Martin D’Cruz - video transcript

Defence Innovation Hub Industry Update

Martin D’Cruz: Hello, everyone. By way of introduction, my team of four public servants provides the Hub commercial and procurement services to ensure our obligations in relation to compliance, probity, contract execution, and AusTender are properly undertaken. My team also provides contract management and contract and administration support throughout the life of all the Hub contracts.

So focusing now on rapid assessments, which is a new Hub product, one of three products, as illustrated in the slide. At the outset, I’d like to acknowledge the feedback my team received from former colleagues from the RPDE programme and also the industry representatives who participated in a bunch of workshops we held, which is very useful to develop the procurement and contract template documentation for rapid assessments.

So there are output of a rapid assessment is a report that is intended to inform capability related questions and business requirements of our defence customers. These rapid assessments are generally low to medium risk procurements with an estimated value below 500,000 GST inclusive. And the contracts are required to be completed within a period of three to six months, so fairly short and snappy turnaround.

What I would like to emphasise are the rapid assessments is not used for is for the procurement specific technology or technology development services which the other Hub products, namely the innovation proposals and special notices, are designed for.

So in replacing and enhancing the former RPDE products, namely Quick Looks and Quick Answers, we wanted the rapid assessments to add value quite deliberately to the capability lifecycle by facilitating collaborative industry and academic input very early in the capability lifecycle stages in order to de-risk the capability challenges and questions that have been identified by the relevant capability manager.

We’ve also developed a set of business rules to guide the endorsement and sourcing process in a streamlined and agile manner to help the requests we receive from the capability managers to be clearly articulated in terms of the capability question.

And follow this through by prioritising those requests and selecting the procurement and contracting strategy in order to conduct a sourcing process, which includes value for money assessments. The business rules also deal with the delivery stages of the contract and the ongoing staff supporting considerations. I’m pleased to announce that the first rapid assessment pilot has been completed to support Land 81-40, which is the deployed force infrastructure capability programme.

So Army was interested in the following capability questions, just to give you a flavour of what we are dealing with. How should Land 81-40 test smart grid/ micro grid capabilities? And the second question was, what might an enduring test and evaluation facility look like? So that report is now with the capability manager for final acceptance, and hopefully will be wrapped up shortly.

The whole rapid assessment process is designed to work in a very streamlined and rapid manner to stick with the principle of rapid assessments. Right from the moment that we receive a request from the capability manager through to the prioritisation stage where we involve the forced design division to consider all rapid assessment and prioritise them against force designs gaps and opportunities and analysis on a quarterly basis. Thereafter, the Hub kicks on with selecting the most appropriate procurement and contracting strategy and will undertake an approach to market.

In terms of the delivery, our colleagues in the project management team would take over. And the Hub tries to just keep it quite simple in terms of the deliverables for a draft and final report with a workshop, if required, included in between to develop the deliverables. If all milestones are on track and completed, the invoices are paid on time, and the project is closed out.

In terms of dissemination of information, the report generally is expected to be suitable for publication to a broad audience, which includes other industry entities who have not necessarily participated in delivering the deliverables. So where circumstances dictate, two versions of the final report may be required. One’s for internal Defence use with all the relevant details and confidential information. And one, which is a consolidated industry advice for wider industrial publication.

So to emphasise that the role of the force design division is embedded in rapid assessments to prioritise the selection on a quarterly basis. But we also accept or consider urgent rapid assessments, which are funded out of this quarterly cycle through other Defence budgets in order to receive Defence’s strategic priorities. In terms of the procurement methods and contracting templates to be used, we go with three procurement methods. One is the open tender of AusTender and advise participants through the Defence Innovation portal as well.

We’re happy to consider if limited tender may be a prudent and pragmatic approach, where circumstances dictate and in other situations, we’ll consider sourcing from existing Defence standing offer panel arrangements, such as the DSS panel or the Reset panel or even the simulation support panel. So the procurement method is driven by Defence’s business requirements and a need to comply with the Commonwealth procurement rules and the Defence procurement policy manual.

What we did to develop the procurement and contracting template is to start with a very simple baseline. And we picked on the ASDEFCON Shortform Services template to be the most suitable and tweaked it in order to achieve the same look and feel as the innovation contract, but not try to over-complicate it and keep it focused on the outcomes that Defence wanted from rapid assessments.

If multiple subject matter experts from various organisations are required to collaboratively deliver the rapid assessment services, we have also included additional terms for each contract and an overarching deed, called a collaboration deed, which I’ll touch on in the next few slides.

So I just want to emphasise in this slide how relevant panel procurements are to rapid assessments. As many of you would understand, panels provide an efficient and effective mechanism for Defence to procure the rapid assessment services because all the panel suppliers have already been assessed as offering value for money.

There is also an obligation on the Hub to comply with the Defence Procurement Policy Directive Number 35, which states that if a standing offer panel arrangement is established in Defence for goods or services, Defence officials must use the standing offer when procuring relevant goods or services unless there is a valid reason not to do so.

However, having said that, there may be circumstances where either the scope of services required, the business requirement of the capability manager does not align with the panel’s scope of services, or indeed the companies we think are the best fit to provide these services are not on the panel. The Hub is willing to consider a limited tender procurement approach to the market.

In terms of the key IP provisions, the Hub has tried to align the IP provisions for rapid assessments with the template provisions of the Defence Support Services and Reset panels. So the rapid assessments IP provisions will state that the Commonwealth owns the foreground IP. The Commonwealth has a broad licence to background IP and the right to sub-licence.

The Commonwealth has a right to all tech data, TD in the services. And may on request grant the contractor a non-exclusive licence to exercise that foreground IP, which is owned by the Commonwealth. And last but not least, the Commonwealth may release background IP to third parties subject to requiring a deed of confidentiality.

So most of this should not come as a surprise to companies who are already on the DNS and Reset panels. And in terms of releasing or industry access to the final report produced by rapid assessments, the Hub would generally disclose these deliverables subject to the capability manager’s consent, any background IP restrictions imposed by the contractor or the owner of the IP, and Defence’s security and confidentiality requirements.

This being a procurement process and a procurement contract, value for money assessment is undertaken for rapid assessments. And the contract price is a fixed price, not a time and materials contract. In relation to a limited tender approach to market, the Hub will use a rate card which standardises the maximum daily rates for undertaking rapid assessment to reduce the need for detailed negotiations and to expedite contract execution on a value for money basis.

The Hub consulted the Financial Investigation Services of Defence and FIS confirmed that the Hub’s rate card is acceptable as the majority of the skill sets and skill levels were below the comparable labour rates on the DSS panel.

In terms of contract finalisation and contract delivery, it’s important to note that the Hub will endeavour to clarify key details of the contractor’s proposed method to deliver the services required and will try to also finalise the delegate approval fairly expeditiously. And will notify the successful tenderers at the end of that process.

However, the standard terms for the rapid assessments are not negotiable. And they’re a template, as I said, which has been used and developed based on the baseline ASDEFCON Shortform Services template referred to in my previous slide.

Contract delivery involves our project management team in consultation with the relevant stakeholders to ensure the services are completed in a timely and effective manner. And the Hub’s team will undertake the relevant contract management responsibilities.

Finally, the publication of this contract outputs. It’s intended that the completed reports will be published on the Hub’s website with the exception of classified information. However, the Hub does not currently have a subscription option for the website. And this will be integrated into the website’s functionality as the rollout of rapid assessments proceed.

I’d just like to acknowledge how the Hub worked with industry participants to tease out the concept of collaboration between industry players, some of whom are natural competitors in the open market. And we did this to deliberately understand the various types and levels of collaboration and the overarching protections that would be required to undertake collaboration in rapid assessment.

So we came up with three contracting models which scaled through the types of collaboration and the time required to undertake the rapid assessments. The first model is a head contracting model, which is a straightforward head and subbie arrangement, which does not involve a multi-party deed of collaboration.

However, when we moved through the managing contractor model where you have a lead collaborator and one or more collaborators who provide inputs, we have individual rapid assessment contracts and a multi-party deed of confidentiality to tie them all together.

The last one is a workshop model where workshops could be included in the delivery of these services involving several participants at one or more workshops. However, the lead collaborator would be engaged under a rapid assessment contract to lead the workshop and deliver the final deliverables. A multi-party confidentiality deal would also be required in this contracting model.

And I might pause it there for any questions.

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