• Inner Slider Default

The Major Service Provider (MSP) model assists Defence to deliver public value - but what is public value, and how does it interact with the MSPs?

The MSP

The 2018 Defence Industrial Capability Plan noted that Australia will need a sophisticated, large and capable defence industrial sector by 2028 to ‘…support the acquisition, operation and sustainment of future defence capability’, as well as to enable the services to carry out military operations, and to surge resources when required.  This is where the MSPs come in.

The MSP model that has been implemented by the Capability Acquisition and Sustainment Group (CASG) is an example of a successful partnership with industry that demonstrates how the public service can leverage private sector expertise to deliver quality outcomes for the war fighter and the taxpayer. The MSPs deliver a more strategically managed approach to the engagement and management of ‘above the line’ services to CASG; this in turn provides greater visibility and control over market engagement and service delivery. 

A key feature of the model is that it actively encourages healthy competition in the defence market – including fostering a viable and vibrant small to medium enterprise, or SME, sector.  The MSPs engage with the SMEs and provide coaching and mentoring about the Defence environment; introducing fresh people into the wider defence ecosystem, while also easing their entry so that retention is increased. Further, the training they receive from the MSPs develops their skill sets and makes them more competitive and capable.

Public value

The Australian Public Service (APS)  is one of the fundamental pillars that enables Australian prosperity via the provision of stable and secure government services. The APS' role is to execute the vision of the Australian Government by implementing government policy, providing essential services to the Australian people. In doing this the APS creates public value.

According to David Thodey’s ‘Independent Review of the Public Service’ in 2019:

‘The Australian Public Service is a foundational institution of Australia’s democracy. It performs a critical role within the executive arm of Government. Its proper functioning is essential to the future prosperity and security of all Australians and successive governments require the APS to perform efficiently and effectively in order to fulfil their responsibilities.’

The public service creates public value when it functions in the manner that Thodey describes. But what is public value, and how does the MSP contribute to it? As The Mandarin noted in their article on public value, the concept refers to:

 ‘…the value created by government through services, laws, regulation and other actions. It is produced by public managers successfully navigating a strategic triangle encompassing the following:

  1. Producing valued outcomes
  2. Within the constraints of available resources and capability
  3. In an authorising environment of formal and informal jurisdiction, legal frameworks and mandate.’

The public service is a valuable national asset for Australia and yet the government continues to demand greater efficiency from its bureaucracy – as is its prerogative. This was one of the primary takeaways from the Thodey Review, and the principle can clearly be seen during the annual budget process where staffing caps and efficiency dividends are often applied – demanding that more be achieved with less.

The drive for greater efficiency doesn’t necessarily mean budgets are being cut evenly across Departments. The annual Department of Defence budget has been steadily increasing in recent years as the Commonwealth undertakes the most significant peacetime rearmament in Australian history to address the challenge of being a middle power during an era that has witnessed the return of great power competition. As the ancient Roman writer Vegetius said, ‘…let him who desires peace get ready for war.’

The Commonwealth previously indicated it wanted to increase spending within Defence to two percent of Australia’s gross domestic product, though this has been superseded by the Prime Minister’s announcement of additional funding on 1 July 2020. While the budget continues to increase, it does not follow that the importance of delivering value for money for the taxpayer has diminished; it is more important than ever that the Commonwealth receives the most ‘bang for their buck’. One of the ways that this is being achieved is by the public service, the Australian Defence Force and the Australian defence industry working in partnership.

Value for money

The MSP model delivers value-for-money for Defence, and for the taxpayer, but value for money is not simply about cost.

The Commonwealth Procurement Rules state:

‘Price is not the sole factor when assessing value for money. When conducting a procurement, an official must consider the relevant financial and non-financial costs and benefits of each submission including, but not limited to:

  • the quality of the goods and services;
  • fitness for purpose of the proposal;
  • the potential supplier’s relevant experience and performance history;
  • flexibility of the proposal (including innovation and adaptability over the lifecycle of the procurement);
  • environmental sustainability of the proposed goods and services (such as energy efficiency, environmental impact and use of recycled products); and
  • whole-of-life costs.’

The four MSP consortia have the backing of 13 capable, highly regarded and well-resourced companies including Downer EDI, EY, PWC among others. The expertise, resources and additional infrastructure that the MSPs draw from their primes and supply chains ensures that value for money is achieved in accordance with the public sector’s own criteria.

There are numerous other benefits to the MSP model that create efficiencies and greater transparency within CASG. Ultimately, the MSPs assist Defence to manage their resources, to reduce costs while also providing industry stewardship (and access to the defence supply chain) for the nation’s defence SMEs. In this way the MSPs enhance CASG’s ability to deliver the complex acquisition and sustainment projects that are its core mission while driving further public value on behalf of the Commonwealth for the warfighter, and ultimately for the taxpayer.