By Darian Macey, July 31 2024
The Department of Defence is planning to approach the market to establish a new panel, the Defence Capability Support Panel (DCSP), to replace the existing Defence Support Services (DSS) Panel. This consultation process has been released via AusTender, seeking industry feedback to shape the DCSP.
Background of the DSS Panel
Established in 2018, the DSS Panel has facilitated a broad range of services supporting the acquisition and sustainment of Defence’s capital equipment and system projects. Here are some key statistics:
- Total Expenditure (since 2018): Over $6 billion
- Number of Suppliers: 524
- Top Spenders:
- CASG: $1.73 billion
- Army: $923 million
- Navy: $436 million
- Major Suppliers:
- KPMG Australia: $823 million
- SME Gateway Pty Ltd: $381 million
- PwC Consulting (Australia): $267 million
The Consultation Process
Defence is now seeking industry feedback on the proposed DCSP. This feedback will help ensure the panel meets strategic needs and encourages active participation from the industry. The consultation covers several topics, including:
- Contracting Models: Feedback on hourly ceiling rates, consistency of labour rates, and subcontractor revenue sharing.
- Outcomes-Based Contracting: Transitioning towards a model focused on achieving specified business goals.
- SME and Indigenous Engagement: Promoting participation of SMEs and Indigenous businesses.
- Governance and Performance Management: Setting expectations and performance management activities.
Criticism of the DSS Panel
The DSS Panel has faced criticism, particularly following a Four Corners report on KPMG overcharging Defence. This event, combined with the Defence Strategic Review, has contributed to a significant decline in spending through the panel since 2023.
Figure 1. Expenditure through the DSS Panel, by branch, 2018 – 2024
Advantages and Disadvantages of Panel Membership
Advantages:
- Insider Knowledge: Embedding staff within Defence projects can provide deep insights.
- Low Risk: Engagements are typically based on day rates.
Disadvantages:
- Geographic Concentration: Most opportunities are in Canberra.
- Staff Detachment: Long-term secondments may lead to losing regular contact with staff.
- Low Margins: The work is often commoditized, and retaining specialists can be costly.
Have your say
I encourage all professional service providers to download the consultation questionnaire and provide their feedback. This is an excellent opportunity to influence the future structure of this critical Defence procurement and ensure it meets the needs of both Defence and industry.
Download the questionnaire here and have your say by 14 August 2024.
Author: Darian Macey
Darian is a former Engineering Officer with the RAE with tertiary qualifications in Engineering and Project Management. He is a leading practitioner within Australia's NSI sector with previous employment in Government, project management and building contractor organisations.
