Katherine Ziesing | Canberra
Minister for Defence Industry Christopher Pyne this morning released an update to the stalled Land 400 Phase 2 program while CASG chief Kim Gillis has announced that both BAE/Patria and Rheinmetall have been down selected to take part in the Risk Mitigation Activity (RMA).
The program for Army’s Mounted Combat Reconnaissance Capability has completed the first stage of its industry solicitation, including the conduct of an open Request for Tender (RfT) and the selection of an initial source evaluation to finalise the now determined tenderers that will participate in the next stage – the RMA.
The program saw a three-month delay this year in order to look more closely at the Australian Industry Capability (AIC) framework contained in the bids. Deloitte ran the national roadshow that saw seminars in every capital city.
"Did this really warrant a delay? No, it didn’t."
The government has made it very clear to both the program office and industry that they are to maximise local content as much as possible.
According to the executive summary of the report (the full report will be released in the first week of August):
“A key feature of the DIPS is that Government will maximise opportunities for competitive Australian industries. While that principle is already explicit in the planning for the RMA, the Land 400 Program should identify more specific ways in which to give it practical effect including:
- A more concerted effort to identify those parts of Australian industry which are potentially internationally competitive in terms of supplying components of the Phase 2 capability or of supporting its sustainment and growth path.
- Investigation of means, through the DIPS initiatives, by which specific elements of Australian industry might improve their competitiveness and ability to contribute to the Phase 2 vehicle capability.
- Specific requirements within the RMA contract for tenderers to engage with Australian industry and develop costed options for enhanced levels of Australian industry participation in the acquisition, support and upgrade path for the vehicles and including potential access to their global supply chains.”
The program office is placing greater emphasis on the local contents as directed by government so that they “can make a considered, well-informed decision on the preferred combination of overseas and local contribution to the Phase 2 capability”. Each option will include the requirement for a sovereign support capability:
“Indicatively, the options might include:
- A best price option for acquisition, regardless of the location of manufacture and assembly, with the capability supported and sustained in Australia;
- An option, similar to the best acquisition price option, but which includes the use of Australian components, in place of overseas sourced parts, which meet the required performance standards, or other Australian industry contributions to the fielding of the integrated vehicle system;
- An option that is an assembled in Australia option with Australian components, with the capability supported and sustained in Australia; and
- An option for a higher level of Australian industry engagement in the manufacture and through-life growth path of the vehicle, if the extensive industry engagement during RMA demonstrates that this is feasible with a low or minimal cost premium.”
ADM Comment: The Deloitte report in a nutshell: make it as locally as you can for the best price that you can. All of this comes as no surprise to those who have been following the program. This announcement just puts it more formally from the government rather than the program office.
Did this really warrant a delay? No, it didn’t. The timing was just off politically thanks to an election. This program has been taking shape for the better part of a decade. It is very welcome news that a down select has been made and ADM congratulates the two teams going forward. Of course the news is less great for the Thales/GD and Elbit/ST Kinetics teams as they have not made the cut - but that is the nature of competition; there are winners and losers.
ADM will be keeping an eye on how the testing program comes together and what role local industry will play in Army's largest program.