CASG Major Service Provider Arrangement – Is it Time for a Symposium?

There has been plenty of discussion of late around CASG’s Major Service Provider (MSP) arrangement and its efficacy or otherwise.

Be it Land Systems Division recently changing their contracting mechanism for above the line services to align with the Integrated Work Packages (IWPs), or a LinkedIn opinion piece offering an insider’s view.

Discourse on the subject can be difficult as it tends to polarisation as supporters and those with a less conciliatory view face off. The lack of data makes the debate largely anecdotal.

I personally have observed a tendency for the conversation to focus heavily on the impacts to SMEs and rates. This is not bad as these are two pivotal elements of the model but focussing solely on these two concerns is problematic as they do not fully represent the MSP arrangement.

Let’s refresh: why is there an MSP arrangement?

The above-the-line industry provides the professional services intended to flexibly and innovatively support and augment Defence’ Capability Life Cycle (CLC) processes. The CLC is needed to ensure that Defence properly spends over $12 billion each year on Defence acquisition and sustainment. Getting the investment right is essential to ensuring the ADF is ready to respond and maintain a secure and safe Australia. 

The MSP arrangement was put in place by CASG to form strategic partnerships with Service Providers who have the capability and capacity to deliver strategic outcomes for CASG. The strategic aims are embodied in a set of Joint Objectives which I have reproduced (as tendered version) below. Essentially the MSP aims were to increase value-for-money through:

• Better leveraging industry resources and experience
• Growing capability and capacity in the market
• Better integration of diverse resources (both industry and Defence), and
• Encouraging stability within the workforce and security of tenure

Whilst at the same time ensuring:

• A vibrant SME community is maintained
• A reduction in administration and transactional costs, and
• The MSPs themselves are rewarded with returns commensurate to risk

Is the MSP model performing – I don’t think we know

My hypothesis is that there is insufficient data in the public domain to know how the MSP is performing. I would refer back to my own article from August last year where I asked about the MSP, who is driving it and is it leading to good outcomes for Defence.

It seems after some teething issues that there has been good progress in reducing some of the transactional costs for Defence, MSPs and SMEs. There is not much else I would put a claim to. 

My concerns centre mainly on joint objectives b. and c. being the ability to better leverage resources, and how to make more efficient and effective use of the resources to form integrated teams. For my mind these are the critical success factors in having the MSP arrangement make a tangible difference to the market. Otherwise we risk a race to the bottom on a zero-sum game of recruiting and poaching with no one truly incentivised to grow capability and capacity in the sector, or indeed come up with new ways of doing business.

Given we are halfway through (how time flies!) the initial term of the MSP engagement perhaps now is the time to start to examine whether the MSP arrangement is achieving its intended outcomes?

Symposium

Whilst there are contract performance measures for the MSPs being managed by Defence, these are confidential to each MSP and are not a market-wide vehicle. Something that allows the entire market to be heard might be appropriate given the MSP construct is so pervasive. Transparency and discussion on the model can only be a good thing.

Many other Defence fora exist but not necessarily the format where things can really be thrashed out and real two-way communication can occur.

My suggestion is a symposium / workshop where parties can come together. I am not suggesting a talk-fest or public airing of grievances but a forum where ideas can genuinely shared (and heard!) and realistic recommendations and/or ways of advancing the debate can be found. 

Aims and conduct would need to be determined, but if there is a ground swell of support, I think this is something that the above the line community can bring together. 

Genuinely interested in peoples’ thoughts, and happy to see support or otherwise for such an event.

MSP Joint Objectives

a.    recognise industry’s importance as a fundamental input to capability;

b.    implement ‘Smart Buyer’ initiatives introduced into Defence following the First Principles Review, and in particular, more effective engagement with industry to better leverage its resources and experience to deliver CASG outcomes;

c.    make the most efficient and effective use of ‘above the line’ industry resources to work with internal resources (APS and ADF) in an integrated way to deliver Defence capability outcomes;

d.    promote collaborative behaviours, and strategic, co-operative and constructive working relationships, between CASG and industry, and within industry (including SMEs in the MSP supply chain);

e.    ensure the MSP as a commercial entity makes a reasonable return on its investment in being an MSP and performing the MSP services, being a return that appropriately reflects the properly managed risks assumed by the MSP;

f.     deliver better value for money to CASG than the current arrangements for CASG’s procurement of ‘above the line’ industry services, including through the use of highly competitive labour rates, pre-agreed terms and conditions for the various kinds of services and optimising economies of scale;

g.    minimise operating costs for both CASG and industry (including costs of tendering and other transaction costs);

h.    maintain a viable and vibrant Small Business sector for ‘above the line’ subject matter expertise, through the MSP supply chain;

i.     maximise the continuity and stability of the MSP’s personnel (including SME personnel in the MSP supply chain) involved in the performance of services to CASG; and

j.     ensure that an enhanced and sustainable capability exists within both Defence and industry to support current and future CASG work requirements.