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
4 AIR DOMAIN Governance Strategy 2020
• 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
AIR DOMAIN Governance Strategy 2020 5
¶ 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
6 AIR DOMAIN Governance Strategy 2020
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.
AIR DOMAIN Governance Strategy 2020 7
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.