SPO Governance Strategy 2020 - Defence Home

2020

AIR DOMAINSPO Governance Strategy

Helping our SPOs govern

Getting the Capability Edge

2 AIR DOMAIN Governance Strategy 2020

The Air Domain SPO Governance Strategy

The Air Domain SPO Governance Strategy1, detailed in

Figures 1-4, is aligned with the CASG Integrated

Governance Framework and provides a governance

framework for SPO activities. The key elements are:

(1) governance should support the delivery of capability

outcomes;

(2) governance activities should be tailored to the risks,

issues and opportunities within the SPO; and

(3) assurance activities are focussed on improving

capability outcomes through influence, shaping and

leadership.

Enterprise Model

The CASG SPO Design Guide describes the Capability

Acquisition & Sustainment Enterprise (CASE) model for

managing each capability program. The CASE model

describes a strategic partnership between the Capability

Manager representatives, CASG and partners (industry

or foreign government) to deliver capability to meet

Defence’s preparedness and operational requirements.

A simplified view of the standard Enterprise Model

(CASE) is shown at Figure 1.

SPO Governance ModelFigure 2 shows the four key areas of activity, or functions, performed by Commonwealth staff in a contemporary SPO within the CASE. Collectively, these functions form the SPO Governance Model through which the SPO satisfies its obligations to CASG, Defence and Government.

The four functions apply equally to the SPO’s performance of acquisition and sustainment activities in the Capability Life Cycle.

Planning Function

In the SPO context, planning comprises the following activities:

• Setting requirements. Requirements range from

broad capability needs for complete weapon systems

through to the detailed requirements of, for example,

a specific configuration change. SPO staff typically

1 CASG Program Performance Branch is developing guidance on the future Integrated Governance Framework (IGF), which describes the application of governance across all levels within CASG. The guidance in this Air Domain SPO Governance Strategy, with its particular focus at SPO level, will therefore be even- tually subsumed within the broader IGF.

interact with the Capability Manager representatives

(who identify the capability needs) and the Supplier

(who is contracted to develop and deliver outputs to

meet the capability needs). The SPO has a key ‘value-

add’ role to translate the capability needs into a set of

requirements against which the Supplier can deliver

measurable outputs. The Supplier should assist

where appropriate in the requirements development

process but the SPO, as the Commonwealth

representative, owns and therefore approves the

requirements set.

• Determining contracting strategy. The SPO must

periodically review contract requirements to identify

the evolution that may be required to ensure the

contract continues to be relevant and effective to

meet forecast needs. The contracting strategy

naturally follows from strategic planning by the

Enterprise executive leaders. For example, Strategic

Partnering Boards set the capability direction and

identify ways to improve service and value to the

Capability Manager and system operators.

• Developing contract changes. The SPO develops

proposed changes to improve extant contracts,

consistent with the contracting strategy.

Assurance Function

Assurance is the function of establishing ‘justified confidence’ based on objective evidence in the work done by and on behalf of the SPO. Assurance activities support the SPO’s overall obligation to ‘ensure’ CASG outcomes.

Within the CASE, CASG is accountable to ‘ensure’ (make sure) that it delivers its assigned CASG inputs to capability in accordance with the relevant enterprise agreements (Materiel Acquisition Agreement / Materiel Sustainment Agreement / Product Schedule). CASG is accountable for delivering products and services that are:

• safe

• suitable (fit for purpose)

• cost-effective

• delivered to agreed schedule, and

• compliant with relevant legislation, regulation and

AIR DOMAIN Governance Strategy 2020 3

policy - including the Work Health and Safety Act;

Public Governance, Performance and Accountability

Act; Defence Aviation Safety Regulations; and CASG

Business Management System processes.

Assurance comprises the following activities:

• Assurance performed within the SPO. The SPO

both performs, and is subject to, routine assurance of

internal activities undertaken by its own staff. The

SPO’s internal assurance activities are complemented

by the assurance programs of second parties, such

as safety regulators and Domain/CASG functional

assurance programs and audits.

• Assurance performed by the SPO on Suppliers.

When a SPO outsources activities to an external

Supplier, the SPO must have sufficient confidence

that the Supplier is also performing and complying

with CASG’s requirements. Independent SPO

verification of every Supplier activity is impractical

and undesirable, so the SPO instead should ‘assure’

(have justified confidence based on sufficient

objective evidence) that the Supplier is meeting the

performance and compliance requirements. Such

assurance activities are part of the SPO’s reasonable

measures to meet its overall ‘ensure’ accountabilities

within the CASE. A proposed model for performing

assurance oversight of Suppliers is described below.

Contract Administration Function

Contract administration comprises the typically

transactional activities necessary to keep the contract

up-to-date and discharge the basic Commonwealth

contractual obligations. The SPO should aim to limit the

transactional activity overhead whilst doing such

activities as:

• raising contract variations or extensions of work, for

example Survey & Quotes

• administering contract change proposals

• providing Commonwealth furnished equipment and

services under the contract


• performing contractual acceptance of supplies2

• paying invoices

Reporting Function

The SPO has an ongoing obligation to report on its performance and compliance accountabilities. This includes reporting on the performance and compliance of Suppliers against contracted requirements, as informed by the SPO’s Supplier assurance activities.

In Air Domain SPOs, reporting along with the other governance functions is managed through the standardised House of Governance on-line management portal.

SPO as Smart Buyer

In Figure 1 the interface between CASG (the SPO) and its

Suppliers must be managed by the SPO in its role as a

‘Smart Buyer’. The SPO performs this role by being able

to answer the following questions:

• ‘Is the contract doing what’s needed?’ For SPOs

establishing a new procurement contract, the first

question will be ‘Will the contract do what’s needed?’

• ‘Is the contractor performing and complying as

expected?’ Note that performance is not just about

meeting routine delivery requirements under the

contract, but the extent to which the Supplier is

innovating and managing cost of ownership over the

longer term – in other words, how effectively the

Supplier is exhibiting expected ‘stewardship’

behaviours as a partner in the Enterprise.

The following provides an approach that SPOs, acting as

Smart Buyers, can use to answer the above questions by

becoming and remaining informed about Supplier

performance and compliance. Further, the approach

describes how SPO staff can shape and influence

Supplier behaviour to build assurance (justified

confidence) that the Supplier is delivering its expected

outputs as part of the Enterprise.

Supplier Assurance Model

Principles

Assurance activities should be guided by the following

principles:

2 Contractual acceptance of supplies generally occurs only after relevant SPO functional staff confirm that all agreed requirements for a delivered product have been met. For example, the SPO senior engineer would attest to the technical acceptability of a delivered product against the specified technical requirements. This activity, which supports and leads to contractual supplies acceptance, is part of the ‘Assurance’ function.

• Enterprise focused. A SPO’s assurance activities

should be viewed as part of the broader SPO intent to

focus on Enterprise ‘System’ level health monitoring

and improvement. SPOs have an elevated focus on

overall system health, which is informed partly by

how well Suppliers are performing the outsourced

transactional activities.

• Risks, Issues, Opportunities (RIO) led. Assurance

activities (what and how deep) should be informed by

an understanding of the risks, issues and

opportunities present across the Enterprise at any

given time. The SPO resources allocated to assurance

activities should be scaled and focused according to

the risks, issues and opportunities being managed -

and adjusted as changes occur in the environment.

• Value creating. SPOs should create value in the

capability delivery chain by performing assurance

activities that indirectly but positively ‘shape and

influence’ Supplier behaviour and outputs. In so

doing, SPO staff should exercise crucial leadership

behaviours within the Enterprise.

• Transparent. SPOs should be transparent in the

intent of their activities across the Enterprise, since

transparency is the most important enabler to

creating trust. A developing trust between the SPO

and its Suppliers will engender improved relationships

and collaboration, which in turn will encourage

increased Enterprise performance.

• Rich conversations. SPOs should undertake rich

conversations - both amongst the integrated SPO

team members, and across all partners in the

Enterprise. These rich conversations underpin the

successful implementation of the assurance model.

They will allow the Enterprise to build both a well-

informed RIO picture, and the trusted relationships

essential to Enterprise success.

Figure 3 describes the proposed Air Domain Supplier

Assurance Model. Key elements of the model (from left

to right) are:

• Enterprise Risks, Issues, Opportunities (RIO) Dashboard


¶ Assurance activities should be informed by an

appreciation of the risks, issues and opportunities

in the Enterprise at any point in time. The direction

and amount of assurance effort is determined by

where and how to best treat known risks and

issues, and exploit opportunities, for further

system improvement.

¶ The SPO’s RIO ‘dashboard’ is informed by

intelligence gained across the Enterprise from all

functional areas within the integrated SPO team.

Each SPO workforce Function (Program

Management, Commercial, Engineering &

Technical, Materiel Logistics, Corporate

Performance and Decision Support) will bring to

RIO reviews their knowledge of both the

contracted functional requirements and the

observed performance of the Supplier in meeting

those requirements.

¶ SPOs should also seek feedback from the

Capability Manager representative/operator, as the

end customer, to help inform the overall view of

Supplier performance.

¶ The SPO’s intelligence gathering and awareness

should also extend across the range of agencies

responsible for delivering Fundamental Inputs to

Capability, where CASG is responsible for

coordinating those inputs as the lead delivery Group.

• Surveil

¶ The model assumes a starting point where the

RIO is yet to be fully populated. SPO staff, at all

levels and across all functions, engage in

surveillance activities with two explicit intents.

First, to develop a sense of how well the overall

system is functioning, and secondly to identify

the specific risks, issues and opportunities within

the Enterprise.

• Surveillance activities range on a spectrum

from informal to formal actions. There are many

options available on this spectrum, including:

walking around, attending meetings, reviewing

performance data/statistics, reviewing contract

deliverable documents, witnessing

requirements verification activities, and

performing audits.

• Assess

¶ SPO staff gather and assess the collective

intelligence gained from surveillance activities in

order to update the RIO dashboard. This view

then informs the SPO’s strategy to shape and

influence the Supplier’s behaviours where

necessary to treat the identified risks and issues,

and exploit the opportunities.

¶ The RIO dashboard should be highly visible to all

staff in order to be fully effective in guiding the

SPO’s collective shaping and influencing effort.

• Shape and Influence

¶ Shaping and influencing activities may range on a

spectrum from informal to formal actions. There are

many options available on this spectrum, including:

• saying something (voicing interest/concern)

• using the Enterprise Management Framework

tiered system of meetings and working groups

to agree and progress actions to resolve risks

and issues, and seek continuous improvement,

in partnership with the Supplier (and Capability

Manager representative where applicable)

• issuing audit corrective action requests

¶ On occasions SPO staff will exercise a vested

Commonwealth authority to give formal direction

or make executive decisions – for example, as the

chair of a configuration control board or a program

review board. The exercise of such authority is a

more direct form of shaping and influencing

outcomes, however, it is distinct from the SPO

directly intervening in the activities of the Supplier

to correct shortfalls, as described below.

• SPO Intervention

¶ Should the SPO’s attempts to indirectly shape and

influence the Supplier’s behaviour not result in the

desired behaviour shift or performance

improvement over a reasonable time, the SPO

may exercise its prerogative to take unilateral


action to correct shortfalls of performance and/or

compliance. This is a last resort course of action

and should be undertaken at the considered

discretion of the SPO senior executive.3

SPO Staff ‘LEAD’ Skills and Behaviours

The SPO Governance Model requires SPO staff involved

in assurance, at all levels and across all functions, to

apply ‘soft’ (relational) as well as ‘hard’ (technical

function) skills, and a sensitivity to adapt the approach to

suit the specific context. It also requires a higher level,

mature understanding of the Enterprise system within

which the SPO operates.

Supplier assurance keeps Commonwealth SPO staff

fundamentally engaged in, and leading, the business in

their particular functional areas. While the

contemporary SPO model has shifted greater

workshare for routine management and delivery to

Suppliers, the shift has also created opportunities for

3 USAF Colonel John Boyd’s well known Observe-Orient-Decide-Act (OODA) Loop Model is a useful analogy to describe the iterative approach to Supplier assurance. The notable difference of intent is that the SPO’s aim is not to defeat an adversary, but rather to promote a positive partnership with the Supplier towards meeting the common Enterprise goals.

SPO staff to more actively shape and influence positive

outcomes for Defence capability.

These are leadership behaviours expected of SPO staff

operating within the Enterprise partnership with Suppliers

and the Capability Manager representatives. As

described in Figure 4, the SPO team is entrusted to

LEAD to give Confidence to our Capability Managers

that our systems are optimized to deliver capability that is

safe, fit-for-purpose, cost-effective and delivered on time.

Air Domain SPO Governance Strategy 2020 - Supplier Assurance Model

Examples in Practice

Following are two examples to illustrate how the Supplier

Assurance Model might be used in practice.

Example 1: Contract Data Item Review

A SPO engineer reviews a data item document delivered

by the Supplier to the Commonwealth for acceptance.


The SPO engineer does an initial review of the document

and finds it has numerous content and editorial

deficiencies. Rather than raise a detailed feedback

record of every issue identified with the document, the

engineer uses the document as a source of intelligence

to inform observations on the health of the Supplier’s

management system.

Using for instance an Organization-People-Processes-

Data-Tools (OPPDT) view, the engineer may evaluate: the

adequacy of the Supplier’s internal quality assurance

mechanisms; the level of professional knowledge of the

document author and reviewers; the appropriateness of

the technical and management processes used in

generating the document; and, the accuracy and

completeness of the data used to underpin the

document’s content.

The SPO engineer does not attempt to correct or rewrite

the whole document, but instead:

• Enters feedback on the observed ‘system’ concerns

into the SPO RIO dashboard, for further discussion at

the SPO’s next RIO review session.

• Meets with the Supplier’s document release authority

to explain the observed shortcomings, clarify any

misunderstanding of requirements, and allow the

Supplier to consider not only the specific rework

required of the data item, but identified ‘system’

corrective actions.

• Respond formally (if the data item was formally

submitted) in writing to the Supplier to record the

SPO’s concerns and confirm the SPO’s

understanding of the Supplier’s intended next

actions. In this case the SPO is working with a

relatively new Supplier, so the SPO team considers

opportunities to help further educate and support the

Supplier as it matures its own system.

Example 2: Spares Supply Performance

The SPO logistics lead observes repeated breakdowns in

the Supplier’s spares supply processes. These

observations are reinforced by feedback from the

operating unit expressing dissatisfaction with the

timeliness of spares delivery. Routine performance

reporting by the Supplier also highlights a trend of

underachievement against the related supply metrics in

the contract.

The logistics lead checks that there have been no

changes to the agreed fleet Rate of Effort upon which

the original spares modelling and metrics were based.

She then voices her concerns to her Supplier

counterpart. The Supplier agrees to further explore the

possible root cause(s) of the spares delivery shortfalls

and then brief the SPO logistics lead with the findings in

three weeks’ time. The SPO lead offers to support the

review, particularly to understand where there may be

any Commonwealth-controlled variables (for example,

directed numbers of spares) affecting the supply

system performance.

After the agreed three weeks the Supplier is not yet

ready to brief the outcomes of its review and, despite

periodic ongoing inquiries by the SPO logistics lead, the

Supplier remains non-committal on a priority or date to

complete its review.

The SPO logistics lead therefore announces that the

SPO is considering performing an independent formal

audit of the Supplier’s spares management system in

two weeks’ time. The timing of the audit allows a

deliberate opportunity for the Supplier to complete its

internal review ahead of SPO formal intervention.

Two weeks later, in a routine SPO-Supplier management

meeting, the SPO logistics lead announces that instead

of proceeding with the audit the SPO is pleased to

observe the positive actions taken by the Supplier to

identify the supply system issues and implement actions

to improve the system performance. The SPO Director in

turn reinforces this message at the next Enterprise

executive team forum.

The SPO and Supplier subsequently agree to review the

effectiveness of the improvement actions during the next

quarterly performance review.

Documents

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