Defence project delays and cost overruns
Responses by Defence to Questions on Notice sought by the Senate Foreign Affairs, Defence & Trade Legislation Committee on major capital equipment project cost overruns are illuminating. Of the 15 projects with cost overruns two had increases in excess of 100% and a further six had overruns exceeding 50% as the following indicate:
* Project SEA 1446/1 (Collins Interim Capability) exceeded its $225.2m approved funding by $128.5m (+133%).
* AIR 5279/2 (CAMM) exceeded its $58.8m budget by $32.4m (+122%). The reason given was for essential changes to the system and increased implementation costs.
* DEF 444/1 (Classified) exceeded its $113m approval by $54m (+92%).
* AIR 5333 (2/3 CRUs) exceeded its $186.6m approval by $81.6m (+78%). This was to cover redeveloped acquisition strategy following inability of the contractor to deliver the units plus additional functionality (TADIL 16).
* AIR 5232/2 (NavTrainer) exceeded its budget of $38.5m by $14.8m (+63%) to meet additional cost of replacing HS748 and underestimates for prime contract.
* JP 2042/1A (Bluefin) exceeded approval of $26.8m by $10.1m (+60%) due to additional operational requirements.
* JP 2027 (LPA) exceeded approval of $99.8m by $36.3m (+57%) due to enhanced capabilities sought.
* SEA 1418/1 (Maritime Ranges) exceeded approved funds of $32.7m by $11.4m (+53%).
In big budget projects such as the two below, the cost overruns were very significant although the percentage increase was less than those above:
* AIR 5398/1 (AGM 142) exceeded approved funding of $406.1m by $97.9m (+32%). The underestimate was due to the complexity of the integration and support effort required and the tendered price for the missiles being higher than planned.
* AIR 5400/1 (Air-to-air weapons) exceeded its budget of $293.8m by $58m (+25%) due to higher than expected costs for integrating and testing ASRAAM on F/A-18 and increased cost of AIM 120 missile.
Project delays against schedule
Twenty major projects were identified as having delays against schedule in excess of six months, however no explanations were offered. Listed below are those with delays of more than 20 months (with slippage in months in brackets):
* AIR 5186 Australian Air Traffic System (59);
* AIR 5279/2 CAMM2 (48);
* JP 5195/2 GPS in aircraft (46);
* AIR 5232/2 NavTrainer (41);
* AIR 5046/3C Black Hawk Simulator (38);
* JP 65/4 Parakeet (37);
* SEA 1229/2&3 NULKA (36);
* AIR 5397 Military Airspace Control Comms (35);
* AIR 5276/2 AP-3C Implementation (26);
* Land 53/1B NINOX NFE (22);
* Land 52/4 Medium Recovery Vehicle (20).
By Tom Muir, Canberra