[Peetwo]

ANAO OneSky audit report tabled??

I note that today the ANAO 'Management of the OneSKY Contract' audit report was tabled in both Houses of the Parliament today - see HERE.

Summary and recommendations

Background

1. Airservices Australia (Airservices) is established under the Air Services Act 1995 to provide air traffic control and other related services to the aviation industry in Australian-administered airspace. The Department of Defence (Defence) provides air traffic management to military aviation in Australia, including at Defence airfields that operate with shared military and civil use.
2. The OneSKY program aims to build and operate a joint civil–military air traffic management system. The program includes the design and delivery of the new Civil Military Air Traffic Management System (CMATS) plus supporting infrastructure for Airservices and Defence. Airservices is the lead agency delivering the CMATS program in collaboration with Defence.
3. In February 2018 Airservices entered into separate acquisition and support contracts with Thales Australia Limited (Thales) and an on-supply agreement with Defence.

Rationale for undertaking the audit

4. Passengers in Australian airspace rely on Airservices to provide critical air traffic control infrastructure safely and efficiently. The OneSKY program is a major change for Airservices, and CMATS is a core component of the program. Airservices has contracted Thales to develop and support CMATS. The ANAO has previously undertaken three performance audits on the procurements for CMATS, the most recent in 2019.1 Procurement and contract management of large-scale IT projects involve elevated risks. The audit provides assurance to Parliament on whether Airservices is managing the contract for CMATS effectively.
Audit objective and criteria
5. The objective of the audit was to assess the effectiveness of Airservices’ contract management for the OneSKY program.
6. To form a conclusion against the audit objective, the audit team applied the following high-level criteria:

• Has Airservices developed appropriate governance arrangements to support contract management?
  
• Has Airservices managed the contract effectively to achieve value for money?
  

Conclusion

7. Airservices’ contract management of the OneSKY program is partly effective. It has governance processes in place and has developed procedures to manage the contract. Shortcomings in contract management planning, performance management and probity have limited its effectiveness in managing the contract to minimise cost increases and schedule delays.
8. Airservices has implemented partly appropriate contract management governance arrangements. A contract management plan is in place; however, arrangements did not sufficiently cover provider performance, program risk and probity issues. Risk processes did not completely capture interdependencies between contract management and program risks. An on-supply agreement formalised arrangements between Airservices and the Defence for the delivery of CMATS. It relies on effective collaboration and governance forums for issues escalation. The Defence component of CMATS was declared a Project of Concern in October 2022 outside of the formal governance forums.
9. Airservices is partly effective in managing the contract to achieve value for money. It has a process to manage variations; however, a high number of variations to date have resulted in cost increases and schedule extensions, and the rationale for its value-for-money assessment was not consistently documented when seeking approval. The incentive-based pricing model agreed in the contract between Airservices and Thales has not been fully effective in containing costs, with the target price expected to be met. Airservices’ supplier performance management is not fully developed or utilised. Airservices applies enterprise-wide probity procedures for conflicts of interest and gifts and benefits, but staff did not always follow these.

Recommendations

Recommendation no. 1
Paragraph 2.20

Airservices Australia update the contract management plan to:

1. include how contract management risks and probity are managed;
   
2. provide sufficient guidance on the performance management approach; and
   
3. incorporate additional oversight and periodic contract reviews to ensure contract deliverables remain on track and commercial arrangements are fit for purpose.
   

Airservices Australia response: Agreed.

Recommendation no. 2
Paragraph 2.35

Airservices Australia identify and document how contract management risk connects to risk at the program level and when specific contract management action could be used to mitigate and improve control of program risks.
Airservices Australia response: Agreed.

Recommendation no. 3
Paragraph 3.21
Airservices Australia, when assessing contract variations:

1. record the rationale in approval documentation explaining its value-for-money assessment, including against the overall contract cost and program delivery objectives; and
   
2. identify thresholds for when the impact of incremental change warrants a more significant value-for-money assessment or new procurement rather than varying the current contract.
   

Airservices Australia response: Partially agreed.

Recommendation no. 4
Paragraph 3.62
Airservices Australia identify which program key performance indicators relate to contract management and link the results of these to contract management actions to better ensure Thales’ accountability in delivering under the contract.
Airservices Australia response: Agreed.

Recommendation no. 5
Paragraph 3.89
Airservices Australia strengthen guidance, education and process around accepting gifts, benefits and hospitality during contract management to address probity risks.
Airservices Australia response: Agreed.

MTF...P2  

And multitudes wept - FCOL