Media reports of $10 billion worth of project delays at the Defence Materiel Organisation (DMO) stem from its willingness to take on high-risk projects and not mismanagement, it announced today.
The DMO's chief executive officer, Dr Stephen Gumley, said the organization intentionally takes on and manages "some of the riskiest projects in Australia" to provide our armed forces the best possible advantage.
"We are not risk adverse," he said. "DMO is engaged in challenging acquisition and sustainment activity, involving leading edge technology, complex systems integration and engagement with [the] international defence industry."
The government expects DMO to deliver maximum value for every dollar spent on its acquisition and support contracts, the DMO said in a statement.
It is currently managing more than 200 projects, each valued at greater than $20 million, and with the largest at $15 billion.
The DMO did concede, however, that schedule delay "is a problem with military projects worldwide" and the average delay on major projects has improved since 2003.
"While any delay is disappointing, DMO actively works with the contractor to deliver quality capability and prevent any further delay," it said in a statement.
Defence's analysis of underlying causes of project slippage indicates "particular risk" related to foreign industry's capacity to meet the challenges of Defence's expanding capital investment program.
The DMO claims to have acquisition projects valued at $60 billion under management with a further $40 billion of "whole-of-life sustainment" projects over 10 years.
"DMO must accept risk and manage it carefully. To only take on low-risk projects would compromise the ADF's performance on operations and would not be in the national interest," it said in a statement.