Support & Infrastructure: Defence infrastructure – Managing the Estate | ADM August 2012

It may come as a surprise to many that Defence is one of the largest landlords in the country, managing over 3 million hectares of land spread across every state and territory of the Commonwealth. To strategically manage the Defence estate, the Infrastructure Division of the Defence Support Group (DSG ) employs around 330 people and has an annual budget of between $1.7-2.1 million dollars.

The division does much more than just manage Defence real estate however. It is, for example involved early in the process of many capital acquisition programs, ensuring that necessary infrastructure is in place to support whatever capability may be delivered – from Air Force’s Joint Strike Fighter or C-17A heavylifter to Army’s Mercedes G-Wagons.

Today, together with its sister organisation, the Defence Support Operations Division, it is facing the challenges of maintaining buildings and facilities which range from a 200-year old Army Barracks to the very latest in cutting edge Command, Control and Communication centres as the Australian Defence Force steps into the networked future.

It is also competing with other large infrastructure projects in the north and west of Australia for construction work and has recently developed new initiatives to ensure it remains engaged with industry.

Looking towards the inaugural ADM Defence Support Services Summit to be held in Melbourne in August, one of its aims is to foster and develop the relationship even further.

The Infrastructure Division can be regarded as a Fundamental Input to Capability (FIC), which plays a vital, if not entirely glamorous role, in ensuring the ADF the means to carry out its role.

Defence support group

The Defence Support Group, as the overarching organisation, is the support service that both enables and delivers Defence capability.

As well as Infrastructure, it comprises two other service delivery divisions: Reform and Corporate Services Division (RCS) and Defence Support Operations (DSO).

As such it is the consolidated service delivery organisation for Defence, with a budget of around $3.9 billion and an asset base which has a gross replacement value of $62 billion.

Infrastructure division

The role of the Infrastructure Division is the strategic development, management and disposal of the Defence estate, in contrast to Defence Support Operations, which provides the day to day services.

To accomplish its goal, it is divided into six branches: Capital Facilities and Infrastructure (CFI), Property Management (PM), Environment and Engineering (EE), Infrastructure Strategic Engagement and Governance (ISEG), Estate Planning (EP), as well as a small executive team to support Head Infrastructure.

“We look after the strategic, or ‘big picture’ side of things, including the development and delivery of the major capital facilities program,” explained Head of the Infrastructure Division John Owens to ADM. “We also develop policy related to engineering across the estate, we are responsible for environmental policy and issues management on a large scale.

“In addition, we look after the large scale property management side of things across the estate and we also have a role in strategic engagement and strategic planning for the estate. For example, we plan the maintenance for the estate, but it is delivered by the Defence Support Operations Division.

John Owens, an ex-Army Intelligence Corps officer has held the role for the last four and a half years and reports to the Deputy Secretary of Defence Support, and in turn to the Chief Operating Officer of the Defence Support Group (this month’s From the Source interviewee Simon Lewis, Defence’s Chief Operating Officer on P58 also looks at infrastructure issues).

Owens has around 300 civilian and 30 uniformed personnel to look after 394 owned and 350 leased properties and 72 significant bases spread throughout all states and territories. Together the Division supports the activities of over 100,000 personnel.

“The Defence estate is one of the largest and certainly the most complex landholding in the country,” he said. “It consists of about three million hectares, not including the Woomera Prohibited Area, which Defence doesn’t own but over which it has certain statutory rights about controlling access.”

Within the land managed by the division, there is significant indigenous heritage, particularly in the large training areas. European heritage is also significant with historic buildings such as Victoria Barracks facilities in Brisbane, Melbourne and Sydney and Anglesea Barracks in Tasmania, which celebrated its 200th anniversary last year. Five listed world heritage areas are included in Defence estate.

The annual budget is typically somewhere between $1.7 and $2.1 billion dollars, with between $800 million and $1.3 billion allocated to capital funding (new construction); a further $150 million is spent annually on leasing and between $450 and $500 million on estate maintenance, administered by Defence Operations.

“On the property side, we look after the full range of property management, from acquisitions, leasing and disposals,” Owens explains. “We oversee the leasing of Defence properties from other entities and the lease of parts of our bases to other people, so we do both expenditure and revenue leasing.”

The Infrastructure Division conducts strategic planning in close co-operation with the Defence Capability Group, so that the facilities implications of new acquisition projects are understood at an early stage.

Major Facilities

The development and delivery of major facilities programs are other major roles. These projects have to receive initial Government approval, sometimes as high as cabinet level. In addition, projects over $15 million have to be examined by the Public Works Committee before referral to the Parliament.

“We do a lot of work in developing the projects to the point where we can deliver a high level of confidence to the Government and Public Works Committee that we know how much the project will cost and how long it will take, what it will do and how we achieve the desired outcomes,” Owens said.

“Then of course we have to deliver the projects. We have to work with our industry partners to ensure that we keep to time and to schedule, keep to budget and scope, all those classic project management things.

Furthermore, interaction with local and State Governments is an important part of the process.

“We liaise closely with the Governments on planning issues which may affect Defence bases. Things like, how a new development outside a base will impact on us, and how a development on-base would affect the neighbouring area,” he said “The other services we provide are environmental policy and standards and database, and extensive liaison with the whole of Government on environmental initiatives and how they affect Defence.”

Challenges

One of the significant challenges faced by the Infrastructure Division is in the upkeep of a whole range of Defence establishments, from Anglesea Barracks to the modern EASTROC Command and Control centre at Williamtown.

“We have almost everything you can think of somewhere on the Defence estate, including a bowling alley at Woomera,” Owens said. “It’s a very complex land holding.” Many Defence buildings date from World War Two or before, so the management, sustainment and future planning for them is becoming increasingly more complicated as they age.

When they were initially planned and constructed, many bases were located in remote areas, or well away from densely populated areas, but the urban sprawl of our major cities and regional centres has now meant that Defence now lives surrounded by housing and industry.

“Simpson Barracks at Watsonia in Melbourne and even the RAAF base at Williamtown are examples of establishments that were built well away from people and urban areas, but nowadays those people and urban areas have come to us,” Owens told ADM. “Managing those interfaces is a big challenge for us.”

The huge demand on construction services caused by the resources boom also places pressure on Defence facilities projects. Another factor is the loss of skilled staff from the construction companies to the mining sector, which then has a flow on effect for both civil and defence construction programs.

Engagement with industry is another area which is very important to the Division and this is one of the reasons why Owens said he looks forward to ADM’s Defence Support Services Summit.

“It’s very important for us to work closely with industry and I see a summit such as this as an opportunity to bring senior people within my organisation together with industry to understand industry pressures, but also for them to understand the pressures on us and look at ways to work more closely together. It will be a very important opportunity for us,” he said.

“We need to co-operate and work with industry as partners, but we also need to be mindful of specific contractual issues, such as the allocation of risk and responsibilities under a contract. We need to be close, but we also need to be able to understand our respective rights and obligations in a contractual sense, because we invest large quantities of taxpayer dollars and we need to be able to assure the Government they are getting value for those dollars.”

The summit is seen as an important part of industry engagement process, but there is also an educational aspect to it, with the Division seeing the forum as an opportunity to understand emerging construction techniques and approaches which may benefit future projects.

Owens said the relationship between Defence and industry has improved over recent years, but understanding the facilities requirements of a major capital equipment program can be difficult until quite late in the process.

“If the Government has to choose between two different types of vehicle and one is the size of an American Humvee and the other the size of a Land Rover, you clearly have completely different garaging, servicing, workshop and hardstand requirements,” he said.

“We need to work early with the Capability Development Group, DMO and the services to understand the facilities requirements for new capabilities when they come on line. We can feed that data in and get good estimates of the cost and time required to deliver the facilities to support the capability.”

The long process of large construction projects, coupled with the approval process through the Public Works Committee when required can mean that the works requirement can actually drive the schedule for capability development and major projects.

Towards the future

A key strategy in recent years has been the establishment of an Infrastructure Division cell within the Defence Capability Development Group, charged with the responsibility of ensuring that Infrastructure works closely with CDG desk officers to firstly understand, then scope out the implications to facilities early in the process.

Another major initiative has been the establishment of a strategic governance branch to engage with the services, CDG and DMO to understand how the work scope of the facilities and training areas are factored in to the capability and development process.

“We now we need to work closely with industry and we need to understand each other’s requirements. We need to understand the pressures on industry, but industry also needs to understand the pressures on us and we need to work the relationship in the future,” Owens said.

“We need to be mindful of our respective contractual obligations, but the relationship is really important. I tell my people that no issue is worth a relationship. You need to preserve the relationship and work through the issues and not ruin that relationship over a single issue. We look forward to engaging with industry further as we progress”

Doing business with the infrastructure division

For companies and individuals wishing to know more about doing business with the Infrastructure Division, John Owens said the easiest way is to contact his group through the Defence web portal: www.defence.gov.au/id and click on the ‘Contact Us’ tab.

Otherwise they can be contacted by telephone through the Defence switchboard.

“For all services we run open tender processes and there are also a number of panels that are used for consultation and other services, a Defence Infrastructure, Defence Environment, Defence Environment & Heritage panel and we also have a strategic partner in property management, so we compete these through the normal processes,” John Owens.

“However our big construction projects are tendered separately and not through a panel process at this time. Notice is given through Austender and the newspapers for example. We are well and truly in the market and we’re pretty easy to find.”