Annual Report 2005-06 - Chapter 2 - Home : Department of · PDF file · 2014-10-23Annual Report 2005–06 reports our ... Equipment Program consists of project ... selection of the

17

c h a p T e r 2

2outCoMe peRfoRMaNCe

An overview of the DMO’s performance against its outcome and outputs including Top 30 projects by 2005–06 expenditure and projects and products of emerging interest.

2.1 OvERvIEW OF THE DMO’S OuTCOMES AND OuTPuTS

2.2 OuTPuT 1.1: MANAGEMENT OF CAPABILITY ACQuISITION

2.3 OuTPuT 1.2: CAPABILITY SuSTAINMENT

2.4 OuTPuT 1.3: POLICY ADvICE AND MANAGEMENT SERvICES

18

oVeRVieW of the dMo’S outCoMe aNd outputS

The DMO’s outcome describes the results that the Government seeks from the DMO, and is achieved through the successful delivery of outputs, to the standards set in the Portfolio Budget Statements 2005–06 and, where applicable, revised in the Portfolio Additional Estimates Statements 2005–06. The Defence Annual Report 2005–06 reports our achievement against these targets, in both financial and non-financial terms.

The DMO’s outcome is to ensure that Defence capabilities are supported through efficient and effective acquisition and through-life support of materiel. Two of the DMO’s outputs reflect the DMO’s role in capability acquisition and support and the third reflects the DMO’s role in providing policy advice to the Government.

ouTpuT 1.1—manaGemenT of capabIlITy acquISITIon

under this output, the DMO delivered specialist military equipment and associated equipment to Defence and supported the acquisition process, including all pre-approval activities for major and minor capital invest-ments. All DMO Divisions contributed to this output. Expenditure under this output included the DMO’s costs in delivering acquisition services. Output 1.1 represented 51.9 per cent of the DMO’s expenses in 2005–06.

ouTpuT 1.2—capabIlITy SuSTaInmenT

under this output, the DMO delivered support for specialist military equipment and

associated equipment to Defence. It included the maintenance of equipment and purchasing of inventory, such as explosive ordnance, fuel, stores and spare parts. All DMO Divisions contributed to this output. Output 1.2 represented 47.3 per cent of the DMO’s expenses in 2005–06.

ouTpuT 1.3—polIcy aDVIce anD manaGemenT SerVIceS

under this output, the DMO delivered procurement and industry policy and advice to both Defence and the Government. Corporate functions that would exist regardless of the scale or nature of the DMO’s business are also covered by this output. This output represented less than one per cent of the DMO’s expenses in 2005–06.

approprIaTIonS anD oTher reSourceS

Outputs 1.1 and 1.2 were funded by payments from Defence for goods and services provided, as set out in Materiel Acquisition Agreements and Materiel Sustainment Agreements. These agreements were established between Defence and the DMO in 2005–06. Funding for these Outputs represents over 99 per cent of the DMO’s funding requirements. Output 1.3 was funded largely through a direct appropriation. Table 2.1 shows the total revenue recognised from all origins for 2005–06, including appropriations.

c h a p T e r 2

19

o V e r V I e W o f T h e D m o ’ S o u T c o m e a n D o u T p u T S

charT 2.1 Dmo ouTcome anD ouTpuT GroupS—acTual expenSeS (1) (2)

Table 2.1 ToTal Dmo reVenue recoGnISeD 2005–06

2005–06 2005–06 2005–06 Variation

budget estimate

$’000

revised estimate

$’000

actual result $’000 $’000

reVenue

Revenues from Government 44,211 44,257 44,257 -

Revenue from Defence 6,887,680 7,223,227 7,428,433 205,206

Funds from Foreign Governments – 125,910 76,585 –49,325

Own-Source Revenue 192,018 35,777 9,222 –26,555

Total revenue 7,123,909 7,429,171 7,558,497 129,326

Other gains 1,500 1,500 42,383 40,883

Total gains 1,500 1,500 42,383 40,883

purchase of assets—capital from Defence 121,197 122,043 - –122,043

Total Dmo resourcing 7,246,606 7,552,714 7,600,880 48,166

Defence materiel organisation

Total Expenses: $7,592.1m

outcome 1

Defence capabilities are supported through efficient and effective acquisition and through-life support of materiel


output 1.1

Management of Capability Acquisition


output 1.2

Capability Sustainment


output 1.3

Policy Advice and Management Services

Total Expenses: $59.9m

Notes:1. Total Expenses by Output are as shown in the DMO Financial Statements, Note 19B – Major Classes of Departmental

Revenue and Expenses by Output Group.2. Total Expenses includes $41.929m of Resources Received Free of Charge which has been attributed across the

three outputs.

2.1

20

output 1.1: MaNaGeMeNt of CapabiLity aCquiSitioN

The planned resource use for Output 1.1 was revised from $3,849.3m to $3,753.6m in the Portfolio Additional Estimates Statements 2005–06. Actual expenses for 2005–06 were $3,939.1m. The DMO’s 2005–06 budget included an estimate of funding for those projects expected to be approved in the current year. While the number of projects expected to be approved did not occur, the planned resource use increased significantly from the previous year.

approVeD maJor capITal equIpmenT proJecTS

In its role of supporting Defence capabilities through efficient and effective acquisition and sustainment of equipment for the ADF, the DMO manages the Approved Major Capital Equipment Program as well as a program of minor projects. The Approved Major Capital Equipment Program consists of project elements which are funded from the Defence Capability Plan and are transferred to the DMO following approval. Approved Major Capital Equipment Program projects are generally costed at $20m or more, although individual project phases within the Defence Capability Plan such as studies, or pre-second pass elements, can cost less.

mInor capITal InVeSTmenT proJecTS

The program of minor projects comprises projects that are funded from outside the Defence Capability Plan—such projects cost less than $20m and are part of the Other Capital Purchases category.

2005–06 expenDITure— Top 30 anD oTher SIGnIfIcanT proJecTS

Table 2.2, and the descriptions that follow, provide details of the top 30 projects ranked by expenditure in 2005–06. Expenditure for the top 30 projects represented 66 per cent of the total expenditure on major capital equipment projects in 2005–06. Significant expenditure also occurred late in 2005–06 on the Heavy Airlift (C-17) project that was approved in the 2006–07 Budget. The early spend was incurred in order to use an identified opportunity to reduce delivery schedule risk.

c h a p T e r 2

21

o u T p u T 1 . 1 : m a n a G e m e n T o f c a p a b I l I T y a c q u I S I T I o n

Table 2.2 Top 30 proJecTS by acTual 2005–06 expenDITure

project number

approved project

expenditure (1)

cumulative expenditure

to 30 June 2005

2005–06 budget

estimate (2)

2005–06 revised

estimate (3)

2005–06 actual

$m $m $m $m

aeroSpace

Armed Reconnaissance Helicopter AIR 87 Ph2 1962 806 440 373 262

F/A-18 Hornet upgrade AIR 5376 Ph2 1503 789 183 156 154

Additional Trooplift Helicopter AIR 9000 Ph2 3577 107 138 152 120

ADF Air Refuelling Capability AIR 5402 1761 189 110 173 194

Anzac Ship Helicopter SEA 1411 Ph1 1006 918 47 48 23

Strategic Airlift Capability AIR 5216 Ph1 1045 977 32 38 26

aIrborne early WarnInG anD conTrol

Airborne Early Warning and Control AIR 5077 Ph3 3531 2,071 296 373 339

marITIme

Armidale-class Patrol Boat SEA 1444 Ph1 548 100 186 166 151

Anzac Ship Project (4) SEA 1348 Ph2 5372 5,052 164 155 181

FFG upgrade Implementation SEA 1390 Ph2 1480 965 116 57 56

Collins Replacement Combat System

SEA 1439 Ph4A

448 208 95 113 90

SM-1 Missile Replacement SEA 1390 Ph4B 599 - 80 52 38

New Heavyweight Torpedo SEA 1429 Ph2 430 131 54 48 33

Anti-Ship Missile Defence SEA 1448 Ph2A 342 9 47 64 49

Collins-class Reliability and Sustainability Improvements

SEA 1439 Ph3 375 146 39 33 32

elecTronIc anD Weapon SySTemS

Electronic Warfare Self Protection for Selected ADF Aircraft

AIR 5416 Ph2 295 29 107 62 59

New Air Defence Command and Control Systems for 2CRu/3CRu

AIR 5333 253 68 51 31 27

Jindalee Operational Radar Network JP 2025 Ph3/4 1245 1,137 46 40 42

Explosive Ordnance Reserve Stocks JP 2085 Ph1B 207 51 41 30 20

Lightweight Torpedo Replacement JP 2070 Ph3 269 - 39 25 32

Lightweight Torpedo Replacement JP 2070 Ph2 321 113 37 32 29

Milsatcom Ground Infrastructure JP 2008 Ph3E 205 73 37 43 39

High Frequency Modernisation—Remainder of the network

JP 2043 Ph3A 616 306 34 23 20

Continued

2.2

22

c h a p T e r 2

project number

approved project

expenditure (1)


to 30 June 2005

2005–06 budget

estimate (2)

2005–06 revised

estimate (3)

2005–06 actual

$m $m $m $m

lanD

Bushranger Infantry Mobility vehicles LAND 116 Ph3 356 116 86 66 84

Tank Replacement Project LAND 907 Ph1 557 155 81 150 153

upgrade of M113 Armoured vehicles LAND 106 594 182 78 16 13

Australian Light Armoured vehicles LAND 112 Ph3 678 522 42 47 40

General Service Field vehicles—Overlander

LAND 121 Ph2 89 22 30 23 24

amphIbIouS VeSSelS

Maritime Operations Support Capability

SEA 1654 Ph2A

143 66 62 36 38

neW aIr combaT capabIlITy

New Air Combat Capability AIR 6000 JSF SDD

213 92 55 56 55

ToTal Top 30 proJecTS 30,200 15,400 2,853 2,681 2,423

aeroSpace

Heavy Airlift (5) AIR 8000 Ph 3 1,938 - - - 386

Notes:1. 2006–07 Budget Estimates cost indexation and exchange base.2. 2005–06 Budget Estimates cost indexation and exchange base.3. 2005–06 Additional Estimates cost indexation and exchange base.4. Project approval, expenditure and estimate figures are the net cost of the ten-ship program after deducting

New Zealand payment.5. The Heavy Airlift project was approved in the 2006–07 Budget. Initial expenditure in June 2006 was made in order to

utilise an identified opportunity to reduce delivery schedule risk.

Table 2.2 Top 30 proJecTS by acTual 2005–06 expenDITure (continued)

23


Top 30 proJecTS by 2005–06 expenDITure

aIr 87 ph 2 armeD reconnaISSance helIcopTer

prime contractor: Australian Aerospace

Project Air 87 will provide Defence with 22 Tiger Armed Reconnaissance Helicopters, a training system including simulation devices for aircrew and maintenance personnel, a software support facility and a ground mission management system.

The Commonwealth signed a 15-year support contract that commenced at in-service date when the first two armed reconnaissance helicopters were delivered on time on 15 December 2004.

As at July 2006, six Tiger Armed Reconnaissance Helicopters have been accepted into service, two of which were assembled in the Australian Aerospace Brisbane facility. Over 1,000 flying hours have been accrued on the Australian fleet.

Primarily due to delays to the Franco-German Tiger program, training of the Australian flying instructors is behind schedule. Defence and

Australian Aerospace are working together to minimise this delay which Defence estimates to be 18 months.

In June 2006, three aircraft were deployed to Woomera from the training base in Oakey, Queensland to conduct further testing on the sensors and weapon system culminating with the firing of a live Hellfire missile as well as flight training. This formed the third and final phase of live fire testing of the Hellfire to meet airworthiness accreditation requirements. A total of eight laser-guided Hellfire missiles has now been fired at ranges of up to eight kilometres, including one at night, all striking the target with lethal precision.

The estimated expenditure for 2005–06 was not met, primarily because of the delay in training and delayed acceptance of aircraft and support systems.

This project contributes to Army capability.

aIr 5376 ph 2 f/a–18 horneT upGraDe

prime contractor: The Boeing Company (united States)

This project seeks to upgrade the F/A-18 fleet to incorporate enhancements that will improve situational awareness, radar and electronic warfare capabilities to allow the aircraft to perform its air defence tasks more effectively. The improved situational awareness aspects address cockpit displays, a moving map, a helmet-mounted cueing system for the advanced short-range air-to-air missile, and improved datalinks.

2.2

24

c h a p T e r 2

Assessment of electronic warfare options continued in 2005–06, including the source selection of the radar warning receiver. The proposed solution is dependent on a successful test and evaluation and contracting outcome. A major project milestone was achieved with the project commencing fleet modification of Hornet upgrade 2.2 elements.

The successful negotiation of the prime contract for the Hornet aircrew training system resulted in acceleration of the schedule, which required additional programming.

This project contributes to Air Force capability.

aIr 9000 ph 2 aDDITIonal TrooplIfT helIcopTer

prime contractor: Australian Aerospace

On 31 August 2004, the Prime Minister and the Minister for Defence announced that the multi-role helicopter 90 (MRH-90) had been selected as the preferred platform for the ADF’s additional troop lift squadron under Phase 2 of the AIR 9000 program.

AIR 9000 Phase 2 will acquire 12 helicopters, the associated support equipment and establish the in-service support contract.

The first delivery of the MRH-90 helicopter is expected in December 2007.

In 2005–06, production commenced on the MRH-90 helicopters at the Eurocopter facilities in France.

Assembly of the first aircraft fuselage occurred in November 2005 with the second and third aircraft fuselage assembled in March and June 2006.

The estimated expenditure for 2005–06 was not met due to a delay in establishing an approved earned value baseline as planned.

On 30 June 2006, a contract change proposal was signed, increasing the scope of the project to include a total of 46 MRH-90 aircraft to the Army and Navy to replace Black Hawk and Sea King helicopters, along with a comprehensive support package that includes instrumented aircraft, full flight mission simulators and a software integration support facility.

This project contributes to Navy and Army capabilities.

aIr 5402 aDf aIr refuellInG capabIlITy

prime contractors: EADS CASA, Spain (Acquisition) and through-life support (contract under negotiation)

This project will provide five new generation Airbus A330 multi-role tanker transport aircraft, together with through-life support services including engineering, maintenance, spares, technical data, software and training support for the fleet.

The acquisition contract was signed in December 2004. The in-service date (comprising two aircraft, completion of qualification testing and issue of the military airworthiness certificate) is planned for late 2009.

25


Design of the military modifications to install aerial refuelling equipment, military communications and navigation suite, tactical data link and electronic warfare self-protection was undertaken with the critical design review, achieved in June 2006. A change to the acquisition contract was approved in March 2006 for the procurement of a multi-role tanker transport full mission simulator. Delivery of the first commercial A330 from Airbus to the conversion facility in Madrid, Spain was achieved ahead of time in May 2006.

The higher than expected overall expenditure in 2005–06 was due to early delivery of the first commercial A330 aircraft, offset by lower than expected amounts due to the final simulator payment schedule and re-phasing of the critical design review milestone and other minor payments.

Negotiation of the through-life support contract recommenced in June 2006 and is expected to be completed by the end of 2006. The delay is due to resolution of a critical aspect of the contract but will not affect the in-service date.


Sea 1411 ph 1 anzac ShIp helIcopTer

prime contractor: Kaman Aerospace International Corporation

This project will acquire 11 Super Seasprite maritime combat helicopters for the Anzac-class frigates, providing an enhanced capability for surface surveillance, anti-ship

warfare, contact investigation and maritime utility tasks. The acquisition includes a full mission flight simulator and software support centre.

While nine of the helicopters have been provisionally accepted, routine Seasprite flying operations were suspended in March 2006, in response to emerging safety and reliability concerns with the aircraft’s automatic flight control system.

Testing of the tactical system software for full functionality by the contractor has continued pending Commonwealth review of the resolution proposed by Kaman to address the automatic flight control system safety concerns.

Of the remaining two aircraft, one is in storage in Australia and one remains in the united States for ongoing flight testing by Kaman under united States Federal Aviation Administration regulations.

The project did not achieve its 2005–06 budget estimate due to a range of technical issues encountered during the year, primarily associated with software integration and the aircraft’s automatic flight control system.

This project contributes to Navy capability.

aIr 5216 ph 1 STraTeGIc aIrlIfT capabIlITy

prime contractor: Lockheed Martin Aeronautical Systems

Twelve C-130J aircraft have been acquired to replace the C-130E aircraft. The aircraft are

2.2

26

c h a p T e r 2

in-service and the major elements of the project have been completed. In-service support of the C-130J has been transitioned to the running system.

During 2005–06 additional repairable items were procured to increase spares holdings with further deliveries planned for 2006–07. Incorporation of the Block 5.4 upgrade to the C-130J fleet is under way following successful prototype testing of the modification in February 2006. Four aircraft have been modified to the Block 5.4 standard at RAAF Richmond, NSW with production expected to continue until April 2007.

The Block 5.4 upgrade corrects a number of deficiencies, errors, latent defects and warranty items in the aircraft software. A contract for the installation of an Operational Loads Monitoring System has also been let.

The estimated expenditure for 2005–06 was not met. The shortfall was primarily due to delays in delivery of additional spares, and components required for the Block 5.4 upgrade, changes in the operational loads monitoring system payment schedule, and savings in the C-130J prime acquisition contract milestone payments.


SpecIal proJecT

aIr 8000 ph3 rapID acquISITIon of The heaVy aIr lIfT capabIlITy

prime contractor: The Boeing Company under a FMS arrangement with the united States Government.

In March 2006, the Government approved the acquisition of four Boeing C-17 Globemaster III aircraft and associated sustainment requirements to meet the heavy air lift and rapid global response capability requirements of the ADF. The C-17 aircraft will significantly

enhance the ADF’s ability to support national and international operations and major disaster rescue and relief efforts, and has the load capacity and range to rapidly deploy combat and support vehicles.

The FMS case with the united States Government was signed in May 2006 for the delivery of C-17 aircraft and associated support and equipment. The accelerated schedule for this capability is possible due to the ‘military-off-the-shelf’ nature of the acquisition. The DMO’s resources were reprioritised to take advantage of this.

A separate FMS case has been signed to provide initial RAAF C-17 aircrew and maintenance training, with Air Force personnel collocating with the united States Air Force to undergo specialist training. This training commenced in the second quarter of 2006, and will provide a fully operational crew for the first aircraft arrival in Australia, which is expected in December 2006.

Initial operational capability is planned for August 2007. Entire fleet delivery is expected to be completed by mid-2008. A full operational capability will be achieved when the in-country training systems (including the aircrew simulator) and required facilities are established. This is not anticipated to occur before 2011.


aIr 5077 ph 3 aIrborne early WarnInG anD conTrol

prime contractor: The Boeing Company (united States)

This project will provide Defence with an airborne early warning and control capability, through the provision of six aircraft and associated supplies and support. Modification of the last four aircraft will take place in south east Queensland.

27


Sea 1444 ph 1 armIDale-claSS paTrol boaT

prime contractor: Defence Maritime Services (ships being built by Austal Ships)

This project will deliver 14 Armidale-class patrol boats, and 15 years of support for each vessel, to replace the ageing Fremantle-class patrol boats. The patrol boats will make a critical contribution to coastal surveillance and enforcement capability.

The contract was signed in December 2003, and will provide a capability for the Navy to achieve up to 3,000 available days per year for Coastwatch and ADF support to operations, plus a surge capacity of up to 600 additional available days per year. The new boat is larger than the Fremantle-class and capable of operating in higher sea states. The first vessel was commissioned as HMAS Armidale in June 2005.

Additional funding, in line with the Government agreeing to an extra two vessels to patrol the North West Shelf, has been endorsed and the contract change proposal has now been signed by both parties. These extra vessels will be built after the current 12 boats, with delivery commencing mid-2007, and will

Mission system testing began in July 2005. Mission Computing System Software Build 8, the final build, entered the test phase in October 2005. Boeing Australia Ltd commenced modification of the third aircraft at RAAF Amberley in January 2006 and the fourth aircraft in May 2006. Construction of the maintenance hangar and associated aircraft parking areas were completed in January 2006 as part of Stage 1 of the RAAF Williamtown Redevelopment. upgrading of the Joint Electronic Warfare Operational Support unit facilities at RAAF Edinburgh was completed in June 2006.

In late 2005, strike action against Boeing in the united States caused slippage of several intermediate milestones. Following a recent detailed review of the program, Boeing has advised that significant schedule deterioration has occurred due to problems associated with sub-system integration, supplier hardware availability, radar and electronic support measures maturity, and aircraft modification. Boeing is now engaged with the Australian Government to replan the program to ensure the successful delivery of the required operational capability. As a result, while the project remains on budget under the fixed price contract with Boeing, the planned in-service date of December 2007 is expected to slip to mid-to-late 2009.

The actual spend in 2005–06 was significantly less than estimated due primarily to delays in the signing of a through-life support contract for the capability and costs associated with the above-mentioned slippage against the prime contract.

The project contributes to Air Force capability.

2.2

28

c h a p T e r 2

provide an additional 500 available days per year, bringing the total fleet availability to 3,500 days plus a surge capacity of 600 days.

Five vessels, the second to the sixth of the Armidale-class patrol boat program, were delivered to Darwin by the end of June 2006. Three vessels have entered operational service and the other vessels are completing ship and crew work-ups to enter operational service during 2006–07. The remaining eight vessels will be delivered to Darwin and Cairns by November 2007.

upgrades to facilities in Darwin and Cairns to accommodate the new vessels are expected to be completed by July 2007.

Actual expenditure was lower than the revised estimate due to a transfer of funding for facilities upgrades not occurring when expected, the minor slippage of some significant milestones for boats 6 and 7, and delays in the purchase of primary weapons systems for boats 13 and 14 due to the later than expected approval of the contract change proposal for the extra two vessels. This slippage was somewhat offset by the early achievement of boat 10 milestones.


Sea 1348 ph 2 anzac ShIp proJecT

prime contractor: Tenix Defence

This project involved the delivery of ten ships, associated shore facilities and logistic support. Two of the ten ships (02 and 04) were for the Royal New Zealand Navy. All

ships have now been delivered. Nine ships are in service with the Royal Australian Navy and the Royal New Zealand Navy.

The tenth ship, NuSHIP Perth, was delivered on the contracted date of 16 June 2006 and was commissioned as HMAS Perth in August 2006.

The project involved some 1,300 Australian and New Zealand companies, in construction, systems and equipment, accounting for some 80 per cent of the project cost.

The increase in expenditure was due mainly to a Ship 10 (Perth) delivery payment being reprogrammed into 2005–06 from 2006–07.


Sea 1390 ph 2 GuIDeD mISSIle frIGaTe upGraDe ImplemenTaTIon

prime contractor: ADI Limited

The project seeks to ensure that the four Adelaide-class Guided Missile Frigates remain effective and supportable through to their end of life in 2013–2021. The prime contractor, ADI Limited, continues the upgrade production and installation at its Garden Island facility, Sydney, NSW.

ADI Limited handed the lead ship for upgrade, HMAS Sydney, back for defined Navy use in April 2006. In May 2006, the Chief of Navy approved the Interim Operational Release of HMAS Sydney, allowing operational use of the ship prior to contractual provisional acceptance in December 2006.

HMAS Melbourne commenced upgrade with the ship docking at the Captain Cook Graving Dock in late February 2006. The docking phase was successfully completed in July 2006, ahead of schedule, and the final equipment installation and set to work will be progressed through until early 2007.

Guided Missile Frigate upgrade contract re-negotiations with the prime contractor, ADI Limited, were completed on 29 May 2006.

29


This formalised the Government’s decision to reduce the Guided Missile Frigate upgrade project from six to four ships and settled outstanding commercial and contractual issues on this project resulting in a contract price reduction.

The contract change provides a better framework and improved confidence in the prime contractor’s ability to deliver the contracted capability within its project management arrangements and the project’s approved financial budget. The adjusted financial estimate for 2005–06 was achieved.


Sea 1439 ph 4a collInS replacemenT combaT SySTem

prime contractors: united States Department of Defense under a FMS case and an Armaments Cooperative Project. Raytheon Australia, Thales underwater Systems, Sonartech Atlas, Acoustic Technology and the Australian Submarine Corporation (ASC) Pty Ltd are engaged under separate contracts.

This project will provide a replacement combat system for the Collins-class submarines, contributing to the development of the submarine’s full capability.

Integration of the united States Navy Tactical Command and Control System with other sub-systems at the HMAS Stirling integration facility in Western Australia is complete. Initial sets of united States Navy-based equipment for the first two submarines have been delivered. The majority of products from Australian-based suppliers were delivered

and progressively integrated by the Australian Government and the contracted System Integration Agent in 2005–06.

The detailed platform design and equipment installation in the first submarine (HMAS Waller) is complete. Set-to-work has commenced with the associated harbour acceptance testing scheduled for completion in December 2006. Installation in all submarines is currently planned to be achieved by 2010.

The project did not achieve the full 2005–06 estimate due to payment delays under the Armaments Cooperative Project with the united States and delays in establishing some minor contracts. These delays will not affect the overall project delivery schedule.


Sea 1390 ph 4b Sm-1 mISSIle replacemenT

prime contractor: The DMO is the procurement coordinator supported by the united States Department of Defense and commercial suppliers.

SEA 1390 Phase 4B was approved by the Government in July 2004 and provides for the integration of the SM-2 missile into four Guided Missile Frigates, delivery of missiles with mid-course guidance capability, and acquisition of initial ship outfit and inventory stock missiles. SEA 1390 Phase 4B builds on the capability from SEA 1390 Phase 2 and depends on that capability to be sufficiently mature for the inclusion of this additional capability. The initial in-service date for the Guided Missile Frigate SM-2 lead ship is 2009.

The acquisition of the SM-2 capability will be achieved under united States FMS arrangements and a mix of united States

2.2

30

c h a p T e r 2

commercial contracts and FMS cases for the delivery of the SM-2 missiles and the ship equipment hardware, software development, integration, equipment installation and system testing.

Support items and inertial navigational system equipment are included under contract through united States FMS arrangements. Commercial contracts are established for the development work required for the guided missile launching system and the onboard training and land-based simulation systems. A commercial contract remains to be finalised for the fire control system with contract signature anticipated by the end of 2006.

System integration design work through a Government-to-Government arrangement with the united States remains a work in progress, awaiting completion of the supporting commercial contract negotiations. The preliminary design review is delayed pending completion of these arrangements.


Sea 1429 ph 2 neW heaVyWeIGhT TorpeDo

prime contractors: under a Memorandum of understanding, the united States Department of Defense established an Armaments Cooperative Project, with work being performed by the united States Navy (Naval undersea Warfare Center) and Raytheon. ASC Pty Ltd is undertaking integration on the platform under a separate contract.

This project will acquire an anti-surface, anti-submarine heavyweight torpedo for the Collins-class submarines to replace the united States Navy Mk 48 Mod 4 heavyweight torpedo currently in Navy service.

The project scope includes the acquisition of the weapons, associated logistic support, weapon system interface equipment, operational support and test equipment, and transition into service. The torpedo maintenance facility upgrade was completed in March 2005.

A platform-design contract was established with ASC Pty Ltd with submarine integration work scheduled for completion by late 2006. This is later than the previous forecast due to delays in finalising the design, and changes to the full-cycle docking schedule for HMAS Waller. Installation in all submarines is currently planned to be achieved by the end of 2010.

The first of several batches of torpedoes will be delivered to Australia in late 2006, before HMAS Waller commences weapon certification trials following the completion of its full-cycle docking. The second delivery of torpedoes to Australia is scheduled for mid-2007 with all weapons to be delivered by 2010.

Successful joint (united States Navy/Royal Australian Navy) trials were conducted on Western Australian ranges, and as a result, the united States Navy approved full production of Mod 7 in June 2006.

The project did not achieve its 2005–06 expenditure as payment delays occurred under the Armaments Cooperative Project and cost savings were made on the ASC Pty Ltd work package. These delays will not affect the overall project delivery schedule.


31


Sea 1448 ph 2a anTI-ShIp mISSIle Defence

alliance agreement: Anzac Ship Alliance—The Australian Government with Tenix Defence and Saab.

This project will deliver an initial Anti-Ship Missile Defence operational capability, providing an improved level of self-defence against modern anti-ship missiles for the Anzac-class frigates. It will also progress a preliminary phased array radar program to mitigate risk, and inform the design and development of a phased array radar system architecture for incorporation in the now approved Phase 2B into the full Anti-Ship Missile Defence suite.

Phase 2A will upgrade the combat management system and fire control system and install an infra-red search and track capability. Initial operation capability delivery into the first Anzac-class ship is now planned for 2009 to accommodate a combined Phase 2A and Phase 2B schedule. The remaining ships will be upgraded progressively over the period 2010 to 2013.

Phase 2B completes the Anti-Ship Missile Defence capability by introducing Australian phased array technology. This technology will support multiple engagements against incoming missile threats.

Anti-Ship Missile Defence Phase 2B is a leading edge technology project, showcasing Australian small-to-medium enterprise prowess in a complex, risky, and high profile project where the capability advantages are potentially very high in terms of ship self-defence capability over that offered by conventional radar technologies.

Milestones achieved in 2005–06 were: approval of Phase 2B in September 2005; award of the preliminary phased array radar contract to CEA Technologies in December 2005; and completion of the Anti-Ship Missile Defence program system readiness review in May 2006.

The successful Anti-Ship Missile Defence program system functional review planned for June 2006 was delayed until the end of August 2006 owing to the late award of the preliminary phased array radar contract. The variation in 2005–06 expenditure was due mainly to the delay in signing the preliminary phased array radar contract. This delay was due in part to negotiation of a strategic deed encompassing protection of defence strategic interests.


Sea 1439 ph 3 collInS-claSS relIabIlITy anD ImproVemenTS

prime contractor: ASC Pty Ltd

This project will provide a large number of reliability, sustainability and safety improvements to the Collins-class submarines through the ongoing implementation of the McIntosh/Prescott Report recommendations and the work of the Submarine Capability Team. It also addresses current shortcomings in the submarine support infrastructure.

Modifications to the second submarine were completed during its full-cycle docking in 2005. Further modifications including fire-fighting and sewage system upgrades are scheduled for completion in late 2006 during the full-cycle docking of the third submarine HMAS Waller. These and additional modifications will be incorporated into other submarines during major planned maintenance periods.

2.2

32

c h a p T e r 2

Expenditure for the year was slightly less than the revised estimate due to competing priorities relating to other work being carried out by ASC Pty Ltd.


aIr 5416 ph 2 elecTronIc Warfare Self proTecTIon for SelecTeD aDf aIrcrafT

prime contractor: Phase 2A—BAE Systems; and Phase 2B—Tenix Defence.

This project will acquire electronic warfare self-protection and ballistic protection measures for selected ADF aircraft. The project is being implemented under three distinct sub-phases: Black Hawk and Chinook helicopters, the C-130H Hercules fleet, and Sea King Helicopters.

phase 2a—The Black Hawk architectural design review has been completed with the detailed design review programmed for December 2006. First article modification for the Black Hawk is expected to commence in April 2007. The Chinook architectural design review was held in September 2006 with the detailed design review programmed for May 2007. Chinook first article modification will be ready to commence in August 2007. The integrated electronic warfare mission support system detailed design review was achieved in June 2006 with factory acceptance testing to be performed in December this year. A number of contracts are expected to be

signed in 2007 associated with the electronic warfare upgrade of the Black Hawk simulator, maintenance training aid and simulated maintenance trainers.

phase 2b—The engineering design activity for the C-130H modifications was completed in December 2005. This followed an approved change in contract scope to incorporate the C-130H satellite communications modification at the same time as the electronic warfare self protection modification. The anticipated in-service date for the first four C-130H aircraft remains on track for mid-2007 with all 12 aircraft completed in early 2008.

Actual expenditure for 2005–06 was lower than planned due to the Radar Warning Receiver (ALR-2002) procurement being placed on hold pending the AIR 5376 Phase 2.3 (Hornet upgrade Project Phase 2.3 Radar Warning Receiver) source selection decision.

This project contributes to Army and Air Force capabilities.

aIr 5333 neW aIr Defence commanD anD conTrol SySTemS for 2cru/3cru ‘VIGIlare’

prime contractor: Boeing Australia Ltd

This project will replace the ageing Air Defence command and control systems at Numbers 2 and 3 Control and Reporting units located at RAAF Tindal (Northern Territory) and RAAF Williamtown (New South Wales) and will design and implement an integrated, real-time ADF Air Defence System and communications network. Acquisition and logistic support contracts were signed with Boeing Australia Ltd in March 2004. The first command and control system is expected to be installed

33


and operational at RAAF Tindal by early 2009, some 24 months later than agreed at contract signature.

The project’s preliminary design review was held in early 2005, and formally completed at the beginning of 2005–06. The project underachieved against its revised 2005–06 financial projection due to planned payments for communications infrastructure being delayed because work was not finished on time, and delays to the prime contract with Boeing.


Jp 2025 ph 3/4 JInDalee operaTIonal raDar neTWork

prime contractor: RLM Management Pty Ltd

The Jindalee Operational Radar Network consists of the network control centre at RAAF Edinburgh near Adelaide, South Australia and two new over-the-horizon radars: one near Longreach, Queensland and the other near Laverton, Western Australia. The previously existing Jindalee radar system near Alice Springs, Northern Territory has also been incorporated to form a three-radar network that is centrally controlled from RAAF Edinburgh. With the successful delivery of the Jindalee Operational Radar Network in April 2003 having resulted in a major enhancement of national surveillance capability, the project’s acquisition component is essentially completed.

The remaining project work focuses on maintenance and support activities and engineering services that provide both facility sustainment and higher-end technical upkeep of the network’s assets.

Actual expenditure for 2005–06 slightly exceeded the revised estimate due to better than expected performance by the contractor.


Jp 2085 ph 1b exploSIVe orDnance reSerVe STockS

contractors: Multiple purchase contracts with Australian and overseas munitions suppliers.

Joint Project 2085 Phase 1B covers progressive acquisition from 2005 to 2008 of a range of explosive ordnance items to increase Defence’s reserve stock holdings.

Overall, the project will procure quantities of around 120 different items of explosive ordnance covering anti-armour ammunition, Army artillery ammunition, mortar ammunition, demolition stores, pyrotechnics, bombs and Navy shells.

New contracts will be placed in 2006–07 for the procurement of a number of items, including precision guided munitions for Army 155mm artillery, and Mk 83 Bombs for the Air Force. Ongoing deliveries against current contracts of Bolide short range air defence missiles, 81mm mortars, and Mk82/Mk84 Bombs are also expected during the period. Contracts were let during 2005–06 for additional Harpoon missiles, 84mm Carl Gustav ammunition and aerial bombs.

2.2

34

c h a p T e r 2

The project did not achieve its 2005–06 expenditure target due to the revision of the annual procurement plan and subsequent payments schedule. The procurement plan for a number of items was rescheduled to combine with planned sustainment buys for those items in 2006–07 and 2007–08 due to lack of a viable economic order quantity.

This project contributes to Navy, Army and Air Force capabilities.

Jp 2070 ph 2 anD ph 3 lIGhTWeIGhT TorpeDo replacemenT

contractors: An Alliance Agreement between the Australian Government, EuroTorp and Thales underwater Systems Australia.

Phase 2 of this project will introduce the EuroTorp Mu90 lightweight torpedo into ADF service to replace the united States Navy Mk 46 lightweight torpedo. The weapon is to be integrated into the Anzac and Adelaide-class Guided Missile Frigates, the Super Seasprite and Seahawk helicopters and the P-3 Orion maritime patrol aircraft. Phase 3 will establish an Australian manufacturing capability and deliver a set number of weapons.

Production quality issues and technical problems identified during European firing trials have delayed the French and Italian torpedo acceptance. The delay in the foreign program by the European contractor has impacted severely on the Australian delivery schedule which has now slipped some 12 months to 2007. Problems discovered

during testing in early 2006 have delayed completion of trials. Installation activities in Phase 2 for the Anzac and Adelaide-class frigates are proceeding to schedule and design has commenced for the installation into the P-3 Orion Maritime Patrol aircraft. Helicopter cost estimates for installation are under review. Modification of helicopters has been deferred pending definition of requirements and acceptance of the Seasprite and completion of SEA 1405 Seahawk Forward Looking Infrared Radar upgrade.

Phase 2 and Phase 3 of the project are being conducted concurrently under the Further Revised Alliance Agreement. Phase 2 of the project did not achieve its 2005–06 expenditure target due to the delayed delivery of the initial batch of Mu90 torpedoes. Phase 3 exceeded its 2005–06 expenditure target due to an earlier than expected Phase 3 contract award. Work is continuing on Phase 3, as weapon production is required to support the first of the modified platforms under Phase 2. Phase 3 payments to the contractor have been suspended, pending the successful completion of further firing trials.

This project contributes to Navy and Air Force capabilities.

Jp 2008 ph 3e mIlSaTcom GrounD InfraSTrucTure

prime contractor: BAE Systems (Australia)

Phase 3E provides high-priority satellite communications ground infrastructure for use with the Optus C1 satellite Defence payload.

Acquisition and through-life support contracts for the maritime element were signed with BAE Systems in November 2003. Eight terminals have been delivered and a contract change proposal to deliver an additional seven terminals was approved by the Government in February 2006. The land terminal contract remains on schedule with the first twelve terminals delivered to the Commonwealth and the remaining terminals due to be

35


delivered by October 2006.

The Project Office is the systems integrator for the overall Phase 3E requirements, which includes (in addition to

the maritime terminals and land terminals) broadcast software and a primary injection facility. The initial primary injection facility has been installed into the Defence Network Operations Centre and testing has commenced.

The initial theatre broadcast software was delivered by Ebor Computing in July 2005. A contract with Ebor Computing was signed on 30 September 2005 for the delivery of the mature theatre broadcast software.

The project finished the financial year within target. The variance was attributed to ships being unavailable for installation, as planned, and also some minor delays in delivery of prime equipment from the contractor.

The project contributes to the Command of Operations capability.

Jp 2043 ph 3a hIGh frequency moDernISaTIon—remaInDer of The neTWork

prime contractor: Boeing Australia Ltd

This project replaces naval high-frequency radio stations at Canberra, Darwin, Exmouth, Sydney, Cairns and Perth and the Air Force high-frequency radio stations at Sydney, Townsville, Darwin and Perth. The new network will provide enhanced high-frequency radio communications capabilities and compatible high-frequency equipment in selected ADF mobile platforms. The project will deliver the new capability in two stages. The first stage, now complete, replaced and rationalised existing facilities. The second stage will provide increased levels of automation, improved capability, enhanced security and survivability, reduced reliance

on staff, and will incorporate the new equipment into the mobile platforms.

The second stage is being introduced progressively between 2005 and 2008, with installation into mobile platforms extending to 2010. The preliminary design review for the second stage was completed in August 2005, while the detailed design review is scheduled for completion in September 2006.

This project contributes to the Command of Operations capability.

lanD 116 ph 3 buShranGer InfanTry mobIlITy VehIcleS

prime contractor: ADI Limited

Project Bushranger will acquire 299 infantry mobility vehicles from ADI Limited. The infantry mobility family of vehicles will consist of six variants: troop, command, assault pioneer, mortar, direct fire weapon and ambulance. The vehicles will provide protected land mobility to Army combat units and 12 troop variants to the Air Force Airfield Defence Guards.

The key outcomes for the project for 2005–06 were the achievement of full design acceptance of the Infantry Mobility vehicle in March 2006, the delivery by ADI Limited to the Commonwealth of all the troop variants in May 2006 and the delivery of eight command variants in June 2006. The delivery of the last

2.2

36

c h a p T e r 2

troop variant is a significant milestone for Defence and Australian Industry.

The Commonwealth negotiated a contract with ADI Limited for the provision of services necessary to support the Bushmaster family of vehicles. Support services commenced in March 2006 at the Brisbane Support Centre, Acacia Ridge.

The Bushmaster vehicle has been well received by the Australian Army soldiers and on operations in Iraq and Afghanistan.

Expenditure exceeded the budget due to the early achievement of contractor deliverables and vehicle production through the solving of some quality issues earlier than planned.

This project contributes to Army and Air Force capabilities.

lanD 907 ph 1 Tank replacemenT proJecT

prime contractor: united States FMS Program

This project will replace the Leopard tank fleet with a modern, more survivable and interoperable tank capability that will be supportable until at least 2020. The project scope includes 59 M1A1 Abrams main battle tanks, seven M88A2 Hercules recovery vehicles, simulators, 14 tank transporters, eight fuel trucks and a logistic package of support equipment, spare parts, ammunition, facilities and initial training.

The new tanks will be operated by the 1st Armoured Regiment (Darwin, Northern Territory), the School of Armour (Puckapunyal, victoria) and the Army Logistic Training Centre (Bandiana, victoria).

Production of the M1A1 tanks and M88A2 Hercules recovery vehicles remains ahead of schedule. The first batch of vehicles were delivered for use in the initial training of Army operators and maintainers in the united States. These vehicles arrived in Australia in October 2006. All simulators have been manufactured and delivery to Australia is expected by late 2006. Production of tank transporters and fuel trucks has commenced, with the initial fuel trucks having been delivered.

Expenditure exceeded the budget for the financial year due to the earlier achievement of delivery of spare engines.

Delivery of support equipment will continue during 2006–07 to support the expected initial introduction into service of this capability by July 2007, which is ahead of the original schedule.


37


lanD 106 upGraDe of m113 armoureD VehIcleS


This project is upgrading 350 of the Army’s fleet of M113 armoured vehicles, which provide transport and fire support for the Army’s mechanised forces. The upgrade will improve

protection, firepower, mobility and habitability. The upgrade includes appliqué armour, a new armoured turret and machine gun, a new engine, drive train and suspension, and the stretching of the Armoured Personnel Carriers and other variants. Acceptance testing of the first three variants is continuing but completion has been delayed by the need to resolve a number of problems identified during the early part of the test program. Although these problems were resolved, final reliability testing identified additional brake system failures, which are now being investigated by the contractor and which have further delayed testing. Consequently, the initial capability in-service date has been rescheduled for July 2007, from December 2006.

Expenditure was less than the 2005–06 budget due to delays in delivery of logistic support products and vehicle equipment due to the development and testing problems and delays.

Full production is expected to commence in mid-2007 once the vehicles have completed testing.


lanD 112 ph 3 auSTralIan lIGhT armoureD VehIcleS

prime contractor: General Dynamics Land Systems (Canada)

Phase 3 of this project acquires 144 new wheeled light armoured vehicles, nine crew procedural trainers, up to 59 behind-armour commanders’ weapon stations, 18 surveillance suites, and the upgrade of the in-service fleet of 113 vehicles to the Phase 3 build. These capabilities will be delivered to the 2nd Cavalry Regiment (Darwin, Northern Territory), the 2nd/14th Light Horse Regiment (Brisbane, Queensland), supporting logistic units including the Army Logistic Training Centre (Bandiana, victoria), and the School of Armour (Puckapunyal, victoria).

All 144 Phase 3 vehicles and 87 of the 113 upgraded vehicles have been delivered. The delivery of upgraded Phase 2 vehicles continued with final delivery of all upgraded vehicles expected to be complete in 2006–07.

A program of rapid acquisitions for the behind-armour commanders’ weapons stations, bar armour and spall liners was conducted to support vehicles on operational deployments. Initial introduction into service has been achieved and full introduction into service should be completed during 2006–07.

Delivery of the crew procedural trainers commenced with the remaining trainers expected to be completed in 2006–07. A contract was signed for the development of the prototype surveillance suite for the Australian light armoured vehicles’ surveillance variant and this prototype should be delivered in 2006–07.

2.2

38

c h a p T e r 2

Expenditure shortfalls against the 2005–06 budget is attributed to the late delivery of the crew procedural trainers by the contractor.


lanD 121 ph 2 General SerVIce fIelD VehIcleS—oVerlanDer

prime contractors: Mack Trucks Australia Pty Ltd; Tieman Industries Pty Ltd; Haulmark Trailers Australia; Crisp-Air Pty Ltd; Comtech Automotive Industries; Royal Wolf Trading Australia Pty Ltd; Smart Engineering And Logistics Solutions Pty Ltd.

This project addresses capability deficiencies within the current field vehicle and trailer fleet and involves the limited upgrade and/or modification of selected in-service field vehicles and trailers and limited procurement of some vehicles and trailers to meet the current capability requirement. This includes new bulk liquid fuel transporters, new recovery equipment for the heavy recovery vehicle, addressing the excessive in-cabin noise levels in some fleets and providing improved occupant safety levels in selected vehicles.

Key outcomes for 2005–06 were:

• on-time completion of the progressive delivery to the Army of 64 heavy recovery vehicles upgraded with new recovery equipment, with priority of delivery to training units and then high readiness units;

• acquisition of an in-cabin noise reduction system for the Mack Truck fleet;

• completion of testing of rollover protective structures, effective seat and seatbelt systems and personnel/cargo segregation systems for 135 unimog and 26 Mack Gun Tractors; and

• commencement of pre-production activities and design acceptance of a personnel/cargo restraint and segregation system and a rollover protection system into the Land Rover 110 4x4 for the regional force surveillance vehicle.


Sea 1654 marITIme operaTIonS SupporT capabIlITy


This project seeks to replace the Navy’s existing afloat support capability (HMA Ships Westralia and Success). Planned withdrawal dates for the ships are 2006 and 2015 respectively (the Westralia was withdrawn from service in October 2006). This afloat support capability increases the effectiveness of the Surface Combatant and Amphibious Forces.

The current afloat support capability is provided by HMA Ships Success and Sirius. These ships support the two-ocean basing policy and provide the sustainment necessary for surface combatant task groups to operate in the expansive waters of the region.

In June 2004, under Project SEA 1654 Phase 2A, Defence acquired the Westralia replacement vessel, the MT Delos, from Hyundai. The Delos is a new build vessel, delivered direct to the Commonwealth from the original owner (Tsakos Energy Navigation) at the Hyundai facility in South Korea immediately after builder’s trials.

In March 2005, Defence entered into contract with Tenix Defence for the package of modification work required to the Delos

39


to make it suitable for acceptance into naval service as HMAS Sirius. Delivery from Tenix took place in August 2006, followed by commissioning of the ship (HMAS Sirius) in September 2006.

In addition, contracts were entered into for the supply of replenishment-at-sea equipment for the provision of contracted support services. The replenishment-at-sea equipment was delivered late in 2005.

The variation in 2005–06 expenditure was due to the modification contract spend being more than previously estimated, due to the early submittal of an invoice.


aIr 6000 JSf SySTem DeVelopmenT & DemonSTraTIon neW aIr combaT capabIlITy

memorandum of understanding: united States Government

This project aims to introduce a new air combat capability with the air dominance and strike functions currently provided by the F/A-18 Hornet and F-111 aircraft fleets. While a formal decision on the replacement aircraft has not yet been made, the Government stated its expectation in June 2002 that this capability would be provided by the Lockheed Martin F-35 Joint Strike Fighter. The Joint Strike Fighter is being

developed by an international collaborative program, led by the united States, and is in the system development and demonstration phase. AIR 6000 System Development and Demonstration New Air Combat Capability funds Australia’s contribution to the united States-led Joint Strike Fighter program. As of 30 June 2006, Australia had contributed $147m to the program.

under a separate existing phase, the project has undertaken the collection and analysis of system development and demonstration information and the associated studies, risk mitigation and planning activities necessary to support the Government’s first pass procurement decision scheduled for late 2006. This phase has also supported Australian industry participation in the Joint Strike Fighter program and negotiation of the Procurement, Sustainment and Follow-on Development Memorandum of understanding. Formal negotiations were completed in June 2006, with signature planned for December 2006.

The subsequent acquisition stage of the project is expected to commence in 2009 following the Government’s second pass procurement decision in late 2008. Procurement will be conducted in a number of phases and will acquire the aircraft and associated systems and transition the capability into service.

The project underachieved slightly against the revised expenditure estimate due primarily to variations in foreign currency exchange rates.


2.2

40

c h a p T e r 2

Table 2.3 neW proJecTS commenceD In 2005–06

project number project name

AIR 7000 North West Shelf unmanned Aerial vehicle Trial

AIR 8000 PH 3 Heavy Airlift

JP 2077 PH 2B Improvements to the Logistics Information Systems

JP 2077 PH 2C Automated Identification Technologies

JP 2088 PH 1A Special Forces Air Drop Rigid Hull Inflatable Boat

JP 2095 PH 1 Aviation Fire Trucks

JP 2098 Joint Combined Training Centre

LAND 125 PH 3 Soldier Enhancement version 2

LAND 17 PH 1 Artillery Replacement

LAND 58 PH 3 Weapon Locating Radar Life of Type Extension

SEA 1448 PH 2B Anzac Anti-ship Missile Defence upgrade-Fire Control Radar

SEA 1448 PH 3 CEA AuSPAR Further Development of AuST Phased Array Radar

SEA 4000 PH 3.1 Air Warfare Destroyer Program—Aegis Combat System

neW proJecTS

During 2005–06, 13 new acquisition projects commenced. These are listed in the following table:

cloSeD proJecTS

Thirteen projects were closed during 2005–06. These are listed as follows:

Table 2.4 proJecTS cloSeD In 2005–06

project number project name

AIR 5276 PH 5A P-3 Orion Fast Track Forward Looking Infra-Red Radar upgrade

AIR 5394 PH 1 Electronic Self-protection for Transport Aircraft

AIR 7000 AIR 7000

JP 126 PH 1 Joint Theatre Distribution

JP 2042 PH 1A ADF Capability

JP 2061 PH 1 C3I Technology Demonstrator

JP 2070 PH 1 Lightweight ASW Torpedo Studies

JP 2077 PH 2A Improvements to the Logistics Information System

JP 2080 PH 2A Defence Management Systems Improvement Project

JP 2089 PH 2A Tactical Information Exchange (F/A-18 )

SEA 1390 PH 5 MK 92 Radar Support Equipment—Design Study

SEA 1412 PH 2 Maritime Warfare Training Centre

SEA 1431 PH 1 S-70B-2 Fleet Support Development

41


proJecTS ‘unDer The SpoTlIGhT’

The DMO is providing intensive management focus on a number of significant products.

These products include:

• the Standard Defence Supply System (SDSS);

• procurement of explosive ordnance for the ADF (Army); and

• clothing procurement.

The STanDarD Defence Supply SySTem

The SDSS is an inventory management system that controls those items of supply that support the ADF and its operational capability. It commenced operation in 1993.

The SDSS is used to manage over 1,600,000 lines of items in General Stores Inventory, worth some $1.8 billion. In association with other supporting systems, SDSS manages transactions to support Repairable Items to the value of $3.72 billion. The SDSS user community is over 8,000 Service and civilian staff within both Defence and external service providers.

The core software is MIMS (provided by MINCOM Ltd) and is complemented by interfaced applications that include Defence-built CENCAT (NATO cataloguing and codification), NAvALLOW (Navy allowance management), CvS (cargo visibility) systems and commercial systems—AIMS (inventory optimisation software) and SLIMS/AMPS (shipboard inventory management). As an integrated system, SDSS manages identification, procurement, requirements determination, warehousing, requisitioning and demand fulfilment, entitlement management and cargo tracking. This functionality enables the management of Defence’s end-to-end supply chain from supplier through Defence warehousing down to unit-level holdings within the three

Services’ logistics operations. It supports all operational platforms and the units that use them in the area of operations.

The operational effectiveness of the SDSS is dependent upon successful performance of all its key elements—the information architecture and supporting hardware (such as servers and bandwidth), the core software, supporting business processes (both their design and compliance with them), data on the system (both its input and its quality), user training and competence, and reporting, compliance monitoring, investigation and audit processes. Shortcomings in any of these elements may impact on the system and its capacity to support both the management and operational needs of Defence. Equally, the ongoing refinement and future development of the system requires attention to all of these elements.

There are increasing demands on the logistics information system—arising from the increased operational tempo and deployment of the ADF, the increased number and dispersal of users, the introduction of accruals-based budgeting and accounting, and advances in computing technology. There are identified shortcomings in the performance of SDSS, related primarily to system controls, business process compliance and data quality. The SDSS has also been subject to both assurance and performance audits by the ANAO. The performance audit of the SDSS upgrade project, which concluded in 2003, found deficiencies in project management and approvals which were acknowledged and addressed. Recent assurance audits, as part of the annual audits of Defence’s financial statements, found continuing problems with the quality of some data held on SDSS. In addition, a 2005 assurance audit found that there was an insufficient level of controls reliance across parts of the system and associated business processes.

2.2

42

c h a p T e r 2

Development of the system is focused on the following issues:

• Addressing identified shortfalls in current performance—particularly, the introduction of an enhanced information technology controls framework; enhanced business processes; improved reporting capabilities; and remediation of a date processing problem (the Julian date issue).

– We have introduced an SDSS information technology controls framework, based on industry best practice. The framework covers both the operation of the system and the control of the business process that the system supports.

– Julian date remediation—In April 2006, Defence and MINCOM successfully analysed and addressed a date limitation with the software, through a code change and complementary update to the database.

• Continuing the future development path and introducing greater functionality, through a major project JP2077. The next phases of this project will deliver new core software, increased financial functionality, improved in-transit visibility, an improved deployable capability and a radio frequency identification capability.

– Phases 1 and 2A that define capability requirements and set the strategic direction for development and implementation have been completed. Phase 2B.1, which will provide new core software and improved financial management capability, attained second pass approval from the Government in July 2006 with the acquisition phase commencing in September 2006 and is planned for conclusion in late 2008.

– Phase 2B.2, which proposes an enhanced deployable capability as well as improved in-transit visibility, is scheduled for second pass consideration by the Government in late 2006.

– Phase 2C, which provides a radio frequency identification capability, gained

second pass approval from the Government on 1 July 2005 and is planned for completion by the end of 2006.

– Phase 2D will address further upgrade proposals and is scheduled for first pass consideration at end of 2006.

• Improving compliance of users with, and the quality of data on, the system:

– user compliance with the process and controls will include training, expert assistance, ongoing exception reporting and investigation, and enhanced compliance and review activity; and

– data will be progressively reviewed and amended through normal stocktaking processes.

The project will exceed half a billion dollars in cost (not all yet approved by the Government) and will be one of the three largest information technology projects currently under development in Australia.

exploSIVe orDnance SuSTaInmenT

The DMO provides sustainment, procurement and through-life support for the ADF’s $2.6 billion guided and non-guided explosive ordnance inventory. Our deployed forces and the Service capability managers continue to receive safe and effective explosive ordnance to meet operational and raise, train and sustain requirements.

The current high operational tempo and associated rapid acquisition and replenishment procurements have placed extreme pressure on the resources of the DMO. As a result, however, its ability to remediate the ongoing ‘legacy’ explosive ordnance backlog decreased.

The most significant issue facing the sustainment of explosive ordnance is the DMO’s ability to sustain the technical integrity of its explosive ordnance inventory, while maintaining the ever increasing level of operational support for overseas operations. This is being addressed under a multi-year program Project Phoenix.

43


The acquisition and through-life support of explosive ordnance requires unique competencies, processes and experiences. This was highlighted by the ANAO with the release in May 2006 of its audit report ‘The Procurement of Explosive Ordnance for the Australian Defence Force (Army)’.

Project Pegasus is addressing workforce, structural and cultural issues specifically dealing with explosive ordnance. Extensive improvements are required within Defence to better align explosive ordnance procurement and introduction-into-service processes with ADF preparedness requirements to train and meet contingencies. The ANAO report noted work already commenced to improve procurement and management of explosive ordnance and the DMO is currently implementing the recommendations.

The 2006–07 Materiel Sustainment Agreements demonstrated the maturity of the relationship between the DMO and the Service Capability Managers, and provided a good basis for the establishment of solid requirements determination processes. Similarly, the establishment of an agreed net personnel and operating costs during 2005–06 facilitated the transition of multiple new guided weapons into the sustainment framework.

The DMO made excellent progress during 2005–06, addressing the ANAO’s financial audit findings with both the financial statements and Computer System Armament (COMSARM) audit findings. Accounting processes for explosive ordnance were implemented to comply with Australian Equivalents to International Financial Reporting Standards. Compliance moved Defence explosive ordnance accounting policies and processes towards industry best practice.

cloThInG procuremenT

Since August 2005, the DMO has been the subject of sustained management attention to improve the management of clothing for the ADF.

In early 2006, anomalies were detected in the procedures and processes for procurement and technical specifications for the combat fleece jacket. There was intense media scrutiny of these anomalies and on ADF combat clothing. In March 2006, the Minister for Defence established a Review into the ADF Combat Clothing Procurement Program. An independent team of industry experts presented the report to the Minister and it was publicly released on 25 July 2006, providing 29 recommendations.

The report created an exciting opportunity for the DMO to continue its reform agenda in this critical area, to ensure that all ADF troops continue to receive the best available clothing and personal equipment.

The DMO has undertaken significant management-initiated reforms to the clothing program. These involved the creation of a new structure, the rotation of new and qualified staff into the clothing program, and the adoption of new business processes.

The reforms created greater transparency of past, current and planned procurement activities. Management actions including audit activity continue to mitigate against future irregularities in the procurement and technical specifications for ADF clothing.

Part of improving the Defence and industry relationship will be the formulation of a clothing capability plan to provide industry with greater certainty of planned procurements as well as the requirement for Defence suppliers to be quality certified. This will instil mutual confidence in the acquisition processes and quality of materiel supplied to soldiers.

The prospect of enhanced relations with industry has been encouraged by the report and its recommendations.

2.2

44

c h a p T e r 2

Industry forums have already occurred, which have highlighted the intrinsic nature of industry’s role in supporting the soldier in the field.

These improvements, along with those being implemented from the Kinnaird Review, have assured improved services from an organisation that has always been focused on providing the best available clothing and equipment to our customer—the ADF.

proJecTS anD proDucTS of InTereST

The DMO’s performance in 2005–06 has shown continuing improvement over that recorded in 2004–05. A comparison of the top 20 acquisition projects shows that Approved Major Capital Investment Program in-year slippage reduced from 20 per cent in 2003, to 12 per cent in 2004–05, increasing slightly to 14 per cent in 2005–06. This already compares favourably with performance by allied defence organisations, but we are determined to move closer to an industry benchmark of ten per cent.

During 2005–06, the DMO delivered and sustained materiel for the ADF. Projects and products of emerging interest during 2005–06 are detailed in Table 2.5.

acquISITIon proJecTS noT IncluDeD In The Top 30—currenT STaTuS

Table 2.6 provides an update on the status of projects included in statutory reports over the previous three financial years. The planned expenditure for these projects during 2005–06 places them outside of the Top 30.

45

ou

Tp

uT

1.1

: ma

na

Ge

me

nT

of

ca

pa

bIl

ITy

ac

qu

ISIT

Ion

Table 2.5 proJecTS anD proDucTS of emerGInG InTereST 2005–06

Titleproject number project Description

approved project

expenditure $m(1)

cumulative expenditure to

30 June 2006$m

2005–06 expenditure

$m Status report

Air Warfare Destroyer

SEA 4000 Ph2 An affordable maritime air warfare capability to the ADF. This will be a complementary part of the layered air defence capability.

460 51 51 First pass approval was achieved in May 2005, concurrent with the announcement of ASC Pty Ltd as the preferred shipbuilder. Raytheon Australia and Gibbs & Cox have been selected as the preferred Combat System-Systems Engineer and ‘Evolved’ Platform System Designer respectively. The Gibbs & Cox ‘Evolved’ design will compete with an Australianised version of Navantia’s ‘Existing’ design F100 Destroyer. The Project is on schedule to present a fully developed comparison of the cost, schedule and capability of the two design options for Government consideration as part of second-pass approval planned for July 2007.

Amphibious Watercraft Project

JP 2048 Ph1A Six amphibious watercraft for delivery to the Army. The platform will be capable of deployment with the Landing Platform Amphibious ships.

58 36 23 All watercraft have achieved initial operational release and are operating in service, with project management responsibility transferred to the Amphibious and Afloat Support Program Management Office. In accordance with the project closure plan, the last items in project closure arrangements are being finalised.

Amphibious Assault Ship (LHD) Project

JP 2048 Ph4A/4B

An increased amphibious deployment and sustainment capability to support an enhanced deployed force.

38 17 11 Not yet to contract. Assessment of two suitable existing ship designs continues. Government first-pass approval was achieved in August 2005, releasing approximately $30m for first and second pass activities. Australian industry was briefed on first-pass outcomes. Design development activity with resident project teams in France and Spain was completed on 3 April 2006. The Request for Tender for design and construction of the LHDs was released, on schedule, on 28 April 2006. The Defence Capability Plan 2006–16 budget for this project is $1.5 to $2 billion.

Note: 1 2005–06 Additional Estimates indexation and foreign exchange parameters.

2.2

46

ch

ap

Te

r

2Table 2.6 upDaTe of STaTuS of preVIouSly reporTeD Top 30 proJecTS (fInancIal yearS 2004–05, 2003–04 anD 2002–03)

Title project number

approved project

expenditure$m(1)


30 June 2006$m


$m Status report

aeroSpaceF/A-18 Hornet Structural Refurbishment Program—Stage 1

AIR 5376 Ph3.1 121 75 18 Following successful prototype of the modification on an aircraft in January 2004, the project is now into the production phase with 23 aircraft delivered to July 2006. Production is expected to continue through to December 2008 at RAAF Williamtown.Costs are forecast to exceed the programmed outlays for 2005–06 due to the additional cost of unexpected damage found during aircraft teardown in the Hornet upgrade Phase 3.1 modifications.

Lead-in Fighter Capability

AIR 5367 Ph1 1,023 1,000 37 This project involves the acquisition of 33 Hawk A27 aircraft to perform lead-in fighter and ADF support roles. Aircraft delivery was completed in October 2001. The final operational capability for radar simulation function has been delayed due to technical difficulties. This capability is currently under test and evaluation to facilitate final acceptance. The project underachieved against estimates due to these delays.

marITImeMine Hunter Coastal Acquisition

SEA 1555 Ph2 1,246 1,143 10 All vessels have been accepted into service. The underspend in 2005–06 was due primarily to the prime contractor’s limited resources being focused on delivering in-service support activities, including the deactivation and short-notice reactivation of two vessels, as opposed to finalisation of outstanding acquisition contract changes.

Evolved SeaSparrow Missile

SEA 1428 Ph2ASEA 1428 Ph2B/3

354274

348243

-21

Progressive missile deliveries, which included the last of the Phase 2A missiles, occurred throughout 2005 and will continue in 2006–07 and subsequent years. All Anzac-class frigates have been fitted with the Evolved Seasparrow missile system with the last ship, HMAS Anzac, upgraded in June 2006 during that ship’s recent major maintenance period.

Collins Class Submarine Augmentation

SEA 1446 Ph1 233 204 4 All major elements are complete. The remaining activity under this project is the platform training simulator upgrade, the procurement strategy for which is almost complete. Placement of a contract is anticipated later in 2006. Expenditure for the year was slightly more than the revised estimate due to the ability to purchase spares items earlier than planned.

continued

47

ou

Tp

uT

1.1

: ma

na

Ge

me

nT

of

ca

pa

bIl

ITy

ac

qu

ISIT

Ion


approved project

expenditure$m(1)


30 June 2006$m


$m Status report

New Submarine Project

SEA 1114 Ph3 5,121 5,072 5 The last of the six submarines was delivered in March 2003. A number of minor activities were progressed in preparation for project closure. Expenditure for the year was slightly more than the revised estimate due to ASC Pty Ltd’s ability to take on additional minor tasks.

lanDDirect Fire Guided Weapon

LAND 40 145 92 32 Delivery of the Javelin Command Launch units and Outdoor Training Systems was completed in April 2006. The training systems were delivered 12 months ahead of the original contracted schedule. Javelin has been deployed operationally with trained personnel and logistical support in Iraq and Afghanistan.

Ground Surveillance Radar

LAND 53 Ph1 84 86 22 The key outcomes expected in 2005–06 were the delivery of the remaining production equipment, commencement of the through-life support contract, and completion of the service training activities. These outcomes were achieved on schedule. Completion of the acquisition contract was achieved earlier than forecast in June 2006.

elecTronIc anD Weapon SySTemSAir-to-Surface Stand-Off Weapon Capability

AIR 5398 Ph1 441 383 21 AIR 5398 successfully completed the initial operational test and evaluation program including two live missile firings at the Woomera Test Range in October 2005. Chief of Air Force subsequently granted service release for the employment of the AGM-142E weapon on the F-111C aircraft fleet in May 2006, and initial operational capability was declared in June 2006.

Air-to-Air Weapons Capability

AIR 5400 Ph1 313 277 11 Both missiles have been released into service with the Air Force and the project is transitioning the full capability to the in-service management agencies. The final item to transition is the maintenance and software support facilities contract for the advanced short-range air-to-air missile, which will be transferred to in-service management late in 2006.

continued

2.2

Table 2.6 conTInueD

48

ch

ap

Te

r

2


approved project

expenditure$m(1)


30 June 2006$m


$m Status report

Tactical Air Defence Radar Systems

AIR 5375 Ph1 207 165 13 The Australian Government took acceptance of Tactical Air Defence Radar System from Lockheed Martin Corporation in November 2005. Financial withholds were put in place pending the close-out of defects and omissions noted at acceptance.The Tactical Air Defence Radar System is now in operational use with the Air Force. A long-term installation operating permit for the new radar system was issued by Commander Surveillance and Response Group on 12 July 2006. In-service support arrangements, including contractor support, are in place. Project office closure and project transition was concluded in July 2006.

E-Defence Project

Transferred to Chief Information Officer Group

JP 2054 Ph1 116 54 1 E-Defence aims to provide the infrastructure for a corporate electronic identity framework. The project will develop infrastructure to enhance current e-mail systems with a corporate directory service.All major procurement activity is paused pending both a re-assessment of requirements and revision of the acquisition strategy; completion of both documents is scheduled for May 2007. Delays in completing the re-assessment of requirements and revision of the acquisition strategy have arisen due to the longer than planned requirements development phase and industry’s evolving ability to deliver a commercial-off-the-shelf solution. Responsibility for the acquisition and implementation of the capability was transferred to the Chief Information Officer Group from the DMO.

Note: 1 2005-06 Additional Estimates indexation and foreign exchange parameters.

Table 2.6 conTInueD

49


mInor capITal InVeSTmenT proJecTS

Minor capital projects are undertaken to address emerging requirements—to enhance or replace existing capability, or develop or acquire new capability—of relatively low amounts. unlike the major projects that are funded from the Defence Capability Plan, minor projects are funded from within capability managers’ operating allocations. Like major projects, the funds are transferred to the DMO through a Materiel Acquisition Agreement. There are currently about 200 such projects with an average amount of less than $5m. During 2005–06, $138m was expended on minor capital projects.

The five most significant minor projects are listed in Table 2.7.

Table 2.7 Top fIVe mInor proJecTS

project number

approved project

expenditure


to 30 June 2005

2005–06 budget

estimate

2005–06 revised

estimate

2005–06 actual

expenditure

$m $m $m $m $m

Heavy Remote Positioning Device

AMP050.13 19 - 12 12 11

PC9/A Electronic Flight Instrument Systems Replacement

AFM00910 19 4 10 10 10

Field Materiel Handling Capability

AMP060.27 9 4 5 5 5

C-130J and C-130H Simulator Enhancements

AFM00943 14 - 6 6 5

Modification to Fixed Wing Aircraft

AMP989.10 5 - 5 5 5

ToTal Top fIVe mInor proJecTS 66 8 38 38 36

2.2

50

output 1.2: CapabiLity SuStaiNMeNt

Sustainment involves the management and provision of services and products needed to meet the capability, preparedness and performance requirements of a materiel system. Typical services include maintenance, engineering, supply, configuration management, replenishment of consumable items and disposal action. Common products include spares, technical data, support and test equipment, training equipment and materials.

The DMO’s sustainment services to Defence, and the price the DMO receives for these services, is formalised in Materiel Sustainment Agreements between the DMO and Defence capability managers. Currently, 93 Materiel Sustainment Agreements exist. Sustainment agreements are based around the DMO sustainment products, which have been defined by each of the DMO Systems Divisions in consultation with the Defence capability managers to reflect the output of the DMO sustainment activity.

Products have been designed around key platforms, systems or fleets supported by the DMO. For example, key products include sustainment of F/A-18 Hornet aircraft, replenishment and sustainment of explosive ordnance, sustainment of Collins-class submarines, sustainment of navigation warfare systems, and supply of ADF clothing.

aeroSpace SySTemS

Sustainment of aerospace weapon systems is managed in seven System Program Offices and three System Support Offices, which

support fixed and rotary wing aircraft and systems and a range of aircraft simulators. In 2006–07, a Helicopter Systems Division will be formed and assume responsibility for helicopter acquisition and sustainment.

Implementation of the support philosophies outlined in the Australian Defence Aerospace Sector Strategic Plan continued to be a focus of activity. The plan, endorsed by the Government in June 2004, focused on moving over time to outcome and incentive-based contracts that improved sustainment support of Defence aviation capabilities.

Aerospace Systems Division adopted new approaches to acquisition and sustainment during the year. Central to this was a commitment to performance-based contracting with industry, and the development of greater business acumen and financial management skills among Aerospace Systems Division staff, to support a more commercial approach to contract management.

Major challenges for sustainment addressed during 2005–06 included:

• negotiation and implementation of performance-based contracts for elements of acquisition and sustainment support of the P-3 Orion aircraft, and the next five years of through-life support arrangements for the A-27 Hawk Lead In Fighter;

• management of ageing aircraft platforms, including the F-111, F/A-18 Hornet, C-130H Hercules, B707, Iroquois and PC-9/A Pilatus; and

• logistics support for F/A-18 Hornet, C-130J and C-130H Hercules, P-3 Orion, PC-9/A

c h a p T e r 2

51

o u T p u T 1 . 2 : c a p a b I l I T y S u S T a I n m e n T

Pilatus, Seahawk, Sea King, Super Seasprite and Black Hawk weapon systems.

Significant achievements during 2005–06 included:

• signing an alliance agreement with Tenix and Australian Aerospace and establishing the joint management office and a number of project teams to provide life-of-type support to the P-3 Orion weapon system;

• signing the Hornet Aircraft Support Agreement with Boeing Australia, BAE Systems and L-3 Comms (Canada) to provide contracting terms and conditions for future Hornet upgrades and support;

• signing a performance-based contract with Raytheon for maintenance of P-3 Orion repairable items;

• completing the first year of the Caribou performance-based through-life support contract with Australian Aerospace;

• signing a performance-based maintenance contract with Airflite for supply, repair and engineering services for life-of-type of the PC-9 aircraft;

• continuing efforts to improve sustainment of the air lift fleet, including optimisation of the C-130J Hercules deeper maintenance cycle, improved availability of B707 refueller aircraft, and commencement of C130H Hercules aircraft maintenance at Canberra airport to mitigate against increased maintenance time as a result of ageing aircraft issues;

• continuation of an ongoing program to improve F-111C engine reliability, safety and availability and decrease support costs; and

• rapid modification of two Chinook helicopters subsequently deployed to Afghanistan for the demands of combat operations.

Closed Activities during 2005–06 included:

• completion of a project to deliver the capability to reduce fuel tank repair times, enhance quality control and provide a deployable fuel tank repair capability.

Projects transitioned into service during 2005–06:

• Project AIR 5391 Ph 6 delivered full fleet modification and transitioned management to in-service agencies. The project delivered an interim electronic warfare self protection capability for the F-111C which significantly improved its ability to survive in a hostile environment.

• Project AIR 5416 Ph 3 delivered an upgraded radar warning receiver capability in the F-111C. The project upgraded the electronic warfare self protection suite to ensure support out to at least 2010 and upgrade the radar warning receiver capability in the aircraft, mission simulator and support areas to both the F-111C and F/RF-111C.

• Project Air 5398 Phase 1A/2 achieved its initial operational capability and obtained service release, a supplementary type certificate. The project acquired the AGM-142E stand-off weapon, improving survivability of the F/RF-111C aircraft.

• AIR 87 accepted six aircraft into service and commenced pilot training in Australia.

• Eight B300 navigation training aircraft became fully operational for the Air Force.

• Three B300 aircraft were accepted in the Army.

• The electro-optic consolidated automated support system was accepted into service to test and fault-isolate the F/A-18 Hornet Forward Looking Infra-Red/Laser Targeting Ranger system.

2.3

52

c h a p T e r 2

• The Intermediate Avionics Test Set Deployable Workshop, a mobile facility designed for deployment in support of F/A-18 Hornet aircraft squadron operations, was accepted into service.

New projects accepted during 2005–06 included:

• Air 9000 Phases 4 and 6, which achieved second pass approval for the acquisition of a further 34 MRH 90 multi-role helicopters in addition to the 12 MRH 90 already being acquired under Phase 2 of the project. A contract change proposal was signed with Australian Aerospace for the additional aircraft and in-service support;

• JP129 Phase 2 second pass approval for Tactical unmanned Aerial vehicle system for the Army; and

• F/A-18 Hornet Air Combat Manoeuvring Instrumentation System (minor project for F/A-18).

Other new activities and significant milestones reached in 2005–06 included:

• delivery of the first Airbus A330 ahead of schedule from the Airbus factory in Toulouse, France to the EADS CASA Aircraft Conversion Centre in Madrid, Spain for prototype conversion to the multi-role tanker transport configuration;

• signing of an order for the acquisition and support of a full flight mission simulator for the A330 multi-role tanker transport;

• completion of development, test and evaluation of the prototype F/A-18 Hornet AIR 5276 Phase 2.2 upgrade in the united States, and commencement of the production phase at RAAF Williamtown. The upgrade provided new multi-function colour displays, a moving map, a helmet-mounted cueing system for the advance short-range air-to-air missile, and improved datalinks;

• a performance-based contract was signed in August 2005 with Rosebank Engineering Pty Ltd to provide maintenance, engineering and supply support for the F/A-18 Hornet hydraulic and undercarriage systems and

associated components providing the Commonwealth with asset availability and reliability;

• a modification program to improve the reliability of the F/A-18 Hornet Generator Control units with the final kits being received and 48 out of 170 units being modified;

• the operational test and evaluation of a new aircraft / stores configuration, which will enable the F-111C to carry up to 10 GBu-12 500lb laser guided bombs; and

• planning for a major F-111C fuel tank refurbishment program was finalised.

marITIme SySTemS

The sustainment of maritime materiel is managed by ten System Program Offices located near to the ship classes supported and generally aligned with the Navy’s outputs.

All depot-level maintenance is contracted out. In-service support management is conducted by a variety of arrangements varying from integrated logistics support and maintenance through a single prime contractor, to the system program office acting as the prime with separate contract and in-house support. The Logistic Support Agency–Navy provides the majority of inventory and repairable item management for most classes (except the hydrographic ships, the Armidale-class patrol boats and the Huon-class coastal mine hunters).

The major challenges for sustainment that were addressed during 2005–06 included:

• managing the obsolescence of equipment and repair parts for most classes of Navy ships to address increasing levels of broken down for spares vital components;

• good progress on the stabilisation of the Collins-class submarine through-life support contract, including completion of certification extension and full-cycle dockings;

53

o u T p u T 1 . 2 : c a p a b I l I T y S u S T a I n m e n T 2.3

• additional support for the increased number of Anzac-class frigates as a direct result of the increased operational tempo of the frigates since introduction into service, including installation of improved force protection equipment;

• the return to service of two Huon-class coastal mine hunters, of which one had been fully laid up and the other being prepared for laying up; and

• taking delivery of the first six Armidale-class patrol boats, with four now in service, supported from Darwin by Defence Maritime Services, the prime contractor.

The major achievements in sustainment during 2005–06 included the following:

• New integrated materiel support strategies were successfully developed in 2005–06 and implemented for Huon-class coastal mine hunters with substantial progress on a new alliance-based arrangement for the Anzac-class frigates. Continued implementation of these performance-based contracts during 2006–07 will include the Leeuwin-class hydrographic ships, Adelaide-class guided missile frigates, and the Amphibious and Afloat Support major units.

• A performance-based integrated materiel support variation to the contract for the Huon-class coastal mine hunters was signed in April 2006. It anticipates a saving of $3m in the first year that the provisions are fully implemented and a 2.5 per cent improvement each year after that. The length of the contract is also linked to key performance indicators. This contract variation also includes the reactivation of two ships for northern Australia patrol operations;

• The trialing of an E-business software gateway in order to streamline spares procurement was successfully demonstrated. The Logistic Support Agency-Navy demonstrated improved supply chain effectiveness by automating

many procurement functions while maintaining appropriate controls making the processing of purchase and repair orders virtually instantaneous compared to the traditional 30–90 days.

• The establishment of the Australian Asset Management Collaboration Group comprising members of the Cooperative Research Centre for Integrated Engineering Asset Management was achieved in June 2006, with Maritime Systems Division representing Defence at this stage. This outcome grew from work between the Division and the Defence Science and Technology Organisation, under a logistic cost of ownership research and development activity.

• Improved logistics management at sea. Successful trials were completed in June 2006 using a personal digital assistant-based asset management system. The system links the personal digital assistant and software to a ship’s central logistics system and provides the mechanism for capturing crucial information at the site and time of repair, enabling a greater visibility of the maintenance and life cycle issues concerning a class of ship.

• Joint Fuels and Lubricants Agency successfully provided the logistics support necessary to conduct overseas operations at short notice. Of note is the delivery of aviation quality fuel in Darwin for operations in Timor-Leste (Operation Astute) using innovative containerised fuel tanks.

• The development of improved main stowage batteries for the Collins-class submarines. The improved battery will deliver extended operational life and is anticipated to reap considerable savings and operational availability for the class.

54

c h a p T e r 2

elecTronIc anD Weapon SySTemS

The sustainment of electronic and weapon systems materiel is managed in 20 System Program and System Support Offices. These cover command and control systems, communications, airspace surveillance and control systems and their supporting radars, electronic warfare systems (including self-protection), guided weapons and explosive ordnance of all types.

The various System Program and System Support Offices maintained a high level of availability of the various systems within the level of resourcing provided during the year. This was achieved during a period of exceptionally high ADF operational tempo, with a large number of high priority, short notice support taskings being achieved to meet the increasing number of deployments. The following are examples of enhanced in-service support achieved over the reporting period.

• The centralised support model for command and intelligence systems and deployable networks has continued to mature. As the extant deployable data networks are becoming obsolete, a replacement program known as the Next Generation Deployable Local Area Networks has progressed through design and acceptance and will go into production in 2006–07. Software maintenance of command support and intelligence applications is being rationalised. The sustainment office introduced a number of additional command support systems to support new deployments during the year. While the tempo of operations has continued to challenge the System Support Office, demands from the ADF continued to be met in a responsive and coordinated manner.

• The availability and serviceability of the Nulka Active Missile Decoy System fitted to Australian warships remained excellent over the period. The serviceability of these

systems was clearly demonstrated by the successful test firing of missiles in an international naval exercise.

• During the period, the ADF’s Over the Horizon Radar wide area surveillance capability which includes the Jindalee Operational Radar Network continuously exceeded the operational availability requirements of the Air Force. This support involved extended surveillance operations in support of Operation Astute (Timor-Leste). ANAO Report No. 24 of 2005–06 Acceptance, Maintenance and Support Management of the JORN System concluded that the Jindalee Operational Radar Network had successfully transitioned from the acquisition to the in-service support phase and that the radars, along with the Jindalee radar at Alice Springs, were effectively maintained and operating within their design parameters. The ANAO found key factors that contributed to the effective support included the application of well-designed maintenance plans and procedures, supported by suitably defined performance targets, as well as the use of a maintenance management system with extensive functions covering inventory management, maintenance scheduling, records management, and maintenance management reporting.

• Improvements in the management of the $2.6 billion guided and non-guided explosive ordnance inventory were achieved during the financial year. under the explosive

55


ordnance remediation program, a far higher standard of administrative control was implemented, including computerising stock movement and configuration change. The program has succeeded in pricing the majority of the current stock holdings, including items purchased over 20 years ago. An in-house, major upgrade to the COMSARM computing system that logistically manages ADF explosive ordnance was successfully completed without disruption to the storage and delivery of this key element of capability. These and a number of other smaller process and procedural improvements have combined enabling the delivery of a material improvement to the accuracy and confidence of Defence’s explosive ordnance accounting and systems processes.

• The ADF’s Guided Weapons Sustainment—West organisation provided assistance during the period to ensure that a Joint Armaments Cooperative Program between Australia and the united States for the development and introduction of an advanced torpedo capability remained on track. A torpedo production, maintenance and weapon turn-around service in support of developmental and operational test firings of the enhanced torpedo was provided. That enabled the cooperative program’s master schedule to be preserved at a critical phase of the development program. united States Navy and Royal Australian Navy submarines were involved in this series of successful tests conducted off the West-Australian coast.

• The new facility for the Mu-90 Lightweight Torpedo in-service support activities was completed in Western Australia, which will enhance the ADF’s ability to support this new capability. In addition, the Evolved Seasparrow Missile Maintenance and Certification Facility was completed at Defence Establishment Orchard Hills in New South Wales.

• The delivery of the 13 upgraded Combat Net Radio Medium Repair Facilities has been completed. These facilities provide a significantly improved and more reliable ability to support combat net radio equipment in Australia and while deployed on operations.

• A contract for the sustainment of the initial Maritime Communications Modernisation System components has been signed. The system will support the new equipment provided under Project SEA 1442 Phase 3 for a period of five years.

• The future support of two critical naval communications facilities has been assured with the signing of a new contract for the maintenance of the Navy Transmission Station in Sale, victoria and the completion of revisions to the contract for the maintenance and engineering services for the Naval Communications Station Harold E Holt in Exmouth, Western Australia.

• A wide variety of sustainment mechanisms continue to support the extensive and diverse satellite communications equipment in service with the ADF. A mixture of commercial-off-the-shelf and military terminals from narrowband handheld to wideband ground stations are supported across the Middle East Area of Operations, in Afghanistan, Timor-Leste and in other areas where the ADF is operating. Extremely high levels of availability are being maintained in spite of the harsh environments and the remoteness of the locations to the Australian support base.

Major challenges for sustainment during 2006–07 include:

• Responding to the increased ADF operational tempo and the increasing number of operationally deployed information technology-based Command Support Systems, by adapting existing support models to accommodate the shortened acquisition timeframes and the short product lifecycles.

56

c h a p T e r 2

• Addressing the impending obsolescence of a number of land-based communications fleets to ensure continuing availability of these capabilities.

• Integrating recently procured capabilities to support operations under ‘rapid acquisition’ into existing, proven sustainment processes to ensure quality support for that equipment for the life of the military operation and beyond. This is particularly true, though not limited to, the many electronic warfare self protection equipment types recently procured to support operations in the Middle East Area of Operations, Afghanistan, Timor-Leste and elsewhere. A new Land Self-Protection System Program Office is being established to address some of these issues.

• Dealing with a number of key cryptographic fleets that are nearing their end of life. Through a series of acquisitions, working with Australian and international agencies and manufacturers on the ongoing capabilities which will need to be sustained through fleet replacement.

• Adapting sustainment models for existing ADF air traffic control systems whose management will transition under the Defence/Air Services Australia initiative to integrate military and civil facilities under Project Genesis.

• Acquisition and through-life support of explosive ordnance requiring unique competencies and processes. Training and development programs are being developed to overcome the loss of trained and experienced personnel resulting from an ageing workforce.

• Transitioning of multiple new guided weapons will require the allocation of sufficient resources to ensure that the capability can be sustained. An effective ‘Acceptance into Service’ framework for guided weapons is being developed to ensure all aspects of sustainment are addressed.

lanD SySTemS

The sustainment of land systems is managed through eight System Program Offices. Land materiel products span more than 1,200 equipment fleet types and tens of thousands of consumable line items. Land materiel is supported throughout Australia and in several concurrent overseas operational theatres. During 2005–06, these products were managed across 29 separate Materiel Sustainment Agreements.

The range of land materiel is significant and includes: armoured vehicle fleets; a diverse range of wheeled vehicles fleets; engineer plant; bulk liquid distribution and storage systems; electrical equipment fleets; a range of weapon systems, from small arms to mobile guided missile systems; medical and dental equipment; tentage and defence stores; and uniforms and consumable stores, such as combat rations.

SupporT To operaTIonS

The greatest challenge for land materiel sustainment during 2005–06 has been support to operations. The ADF has significant quantities of land materiel deployed on operations in two separate theatres in the Middle East, and in Timor-Leste and Solomon Islands. Significant operational support achievements include:

• the short notice development, manufacture and installation of bar armour and spall liner kits for the Australian Light Armoured vehicle (ASLAv) fleet. DMO personnel and contractors performed some of this work within the area of operations;

• the development and manufacture of armoured crew cabins for both unimog and Mack trucks;

• the integration of remote weapon stations for the ASLAv fleet;

• the deployment and support of Bushranger Infantry Mobility vehicles prior to formal introduction into service;

57


• the deployment and continuous support of weapon locating radar;

• the development of armoured crew cabins for various items of engineer plant;

• a total of 26 rapid acquisition projects were undertaken at a total cost of $29m;

• the satisfaction of 24,000 demands per month for combat clothing and 150 demands per month for personal protective equipment (body armour);

• the short-notice deployment and support of 38 M113A1, 240 wheeled vehicles and other ancillary equipment to Timor-Leste under Operation Astute; and

• the satisfaction of over 2,000 SDSS demands from overseas operations per month.

SIGnIfIcanT achIeVemenTS

In addition to the considerable support provided to operations, other significant achievements included:

• planning and loading 31,516 jobs by Joint Logistic Command using 532,881 hours of labour;

• the refurbishment of more than 280 vehicles under the operational remediation program, including:

– 140 Landrovers,

– 50 specialist patrol vehicles,

– 59 unimog trucks, and

– 31 Mack trucks;

• the refurbishment of a further 580 vehicles and 2,378 major assemblies under the B-vehicle logistics supplementation program;

• increased small arms maintenance with over 7,000 weapons being loaded to ADI Limited for repair. Of these, 3,000 were fully rebuilt to the latest build standard and a further 360 heavy machine guns were overhauled;

• the achievement of an average daily operational availability of the deployed ASLAv fleet in excess of 90 per cent;

• the improvement in ASLAv powerpack replacement time by 80 per cent;

• the publication of ASLAv technical data as interactive, online technical manuals; and

• significant improvement in the operational availability of M113A1 vehicles at the School of Armour; increasing from 45 per cent to above 90 per cent. Similar improvements have been achieved in Leopard tank availability; increasing from 50 per cent to over 85 per cent.

SIGnIfIcanT cloSureS

Support activities that have been completed, include:

• the withdrawal from service of the Rapier Ground-based Air Defence System, including the disposal of more than 36,000 line items of spare parts and supporting equipment; and

• the withdrawal from service of the Armoured vehicle Launcher Bridge fleet including the commencement of disposal action.

proJecTS TranSITIoneD InTo SerVIce

The delivery of the following capabilities occurred in 2005–06:

• The Infantry Mobility vehicle Bushmaster was introduced into service and a new contractor support facility was commissioned in Brisbane.

• Project Land 19 Phase 6 was completed, resulting in the doubling of the RBS-70 Short Range Air Defence (SHORAD) fleet.

• A state-of-the-art, third generation SHORAD dome trainer was commissioned at the 16th Air Defence Regiment, Woodside, South Australia. The system was supplied and will be operated and maintained by Tenix Defence Systems.

• Project Land 53 Phases 1E and 1F, Ground Surveillance Radar and Thermal Surveillance Systems respectively, were successfully introduced into service.

58

c h a p T e r 2

oTher SIGnIfIcanT acTIVITIeS

Other significant activities:

• Land Systems Division undertook significant management-initiated reforms to the clothing program that were informed by the independent Review into the ADF Combat Clothing Procurement Program. This involved the creation of a new structure, the rotation of new and qualified staff into the clothing program and the adoption of new business processes.

• A large proportion of the M113A1 fleet was withdrawn from service and the first batch of 30 vehicle hulls were stripped in preparation for the M113 upgrade Project.

• The phased withdrawal from service of the Leopard tank fleet commenced while maintaining agreed levels of operational availability for the residual capability.

• Preparation for the introduction into service of the M1A1 tank, with logistics support agreements being established and initial holdings of repair parts being delivered.

• The provision of support to the Queensland Recovery Operation after Cyclone Larry.

• Transition of the Materiel Support Agreements to a ten-year model and improving the quality of performance reporting.

chIef operaTInG offIcer DIVISIonThe sustainment of logistics information systems includes support for the SDSS, the computer-aided maintenance management system and a number of smaller logistics information systems.

The major challenge for sustainment of logistics information systems in 2006–07 will be the continuing development and upgrade of the Standard Defence Supply System to support enhanced tracking and management of ADF inventory items across the country.

59

output 1.3: poLiCy adViCe aNd MaNaGeMeNt SeRViCeS

During 2005–06, the DMO’s expenses for Output 1.3 totalled $59.9m and we delivered:

• procurement policy advice to Defence and the DMO and contracting advice to the rest of Defence;

• industry policy and advice to Defence and the Government; and

• corporate governance and reporting to meet Government requirements.

A major focus was on the delivery of the Defence Industry Policy Review that is expected to be delivered to the Government in late 2006. The Minister has appointed a small team under the guidance of the Minister Assisting the Minister for Defence to consult widely with stakeholders on the need for a new industry policy statement that takes account of the strategic changes in the five years since the previous major review.

2.4o u T p u T 1 . 3 : p o l I c y a D V I c e a n D m a n a G e m e n T S e r V I c e S

60

c h a p T e r 2

Documents

Annual Report 2005-06 - Chapter 2 - Home : Department of · PDF file · 2014-10-23Annual Report 2005–06 reports our ... Equipment Program consists of project ... selection of the