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Defence Procurement

Industry Commission inquiry report

This report was signed on 30 August 1994, and subsequently released by the Commonwealth Government.

The report contains the findings of the Industry Commission public inquiry on the effectiveness and efficiency of Australia’s current defence procurement arrangements in achieving value for money, taking account of strategic defence arrangements; and the impact, including regional effects and industry development aspects, of defence procurement programs and institutional arrangements on particular industries such as shipbuilding, aerospace, electronics and engineering.

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Contents

Preliminaries
Cover, Copyright, Signing Page, Contents, Abbreviations, Overview, Glossary, Terms of Reference, Overview and Recommendations

1 Introduction
1.1 Inquiry background
1.2 Scope of the inquiry
1.3 Consultations, submissions and hearings
1.4 Inquiry issues and report structure

2 Nature and Extent of Defence Procurement
2.1 Size of defence outlays and defence procurement
2.2 Composition of defence procurement expenditure
2.3 Future trends in procurement expenditure

3 Procurement Policy, Programs and Procedures
3.1 Government purchasing policy
3.2 Current Defence procurement policy
3.3 Defence programs for industry
3.4 Purchasing arrangements

4 Issues in Defence Policy for Procurement
4.1 A framework for Defence decision making
4.2 Premiums for major capital equipment acquisitions
4.3 Longer-term supplier arrangements
4.4 Government-owned enterprises
4.5 Transparency and information
4.6 Summary

5 Assessment of Programs for Industry
5.1 Australian Industry Involvement program
5.2 Defence Industry Development program
5.3 Defence Required Support Capability program
5.4 Defence Export Program

6 The Commercial Support Program
6.1 Introduction
6.2 The CSP in practice
6.3 CSP achievments
6.4 The scope of activities to be subjected to the CSP
6.5 The in-house option
6.6 Transparency of the CSP process
6.7 Speed of implementation of the CSP
6.8 Conclusions

7 The Cost of Tendering
7.1 Industry surveys
7.2 Multi-stage tendering
7.3 Timing issues
7.4 The costs of detail
7.5 Ranking and weighting of tender evaluation criteria
7.6 Summary and recommendation

8 Other Cost Issues in Procurement
8.1 Application of procurement guidelines
8.2 Sharing the costs of risk
8.3 Accreditation
8.4 Intellectual property
8.5 Administrative costs of procurement to Defence

9 Economy-Wide and Industry Development Impacts of Defence Procurement
9.1 Economy-wide impact
9.2 Industry development impact
9.3 Summary

10 Regional Impacts of Defence Procurement
10.1 Overview of direct impacts
10.2 Examples of regional impact studies
10.3 The Commission's regional modelling work
10.4 Should defence procurement be used to promote regional development?

A Inquiry procedures

B Defence procurement in the United Kingdom, Canada and the United States

C Industry priorities: extract from Strategic Review 1993

D Australian Industry Involvement: suggested guidelines

E Commercial Support Program outcomes as at 30 August 1994

F Consultants' report on the CSP

G Quantifying the economy-wide impacts of procurement

H The Commission's survey of selected firms with defence work

I A comparison of models

J Quantifying the regional impacts of the APIN and Collins Class submarine projects

Bibliography

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