Evans takes a shot at DoD cost blowout

Shadow Defence Procurement Minister Chris Evans has lambasted the Department of Defence supply-chain cost blowout, saying such an IT project disaster in the private sector would see shareholders demanding the CEO's head.

Post-election, Evans said, a key challenge for the Latham Labor government will be to get the department's corporate management systems in order.

"Defence has already spent $80 million trying to fix the problems with the supply management system, SDSS (Standard Defence Supply System), and now plans to spend another $150 million to buy a replacement system," Evans said.

"The problems are so severe that they have left Defence unable to account for billions of dollars worth of assets, and unable to fund over $700 million worth of employee leave entitlements."

Details of the project blowout were revealed earlier this month in a national audit report with Defence Minister Robert Hill blaming the cost and complexity of new accounting procedures required for accrual.

He told Parliament the new procedures were underestimated which forced the government to allocate additional funds to complete the job. "The best and latest advice that I have is that it is about 90 percent complete now," Hill said.

When the initial system was put in place, he said the department was totally unaware of the new accrual procedures introduced to provide higher levels of accountability.

IBM Business Consulting Services (BCS) which was the consultant on the project had a different stance to take.

The vendor advised the Australian National Audit Office (ANOA) in June that the project blowout occurred because of lack of DOD resources. In the report, IBM said DOD had to extend working arrangements for the Project Management Officer (PMO) as a result of ongoing delays and IBM contractors were being asked to perform additional tasks that involved new work and responsibilities.

The ANAO report states that the original project had a budget blowout of 200 percent, met very few of the stated outcomes and is yet to deliver any value for money.

The Department of Defence information systems procurement manager, John Peters, could not be reached for comment.