunits(Theamphibiousandafloatsupportshipcomponentcomprisesfive shipsHMAShipsManoora,Kanimbla,Tobruk,SuccessandSirius). Toimplementessentialchangeinthemanagementandrepairoftheunits,anIndependent TeamheadedbyMrPaulRizzowilldevelopaplantoreformthesepractices,andoversee earlystageimplementationofthosereforms. MrRizzowillbesupportedbyAirViceMarshallNeilSmith(rtd)andRearAdmiralBrian Adams(rtd)whohaverelevantexperienceinDefenceadministration,engineering, maintenance,logistics,systemsengineering,safetycertificationandtheoperationand supportofamphibiousships. Manyofthecausalfactorsidentifiedhavebeen,orarebeing,addressedbysubstantial reforminitiativesunderwayintheAustralianDefenceOrganisationasaresultof:

theStrategicReviewofNavalEngineering; theoperationofthenewSeaworthinessBoard;and theStrategicReformProgram.

MrRizzosTeamwilladdressthecausesoftheproblemsfacingtheavailabilityofthe amphibiousandsupportships,inthecontextofreformsalreadyunderway. TheTeamwillalsoconsiderhowthesereformsshouldbeappliedtothemaintenanceand sustainmentofothernavalvessels. TheTeamwillalsoconsiderthemaintenanceconceptbeingdevelopedforthenewAir WarfareDestroyerandtheLandingHelicopterDock,toensureitssuitabilitytosustainthese vesselsforwholeoflife. TheTeamwillfocusonthecausalfactorsalreadyidentifiedandanyotherfactorsit consideredplayedaninfluenceinthecurrentconditionofamphibiousandafloatsupport ships. TheTeamwillconsultwithrelevantmembersoftheAustralianDefenceOrganisation,the shipmaintenancecommunityandthecontractingcommunity. AninitialreportwillbepreparedforconsiderationbytheMinisterforDefenceandthe MinisterforDefenceMaterielwithinthreemonthsofcommencingwork.Atthattime,Mr Rizzowillrecommendwhetherfurtherreportsarerequired. TheTeamwillbesupportedbyasmallsecretariatlocatedintheOfficeoftheSecretaryand theCDFintheDepartmentofDefence.

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AnnexBCausalFactorsContributingtotheUnavailabilityofthe NavysTwoLPAs
1. Thisreportreviewsthecontributingfactorsleadingtotheearlydecommissioningof HMASManooraandtheextendedunavailabilityofHMASKanimbla.Thetwoshipswere purchasedfromtheUSin1994,aftera$500mprojecttoacquireadedicatedtrainingand helicoptersupportshipwascancelled.Bothshipssubsequentlyundertookfurther modificationsinalengthyandproblematicConversionProjectbetween19961999.Since commissioningintotheRoyalAustralianNavy,theshipshavebeenusedinsupportof operationsinthePersianGulfin20012003,supporttotheIndonesianTsunamiresponse effortandcontingentoperationsoffFijiin2006.Theyarenow40yearsold. 2. WhentheLPAswerepurchasedacompletesetoflogisticsproductswasnot acquired.ItislikelyitdidnotexistwithintheUSNavy.Accordinglythebaselinetomanage maintenanceandconfigurationwasinconsistentandnotreadilyusable.Duringthe conversionProjectthisprovedproblematicandoncompletionanupdatedsetoflogistic productsstilldidnotexistandthefoundationforfuturemaintenancesupportand configurationmanagementwasweakened.Todaysproblemthusstemmed,inpart,from theinitialpurchaseofthevesselsinapoorstate.Effortstoremediatethisshortcoming have,overtheyears,neverproperlysucceededthroughlackofresourcesorpressureto keeptheshipsrunningtomeetemergingoperationalrequirements. 3. ThedriveforefficiencyandcapsonAPSanduniformstaffinglevelsinDefenceover manyyearshasmeantagreaterneedtooutsourcemanycriticalfunctionstoIndustry.The driveforgreaterDefenceefficiencyisessential,butinsomecasestheresultingoutsourcing ofdeepermaintenancerequiringhighlevelskillsandexperiencehasbeenoutsourced, resultinginalossofprofessionalskillswithinNavyandDefenceMaterielOrganisation(and possiblymorebroadlyacrossDefence),aninabilitytointernalisetheknowledgeofsome criticalcomponentsofourbusiness,andinsomecasesgreatercost.Thishasworkedtothe detrimentoftechnicalskillsandcompetencies. 4. In2009theChiefofNavyinitiatedanewconceptcalledtheSeaworthinessBoard,a conceptmodelledonthesuccessfulAirworthinessBoardimplementedbyRAAFsomeyears ago.Itservesasalongoverduemeansofprovidinganindependentreviewofmaritime systemsoutsidethededicatedSafetyManagementSystem.ThisreviewprovidestheChief ofNavy,inhisroleastheADFSeaWorthinessauthority,withanindependentverification thathecansafelyoperateashipinitsintendedrole,contributingdirectlythereforetothe safetyofourpeople.ThecurrentstateoftheshipscametolightinSeptember2010when theSeaworthinessBoardreviewedtheLPAs. 5. TheSeaworthinessBoardrevealedasignificantlevelofaggregatedriskfortheLPAs asaresultofshortcomingsinareasincludingmanninglevels,trainingloads,experience, maintenance,integratedlogisticssupportandconfigurationmanagement.Subsequentto thatboardtheChiefofNavydirectedthattheshipsenteranoperationalpauseinlate September2010. 6. Areviewofthefactorsresultinginthatdecisionidentifiedsystematicandcultural problems.Thiswasevidenceofacandoandmakedoculture,alackofconformanceto assuranceprocesses,aperceptionthatsurfaceshipsarenotsubjecttothesamelevelofrisk

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assubmarinesandaircraft,aperceptionthatLPAsweresecondtiershipsandthatthere wereinsufficientresourcestoaddressshortcomings. 7. In2009aStrategicReviewofNavyEngineeringcommissionedbytheChiefofNavy andledbyAVMJulieHammer(Ret),immediatepastpresidentoftheInstituteofEngineers Australia,highlightedanumberoforganisationalshortcomingsandrecognisedtheneedfor reformintheNavalEngineeringSector.Aremediationplanwasinitiatedinearly2010and, combinedwiththeNewGenerationNavysculturalchangeprogram,reformisunderway. 8. IntheDMO,competenceintheSystemsProgramOffice(SPO)hadfallenwellbeyond anacceptablelevel.StaffinglevelsandexpertiseintheSPOhavevariedsignificantlyacross thelast10years.InDecember2006theNavalTechnicalRegulatingAuthorityremovedthe authorisedengineeringcertificationfromtheSPOonthebasisthatadequateprocessesto ensureconformancewithregulatoryrequirementswerenotinplace.Certificationwas reissuedinMay2008butitisnowevidentthattheSPOisonceagainunabletomeetallof itstechnicalregulatoryrequirementsthroughalackofresources.Actionisnowunderway torebuildbusinessprocessesandrevieworganisationalstructure.Amaintenance remediationprogramfocusedoncriticalhighriskmaintenanceactivitieshasalsobeen ongoingsinceearly2010. 9. ConstantchangeinmuchofDefencehasinadvertentlyhelpedtomask,ratherthan highlighttheindicativesignsthatallwasnotwellwiththeLPAClass.Therecent SeaworthinessBoardprovidedafocusonthesituationthatwasnotpreviouslyevident throughthecomplexNavaloperatingandregulatorysystems.Theawarenessofthe situation,theabilitytoresolvethedeficiencieswithinthelifeoftheLPAClassandNavys governanceobligationsledswiftlytoadecisiontoceaseanyfurtherinvestmentinManoora andconcentratealleffortsandresourcesonKanimbla. 10. TheLPAstoryisaprotractedandnotalwayshappyone.Manyoftheseedsofthe problemsnowfacedweresownlongago.Whilethecurrentsituationisunpalatable,the decisiontoinvokeanoperationalpausewascorrectandnecessary.Hadthisnotoccurredit wouldnotbeunreasonabletopredictanincreasedriskofarepeatofaSeaKingsortof accidentin2005,whichkilled9ofourADFpeople.Navyhaslearntfromthataccident, understandstheenormouschallengesofculturalreform,andDefencehasanumberof initiativesunderwaytoremediatecurrentshortcomings. OriginalSignedby A.G.HOUSTON ACM CDF 9February2011 9February2011 IJWatt Secretary OriginalSignedby

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AnnexCStakeholdersConsulted
DEFENCE AirChiefMarshallAngusHouston DrIanWatt MrBrendanSargeant MrPhilMinns MrGeoffreyBrown VADMRussellCrane RADMStephenGilmore AIRCDREAnkerBrodersen CDREStephenMcDowall CAPTRANMichaelFinlayson CAPTRANAndrewFysh CAPTRANStephenBasley CAPTRANColinDagg CAPTRANJacquiKing CAPTRANMarkKellam CAPTRANBraddonWheeler CAPTRANBradWhite MrJohnColquhoun MrGaryODonnell MsLynnePeever MrGarryDuck MrDavidBrinton MrShaunCarmichael MsGayeLindfield MsTheresaJones ChiefoftheDefenceForce Secretary,DepartmentofDefence DeputySecretary,StrategicReformandGovernance DeputySecretary,PeopleStrategies&Policy ChiefAuditExecutive ChiefofNavy Commander,AustralianFleet DirectorGeneral,DefencePreparednessBranch, VCDFGroup Commander,SurfaceForce ActingHeadNavyEngineering Amphibious&AfloatSupportGroupCapability Manager DirectorStrategicReformofNavalEngineering ChiefStaffOfficer(Engineering) DirectorGeneral,NavyCertificationandSafety DirectorRANTestEvaluationandAnalysisAuthority DirectorAirWarfareDestroyerCapability ImplementationTeam DirectorJointAmphibiousCapability ImplementationTeam ExecutiveDirectorNavyPlatformSystems Director,NavySafetyandRegulatoryProgram AuditDirector PrincipalSystemsEngineer DirectorAuditCentral OperationalRiskManager,Amphibious&Afloat SupportGroup AuditManager SeniorAuditor

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CMDRGraemePedley

ChiefofStafftoCommanderofMineWarfare, ClearanceDiving,Hydrographic,Meteorologicaland PatrolForce(COSMHPFOR) CommandingOfficerHMASTobruk CommandingOfficer(CO)HMASKanimbla SupplyOfficer,HMASKanimbla DirectorSeaworthinessCoordination FleetMarineEngineeringOfficer(FMEO) Commander,Test&Evaluation DeputyDirectorAirWarfareDestroyerCapability ImplementationTeam DeputyDirectorLandingShipDockCapability ImplementationTeam AssistantDirector,CertificationPolicyand Requirements SeniorAuditor ExecutiveOfficer(XO),HMASKanimbla EngineeringOfficer(EO),HMASKanimbla EngineeringOfficerHMASTobruk.

CMDRPaulScott CMDRBrendonZilko CMDRGregSwinden CMDRColinPryde CMDRGrahamWilliams CMDRJohnRenwick CMDRBenFavelle CMDRStuartTaylor MrDavidPage MrFrankieLum LCDRBenHissink LCDRStephenLangridge LCDRSeanFeenan DMO
DrStephenGumley MrWarrenKing MsShireaneMcKinnie MsJaneWolfe RADMPeterMarshall AVMChrisDeeble MrPeterLambert MrAndrewCawley CDREMichaelHoughton CDREMarkSander CDREBobRichards CDRESteveTiffen AIRCDREBrendanBetchley

ChiefExecutiveOfficer DeputyChiefExecutiveOfficer GeneralManagerSystems GeneralManagerReformandSpecialProjects HeadMaritimeSystemsDivision ProgramManagerCollinsandWedgetail HeadHumanResources&CorporateServices,DMO ProgramManager,AirWarfareDestroyer DirectorGeneralMajorSurfaceShipsBranch DirectorGeneralFutureSubmarinesProgram DirectorGeneralMaritimeSupport AirWarfareDestroyerDeputyProgramManager Materiel DirectorGeneralLogisticsInformationSystems Branch

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MrAlanEvans MsWendyMesser CAPTRANAdamGrunsell CAPTRANKatherineRichards CAPTRANStevePearson GPCAPTJamesHood MrJonathanAnglin MrPeterPriddle CMDRTimMahony MsLoreenaWootton LCDRMarkStoneTolcher INDUSTRY
MrRobinMadders

DirectorGeneralSpecialistShipsBranch SeniorAdvisorReviewandAnalysis DirectorAmphibious&AfloatSupportSPO LHDSustainmentDirector AirWarfareDestroyerCapabilityDevelopment Director OfficerCommandingAirborneEarlyWarningControl SystemsProgramOfficer DirectorSmartSustainmentPartnering DirectorLogisticsSystemsProjectOffice Director,MaritimeSustainmentSupport ActingDirector,SystemsGroupImprovementTeam Manager,MaintenanceSystems

ProgramManager,AmphibiousandAfloatSupport SPOIntegratedMaterielSupport(RollsRoyce AustraliaServices) EngineeringManager,AmphibiousandAfloat SupportSPOIntegratedMaterielSupport(Rolls RoyceAustraliaServices) GlobalVicePresident,BusinessDevelopmentand Channels(Mincom) VicePresident,Naval(ThalesAustralia) SeniorAdvisortotheVicePresident,Naval(Thales Australia) ProgramDirector,BudgetandManagement Program(ASPI) PrincipalSurveyorManagerSydneyMaritime,Det NorskeVeritas(DNV) BusinessDevelopmentManager,DetNorske Veritas(DNV) AirWarfareDestroyerPlatformSystemSupport Manager,ASCShipbuilding AirWarfareDestroyerIntegratedLogisticsSupport Manager,ASCShipbuilding AirWarfareDestroyerCombatSystemTechnical Specialist,RaytheonAustralia

MrPhilBaldwin

MrChrisEdwards MrChrisLloyd MsHellenGeorgopoulos MrMarkThomson MrIanPeacock MrRodneyHumphrey MrDonPolman MrEugeneLibrandi MrMickEdwards

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AnnexDSubmissionsReceived

JasonCarter WilliamDoran CDREGrantFerguson CMDRPhilipGregory PeterHodel RADMPeterJones StephenLangridge DavidNarula CMDRRamonRees StephenSharp TedWalsh POBrendanWilson MarkGairey CMDRMarkProctor DavidYork ArthurBoyd BrentClark PhilipClark AndrewFazel BevanGardner GregHodge ZoranJaksic BruceJames CraigLockhart BevLyttle MichaelMcLean FSUSydneyFireControl,FleetSupportUnit,HMASKuttabul AustralianSuperHornetProject SupportforWoundedInjuredorIllProjectSWIIP OccupationalHealthSafetyandCompensation CapabilityIntegration,SURFORCOM SeniorContractsOfficer,CorporateManagementBranch HeadquartersForcesCommand,VictoriaBarracks HeadICTOperations,CapabilityDevelopmentGroup EngineerOfficer,HMASKanimbla ProgramManagerSRP,CentreforMaritimeEngineering AsstProductionManager,HMASSuccessIMOProject TechnologyManagerControlandNavigation,NAVSTRATCOM PreparednessandComplianceManager,SURFORCOM RoyalAustralianNavyDieselInspector,FleetSupportUnit PDFutureSubmarine,FutureSubmarineProgramOffice DeputyDirector,LHDSystemsProgramOffice Director,CentreforMaritimeEngineering,MaritimeSupport Branch,MaritimeSystemsDivision Director,ForwardHorizons HeadofBusinessDevelopment,BAESystemsAustralia Warrandyte,VIC DefenceSystemsManager,UGLInfrastructure SeniorElectricalConsultant,BurnessCorlettThreeKeys Australia ChiefExecutiveOfficer,DMSMaritime GeneralManager,BurnessCorlettThreeQuaysAustralia ChiefExecutive,ResourcesandEnergyTransfieldServices AustraliaPtyLtd ChiefExecutiveOfficer,BabcockPtyLtd ExecutiveManager,BeakEngineering ManagingDirector,McLeanManagementConsultants

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GaryMoran DavidParmeter DougRoser JohnSimmons RobertSimpson ChrisWilliams LEUTAndrewMcNeill

Manager,GryphonInternationalAustralia ManagingDirector,TeekayShippingAustralia Chairman,AustralianSocietyforDefenceEngineering Kambah,ACT GlobalLeadNavalShips,Lloyd'sRegister Director,HIFraserGroup LandSystemsDivision,DMO

NotingthatpublicsubmissionsweretobetreatedasInConfidence,theabove individuals/organisationshaveagreedtohavetheirdetailsdisclosedinthereport.In addition,threesubmissionshavebeenreceivedfromundisclosedindividuals.

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AnnexEAcronyms

ADF AWD DCP DMO ICT LHD LPA SPO AustralianDefenceForce AirWarfareDestroyer DefenceCapabilityPlan DefenceMaterielOrganisation InformationandCommunicationsTechnology LandingHelicopterDock LandingPlatformAmphibious SystemProgramOffice

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