Defence Budget Audit Needs Needs More ICT

The Minister for Defence, Senator John Faulkner, has released the "2008 Defence Budget Audit" (Pappas Review by George Pappas). Amongst other savings, the report identifies 15 to 30% of possible savings in operating costs for ICT. However, it does not detail this further nor look at the much larger savings (which would be in the billions) by the more effective use of ICT to run Defence. A reduction in ICT spending may be a false economy if it prevents an overall saving in defence, which could be as much as 15% of the total budget.

Rather than the process driven approach which has been tried in Defence many times and failed, I suggest a behaviour driven approach. This would retrain defence staff, both civilian and military with the new skills they need and provide direct incentives for them to use those skills effectively. Also they staff would be provided with the tools to work effectively, particularly ICT systems.

As an example, the audit report identifies video conferencing as a technology for savings, by replacing air travel. However, if staff are not trained in how to use video conference effectively and are not given incentives to use it, the technology will remain underused. At best video conferencing will be used to replace some unproductive face to face meetings with unproductive virtual ones.

Available are:

1. DEFENCE BUDGET AUDIT RELEASED, Media Release, John Faulkner , Minister for Defence, MIN49/09, 17 November 2009
2. Response to the Defence Budget Audit, Department of Defence, 17 November 2009
3. Executive Summary, Defence Budget Audit, Department of Defence, 17 November 2009
4. Defence Budget Audit, Department of Defence, 17 November 2009

The report recommended changes to Defence operations to reduce cost and increase effectiveness. The Government has accepted many of the recommendations, including to reduce the number of ICT contractors used. Recommendations to close smaller defence bases will be delayed until after the next election.

The executive summary states:

Capturing efficiency while reforming ICT. A holistic ICT transformation is planned to significantly improve the quality of the ICT infrastructure provided to Defence. While the current focus on the transformation effort is primarily on quality, there should be an increased focus on capturing the significant efficiencies in the process.

These reforms could save Defence 15 to 30% per year in operating costs, dependent on the future ICT strategy. These savings are estimated at $215 million per year, but have not been analysed in detail because the ICT strategy is beyond the scope of this review.

From: Executive Summary, Defence Budget Audit, Department of Defence, 17 November 2009

Several of the more general recommendations also relate to the use of ICT more effectively (excerpt appended).

Extensive documentation has been provided for the audit, with an executive summary (8 pages), full report (308 pages) and government response (4 pages). One flaw in this is that the response is a secured PDF document which cannot have text copied from it, making analysis difficult.

More seriously, the report itself is provided in the form of a bitmap images with no accompanying text. As a result it is not possible to search the document nor copy text from the document (copying has been barred for this document in any case). Where a document is only available in hard copy form it may be necessary to scan it in for online distribution. PDF has an option to provide an optical character recognition version of the document for searching, which has not been done in this case. Also this document has not been generated from a paper original, it is from a digital original. Those who produced the PDF version will have had to make a deliberate decision not to provide it in an easy to search text format and so as to limit access to the document by the public. Such action by a public servant is unethical and may be contrary to Australian law. In any case the document provided does not meet the Disability Discrimination Act Advisory Notes issued by the Australian Human Rights Commission likely placing the Department of Defence in breech of the Act.

From the Executive Summary, Defence Budget Audit, Department of Defence, 17 November 2009:

Reducing the cost of Defence inputs can be achieved in three ways:

• Reducing non-equipment procurement costs. Defence procures a wide range of commercial products and services such as building services, travel and relocation services. Clear opportunities exist to reduce these costs by:
• Procuring more competitively priced products and services. For example, unbundling routes and removing price arbitrage on removal contracts.
• Changing the specifications for what is required to obtain less costly products, where doing so will not compromise capability. For example, increasing the procurement requirement that military clothing is imported from low cost countries.
• Changing patterns of use. For example, making greater use of Defence’s extensive video-conference network rather than undertaking single day travel.
• These improvements can save Defence between $326 and $518 million per year in non-equipment expenditure.
• Reducing the cost of major equipment procurement.
  

Although a longterm task, there are significant opportunities to reduce the cost of major equipment procurement through:

• Procuring a higher proportion of MOTS equipment
• Increasing the level of competition for major equipment acquisition and sustainment contracts
• Reviewing the proportion of local sourcing which is not justified by strategic requirements.
  

Purchasing a greater proportion of MOTS (which the most recent Defence Capability Plan (DCP) plans for) and increasing the level of competition on major contracts (which partially overlaps with savings identified in the lean backbone section) could ease cost pressures by $345 to $660 million, but these are not ‘banked’ as savings.

• Reducing the cost of combat capability through the use of Reserves.
  Beyond support functions, there is also an opportunity to deliver the same military capability at a lower cost through a flexible surge model. This model makes expanded use of Reserves and deployable contractors.
  These changes could reduce the cost of combat capability by ~$50 million per year.

The total productivity dividend from all of these measures is in the range of $1.3 to $1.8 billion per year, and a one-off saving of $218 to $398 million. The extent of reform required to capture these savings will take 3 to 5 years. The operational cost savings already identified by Defence (as part of the Defence Savings Plan, also know as ‘E2’) have been integrated with or replaced by the Audit savings, which provide analytical substance, much greater detail and show where Defence can go further to realise additional savings.

Removing the long-term structural inefficiencies of a fragmented estate. This can be achieved by starting the process of consolidating estates into an efficient superbase model, laying the foundation for the next ‘S’ curve in Defence productivity. A superbase model would dramatically reduce subscale base costs,
extensive travel and relocation expenses, and the costs associated with managing a complicated supply-chain network.
The estimated yearly savings from a superbase model that would meet Australia’s strategic requirements would increase over time (assuming a staged consolidation), and could reach $700 to $1,050 million by 2035 (in 2008 dollars). ...

From: Executive Summary, Defence Budget Audit, Department of Defence, 17 November 2009

Audit of Online Government Documents in Parliament

The Australian National Audit Office (ANAO) issued "Online Availability of Government Entities' Documents Tabled in the Australian Parliament" 25 May 2009 (Report Number: 37). Government agencies are required to keep online, and publicly available, the documents they present to Parliament. The Audit office found that 90% of documents were online, but 95% of these were in PDF format and did not meet guidelines for accessibility to the disabled. Somewhat paradoxically, the ANAO's own report is in PDF and so appears not to conform with the guidelines which the report recommends be used. The Auditor thought AGIMO’s web publishing guidelines were not at fault.

You can download the Audit_Report_37 in PDF, or view a web summary as a
Audit Brochure. Below are the key findings:

Key Government entities’ compliance with online publishing policy (Chapter 2)

The ANAO undertook a desktop review of a sample of papers tabled from 2000 to 2008 to assess their online existence, ease of discovery online, online accessibility, and consistency between the online and printed versions.

Overall, our testing indicated that the proportion of the tabled papers examined found online has improved from 54 per cent in 2000 to 89 per cent in 2008. This improvement is due to a number of factors, including an increased focus on the delivery of online services by government entities.

However, no more than 90 per cent of the tabled papers examined in any one year were available online. The main reasons that this level has not increased is that either some individual government entities still do not have a web presence or that they are not fully aware of the requirements to publish tabled papers online. Further, MOG changes have caused restructures of entities and their websites. In essence, the merger or creation of a government entity and the subsequent new website can result in documents or links to such documents being inadvertently removed. In either case, web users are hindered or prevented from finding documents online.

The ease of discovery of an online document was quite high, having increased from 89 per cent of documents examined in 2000 to 100 per cent in 2006, although it declined slightly in each of 2007 and 2008. The tabled papers we found online were generally able to be discovered through publicly available search practices. Where discovery was difficult, the cause was usually poor website design that hindered navigation by web users.

Online accessibility was examined in two parts: providing access to web users without the need to use proprietary software and providing access to web users with a disability. In the first part, the recommended formats are HTML which any web browser can view; and plain text or RTF which any text reader or open source word processing software can view. The use of these formats to publish documents online has varied considerably since 2000. In particular, of the documents we examined in 2008, about 25 per cent were in HTML and less than five per cent were in RTF.

In contrast, over 95 per cent of the documents we examined in 2008 were in PDF, being a proprietary software format. Although PDF can have a free reader associated with it, a link to a reader was only supplied for about 65 per cent of documents.

The second part of online accessibility pertains to the Disability Discrimination Act 1992 that requires government bodies to provide equitable access to people with disabilities, where it can reasonably be provided. To give effect to the requirements of the Act, the AHRC endorsed a standard¹⁵ on web accessibility. This standard recommends the use of HTML or text based formats. As mentioned, our testing has indicated that the use of HTML and text based formats is low. In addition, a number of government entities only publish documents online in PDF, which does not comply with this standard.

The authorised version of a tabled paper is the printed (hardcopy) version that is tabled in Parliament. It is important to ensure consistency between the printed and online versions. Our testing of online Parliamentary Papers for 2007 found over 90 percent of documents were consistent with the printed version. Based on our analysis, the ANAO considers that there are a number of useful practices to ensure consistency between the online and printed versions of a document. They include, but are not limited to: maintaining communication between the print and online publishing functions; ensuring that the document author verifies the online version prior to web publishing; and placing the final PDF version provided to the printer online.

Although the level of results achieved indicated an improvement in online availability of tabled papers, the ANAO considers that further improvement can be realised. Government entities should review the level and nature of their online publishing activity and assess the risks of them not complying with the online publishing requirements related to tabled papers. Specifically, entities with a high risk of not complying with the requirements, such as those having no web presence, those producing multiple documents for tabling in Parliament each year, or which have been subject to a MOG change, should address any shortcomings in a cost effective way.

Overall, increased government entity compliance in the above matters would benefit from further cooperation between the Department of Finance and Deregulation (Finance), the Department of the Prime Minister and Cabinet (PM&C) and the Departments of the Parliament to confirm respective roles and responsibilities.

Government entities’ online publishing practices (Chapter 3)

Based on the results of our desktop review, we selected entities for detailed fieldwork that exhibited a medium to high level of compliance with the Government’s online publishing requirements to allow this audit report to convey practices that would lead to better reporting by all government entities.

Each of the audited entities had sound online publishing practices. In particular, each entity had:

• a range of informative policy and guidance material to support staff performing online publishing functions;
• well-defined processes for publishing documents online, including controls to restrict access to online publishing functions to authorised staff; and
• processes and practices to help manage and provide assurance about online content, including obtaining advice as to the timing of the tabling of documents in Parliament.

In addition, each of the audited entities had controls in place to assist in managing the validity of their online content. In particular, all but one of the entities had a formal content management system (CMS). The ANAO’s audit report on Government Agencies’ Management of their Websites discusses entities use of specialist software to manage content.¹⁶

Only one of the audited entities specifically referred to the requirements for publishing tabled papers in its online publishing policy and procedural documentation. The ANAO considers that those government entities that have multiple documents tabled in Parliament would benefit from emphasising this requirement in their online publishing policy and procedural material. Further, in some entities the monitoring and reporting of web-related statistics was ad-hoc.

Overall, we considered that AGIMO’s WPG (which informs entities of the Government’s web publishing requirements) was relevant, accessible and easy to use. However, the following opportunities were identified to improve the level of guidance in the WPG about the online publishing of tabled papers and improve entities’ awareness and understanding of the requirements:

• specify the requirements relating to tabled papers with greater clarity;
• provide advice on the period of time that government entities must maintain documents online; and
• provide advice on whether an entity can archive electronically its Parliamentary documents after a number of years.

Further, the ANAO considers that stronger alignment between AGIMO’s online publishing requirements and PM&C’s guidance for presenting documents to the Parliament could improve the effectiveness of entities’ online publishing practices for tabled papers.

¹⁵ The Web Content Accessibility Guidelines, which is a series of documents that explains how to make web content accessible to people with disabilities.

¹⁶ ANAO Audit Report No.13 2008–09, Government Agencies’ Management of their Websites, available from <http://www.anao.gov.au/>.

Summary of entities' responses

Each of the audited entities, including AGIMO, agreed with, noted or supported the three recommendations. In addition to the audited entities, we sought comments on the draft report from four other entities mentioned in the audit, the Department of the Senate, the Department of Parliamentary Services, the Department of the Prime Minister and Cabinet and the Australian Human Rights Commission. Where provided, entities’ responses to a recommendation are included in the body of this report, and entities’ general comments are in Appendix 1. ...

From: "Online Availability of Government Entities' Documents Tabled in the Australian Parliament", Report Number: 37, Australian National Audit Office, 25 May 2009

Australian Government Green Office Audit

The Australian National Audit Office (ANAO) reported on "Green Office Procurement and Sustainable Office Management" 11 March 2009. As well as the summary Audit Brochure there is the full Audit_Report.

Information and Communications Technology

24. In an office environment, data centres, computers, printers, copiers and multi-functional devices all consume energy. Large organisations can spend up to ten per cent of their ICT budgets on energy costs.

Government agencies purchase, lease or consume a significant range of goods and services. In 2007–08, the procurement of goods and services by Australian Government agencies was valued at over $26 billion. These include office supplies, vehicles, information and communications technology, energy, waste and water services as well as office buildings and facilities. While these goods and services are procured for agencies to achieve their outcomes, they do have an environmental impact. This impact includes greenhouse gas emissions (such as from energy consumption in buildings and from vehicles), waste to landfill from paper, equipment and office refurbishments as well as the consumption of scarce resources such as fresh water and fossil fuels.

The Australian Government has indicated that it is seeking to be at the forefront of environmental purchasing practice. In May 2008, the Prime Minister also commented that ‘the Government accepts its own responsibility to provide practical leadership…with practical measures to reduce our own environmental footprint and measures to harness savings from more efficient use of energy and water’. ^...

In an office environment, data centres, computers, printers, copiers and multi-functional devices all consume energy. Large organisations can spend up to ten per cent of their ICT budgets on energy costs.

Energy use in ICT

The ANAO’s 2005 audit recommended that agencies consider energy efficiency in their ICT purchases. In the 2008 survey, 65 per cent of agencies advised that they now consider energy consumption in their ICT procurement. In addition, the vast majority of agencies indicated they had implemented at least one measure to reduce energy consumption of office and ICT equipment. Some of the 48 per cent of agencies who shut down personal computers (PCs) overnight, reported significant savings from the initiative.

Data centres are a significant area of energy use, typically accounting for 15 to 40 per cent of tenancy energy consumption. An Environment review has identified potential energy savings of up to 33 per cent for data centres through better design layout and upgrading infrastructure. An Environment pilot computer infrastructure project also identified energy savings of 83 per cent compared to the traditional model.

ICT Waste (e-waste)

Approximately 100 000 desktop computers and laptops are being replaced by the Australian Government every year. A significant proportion will end up in the waste stream. Only 16 agencies (25 per cent) reported that their contracts for the supply of ICT included product stewardship requirements in relation to the disposal of ICT equipment. There has been a lack of progress in developing national standards for ICT waste management. However, this should not preclude agencies from giving priority to this area. ...

From: Audit Brochure, "Green Office Procurement and Sustainable Office Management", ANAO Audit Report No.25 2008–09, 11 March 2009.

Energy use in ICT
Energy use in ICT

25. The ANAO’s 2005 audit recommended that agencies consider energy efficiency in their ICT purchases. In the 2008 survey, 65 per cent of agencies advised that they now consider energy consumption in their ICT procurement.

In addition, the vast majority of agencies indicated they had implemented at least one measure to reduce energy consumption of office and ICT equipment.

Some of the 48 per cent of agencies who shut down personal computers (PCs) overnight, reported significant savings from the initiative.

26. Data centres are a significant area of energy use, typically accounting for 15 to 40 per cent of tenancy energy consumption. An Environment review has identified potential energy savings of up to 33 per cent for data centres through better design layout and upgrading infrastructure. An Environment pilot computer infrastructure project also identified energy savings of 83 per cent compared to the traditional model.

ICT Waste (e-waste)

27. Approximately 100 000 desktop computers and laptops are being replaced by the Australian Government every year. A significant proportion will end up in the waste stream. Only 16 agencies (25 per cent) reported that their contracts for the supply of ICT included product stewardship requirements in relation to the disposal of ICT equipment. There has been a lack of progress in developing national standards for ICT waste management.
However, this should not preclude agencies from giving priority to this area. ...

From: "Green Office Procurement and Sustainable Office Management", ANAO Audit Report No.25 2008–09, 11 March 2009.