Governance issues in defence projects


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I nearly missed this article, in fact I found it when I was about to throw out last weekend’s papers – print edition. Geoff Cumming wrote this in last Saturday’s NZ Herald.

Cumming highlights major deficiencies in defence procurement. The issue surfaced last year, but was largely overlooked in the media.  Cumming suggests that this may well have been due  to the ongoing Winston Peters saga.

What makes the issues so important is that Cummings highlights the fact that many, if not all,  of these issues are ongoing and appear to be systemic rather than one-offs and that little appears to have been done to resolve them. despite them having been raised in reviews over several years.

I find this very disturbing from a governance perspective. How is it that the problems can have been identified, but not dealt with despite their recurrence?

This extract, from the NZ Herald piece, gives the flavour:-

The Coles Review suggests a common thread in the problems plaguing all three services is the Ministry of Defence’s handling of major acquisitions and its dysfunctional relationship with the New Zealand Defence Force.

What should be worrying Mapp is the sense of deja vu – the same problems have been highlighted in three inquiries by the Auditor-General since 2001, a 2004 report by former State Services Commissioner Don Hunn and successive select committee reports.

Together, the reports conjure a civil-military cocktail of considerable self-destructive capacity, yet it seems no one has been held accountable and lessons haven’t been learned.

The Audit Office set out last year to audit 10 major acquisitions subject to cost and delivery overruns but had to give up because of the two agencies’ poor information and reporting systems. “In our view, the defence agencies must improve the transparency of reporting so that readers of the reports can have confidence that [they] are appropriately managing the acquisition process.”

Explaining the cost variations, the agencies disclosed that costings on projects sent for Cabinet approval were “intelligent guesses”. Auditor-General Kevin Brady said they should be robust.

Just how badly bureaucratic failings and mistrust can affect operational outcomes is perfectly captured in the Coles Review into the Canterbury’s safety and functionality.

What we appear to have is a situation where governance appears to be lacking, not just in one instance but in several.

This situation should be causing alarm bells to ring and action to be taken.

These problems have affected and will continue to affect operational capability of the NZDF.  Arguably they have contributed to considerable additional cost on projects undertaken and the acquisition of assets which may well not fulfill all operational functions for which they were acquired.

Read Cumming’s comments on the Canterbury as an example.

It would be interesting to know why the immediately preceding Minister had not taken action on these issues. Indeed it would be useful to know why the Minister prior to him had not taken action as well. After all 3 Auditor General reports since 2001, Don Hunn’s 2004 report and various select committee reports.

I have some immediate questions:-

  • Just what has been going on at the Ministry of Defence?
  • Why have these issues not been addressed?
  • How much money has been wasted? If any?

This issue deserves far greater public attention.

What is particularly disturbing is that the issues identified appear to be classic governance issues.

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