Departmental Forecast Report
for the year ending 30 June 2003
Statement of Objectives
Specifying the performance forecast for each class of outputs for the year ending 30 June 2003
The Ministry of Defence has committed to provide output classes in 2002/2003 which meet the requirements of the Vote Minister for timeliness, quality specification and cost.
Summary of Departmental Output Classes
Departmental output classes to be delivered by the Ministry, and associated revenue, expenses and surplus or deficit, are:
Output Operating Statements: 2002/2003
| Departmental Output Class | Description | Revenue: Crown $000 |
Revenue: Other $000 |
Total Expenses $000 |
Surplus/ (deficit) $000 |
|---|---|---|---|---|---|
| D1 - Policy Advice | Policy advice, strategic planning and the management of international defence relationships. | 2,936 | - | 2,936 | - |
| D2 - Audit and Assessment of Performance | Evaluation of New Zealand Defence Force activities including the delivery of outputs, management systems and resource utilisation. Internal audits of the Ministry, and audits as required by s.3 of the Hazardous Substances and New Organisms Act 1996. | 1,668 | - | 1,668 | - |
| D3 - Management of Equipment Procurement | Management of procurement or refurbishment of items of equipment contributing to a capability of the New Zealand Defence Force, and liaison with the defence industry. | 3,667 | 2,146 | 5,813 | - |
| Total | 8,271 | 2,146 | 10,417 | - |
GST Status of Departmental Output Classes 2002/2003
| Departmental Output Class | GST - Excl DFR $000 | GST $000 | GST - Incl (Vote) $000 |
|---|---|---|---|
| D1 - Policy Advice | 2,936 | 367 | 3,303 |
| D2 - Audit and Assessment of Performance | 1,668 | 209 | 1,877 |
| D3 - Management of Equipment Procurement | 5,813 | 726 | 6,539 |
| Total Departmental Output Classes | 10,417 | 1,302 | 11,719 |
Explanatory Notes: The forecast financial statements in this report present expenses (and revenue) exclusive of GST, in accordance with generally accepted accounting practice. When appropriated by Parliament these expenses are inclusive of GST, in accordance with legislation. Thus:
- the GST-exclusive amounts for each departmental output class correspond to "total expenses" for 2002/2003 appearing in the Output Operating Statements appearing on page 14 of this report, while the aggregate amount for all three output classes corresponds to "total output expenses" for 2001/2002 in the Statement of Forecast Financial Performance on page 8 of this report; and
- the GST-inclusive amounts for each departmental output class correspond to the bolded annual appropriations for 2002/2003 appearing in Part B1 of Vote Defence in the Estimates of Appropriation (B.5).
Vote Defence
Output Class D1 - Policy Advice
Description
Under this output class the Minister of Defence will purchase:
- advice on defence policy matters. This includes advice on:
- changes in the strategic environment;
- defence and security policies;
- goals and outcomes, together with strategies for achievement;
- the military capabilities required to meet defence policy goals, broad resource implications and the relative merits and risks associated with proposed capability options;
- management of bilateral and multilateral defence relations;
- responses to ministerial and parliamentary questions, Official Information Act inquiries, Ombudsman correspondence and public affairs advice.
Quantity and Timeliness
The Ministry will:
- undertake analysis of significant issues that have an impact on the Government's defence and security policies;
- undertake capability reviews to identify the options for achieving the Government's defence policy goals;
- manage defence relationships with Australia and other regional countries;
- participate in the regional multilateral security dialogue;
- host the annual meeting of Australian and New Zealand Defence Ministers and senior officials;
- provide the following Ministerial services:
responses to Ministerial correspondence:
replies to ministerial correspondence will be actioned within fourteen working days of receipt by the Ministry.
responses to Parliamentary questions:
Parliamentary questions will be actioned within time frames set by Standing Orders of the House of Representatives.
responses to Official Information Act requests:
Official Information Act enquiries will be actioned within statutory requirements.
- produce publications in accordance with an agreed programme.
Quality
Advice will meet the following quality standards:
- reports will state their purpose and address issues raised by the Minister;
- assumptions will be explicit, argument will be logical and supported by facts;
- forecasts will be supported by thorough analysis;
- a range of options will be presented and assessed for benefits, costs and consequences;
- consultation will be undertaken with interested parties, and objections to proposals will be identified;
- issues of implementation, technical feasibility, timing and consistency with other policies will be considered;
- reports and oral advice will be delivered within agreed or statutory time-frames;
Written and oral advice tendered to the Minister of Defence will accurately reflect revenue and expense implications (quantified where possible); and administrative implications and costs (quantified where possible).
The Ministry of Defence will maintain quality control procedures to support the policy advice delivered under this output.
Cost
This output class will be provided within the appropriated sum of $3.303 million (inclusive of GST).
| Year | Cost GST incl $000 |
Cost GST excl $000 |
Total revenue: GST excl $000 |
Revenue Crown: GST excl $000 |
Revenue other: GST excl $000 |
|---|---|---|---|---|---|
| 2002/03 | 3,303 | 2,936 | 2,936 | 2,936 | - |
| 2001/02 | 3,505 | 3,116 | 3,116 | 3,116 | - |
Output Class D2 - Audit and Assessment of Performance
Description
Under this output class the Minister of Defence will purchase;
- independent evaluations of delivery of New Zealand Defence Force outputs;
- independent reviews of the efficiency and effectiveness of New Zealand Defence Force management systems and resource utilisation;
- internal audits and reviews of the Ministry's acquisition, policy and corporate activities;
- audits of the controls on hazardous substances under the control of the Minister of Defence, as required by the Hazardous Substances and New Organisms Act 1996.
Quantity and Timeliness
During the year the Minister of Defence expects the Ministry to:
- complete satisfactorily an agreed programme of evaluations.
- conduct other assessments and audits of the New Zealand Defence Force as and when directed.
Quality
The evaluations will have the following characteristics:
- evaluations will be conducted in accordance with prescribed practice;
- evaluations will be judged by target audiences as meeting the objective;
- reports will be accurate and all material facts will be included;
- findings and conclusions will be a logical derivation from the circumstances found;
- managerial review will be maintained throughout the evaluation process.
Cost
This output class will be provided within the appropriated sum of $1.877 million (inclusive of GST).
| Year | Cost GST incl $000 |
Cost GST excl $000 |
Total revenue: GST excl $000 |
Revenue Crown: GST excl $000 |
Revenue other: GST excl $000 |
|---|---|---|---|---|---|
| 2002/03 | 1,877 | 1,668 | 1,668 | 1,668 | - |
| 2001/02 | 2,080 | 1,849 | 1,849 | 1,849 | - |
Output Class D3 - Management Of Equipment Procurement
Description
Under this output class the Minister of Defence will purchase:
- management of procurement, or refurbishment, on behalf of the Crown, of significant equipment contributing to a capability of the New Zealand Defence Force. This involves management of procurement functions from the initial identification of a requirement through ministerial approval-in-principle and commitments; the subsequent acquisition process, including project investigation, risk assessment, quality assurance, equipment selection, negotiation and execution of contract arrangements up to the point when the equipment is delivered to the New Zealand Defence Force; and the management of any warranty provisions. It also covers investigation of associated financing arrangements and on-sale to the New Zealand Defence Force;
- maintenance of an information base on industrial capability, and the provision of advice to industry on defence requirements.
Quantity, Quality and Timeliness
The Ministry will:
- subject to individual Government approval, progress some or all of the following projects:
- New Maritime Forces Vessels
The intention is to:
- issue an Invitation To Register in the 2nd quarter of 2002
- issue a Request For Proposal in the 3rd quarter of 2002
- subject to the range and scope of responses further definition of milestones will be decided at a later date.
- Light Operational Vehicles (LOV) for the Army
The intention is to:
- complete tender documents and issue the Request For Tender in the 2nd quarter of 2002
- following evaluation and selection of a preferred vehicle type and supplier, seek Government approval to negotiate a contract for the purchase of the LOV in the 3rd quarter of 2002.
- Joint Command & Control System (JCCS)
The intention is to:
- identify a suitable contractor to undertake the project definition study in the 3rd quarter of 2002
- obtain Minister's approval to proceed and commence the project definition study in the 3rd quarter of 2002.
- New Maritime Forces Vessels
- continue management of the following projects:
- Naval helicopters for the RNZN
The following milestones are planned for 2002/03:
- complete delivery of five naval helicopters by the 4th quarter 2002
- pay all outstanding costs by the 1st quarter 2003
- complete final closure report in the 1st quarter of 2003
- complete project within Cabinet approval of $380.8 million (inclusive of GST) after allowing for foreign exchange variance.
- Light Armoured vehicle (LAV) for the Army
The following milestones are planned for 2002/03:
- complete system design reviews in the 3rd quarter of 2002
- complete first of type vehicle testing in the 4th quarter of 2002
- commence full vehicle production in the 1st quarter of 2003.
- Naval helicopters for the RNZN
- complete the following projects:
- Tactical Communications for the Army
The following milestones are planned for 2002/03:
- complete delivery of 1853 radios by the 3rd quarter 2002
- pay all outstanding costs by the 4th quarter 2002
- complete final closure report by the 4th quarter 2002
- complete project within Cabinet approval of $134.2 million (inclusive of GST) after allowing for foreign exchange variance.
- Tactical Communications for the Army
- maintain close links with New Zealand's industry and provide support for the Defence Industry Committee of New Zealand;
- ensure that New Zealand companies are given maximum opportunity to compete for work from projects managed by the Ministry;
- complete material for the Australia and New Zealand Industry Defence Equipment and Capability Catalogue database and update databases on industrial capability;
- conduct industry briefing sessions on current defence projects and activities.
Delivery of this output will be subject to the following quality standards:
- relevance - all contracts will meet the Government's requirements;
- best price - prices agreed for projects will be based on a competitive tender process, or where tendering is not possible, will be based on either independent benchmarks, or full cost disclosure by the provider;
- risk management - any significant variations or potential risks will be identified, together with corrective actions required or taken;
- accuracy - payments will be made at the agreed sum to the correct supplier and no payments will be made in excess of the agreed sum;
- timely - all contracts will be negotiated in a timely manner and payments will be made on time if the provider is meeting the terms of the contract.
- new capabilities and major refurbishment will be acquired within approved budgets, to the quality standards negotiated for each project and within the agreed delivery schedule;
- contract awards will be subject to considerations of through-life cost, quality, delivery schedule and local industrial participation;
- initiatives will be undertaken to harmonise and implement joint industrial policy with the Australian Department of Defence;
- defence industry advice reports will clearly state their purpose and address any issues raised by the Minister;
- assumptions behind advice will be explicit; argumentation will be logical and supported by facts;
- evidence will be given of adequate consultation with interested parties, where applicable, and possible objections to proposals will be identified;
- problems of implementation, technical feasibility, timing and consistency with other policies will be considered;
The Ministry is also responsible for providing general defence industry advice. The principal forum for providing this advice is the New Zealand Defence Technologies Joint Action Group, which will be asked to confirm annually that the Ministry has provided adequate industry advice in support of export activity.
Cost
This output class will be provided within the appropriated sum of $6.539 million (inclusive of GST).
| Year | Cost GST incl $000 |
Cost GST excl $000 |
Total revenue: GST excl $000 |
Revenue Crown: GST excl $000 |
Revenue other: GST excl $000 |
|---|---|---|---|---|---|
| 2002/03 | 6,539 | 5,813 | 5,813 | 3,667 | 2,146 |
| 2001/02 | 4,784 | 4,252 | 4,252 | 3,138 | 1,114 |
