Alarm bells rang across Canberra’s defence establishment this morning over the official report calling for the Defence Material Organisation to be cut loose from the Defence Department.

Under the proposed changes, the DMO, which is responsible for spending billions of tax dollars on defence procurement, would become a stand-alone executive agency responsible to Defence Minister Joel Fitzgibbon and not the department.

Powerful US, British, Italian, German, Swedish and Israeli arms manufacturers have lobbied long and hard against the department’s involvement in the allocation of defence contracts saying it slows down the decision-making and involves too much red tape.

The Howard Government heard the plan for the DMO’s transition into an executive agency in 2003, spotted the danger signs and rejected the idea.

Now the plan has been resurrected by businessman David Mortimer in a report to Fitzgibbon containing 46 recommendations.

Mortimer formerly served the late Sir Peter Abeles as managing director of TNT, which co-owned Ansett with Rupert Murdoch.

Today he is the chairman of Australia Post, Wal King’s Leighton Holdings and Crescent Capital Partners, he sits on the board of Macquarie Infrastucture Investment Management Limited and Petsec Energy Ltd and is a governor of the Australia Israel Chamber of Commerce.

One of John Howard’s favorite business executives, Mortimer was chairman of Sydney Airports Corporation Limited from July 1998 until its sale to Macquarie Bank in July 2002, chairman of Bankstown Airport Limited, Camden Airport Limited and Hoxton Park Airport Limited until their sale in December 2003, Chairman of MIA Group Limited from 2000-2004, chairman of Citect Corporation Limited from 1997 to 2006, director of Adsteam Marine Limited from 1997 to 2007 and Director of Sigma Pharmaceuticals until June 2007.

He was handpicked by the Howard Government to be a director of the Australian Tourist Commission from 1997 to 2004.

Fitzgibbon will use the defence contracting blunders of the previous government to justify the introduction of the Mortimer recommendations.

In its servile rush to please the Bush White House, the Howard government entered blindingly stupid contracts for the supply of fixed wing aircraft, pilotless planes, helicopters and tanks which have cost taxpayers billions of dollars.

The move to separate the department from direct involvement in the tendering process has been a perfectly choreographed three-step operation:

  1. Expose the defence contracting debacles of the Coalition;
  2. Call for a review from an eminent business figure;
  3. Bring the DMO under ministerial (i.e. political) control to manage all future defence contracts.

This one is worthy of an episode of Hollowmen.

Peter Fray

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