casg cost principles

trailer Defence expected savings from: reducing spares; making more use of performance-based contracting; discouraging unnecessary end-of-year spending; travel efficiencies and improved maintenance philosophies. 108-115, available from [accessed 20 April 2017]. This issue could be managed provided the scope of any sustainment review is appropriately selected. 3.1To assess whether Defence has in place an effective performance framework to support the management and external scrutiny of materiel sustainment, the ANAO examined: With the introduction of its Sustainment Performance Management System (SPMS), Defence continues to develop a basis for an effective monitoring system for sustainment. 2.19Following the First Principles Review, Capability Acquisition and Sustainment Group is undertaking a project to reform and consolidate Systems Program Offices. Part of the context for this audit is to inform the Parliament as to whether Defence has developed its management reporting sufficiently to facilitate a program of ANAO assurance reviews of selected sustainment activities. Defence has clear and long-standing governance and organisational arrangements for managing the sustainment of specialist military equipment. 74In all cases Defence included estimates for Net Personnel and Operating costs, even though the First Principles Review (p. 40) had recommended that Defence stop using this concept: Net Personnel and Operating Cost is Defences current estimate of the [additional] personnel, operating and sustainment cost of a proposed capability. Defences 201516 public reporting of sustainment activity included expenditure information and other descriptive material. 4.18By June2015, Defence was claiming approximately $2billion in savings from the Smart Sustainment Program since its inception in 2009. Will future rises in fuel prices be subtracted from savings? (The Cost of Defence: ASPI Defence Budget Brief 201213, 2012, p. 138). Defence does not yet have a completed register of its acquisition and sustainment contracts though, since January2016, it has had a facility in place and had commenced populating it. Source:Defence, PMkeys Reporting, Full-time equivalent staff in all Systems Program Offices DMO/Capability Acquisition and Sustainment Group, by month, July2004 to June2016. Procurement Framework 3. Defence subsequently increased the numbers of organisational units it considered to be Systems Program Offices from 54 to 78, with staff numbers ranging from three to 178.135. The framework had enabled Defence to clearly identify roles and responsibilities at a functional level, and individual agreements documented funding, deliverables, risks and performance measures for sustainment products. Defence advised that a contract variation has been applied to accommodate this additional work, bringing the total cost to $16.3million. Ruth L. Kirschstein National Research Service Awards, Cost Considerations-Allocation of Costs and Closely Related Work, Cost Considerations-Allowability of Costs/Activities. 5.14Defence offered Bechtel significant additional work in May2016, engaging them to provide advisory services and a senior manager, seconded into a Capability Acquisition and Sustainment Group division head role.130 The estimated cost of all current contracts with Bechtel is about $107million.131. Sustainment can be considered as falling into three categories: sustainment of platforms, products and commodities, as well as the provision of services such as test and measurement. According to generally accepted accounting principles (GAAP), manufacturing overhead must be included in the cost of Work in Process Inventory and Finished Goods Inventory on a manufacturer's balance sheet, as well as in the Cost of Goods Sold on its income statement. 34Defence, Decision BriefSustainment Performance Management System Development, 8 August 2011. 0000000883 00000 n The principle under APB Opinion 20, Accounting Changes, requires restating the affected balance sheet account to reflect the balance as if the new accounting principle had been used from the beginning; the offsetting debit or credit is reported in the income statement as the "cumulative effect of a change in accounting principle." Since 2001, the budget has increased by $418.2million from price index variation, and $121.5million from exchange rate variation. The absence of asset management strategy resulted in poor obsolescence and a lack of reliability management and, consequently, a bow wave of reliability defects and obsolescence. 87Department of Finance, Resource Management Guide No. LAND 121 PH 3B Project Office [Project OverlanderMedium Heavy Capability, Field Vehicles, Modules and Trailers], LAND 121 PH 4 Project Office [Protected Mobility Vehicles (Light)Hawkei], LAND 400 [Combat Reconnaissance Vehicles, Infantry Fighting Vehicles, Manoeuvre Support Vehicles, and an Integrated Training System. The effectiveness of the reforms implemented following the 2003 Defence Procurement Review (the Kinnaird Review) were evaluated in 2008 by the Defence Procurement and Sustainment Review (the Mortimer Review).198 Mortimer made specific recommendations to improve sustainment, including that Defence create an independent Sustainment Efficiency Office to measure, benchmark, and find ways to improve the efficient delivery of sustainment. 200.410 Collection of unallowable costs. Defence materiel sustainment is about the maintenance and support of Defences fleets of specialist military equipment: the provision of in-service support for naval, military and air platforms, fleets and systems operated by Defence. Principles of Antiviral Therapy | Clinical Gate 164Defence, First Principles Review, pp. The development of an effective sustainment monitoring system remains a work-in-progress, and the effectiveness of Defences internal reporting system for sustainment could be improved in several areas. 3.62In summary, the ANAOs review of public reporting on sustainment activity indicates that: 3.63Defence has not published program level estimate data on a consistent basis over time, and no time series analysis is published by Defence to assist with external scrutiny of sustainment expenditure. The cost principle may not take into account any increases in market value to the assets, nor can it report on the depreciation of the asset over time. There has been no consistent application of fundamental tools such as Earned Value Management. CASG was established in June 2015 after the Defence Materiel Organisation was disbanded after recommendations from the First Principles Review. 200.403 Factors affecting allowability of costs. This suggests that, where in-house expertise is not (or is no longer) available, expertise from industry could be bought in. 3.54Under section 17 of the PGPA Act, one of the functions of a Commonwealth entitys audit committee is to provide independent advice and assurance to the entitys accountable authoritythe Secretary of Defenceon performance reporting for the entity. Encouraging Competition 6. 112The committee was called the Materiel and Risk Committee. See Defence Portfolio Budget Statements 201718, Table 68: Top 30 Sustainment Products by End of Financial Year Outcome 201718, pp.

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