Who is the New Zealand Defence Force training partner of choice?
are.
en delivering training innovation for more than 70 years now. We are one of the world’s most focused training specialists, as evidenced by the company training more than 220,000 civil and wmembers every year.
New Zealand Defence Force: On the procurement frontline
hed CAE New Zealand Pty Ltd to develop, deliver and support world-class training and simulation the New Zealand Defence Force, and are proud to support the training and readiness of the NZDF ted training partner. CAE provides a range of simulation products and through-life training support platforms such as the C-130H, SH-2G(I), and T-6C. We are currently developing the NH90 training the Royal New Zealand Air Force, and will provide long-term training services upon delivery in
y-recognised training systems integrator, CAE is committed to providing the New Zealand Defence comprehensive training solutions designed to optimise safety, efficiency and readiness across the erprise.
.com.au
orldwide g partner ce
@CAE_Defence
CAE
@CAE_Defence
cae.com/defence-security
P R O J E C T PA R T N E R
2
New Zealand Defence Force: On the procurement frontline WRITTEN BY A n d rew Wo o d s PRODUCED BY H ey ke l O u n i
3
CPOstrategy talks to Paul Howard Assistant Chief Joint Defence Services, (Commercial) at NZDF, regarding its procurement transformation…
D
elivering a successful procurement programme in any industry or enterprise is
challenging. Add to that the sensitivity and reliability demanded of a military organisation based in one of the world’s most remote locations, and the challenges become significant. The New Zealand Defence Force (NZDF) is the organisation which, in partnership with the Ministry of Defence, provides essential support
do everything: from Headquarters to the
to the delivery of the Government’s
camps and bases, to help them do their
national security interests. The person
procurement,” he explains. “The only
responsible for making sure that
thing we don’t buy are major platforms.
everything keeps flying, sailing and
We actually have a Ministry of Defence
rolling at the NZDF is Assistant Chief of
here, as well as the Defence Force, and
Joint Defence Services (Commercial),
they buy the ships, planes, military vehi-
Paul Howard. Howard looks after all
cles, etc., but it’s us who runs them,
Procurement activity across the NZDF,
including any long-term commercial
incorporating both its military and
relationships as well as the nuances of
corporate pillars, ranging from main-
those relationships and contracts.”
tenance, repair and overhaul (MROs)
Howard’s department is responsible
contracts for major platforms to consul-
for an annual spend of around $800m a
tancy support. “We literally get a call to
year, employing a team of procurement
4
NZDF
reconfiguration. “It was very process driven,” he explains. “They’d made an attempt at category management and professionals and includes the Accounts
had had a number of reviews. In the
Receivable and P2P function too.
previous seven years, prior to my arrival,
“This is good for us, because it means
I think they’d had five different reviews.”
that we have a bit of a nursery, and a
The reviews, conducted by various
career path, for up and coming buyers,”
consultancies, were also fairly consist-
Howard explains.
ent in their summations that the
Howard has a wealth of experience
procurement department was a largely
working for government departments
transactional function and in need of
back in the UK and moved to New
a more strategic approach. In terms
Zealand in early 2015 looking for a new
of the implementations suggested by
challenge in a different environment.
the reviews, Howard believes some
The procurement landscape at NZDF on
were only ‘half done’. “So, I had cate-
Howard’s arrival in late 2015 was largely
gory managers,” he says, “but when I
transactional and in need of major
studied what they were actually doing, w w w.n zd f.mi l .n z
5
Who is the New Zealand Defence Force training partner of choice?
We are. CAE has been delivering training innovation for more than 70 years now. We are one of the world’s most proven and focused training specialists, as evidenced by the company training more than 220,000 civil and defence crewmembers every year. We established CAE New Zealand Pty Ltd to develop, deliver and support world-class training and simulation systems for the New Zealand Defence Force, and are proud to support the training and readiness of the NZDF as their trusted training partner. CAE provides a range of simulation products and through-life training support services on platforms such as the C-130H, SH-2G(I), and T-6C. We are currently developing the NH90 training solution for the Royal New Zealand Air Force, and will provide long-term training services upon delivery in 2020. As a globally-recognised training systems integrator, CAE is committed to providing the New Zealand Defence Force with comprehensive training solutions designed to optimise safety, efficiency and readiness across the training enterprise.
caeaus@cae.com.au
Your worldwide training partner of choice
@CAE_Defence
CAE
@CAE_Defence
cae.com/defence-security
“We're very much moving towards agile procurement in terms of making sure that we know exactly what it is that we want from the market” — PA U L H O W A R D ASSISTANT CHIEF, JOINT DEFENCE SERVICES (COMMERCIAL)
some were acting more like contract
ensure that NZDF was getting the best
managers. In some instances, they
deals. “What I was finding was that the
were producing category strategies
focus of the team was on quantity, not
and category plans, in splendid isolation
quality which meant that basic errors
from the business sponsor or business
occurred followed by significant re-work
owner, or had no buy-in from the busi-
leading to frustrated customers who
ness to implement those strategies. In
saw us a roadblock. In fact, it seemed
some cases, we would find the opera-
that the premise of procurement was
tional procurement teams helping the
like a factory in how it had been set up
customer put something together to
and demonstrated from an organisa-
meet their needs but then the category
tional point of view, that procurement
manager would intervene and question
was perceived as just a process, not a
whether what they were doing was the
strategic function.”
right thing or not, in terms of the cate-
Howard discovered that a great
gory strategy. In some extreme cases
deal of the critical buying decisions in
they would play this out in front of the
NZDF were being taken elsewhere in
customer, who was sitting there think-
the organisation, often without any
ing, ‘What the devil’s going on?’”
input whatsoever from his team until it
Meanwhile, the procurement function
arrived to go through the procurement
was largely process driven with teams
assurance process which his team is
slavishly following process to produce
responsible for. “For example, a business
contracts but not necessarily providing
owner, usually having made their mind
the necessary commercial acumen to
up about what they were buying and w w w. n z d f. m il. n z
7
YEAR ESTABLISHED
1990
REGION HQ
Wellington, NZ
8
NZDF
from whom without coming to procure-
2016 marked something of a water-
ment first, would ask us to ‘assure’ their
shed for Howard and the NZDF, follow-
decision. This would lead to us looking
ing the release of the Defence White
at it and often rejecting it, which led to
Paper, which signalled a $21bn invest-
frustrated customers who were look-
ment in capability over the next 10 to 15
ing for us to tick a box for them, which
years, plus a regeneration of the Estate.
added to the perception that we were
The financial outlay included replac-
a roadblock, people that just got in the
ing two major aircraft platforms. “We
way of the Defence Force doing its busi-
have Hercules and P-3 Orion aircraft
ness. However, there was a recognition
for military movements and mari-
when I was recruited, that things proba-
time patrol, respectively. Following
bly needed to change.”
nearly 50 years of usage, we were
w w w.n zd f.mi l .n z
9
going to buy brand new, latest generation aircraft. Just this year, the NZ
our act together.” As procurement was then part of
Government have announced that we
the logistics organisation, a military
will be replacing our existing Hercules
commander (Commander Logistics),
C-130H aircraft with the C-130J Super
was the designated Chief Procurement
Hercules, following on from the deci-
Officer for the organization and so,
sion to replace the P-3 Orions with the
Howard had a number of conversations
P-8A Poseidon, and we will also take
with both the Commander Logistics and
delivery of our new Maritime Tanker/
Commander’s boss, the Chief of Joint
Fleet replenishment Ship HMNZS
Defence Services. “I decided to have a
Aotearoa in early 2021. We are also
tough conversation to illustrate that I
buying a new offshore patrol vessel
couldn’t necessarily provide the level
and will be completing a frigate system
of strategic procurement support that
upgrade in the next few years.”
the NZDF was going to need. I said to
The programme represented a massive challenge to the procurement team and Howard made it very clear that this was a step change and that procurement in NZDF would need to significantly change in order to enable a successful outcome. “I said to my boss, at the time, ‘When these decisions were being considered, was any thought given to the level of commercial expertise required to ensure we got the best through life-support constructs for these modern complex platforms?’ And the answer was, ‘No, we didn’t but maybe we should have.’ It was a pivotal moment because we were going to have new aircraft and ships turning up in 4-5 years and in Defence terms, that wasn’t a lot of time to get 10
NZDF
them: ‘You’re going to call on us, and if
capability index was introduced which
we stay the same as we are now, we’re
assessed a number of elements that
not going to be able to do it, because at
assessed a Government Agency’s
the moment, we’re not fit for purpose.
procurement practice and capabilities. It
You’ll probably end up having to go out
was all about making sure you have the
to the market to get (a lot of) expensive
right people; the right commercial skills
contractors to do this work and your
and strategic positioning. This assess-
capability simply won’t rise.’”
ment, which is carried out annually,
Around the same time, the New
also contributes to the NZ Treasury’s
Zealand government had been revising
Investor Confidence Rating (ICR)
their approach to procurement capabil-
which is used to rate NZ government
ity: ‘You can’t make good investments
Agencies abilities (A-E) to be able to
unless you’ve got good procurement
make substantial investments. “If you’re
people and systems.’ So, a procurement
getting an A or a B rating, then you’re
w w w.n zd f.mi l .n z
11
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NZDF
“…we’re talking about a vision towards World Class and making sure that we are professional in our dealings” — PA U L H O W A R D ASSISTANT CHIEF, JOINT DEFENCE SERVICES (COMMERCIAL)
doing really well, which means that you are trusted to spend significant amounts of taxpayers’ money, without necessarily having to go cap in hand to the Treasury every time,” Howard explains. This presented something of a ‘perfect storm’ for change so Howard persuaded the Chief that his team should come out of the logistics organisation, to create a more strategically focused function that understood, and was capable of, developing and delivering a pipeline of strategic procurement projects. In mid-2017, Howard started to report directly into the Chief of Joint Defence Services who is a member of the NZDF Board. Since then, Howard and his team have made great strides as procurement has pushed itself into a more recognised and strategic position at NZDF. Its PCI (Procurement Capability Index rating) was 2.7 (out of 4) in September 2017. “I think that was reflective of the fact that we didn’t have anything majorly going wrong because we’d fixed quite a few things that were not quite right but in reality, we’d only done some tinkering around the edges. However, I said to my boss, ‘Being “OK”, when you’re just about to spend $21-22bn is probably not where you want to be or w w w.n zd f.mi l .n z
13
should be’ and he agreed.” The PCI at
and Communications and Information
NZDF has since moved up to 3.1 within
Systems branch. They work with those
12 months and has just been reassessed
business units very closely and spend
at 3.35. “That’s actually gone past the
a lot of time onsite with them, some-
target we were set for this year,” he
times attending their management team
enthuses.
meetings, as their Business Partner. I
As part of this overhaul, Howard
think we’ve done that so successfully
proposed a commercial improvement
that recently one of the portfolios had
program and went on a recruitment
their awards night and one of my people
drive. “I reorganised several of the
got nominated for one of their awards.
teams and ceased category manage-
It was a big effort to reconnect with
ment as a concept. I placed our focus
the business, to genuinely help them
back onto the business owners and
get what they need, when they need it
what they needed and how we were going to give it to them. I didn’t want to continue to allow them to go off and do commercial activity on their own, as they didn’t have the right level of expertise to do that, so we created the concept of Procurement Business Partners whose roles were to be multi-faceted. We needed to reconnect Procurement with the customer base, so that they understood that we were there to proactively support them; in certain cases, being fairly well embedded into some of their governance and structures. We called them Commercial Portfolio Managers and recruited senior commercial professionals covering Logistics Command, Capability Branch, Estates and Infrastructure 14
NZDF
Paul Howard Assistant Chief Joint Defence Services (commercial) Paul joined the UK Civil Service in 1982, moving into procurement in 1995. Paul has led many multi-million dollar procurements, programmes and projects including delivering the award winning UK Schools Recruitment Service, The Mobile Infrastructure Project as part of the UK National Broadband strategy, the first WW1 Commemoration event management contract in Belgium (broadcasted live by the BBC) and a TFM contract for NZ Immigration’s new refugee resettlement centre in Auckland. Paul’s career has seen him work in several UK Government Departments finishing as Commercial & Procurement Director for the Department for Culture Media and Sport before moving to New Zealand in early 2015. Paul is a CIPS Fellow with Chartered status, a member of the CIPS Wellington committee and the NZ Procurement Excellence Forum. Paul joined the New Zealand Defence Force in 2015, leading a large team providing strategic and and operational procurement, commercial and P2P services.
w w w.n zd f.mi l .n z
15
and get public value; the other spin off
of creating their own procurement team
was to help stop them (even if they were
with the assistance of a consulting firm,”
unaware) from doing things that were
Howard explains. “I felt that was a false
risky for the business such as breaking
economy, to pay a consultant to develop
the NZ Government procurement rules
a separate team for them, when the
which are based on the trade agreements
money would be better spent on making
we have from around the world.”
sure that the existing procurement func-
The first department Howard and his
tion developed a commercial business
team connected with was ICT, which
partner approach and a delivery structure
was busy completely transforming the
that allowed us to get on with the right
organisation through a move to cloud-
level of advice.”
as-a-service. “They wanted to do a big transformation project and were thinking
From ICT, the business partner approach was rolled out to Capability,
“The PCI at NZDF has since moved up to 3.1 within 12 months and has just been reassessed at 3.35” — PA U L H O W A R D ASSISTANT CHIEF, JOINT DEFENCE SERVICES (COMMERCIAL)
16
NZDF
Logistics and then Estates and
at the very beginning of procurement
Infrastructure. “On a holistic level, we’re
projects to maximize value. We’re very
still in the throes of doing that improve-
much moving towards ‘agile or lean
ment program. We are very much looking
procurement’ too, in terms of making
towards World Class, because I believe
sure that we know exactly what it is that
it’s very difficult to achieve World Class,
we want from the market and that the
especially for a public service organisa-
market is very well appraised of before we
tion because of the lack of a bottom line
actually pull the trigger on the procure-
and the inevitable political shifts that
ment process. We’re not quite there yet,
affect the organisation. So, we’re talk-
but we’re making great progress.”
ing about a vision towards World Class, making sure that we are professional in our dealings, and that we’re involved
w w w.n zd f.mi l .n z
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www.nzdf.mil.nz