Maritime Cross Platform Systems Program Office (MCPSPO)
MCPSPO is an organisation that is transforming from an inventory procurement organisation that was supporting all of Navy, to a Systems Program Office sustaining selected cross platform systems. MCPSPO are now responsible for the engineering and sustainment of select equipment and systems that are used across maritime platforms, required to deliver sustained Defence capability. The MCPSPO’s functions range from tactical procurement of inventory to end-to-end in-service support of complex systems, including configuration and maintenance management.
In 2015, Defence began to investigate the optimisation of a number of disparate, inefficient and potentially costly legacy commercial contracts that were in place for the sustainment of maritime combat and propulsion cross-platform systems. The MCPSPO needed to transform these legacy arrangements into strategic sourced performance-based contracts that delivered all elements of in-service support including maintenance, configuration and ILS management.
The MCPSPO did not have the in-house capability or capacity to explore innovative contracting models. Additionally, the original equipment manufacturers (OEMs) and agency suppliers of the cross-platform equipment were not used to new strategic sourcing approaches.
As a result of our Defence commercial acumen, we were engaged by the MCPSPO to provide specialist procurement and contracting services in their strategic sourcing section and deliver more effective outcome / performance-based contracts that would deliver all sustainment needs and required efficiency gains. This included contracts for:
– LM2500 Gas Turbine Systems
– MTU Diesel Systems
– Mini-Typhoon, Typhoon and Toplite Systems
– Infrared Search and Track System
Working collaboratively with a wide range of Defence and industry stakeholders we facilitated workshops to elicit the client’s diverse requirements. We also identified key measures of success in a contract model that would significantly reduce transactional requirements for the Commonwealth, while delivering the required outcome and capability.
With these success measures as a guiding framework, we used in-depth data analysis of historical cost and system reliability to derive key insights. This was benchmarked against similar products in other industries to build a comprehensive cost forecast for the requirements and provide a detailed contract model with options to MCPSPO and its customers for consideration.
Our support services have led to new thinking and incorporation of joint service involvement where efficiency gains can be attained. This was particularly the case for the MTU diesel engines, which extended across Navy and Army capability at a fixed annual fee; a first of its kind for Defence. Another example was the use of the Joint Logistics Command maintenance services contract, for the maintenance and logistics support of the RAN’s M242 cannons. This outcome led to significant cost savings for the Commonwealth.
During our engagement, we have acted as the Commonwealth’s lead negotiator in setting up In-Service Support Contracts for these systems that have led to the successful execution of contracts between the Commonwealth and successful tenderers. Our analysis of proposals and negotiation ability has directly led to more effective and efficient services that have saved the Commonwealth millions of dollars under these performance-based contracts.
Through our commercial team, the new contract models have met their intent and have achieved the following Value for Money outcomes for the Commonwealth:
– Significant reduction of transactional activity allowing APS teams to focus on governance and assurance
– Development and Implementation of contract management framework that is aligned with Defence capability requirements
– Improved risk management by ensuring that the party most empowered to manage each risk is required to do so under the contract.
– Improved cost transparency and certainty for budgeting
– Achievement of significant direct and indirect cost savings through informed decision making and negotiations.