A monopsonistic environment – we are the dominate customer

Working together with Navy and Industry as an innovative team we provide Seaworthy warships for our Nation

Major Fleet UnitsShip Repair & Maintenance Reform

Group Maintenance Contracts

Strengthening Partnerships with the Maritime Industry


Williamstown Dockyard …………… sold 1985Cockatoo Dockyard ……………… closed 1992Garden Island Dockyard ………… privatised 1999

Australian Submarine Corporation …….… to be sold ??

From owning all the means to maintain our charges… to owning none …

A monopsonistic environment – we are the dominate customer


An Industry that is dominated by a small number of primes (system integration and steel fabrication)

supported by a large number of SME sub-contractors and a few sophisticated electronic system houses; all

heavily reliant on OEMs

We had created ….


A work-package preparation schedule that ensures an incomplete Statement of Work and …

Project Management ‘shells’ having transient SME’s sub-contracting their services to the successful tenderer

No longevity, No predictability, No stability

An Industry more attuned to the preparation of tender responses than to the

preparation of the repair and maintenance activity being tendered for

By arms-length fixed-price induced competition within a highly restricted market we had created …


Creating an Industry environment of ...

false competition in which ‘primes’ are reliant on a common group of OEMs and agents

short-term cost drivers = under-bidding, play-down risk, unachievable schedules, find profit in growth

no security of tenure, no predictability of effort to plan against

the shedding of permanent trades, subrogation of work-force training and skill sustainment


Extract from the RIZZO REVIEW

Short term, individual contracts for the conduct of External Maintenance are resource intensive and fail to foster Industry

investment. (p 23)

Strengthen Partnerships with Industry

Whilst retaining competitive tension, the Defence Materiel Organisation should implement maritime contracts that are broader in scope and longer in term, to build deeper and continuing relationships with Industry.

(Recommendation 5)


While Navy was increasingly influenced by….

provision of greater-depth ‘Parent Navy’ support

diminishing in-house and Navy skill base – Intermediate Level Maintenance no longer exists, organic maintenance deficits

increasing Operational Tempo of Fleet Operations – higher-than-designed usage rates

shorter technology life-cycles and rolling supportability management programs

people & safety-centric initiatives (SKT, WHS) requiring a more mature relationship with Industry


A new grouped asset long-term, performance-based contracting methodology for the repair and maintenance of the Navy’s major fleet units. It was anticipated that this initiative will provide:

• Industry with increased certainty of work (promoting stability and security of tenure), a commonality of contract/expectation, and a manageable and predictable level of effort that it can plan against and deliver efficiencies from;

• Navy with better notice to ships’ crews of the planned location of maintenance and maintenance patterns.

Major Fleet UnitsShip Repair & Maintenance

Reform Initiative


What we needed:A move away from throughput-based profit making towards efficiency-based profit making (the learning organisation, increased innovation, creativity, conditioned-based maintenance, pre-refit assessment, and the challenging of norms – less is more)

• Greater predictability of work-effort, refit location, and overall ship availability (challenging the current usage upkeep paradigms and practices, no compromise to safety/availability)

• Greater certainty of maintenance duration/completion through programming flexibility, use of windows-of-opportunity

• Greater stability to encourage the investment in strategic skill-sets, equipment and facilities (to be a partner rewarded through performance and efficiency)


GroupingsGroupings

Group 1 Amphib & Afloat Support Ships (now only HMA Ships Tobruk and Success)

Group 2 4 x Adelaide Class FFGs

In contract 28 May 2014 with Thales Australia

Group 3 8 x ANZAC Class FFHs

In contract 23 May 2012 with Naval Ship Management (Australia)

a joint venture between Babcock/UGL,


Perform Supportability

Analysis

Develop Engineering

Changes

Invest in Inventory

Perform Maintenance

Incorporate Engineering

Changes

Supportability

URDEFs – Quantity – Days – Stores

EMA – Timeliness– Quality– Budget Achievement– Post-Availability Report– Feedback– Trials

Type C Contract Feedback

Condition Monitoring Results

Condition Assessment Results

Inventory – Consumption– Issues– Repairs– Procurement– Obsolescence– Demand Satisfaction

Support Costs

Availability

Sustainability

Integrated Material Support / ASIPA

GMC ContractorEngineering Support

Maintenance Support

Supply Support

Outcome IndicatorsOutcomesImplement

Design & DevelopAnalyse

Develop Inventory

Investment Plan

Develop Work Package

WI / MWL / TML

Type C Contracts

MTU Diesels, Thales Underwater Systems

etc …

OEMs & in-country

agencies

ANZAC Assumption Model


Within the first 3 months

• Reductions in Growth

• Real Cost Savings

• Rewarding Efficiency


Over the proceeding 18 months

• Better understanding of the maintenance liability

• On time delivery of ships out of maintenance

• Enhancement of work instructions

• Data remediation and improved data integrity

• Earlier ordering & staging of GFE / CFE

• Better & more reliable scheduling and planning

• Better responsiveness in meeting the unforeseen


Base-level Benefits

• Increased performance (productivity)

• Priority adaptability and responsiveness

• Customer environmental awareness and sensitivity

Higher Level Benefits

• Investment in long-term planning

• Workforce skill-set development / Infrastructure investment

• Stability and predictability


12.18 Defence will build upon the success of …mutually beneficial contracting arrangements. This includes appropriate use of measures such as collaborative contracting structures for acquisition projects, …,

performance incentives, rolling wave contracts and group maintenance arrangements for sustainment work.

These will continue to form the basis of Defence’s commercial partnership with industry and deliver better value for money for the Commonwealth and industry.


Questions ?Questions ?

Documents

A monopsonistic environment – we are the dominate customer