The Department of Defence (Defence) seeks approval from the Committee to proceed with the HMAS Cerberus Redevelopment Project, in Western Port Bay, Victoria.
The estimated cost of the project is $463.1 million (excluding GST).
The project was referred to the Committee on 22 June 2017.
Conduct of the inquiry
Following referral, the inquiry was publicised on the Committee’s website and via media release.
The Committee received four submissions and two confidential submissions. A list of submissions can be found at Appendix A.
On 28 September 2017, the Committee conducted a public and in-camera hearing. A transcript of the public hearing is available on the Committee’s website.
Need for the work
At the public hearing, Defence told the Committee about the role of HMAS Cerberus (Cerberus):
Cerberus is the largest Australian defence establishment supporting Navy training requirements within the Department of Defence. Cerberus is the single point of entry for all sailors joining the Royal Australian Navy (RAN) and provides approximately 300 courses, incorporating approximately 6,000 course spaces each year, with durations ranging from one week to one year. At any one time, on average, across the whole of the training year there are approximately 1,100 trainees at HMAS Cerberus, Cerberus relies on the base infrastructure and training, administration and living facilities in order to deliver this series of training for the RAN and for other tri-service elements of the Australian Defence Force (ADF).
According to Defence, ‘Cerberus has had limited funding for new and upgraded facilities and infrastructure since the 1990s except for the security upgrade works completed in 2015’. Defence stated that this was impacting its ability to fulfil its functions:
Facilities and infrastructure shortcomings at Cerberus limit the overall effectiveness and efficiency of the training programs with a knock on impact to ADF operational capability. The progressive deterioration and unreliability of engineering services and supporting utilities and continued use of ageing and ineffective facilities introduce increased pressures on Defence, making it difficult to ensure delivery of training capability output.
In its submission, Defence outlined the current deficiencies in existing infrastructure at Cerberus:
the capacity of the existing water supply network has been exceeded and is unable to meet pressure and flow requirements. A significant portion of the pipe network is in poor condition, and the pipe network does not provide sufficient pressure for fire-fighting;
many of the high voltage, ring main units, transformers and low voltage distribution boards in the electrical network do not meet current Australian or Defence standards. Pedestrian and street lighting present a safety risk to personnel due to non-compliance;
extensive sections of the sewerage network are inadequate or unserviceable, and the pumping stations do not meet current Australian standards;
the stormwater network cannot discharge a one in ten year storm event in some parts of Cerberus, causing local flooding;
the information and communications technology (ICT) network capacity has been exceeded, with parts unable to support modern technology requirements. Many of the pits contain asbestos or are otherwise in poor condition and unable to meet future expansion needs;
while the gas network is in good condition, some sections of the above ground fittings are showing evidence of corrosion. Above ground gas meters and regulator assemblies are not compliant with current Australian standards;
some logistics facilities built prior to 1970 have functional inefficiencies, contain asbestos, do not meet modern storage practices, and are in generally poor condition;
the existing RAN School of Survivability and Ship Safety (RANSSSS) practical training units are ageing and in poor condition, and lack a modern safety system;
various living-in accommodation (LIA) are ageing and in poor condition and are no longer fit for purpose, including the Recruit School LIA, Category School LIA, Officers’ LIA and Junior Sailors’ LIA;
the messing facilities and galleys for officers and junior sailors are in poor condition, equipped with ageing or obsolete equipment, and are not compliant with current Australian standards;
ADF Engineering Training Facilities provide inadequate working and learning environments, and the requirements have outgrown the facilities over the last three decades;
ADF Catering School, RAN Maritime Logistics School and Personnel Support Facilities do not meet contemporary fire safety of heating, ventilation and air-conditioning standards;
ADF Physical Training School (ADFPTS) and running track facilities are ageing and do not meet current functional requirements. The existing gravel running track, built in 1934, is in poor condition and needs refurbishment; and
survival at sea training is currently undertaken at an existing wharf at Hann’s Inlet, which provides an inadequate and unsafe training environment for staff and trainees.
The Committee is satisfied that the need for the works exists.
Scope of the works
Defence has split the scope of the proposed works into 20 project elements.
Project element 1 is focused on upgrading the water supply network. Defence stated that this element includes:
constructing new potable water storage. Providing the new potable water storage will involve constructing a new 1.5 day potable water reserve storage tank providing 750 kilo litres of water storage, demolishing the existing potable water storage tank and removing the redundant chlorinated plant and providing backflow prevention at the proposed storage tank;
remediating the potable water supply mains. With the exception of the potable water mains constructed in 2004, all the remaining potable water service mains downstream from the existing meter will be replaced. The proposed works include replacement about 7,500 lineal metres of water mains and all valves in those mains; and
constructing a new fire-fighting water network. The proposed new fire-fighting water service will include constructing two new firewater storage tanks adjacent to the western entry gate providing 1,100 kilo litres of water storage. The works also include constructing a new fire ring main network including 13,000 lineal metres of fire mains and pump house to house both the fire-fighting and potable water pumping equipment and connecting all buildings requiring a fire service and the external hydrant coverage to the new system.
Project element 2 proposed an upgrade to the electrical system. Defence told the Committee that this element includes:
constructing a new intake switching station. A new intake switching station (ISS) will include new electrical switchgear to accommodate the incoming high voltage (HV) dual feeder from United Energy. The proposed ISS will provide spare capacity to support HV ring main networks to comply with Defence requirements. The proposed works include diverting the existing power supply to the new ISS and decommissioning and removing the switchgear in the existing ISS. New power factor correction equipment will also be installed;
replacing substations. 17 substations, including the ring main units and HV switchgear will be replaced. Four transformers will be upgraded. The cabling directly associated with the replacement or upgrading of the substations will be replaced. The local emergency generator serving the Communications Centre will be replaced;
improving street and pedestrian lighting. New street and pedestrian lighting including poles, light fittings, cabling, switchboards and controls to high risk areas where trainees march at night, will be installed; and
Improving electrical reticulation. Existing Defence owned overhead HV will be replaced with underground cable of about 9,750 lineal metres. The low voltage (LV) services to the north of Cook Road will also be replaced with the underground of about 2,700 lineal metres of LV cable. A new dual ring HV network will also be constructed.
Project element 3 proposes an upgrade to the sewerage network. Defence stated that this includes:
replace sewerage pumping stations. Replacement sewer pumping plant will be constructed adjacent to existing sewer pumping stations one and four. Sewer pumping station three will be replaced in a new location north of the proposed RANSSSS site. Sewer pumping stations one, four, seven and eight will be decommissioned. The sewer rising mains associated with pumping stations one, three and four will be remediated; and
replace primary (trunk) sewer mains. The existing deep sewer mains and associated infrastructure to downstream pump stations will be remediated. About 4,000 lineal metres of new sewer main, 150 manholes will be installed and 50 access chambers will be decommissioned and reconstructed to support the remediation of the sewer. Non-compliant stormwater and downpipe connections to the sewer mains will be made good and reconnected to the local stormwater infrastructure.
Project element 4 involves upgrading the stormwater and drainage network. According to Defence, this includes:
improving stormwater outfall quality. Four bio-retention basins will be constructed on key stormwater mains prior to the outfalls to the adjacent wetlands. One stormwater retention separator unit to capture hydrocarbons will be constructed where the local topography precludes the construction of bio-retention basins; and
Improving stormwater trunk infrastructure. Collapsed areas of the stormwater trunk infrastructure will be repaired. About 400 lineal metres of stormwater mains and 526 stormwater pits will be reconstructed and five new stormwater pits will be installed.
Project element 5 proposes upgrades to the ICT infrastructure at Cerberus. Defence stated that this includes:
upgrades to 100 non-compliant pits, replacement of 80 asbestos pits, installation of 6,500 lineal metres of ICT conduits and 7,500 metres of single mode cable, relocation of three existing distribution nodes, installation of racks, switches and cables to establish a Defence Engineering Services Network, and the installation of a new Building Management System;
replacement of 6,300 lineal metres of multi-mode optical fibre cables with single mode fibre cables; and
rectification of existing compliance issues with the Defence Voice Network, the Defence Restricted Network and the Defence Secret Network.
Project element 6 proposes the construction of a new logistics precinct. Defence told the Committee that this includes:
Project element 7 proposes the construction of a new RANSSSS. Defence stated that this includes:
construction of a new training ground and support facility for the RANSSSS on a brownfield site;
decommissioning and demolition of the existing RANSSSS; and
remediation of contamination and demolition materials at the existing site.
Project element 8 proposes the refurbishment of various LIA around Cerberus. Defence’s submission outlined what this element includes:
refurbishment of Recruit School LIA, including upgraded bathrooms, laundries, and installation of passive solar protection to windows;
refurbishment of Category School LIA, including kitchenettes, installation of fans in cabins, a new access ramp and passive solar protection to windows;
refurbishment of Officer LIA, including demolition of two existing LIA buildings; and
Minor refurbishment of the Junior School LIA.
Project element 9 proposes the refurbishment of the Wardroom and Junior Sailor’s Galleys. Defence stated that this includes:
refurbishment of the galley to service the Officers’ mess;
construction of a new galley adjoining the existing Junior Sailors’ cafeteria; and
construction of a new heavy vehicle loading and service area.
Project element 10 proposes the refurbishment and consolidation of the ADF Engineering Training Facilities. Defence told the Committee that this element includes:
new offices and training classrooms, including new furniture, fittings and equipment for the Engineering Officer and Senior Sailor Training Facility;
relocation of the Electronic Technician and Torpedo Training Building, including car parking, and demolition of the existing building; and
construction of a new Marine Technical Training Building, associated car parking, and demolition of Building 72 and relocation of some of its functions into the new building.
Project element 11 proposed the upgrade of facilities for the ADF Catering School, RAN Maritime Logistics School and Personnel Support Facilities. Defence’s submission outlined what is included in this project element:
complete refurbishment of Building 188 to fully comply with relevant building standards;
complete refurbishment of existing Personnel Support Building 189 to fully comply with relevant standards; and
replacement of the external facades of Buildings 188 and 189.
According to Defence, project element 12 includes the construction of a new facility for the ADF Physical Training School, including office accommodation, classrooms, staff and trainee ablutions, change rooms and an indoor multi-purpose learning area. It also includes resurfacing of the existing outdoor netball court and running track.
Defence stated that project element 13 includes the demolition of old, redundant Naval Stores/ ICT Contract building and replacing it with 40 car parks. It also includes the removal of a gun turret for storage and demolition of the supporting slab.
In its submission, Defence stated that project element 14 includes the repair and upgrade of the existing gas reticulation network by replacing the PVC sheathing, installing cathodic protections unites and upgrading gas meters.
Project element 15 proposes the construction of a new survival at sea training facility, and includes the construction of a new indoor pool capable of simulating a range of realistic sea conditions, storage areas for training equipment, a laundry, an LHD marine evacuation system chute, an office area for instructors, classrooms and a plant room.
Defence told the Committee that project elements 16-20 have been approved by Government, but are unaffordable within the current approved budget. These elements include the following proposed works:
refurbishment of retail areas;
upgrades to the fuel systems;
additional upgrades to stormwater and drainage networks;
refurbishment of the EMOS building; and
refurbishment of the Senior Sailors’ LIA.
Project elements 16-20 will only be pursued should savings be achieved in the other 15 project elements.
The Committee finds that the proposed scope of works is suitable for the works to meet its purpose.
The Committee received a submission from the Hon Greg Hunt MP, Member for Flinders, noting that ‘the naval base is a major employer in the region, providing significant job opportunities both directly and indirectly his support for the project.’ Mr Hunt offered his ‘strong support’ for the project.
Similarly, Mornington Shire Council Mayor Bev Colomb submitted that:
$460 million upgrade would provide a vital economic boost to our economy, creating a unique opportunity for our local businesses. As a result of this investment, there will be a further injection of $496 million into our community with a total of 2,600 jobs.
At the public hearing, Defence discussed the benefits of the project to local businesses:
Our managing contractor, Lendlease, has undertaken significant engagement and conversations with local industry in the Mornington Peninsular area and sometimes in wider areas of it. Through that engagement Lendlease has confirmed that both local capacity and local capability are available to support the proposed works. Approximately 70 subcontracts are looking to be let via a two-stage procurement process to support the trade works.
Defence provided further detail on the opportunities for local businesses to benefit from the proposed works, stating:
At the moment approximately 160 businesses have registered their interest on the industry compact network (ICN) gateway portal for the project. Lendlease has also established a number of targets based on looking at local industry and its capacity. Of the 70 subcontracts, Lendlease has established a target figure of about 80 per cent to go to local industry.
Cost of the works
The total estimated cost of the project is $463.1 million (excluding GST). It includes construction costs, management and design fees, furniture, ICT, fitting and equipment, contingencies and an escalation allowance.
The Committee received a confidential supplementary submission detailing the project costs and held an in-camera hearing with Defence on the project costs.
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.
The Committee did not identify any issues of concern with the proposal and is satisfied that the project has merit in terms of need, scope and cost.
Having regard to its role and responsibilities contained in the Public Works Committee Act 1969, the Committee is of the view that this project signifies value for money for the Commonwealth and constitutes a project which is fit for purpose, having regard to the established need.
The Committee recommends that the House of Representatives resolve, pursuant to Section 18(7) of the Public Works Committee Act 1969, that it is expedient to carry out the following proposed works: HMAS Cerberus Redevelopment Project.
Proponent entities must notify the Committee of any changes to the project scope, time, cost, function or design. The Committee also requires that a post-implementation report be provided within three months of the project completion. A report template can be found on the Committee website.
Mr Scott Buchholz MPMr Tony Zappia MP