Response to Canberra Times reporting on fuel supply in Defence

An article has been published on the Canberra Times web site regarding the status of Defence’s fuel supply chain and fuel installations.

The journalist, Mr Phillip Thomson, developed this article on the basis of an extract from a report provided to Defence in December 2013, known as the Wraith Review. Mr Thomson obtained this extract through a Freedom of Information request.

Along with the report extract, Defence also provided Mr Thomson a significant amount of clarifying information to ensure the report extract was understood in the correct context. (See: http://www.defence.gov.au/FOI/Decisions/DisclosureLog.asp). It is obvious this information was not used to inform the content. It is unfortunate that Mr Thomson instead chose to publish an article based on assessments made some 18 months ago and in ignorance of the current status of Defence’s fuel management systems.

When providing the report extract to Mr Thomson, Defence also provided the supplementary information below:

Context of the Wraith Review. The ‘Wraith Review’ was commissioned by Defence to obtain an independent Oil Industry perspective of how a Fuels Supply Chain is operated and maintained in comparison to the Defence Fuel Supply Chain. Given that it was completed in December 2013, some of the information contained in the document, particularly relating to risk, is somewhat dated. Some information is also the independent assessment of an external party and does not necessarily reflect, or accurately take into account, the operational and preparedness requirements of Defence.

Work, Health, Safety and Environment (WHSE) Risks. In relation to statements regarding extreme WHSE risks, all of the Immediate Action items in the Wraith Review are being implemented. For example, the Stokes Hill Defence Fuel Installation in Darwin was permanently closed during 2014 and a national Permit to Work system is being implemented across all Defence Fuel Installations.

Fuel Reserves. The report asserts that Defence is holding fuel reserves that are unnecessary to meet capability needs and implies that this operates outside the Chiefs of Service policy on reserve holdings. Fuel reserve holdings are determined based on a range of operational, commercial and supply chain management considerations and agreed in conjunction with capability managers and in accordance with current Defence policies. Defence is considering this opinion as part of the Force Structure Review, along with a range of other potential initiatives, to ensure both operational resilience and further utilisation of industry resources where appropriate.

Defence Management of Fuels. The report raised concerns that independent actions by Groups and services potentially constrained future flexibility with respect to fuels management. Defence has addressed this through the appointment of Commander Joint Logistics in February 2014 as the Head of the Defence Fuels Supply Chain and the single accountable authority for its operation.

Remediating Facilities that ought to be closed. The report asserts that Defence assets are significantly underutilised and present potential opportunity to reduce Defence costs and provide income. Defence is considering this opinion as part of the Force Structure Review.

Status of ‘Wraith Review’ Recommendations. The current status of the recommendations contained in the document is:

1. Immediate Actions. All four recommendations have been agreed by Defence and are currently being implemented. Defence also chose an additional two recommendations from the report to constitute Immediate Action. The status of these additional two recommendations is contained in the summary of Strategic Actions below.
   a) Shutdown DFI-M Stokes Hill, DFI-A FF4 RAAF Darwin and one other site (Strategic Item 12).
   b) Temporarily suspend the fuels elements of the current DSRG BSR retender until the source selection is reviewed (rapidly) to ensure fuel element supplier competence. If the tendered offers are not appropriate, then terminate the current process and retender Fuels services separately to ensure oil industry expertise (Strategic Item 6).
2. Strategic Actions.
   a) Recommendations 1 to 4 have been implemented.
   b) Recommendation 5 has been agreed and implementation is in progress.
   c) With the exception of the DSRG BSR retender process, Recommendation 6 is agreed and implementation is in progress.
   d) Recommendation 7 is not agreed.
   e) Recommendations 8 to 11 are under consideration as part of the Force Structure Review.
   f) Recommendation 12 has been implemented with the exception of the recommendation to shutdown one other site. This is being considered as part of the Force Structure Review. and
   g) Recommendation 13 is under consideration as part of the Force Structure Review.

For information on Defence’s fuel remediation program visit the news on the VCDF site.