Once again the ANAO has not sugar-coated its view on how Defence is handling Land 200, a multi billion-dollar program to modernise Army into a 4th generation force.
“This topic was selected for audit due to the importance of the Land 200 program to Army, the two-year delay in delivering Tranche 1 of the program and the expected cost of nearly $2 billion to deliver Tranches 1 and 2. Tranche 3 is expected to cost a further $1 billion–$2 billion,” the report states.
First, some background on Land 200 - a combination of Land 75 and Land 125. The multi-phased program is intended to transition Army’s command and control from a paper-based system to a modern digital system. Land 200 replaced a previous system, first known as AUSTACCS, that was delivered between 1982 to 1998. This system was significantly limited in its networking and data distribution capability (its electronic battle map was not in real time). In contrast, the Land 200 capability provides real-time situational awareness, combat planning tools and complex combat messaging.
Land 200 is comprised of three tranches of activity: Tranche 1 (Land 75 Phase 3.4 Battle Management System [BMS] vehicles, Land 125 Phase 3A BMS for soldiers and JP 2072 Phase 1 vehicle comms) achieved Final Operational Capability in the first quarter of 2015, two years behind schedule; Tranche 2 (Land 2072 Phase 3 radios, Land 125 Phase 4 BMS upgrades and further vehicle installation) achieved contract signature in 2017 and is expected to achieve Final Operational Capability in 2022; and Tranche 3 has commenced, with industry briefings held in September 2018.
At a cost to date of some $1.3 billion, there is still over $600 million of expenditure remaining for Tranche 1 and Tranche 2. The main deliverables are the Elbit Systems BMS and a tactical communications network by Harris Defence Australia and Boeing Defence Australia.
Given the multiple phases involved and the massive interdependencies inherent in the program, the complexity is daunting. Yet this did not stop the ANAO from concluding that “inadequate requirements definition and poor coordination between the two responsible project offices contributed to an ineffective 2015 procurement for the Army’s Tactical Communications Network, which required a lengthy post-tender refinement process to bring the acquisition within the approved budget.
“The 2015 sole-source procurement process for the Army’s BMS was ultimately effective, but the procurement was delayed pending resolution of affordability issues affecting Land 200 Tranche 2 as a whole. Defence addressed affordability issues by adopting a ‘design to price’ strategy, significantly reducing project scope and assuming additional risk and cost by taking on the role of Prime Systems Integrator. Defence has assessed that it can achieve value-for-money outcomes following these adjustments,” the report said.
“The difficulties encountered in Land 200 Tranche 2 stem in large measure from one project office’s release of a Request for Tender with a scope that exceeded the approved cost and did not fully assess the budget consequences or governance and coordination arrangements at a program level. The desired outcome shifted from the procurement of radios to the procurement of a complex digital communications solution, as Army developed its understanding of how it would operate in a digital environment.”
In essence, Defence spent five years not aligning the separate program offices, the ANAO concluded. The tender process was not appropriate given the scope of requirements as related to its budget. The report goes into excruciating detail about the timeline, Defence performance, industry responses and decision points during this period.
In 2017 Defence took a number of effective actions — including project rationalisation and adoption of a ‘design to price’ negotiation strategy — to address the unaffordability issues as well as effectively becoming the Prime Systems Integrator (PSI) as they could not afford to have industry act in the role.
There are still concerns, even after a September 2018 Independent Assurance Review, that Army will have trouble acting as an effective PSI to deliver on time (let alone on budget) and “should be considered as a candidate Project of Interest.”
A response from Harris notes that the report is heavily redacted and does not allow for proper consideration, along with other technical points about timelines.
ADM Comment: Once again, if you’re looking for sugar coating, I can suggest Aisle 5 of your local supermarket rather than an ANAO report. But this is literally what the independent auditor is for; to provide a ‘warts and all’ view of what happened, why and what is being done to address that by providing recommendations on a path forward.
The digitisation path the Army is on has been bumpy to say the least and there are still bumps ahead to be negotiated. This was never just about putting computers and better radios on vehicles and people. It was about radically changing the way Army operates and fights using new technologies. Army was learning to sprint with training wheels on. The training wheels are now beginning to come off, by design. One can only hope the next ANAO report into this program makes for more comforting reading.