Property services

Program 3.2

Overview

The Overseas Property Office and Services (OPO) is responsible for the strategic management of the $2.4 billion Commonwealth-owned overseas estate, commercially leased chanceries and staff residences overseas, and the department’s leased domestic property portfolio.

OPO manages a multi-year $853 million budget for new constructions and refurbishment programs, and minor capital works programs for the overseas estate. Significant progress was achieved in constructing new embassy complexes in Jakarta and Bangkok, and work has begun on a new embassy in Nairobi. Other significant capital works activities included continued refurbishment of the Paris chancery, establishment of a chancery in Kyiv, relocation of the consulate in Noumea and refurbishment of the Hanoi staff apartment complex.

Procurement for a new contract for outsourced property services was a priority. The tender began in July with a series of industry briefings before the release of the Request for Tender (RFT) in January 2015. An Evaluation Committee and Advisory Board are reviewing tender submissions.

Engagement with counterparts in foreign offices of United Kingdom, Canada, New Zealand, United States and the Netherlands allowed OPO to deepen cooperation on overseas estate management, including colocation where appropriate.

A major domestic priority was to bring together people and work places affected by integration through a property consolidation strategy. The consolidation was completed within the year. Twenty-two divisions were collocated, involving 2250 staff movements.

Management of the overseas estate

The OPO maintained its strategic property planning capability through individual asset management plans (AMPs) for each of its properties, and a Portfolio Strategic Plan (PSP). The PSP was used to forecast major capital works and refurbishment programs for the overseas owned estate and, in conjunction with the AMPs, it also informed investment decisions and performance monitoring of all owned properties.

The department achieved a management expense ratio (MER) of 1.2 per cent, which is appropriate to the unique nature of the overseas estate. The MER refers to management expenses expressed as a proportion of the portfolio value.

Satisfaction with the outsourced property services provider DTZ was measured by an annual survey of posts in June 2015. The survey, conducted by public sector research specialist Orima Research, showed that DTZ achieved a performance rating of ‘good’.

Major construction projects

The delivery of major construction projects in an overseas environment involves significant financial and non-financial risk. To enhance effective governance, strategic leadership and accountability, we have established governance boards, comprising department and private sector representatives, to oversee major projects. The board established for the Jakarta project also has oversight of the Bangkok project. Similar arrangements will be established for upcoming projects in Nairobi and Washington DC.

The project in Jakarta has gone well with handover expected in August 2015, delivering the building on time and within the $407 million approved budget.

Completion of construction in Bangkok is scheduled for late 2016. The project is currently on time and on budget. The design for Nairobi has been completed, and work has begun on documentation for the construction tender.

The construction sites in both Jakarta and Bangkok require the application of Australian work health and safety standards, which OPO ensures are implemented.

Capital works projects

In Hanoi, refurbishment of the embassy residential compound was completed in May 2015. The works included a full refurbishment of all interior spaces, including reconfiguration where required, to provide a functional and modern outcome. The scheduled mid-life services upgrade to the Paris embassy was due for completion in June 2015 but underperformance by the Head Works Contractor combined with latent site conditions have significantly delayed completion, which is now scheduled for late 2015.

Works to establish an embassy in Kyiv were completed in mid-March 2015. The embassy is co-located within the Canadian Embassy in Kyiv as part of growing diplomatic cooperation with like-minded counterparts.

Global outsourced property services contract

The delivery of acceptable property services to the overseas and domestics estate, by the outsourced provider DTZ is a core element of our property management framework. Under existing arrangements, services are delivered through a network of DTZ facilities managers located at overseas posts and in Australia.

In preparation for procurement to replace existing outsourced global property services which expire on 30 June 2016, we engaged extensively with industry to review market capacity and capability. The RFT has expanded the scope of services to be delivered and amended the model through which services are delivered. A single provider will, in future, deliver services to both the overseas and domestic portfolios. We consulted extensively with posts to identify additional services of benefit to them and enhancements to reduce administrative arrangements. The potential efficiencies should improve service delivery and lower costs.

Work health and safety

OPO’s rolling program of auditing overseas properties against Australian Standards continued. To date 235 properties in 75 posts (both leased and owned estate) have been audited to measure local standards of building, plant, equipment and safe work practices against Australian Standards by a panel of independent auditors. The major compliance issues found in the overseas estate (particularly leased properties) relate to fire safety, electrical and gas safety and also non-compliance with Building Code of Australia standards in areas such as stairs, railings and balustrade heights. Rectification works or site specific management plans are initiated to address these issues.

Domestic property

The Overseas Property Office is responsible for managing office accommodation for the department’s Australia-based operations. Office accommodation is provided through commercially-leased premises in state and territory capitals, Newcastle Passport Office, and an owned residence on Thursday Island to accommodate the head of the Torres Strait Treaty Liaison Office.

The department’s Head Office is located in the RG Casey Building in Barton, ACT. This building is currently undergoing a $25 million major refurbishment as part of a new lease negotiated with the building owners MTAA. The current lease expires in February 2017, and the new lease will commence once lessor refurbishment works are completed (expected by March 2016). The new lease will incorporate the remaining period of the existing lease. The lessor refurbishment will improve services to allow a higher occupational density and increase the NABERS energy rating of the base building services to 4 stars.

Diplomatic mail service

A key part of our responsibilities is the management of the department’s diplomatic mail service, which handles official communications between all government agencies and the overseas diplomatic network. Delivery of unclassified communications is managed by the department’s service provider DHL Express and a Canberra-based regional diplomatic courier service hand-delivers classified diplomatic bags. To support the movement of diplomatic mail, the department maintains bilateral agreements with the United Kingdom, Canada, and New Zealand for the movement of classified material on each other’s behalf.

Outlook

The Government’s decision to expand Australia’s diplomatic footprint with the establishment of several new overseas missions will significantly expand OPO’s forward work program. A process to identify suitable properties for the new overseas missions has begun.

In preparation for the construction of a new Washington DC embassy, OPO will shortlist interested architects with a demonstrated capability to undertake the design process, followed by submissions of concept designs and detailed cost estimates. Works cannot start until the Parliamentary Public Works Committee approves the project.

The International Energy Agency (IEA) has committed to a new long-term lease within the Paris chancery building. This will necessitate a major refurbishment of the leased space. The IEA tenancy will generate annual revenue of approximately $4 million.

The major construction projects in Jakarta, Bangkok and Nairobi will continue to require attention as each move into a new stage. In Jakarta, we will focus on relocation to the new embassy complex. It will be a significant logistical exercise. Work in Bangkok will move into the final stages of construction and, in Nairobi, construction will commence on the new embassy.