casg cost principles

, O8>vz_y!_BG10Vu j1+f)*f) A0 u`e0;F)l` qX+^09Wy7k&C ) A Smart Buyer undertakes the roles that government must perform, and effectively outsources other functions when that is the Smart thing to do. 200.410 Collection of unallowable costs. 27. SPO staff have limited experience, skills, and competencies needed to effectively establish, govern, and assure industry delivery of capability. since 2000, a specialist acquisition and sustainment unitpreviously the Defence Materiel Organisation (DMO) and most recently the Capability Acquisition and Sustainment Groupstaffed by a mix of civilian and military personnel; maintenance by the specialist unit of physically dispersed sub-unitsknown as Systems Program Officeswith day-to-day responsibility for Capability Acquisition and Sustainment Group sustainment activities. That modelling indicated cost of ownership of between $240million and $360million per year (October2012 prices), or $5.1million to $7.7million per aircraft per year. F&A (indirect) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.. The First Principles developed were: Clear authorities and accountabilities that align with resources Decision-makers are empowered and held responsible for delivering on strategies and plans within agreed resourcing. Such visibility would enhance Defences ability to benchmark its sustainment performance against allied countries with similar equipment. Systems Program Office consolidation and reform is one of the largest reforms to Capability Acquisition and Sustainment Group deriving from the 2015 First Principles Review. Defence had developed, by the time of that review, a consistent approach to acquisition. In examining why contracting out work to the private sector had not worked well during the Reagan administration, these studies find that government has often not proved to be an intelligent consumer of the goods and services it has purchased. In March 2016, Defence extended Bechtels contract until 30 June 2016, which increased the value to $9.7 million. PDF Supplement to FRN CAS-GAAP Guiding Principles - White House How Are Principles-Based and Rules-Based Accounting Different? Three principal issues remain for the conduct of a process for sustainment parallel to the MPR for acquisition: 35. 129A Management and Operations contractor approach involves an external organisation being contracted to take on all responsibility for the day-to-day running of the organisation, including its transformation, but with the government maintaining ultimate ownership and strategic control over the body. This is reflected in Figure3.4. It is apparent from this audit that Defence has developed information systems that could support the preparation of similar information for its sustainment work. Obsolescence will result in increased Urgent Defect, Cannibalisations and reduced Demand Satisfaction Rates. 5.63The Sustainment Business Model project has not delivered all that DMO expected. 10. 154The template was referred to as ASDEFCON (Support) version 3.0, June 2011. 18Where a Systems Program Office manages multiple equipment lines, one or more product managers with responsibility for specific equipment types may support the Systems Program Office Director. Defence informed the ANAO that it had used this work to reform Maritime asset management, inform its submissions to the First Principles Review, underpin the Systems Program Office reform guide and develop its Systems Program Office review methodology. An output measure, which directly reflects achievement against the Materiel Availability outcome. 18. 2.14Five years later, the Rizzo Review into naval sustainment drew a similar conclusion: The need for the sustainment of assets is understood in Defence and DMO, but it is not given the same rigorous attention as asset acquisition. During the course of this audit (9January2017) the Committee announced that it had commenced an inquiry into Defence Sustainment Expenditure. 134Defence, Strategy& [sic] (formerly Booz & Company), Right Sizing the DMOUsing a capability-driven approach: same outcomes, fewer staff, Canberra, March 2013, p. 2. 144The First Principles Review (p. 36) states: We consider that it would be possible to rationalise and reduce the Systems Program Office structure and staffing levels as more sophisticated contracting models are established and their individual support functions are consolidated as part of the service delivery reform. 191Defence Portfolio Additional Estimates Statements 201516, Table 10: Capability Sustainment Programme, p. 21, available from [accessed 20 April 2017]. 164Defence, First Principles Review, pp. Research and reviews conducted for Defence have revealed a range of specific operational problems that are detracting from the efficient and effective sustainment of Defence capability, including the functioning of Systems Program Offices. Define and endorse an Asset Management Plan. Figure 3.3:Defence estimates of the cost of its capability sustainment program, 200506 to 202021. For example, those sources state: The 2016 Houston Review also found that the full potential of the Australian Tiger program, when reached, will not be adequate to provide the robust, reliable and sustainable aviation reconnaissance and attack capability that Army requires. 5.46Work was then reinvigorated and Defences First Principles Review Implementation Committee approved the Business Framework on 1September2016. consolidation and review of Systems Program Offices; any further development of Defences approach to asset management. 202Defence, The Helmsman Sustainment Complexity Review [Helmsman Review], July 2010, p. 29. 5At the strategic level, guidance is given by the Chief of the Defence Forces Preparedness Directive. Initial establishment of centres of expertise in Capability Acquisition and Sustainment Group is underway. A Defence instruction on lifecycle costing has been in place since at least November1992.64 In addition, a Through Life Support Manual Volume 6Life Cycle Costing Analysis has been available since 2001 (and remains current).65 The issue of instructions and availability of guidance has not provided assurance of adequate costing action. Step 2develop a risk-based tailored project execution strategy, covering approvals, project management, and through life asset management, including a coherent approach to the acquisition and sustainment phases. Defence doing only for itself what no one else can do more effectively and efficiently. From the perspective of the field review, there is some indication that the sustainment models continue to drift apart.202. Source: K. Horn, C. Wong, E. Axelband, P. Steinberg, and I. Chang, RAND white paper, Maintaining the Armys Smart Buyer Capability in a Period of Downsizing, 1999. It has engaged a consultancy (at an estimated cost of $1.2million) to undertake the data identification and cleansing for active major contracts for the top 15 Acquisition and Sustainment projects/products (about 60 contracts) by 30June2016.c After completing approximately 15 major contracts the project was suspended due to competing priorities within Capability Acquisition and Sustainment Group. In 2011, a review of the Smart Sustainment program by consultants engaged by Defence identified that there were no records to support how these funds were spent or what benefits had been realised. Recommendations with potential Defence-wide application: 3. The former focused on availability (aircraft made available to the squadron), while Air Force focused on serviceability (aircraft actually able to be flown). The Focus on core business principle led to the contracting of many roles within CASG, and the lowest number of civilian APS staff within Defence. 3.21Defence has implemented a strategy in recent years that should help to draw problems in individual sustainment products to senior management attention. However, Defence continues to address specific operational shortcomings and there remains scope for Defence to improve its performance monitoring, reporting and evaluation activities to better support the management and external scrutiny of materiel sustainment. This narrower focus risks telling only a partial account of sustainment within Defence and is potentially at odds with the One Defence model promoted by the First Principles Review. Key elements of the governance and organisational framework include: a specialist organisational unitcurrently the Capability Acquisition and Sustainment Groupstaffed by a mix of civilian and military personnel; contract-like arrangements for sustainment between that unit and the Chiefs of Navy, Army and Air Force (Defences Capability Managers); and day-to-day responsibility for most sustainment activities falling to Systems Program Offices, which carry out that work using a mix of in-sourced and out-sourced service provision. 107The Pappas Review examined a sample of equipment fleets and interviewed senior Defence personnel. The document details the Cost Principles that Defence Capability Acquisition and Sustainment Group (CASG) and industry will utilise as a framework towards contract costs and provides Defence and the CASG's expectations and clarity of what costs may be attributed to (cost-recovered from) the Commonwealth. The cost principles are set forth in HHS regulations at 2 CFR Part 200, Subpart E, 45 CFR Part 75, Subpart E, and Appendix IX (Hospital Cost Principles) to Part 200 and Part 45. 47Defence, First Principles Review, p. 17. The review was conducted by David Mortimer, who presented his findings in September 2008. Defence records show that the department made substantial efforts to keep track of the large number of diverse initiatives identified across the department under the smart sustainment reforms associated with the SRP, including internal reporting to management. 2.1The ANAO examined Defences governance and operational arrangements for managing the sustainment of specialist military equipment, with a particular focus on the clarity of: 2.2Defence has clear and long-standing arrangements for the management of materiel sustainment for specialist military equipment. Note c:Defence defines a materiel ready day as a day in which a submarine is not in planned maintenance or does not have defects that prevent it from being at sea. See Fisher, P., A Study of Defence Publications Relating to the Procurement of Software-intensive Systems, DSTO, 1997. Since 2001, the budget has increased by $418.2million from price index variation, and $121.5million from exchange rate variation. The ANAO recommends that Defence develop and implement an evaluation plan to assess the implementation of the recommendations of the First Principles Review. Accrual Accounting vs. Cash Basis Accounting: What's the Difference?
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