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Defence fuel supply chain reform and initiatives

The Defence Fuel Transformation Program is a $1.16 billion program targeted at enabling ADF capability by reducing enterprise risk, increasing resilience and optimising costs across the Defence fuel network. The program is being delivered in a series of tranches which commenced in July 2018 and will conclude by 2045–46.

As the second year of Tranche 1 nears completion, the program continues to deliver on its mission to develop a safer, simpler and assured Defence fuel supply chain in partnership with industry. Major Tranche 1 milestones achieved include the remediation of over 3,600 of the highest priority risk actions, closure of noncompliant and unsafe Defence fuel installations, remediation of critical Defence fuel installation asset data, and strengthening Defence fuel supply chain competencies and training. In May 2020 the first sites commenced construction activities as part of a suite
of infrastructure investments focused on risk reduction. Engineering design work for the remaining bases is well advanced, and the construction phase of these projects will take place in the third and final year of Tranche 1.

An innovative transformation project to commercialise the marine fuel installation at HMAS Cairns was executed in October 2019. This contract has enabled Defence to leverage fuel industry expertise to improve operating and maintenance practices and to capture a financial return from the assets. A future fuel services contract is also being developed to increase integration with fuel industry capability by outsourcing to fuel specialists operations and maintenance activities across the greater part of the network. The request for proposal for the contract was completed this year and attracted a number of competitive responses. Final tendering activities are well advanced and the request for tender process will be completed within Tranche 1.

An overarching framework and implementation plan for governance, assurance and reporting to measure and control the health of the Defence fuel supply chain was developed in 2019–20. This will provide a stronger, more integrated Fuel Services Branch structure for the effective management and governance of the fuel network.

During the year the program also planned Tranche 2 in preparation for Government consideration in early 2021.Tranche 2 will include further targeted investments to reduce the operating risk profile at key Defence fuel installations to improve resilience, and will implement the fuel services contract to sustain the network in accordance with industry standards. Tranche 2 will be delivered over five years, commencing in July 2021.