Key Defence Acquisitions

According to its Annual Report 2006–07, the Defence Materiel Organisation (DMO) is Australia’s largest project management organisation, with over 200 major and over 200 minor projects underway. During 2007–08, DMO’s spending on acquisition and sustainment will total over $9.4 billion (43 per cent of the Defence budget). During the next decade, DMO is projected to spend over $100 billion on equipping and sustaining the Australia Defence Force. However, one commentator has recently calculated that ‘more than $2.9 billion worth of equipment’ will be delivered late.

Joint Strike Fighter (Project AIR 6000)

The key defence acquisition decision that the Rudd Government will need to make in the first year of the 42^nd Parliament will be ‘second pass approval’ for a new Joint Strike Fighter (JSF) to replace the RAAF’s ageing F/A-18 Hornets and its venerable F-111s. The JSF received first pass approval under Defence’s two pass project approval process in November 2006, after which the Howard Government signed a Memorandum of Understanding with the United States in December 2006. This made Australia an international partner in the Production Sustainment and Follow-on Development (PSFD) phase of the JSF F-35 Lightning II project.

Second pass approval, when the government will have to formally endorse the JSF and approve funding for its acquisition, is scheduled for late 2008. Usually at second pass, the government would have two or more options from which to choose, but at this stage it appears that the JSF will be the only option presented. The cost of acquiring up to 100 aircraft under the JSF project has been put at between $11.5 billion and $15.5 billion. As at September 2007, 23 Australian companies had won contracts for work on the international JSF program, worth approximately $160 million. The acquisition of 24 FA-18/F Super Hornets has been fast-tracked to cover any capability gap between the retirement of the F-111s and the arrival of the F-35s.

Multi-Mission Unmanned Aerial Vehicle—MUAV (Project Air 7000 Phase 1B)

This project is expected to provide the ADF with a high altitude, long endurance unmanned airborne surveillance capability. This is a new capability for Australia. Defence recently trialled Northrop Grumman’s Global Hawk aircraft and the General Atomic Mariner aircraft, believed to be the only two contenders. The government is expected to consider second pass approval of AIR 7000 Phase 1B in mid-2008, with an anticipated budget of between $1 billion and $1.5 billion.

Airborne Early Warning and Control Capability (AEW&C) (Project AIR 5077)

Project Wedgetail involves the acquisition and introduction into service of six aircraft, designed as ‘the cornerstone’ of Australia’s surveillance, early warning and detection capability. It was considered to have been ‘a model acquisition project’ until the Howard Government became aware in 2006 that it was behind schedule. A contract was signed with Boeing in December 2000, and the first aircraft was to be in-service by early 2007. Boeing has attributed the delay to difficulties in integrating complex onboard electronics. DMO’s Annual Report 2006–07 stated that the delay had escalated to over two years. In June 2006, the Howard Government announced that it would reserve its contractual rights in regard to liquidated damages.

Air Refuelling Capability (Project AIR 5402)

The ADF is acquiring five KC-30B aircraft for air-to-air refuelling and transport operations. These aircraft will be capable of refuelling the current F/A-18 Hornets and future ‘Super Hornets’ using ‘hose and drogue’ technology from the tankers’ wings. They are also intended for refuelling the future AEW&C and F-35 aircraft from a boom lowered from the fuselage. A recent article reported that certification of the boom system is behind schedule, and might not be operational until late 2010. This would apparently result in a capability gap of up to two years as the last tanker/transport Boeing 707 aircraft will be retired from service in June 2008.

Tiger Armed Reconnaissance Helicopters (Project AIR 87)

Twenty-two Tiger Armed Reconnaissance Helicopters with associated support facilities are being acquired for the Australian Army from Australian Aerospace, a subsidiary of Eurocopter. While several aircraft have already been delivered, operational capability has slipped by two years, due to delays in the parent Franco-German program. On 1 June 2007, DMO stopped payment to Australian Aerospace, and Defence has also claimed more than $10 million in liquidated damages for the late delivery of training devices.

Super Seasprite (Project SEA 1411)

Eleven SH-SG(A) Super Seasprite helicopters, using refurbished airframes built between 1963 and 1980, were ordered in 1997 for entry into service in 2001. The aircraft were to provide airborne anti-surface warfare capability for the ANZAC Class frigates. Software integration problems delayed the project and the aircraft were grounded in March 2006 due to safety and reliability concerns. Defence had already spent $1 billion on the project when, in May 2007, the Howard Government decided to spend an additional $100 million on making the aircraft airworthy. The first aircraft could be in operational service by 2011. The delay is said to have caused a ‘major capability gap in naval aviation’ and to have complicated pilot training.

Army battlespace communications systems (Project JP 2072)

DMO recently terminated General Dynamics Canada’s (GDC) December 2005 contract for the initial $27 million phase of this project to network and digitise battlefield communications. This followed findings that GDC ‘had failed to meet deliverable targets’. According to one commentator, ‘significant delays’ had been ‘due in part to unanticipated complexities of the Phase 1 task and possibly to an imperfect “define and design” contracting model’.

Documentation
Department of Defence, Defence Capability Plan 2006–2016: Public Version, Department of Defence, Canberra, 2006.
Australian Government, Portfolio Budget Statements 2007–2008: Defence Portfolio.