- Explosive Ordnance Facilities Northern NSW Redevelopment project
Department of Defence
2.1The Department of Defence (Defence) seeks approval from the Committee to proceed with its proposed Explosive Ordnance Facilities Northern NSW Redevelopment project at Defence Establishment Orchard Hills (DEOH).
2.2DEOH provides operational, explosive ordnance storage, maintenance, training, administrative, support, accommodation and recreational facilities.[1] The base is also home to:
- the Defence Explosive Ordnance Training School
- a significant area of critically endangered Cumberland Plain Woodland. Over 900 hectares of the site have been set aside as an environmental offset for the Western Sydney Airport
- armament services provided by the private company Thales.
- The Defence Establishment Orchard Hills 2018 Estate Base Plan identified the need to undertake a combination of new and upgrade works. These base redevelopment works will support another major work at the site, Department of Defence — Guided Weapons and Explosive Ordnance Storage Program Tranche 2.
- The total estimated cost of the project is $359.3 million (excluding GST).
- The project was referred to the Committee on 1 July 2024.
- Subject to Parliamentary approval, design activities are expected to be completed in early 2025, with construction expected to commence in mid-2025 and be complete by mid-2028.
Conduct of the inquiry
2.7Following referral, the inquiry was publicised on the Committee’s website.
2.8The Committee received two submissions, one confidential submission and three supplementary submissions to the inquiry. A list of submissions can be found at Appendix A.
2.9On 25 September 2024 the Committee conducted a site inspection at DEOH. This was followed by a public and in-camera hearing on 26 September at Mulgoa Hall, Mulgoa. A transcript of the public hearing is available on the Committee’s website.
Need for the works
2.10At the public hearing, Defence explained the proposed works will deliver a combination of new and upgrade works which will support the base’s guided weapons and explosive ordnance capability:
A priority of the 2024 National Defence Strategy is the Australian Defence Force's guided weapons and explosive ordnance capability, including the government's direction to build stocks, strengthen supply chains and manufacture munitions in Australia. The proposed works to be delivered at the Defence establishment Orchard Hills will directly support Defence's guided weapons and explosive ordnance capability by providing new and upgraded facilities and infrastructure to manage, store and maintain munitions and to train the highly skilled workforce required to support the capability.
2.11The works will consolidate base support functions into administration precincts and maximise resource efficiency to optimise base operating costs. Specifically, the project will deliver the following:
…new and upgraded working accommodation for procurement, storage, distribution and administration support activities; new and upgraded training facilities for the Defence Explosive Ordnance Training School; new living-in accommodation; health and wellbeing facilities, including a small gymnasium for permanent staff and trainees; an upgraded base entry and improvements to perimeter security; a new cadet multi-user facility; and upgraded utilities and infrastructure, including power, water and sewerage.
2.12The Committee received submissions from the public expressing concern about the long-term sustainability of the site given the increase of surrounding urban development. Mr Bob Wheeldon, from the Defence Neighbours Association, commented at the public hearing:
…rather than the Hunter Valley and Sydney, which are the busiest locations in New South Wales, I would suggest that, with the limited public funds that the government have, they should be looking to move this money in the long term … if they're looking at 10 years or 20 years down the track, it's all sunk money. So, if you're talking about an investment that's going to take 30 years to pay off, it is crazy to put it here.
2.13At the public hearing, Defence explained that although the base has now been encroached by urban development, including residential properties, the need to carry out the works at this site, rather than somewhere more remote, remains:
…Orchard Hills has been an enduring base on site for the last 79 years…During that period, it has been a vital explosive ordnance location. It is a key node in our explosive ordnance logistics system. Over the 80 years, we've continually developed this base. We have a wide range of diverse capabilities that are hosted on that site, ranging from explosive ordnance storage through to technical guided weapons maintenance activities. A wide degree of explosive ordnance technical and academic training is conducted there.
It's worth understanding that the base is quite diverse, with many facilities built on that base. It would be extremely expensive to relocate that to a significantly large site. The site itself is four kilometres by four kilometres, so you can get an appreciation of the area we require for the dispersed nature of activities we have.
…We certainly expect to see further encroachment on the site. However, the current capabilities that we have on that site are contained within the Defence boundary and we do not promote or project any appreciable risk outside of the Defence boundary. We are confident that we can continue to develop and support the capabilities that we have on base within the current Defence boundary through the future.
Options considered
2.14In its submission, Defence outlined the options considered for the project:
1Do nothing. The degrading condition of the existing facilities and infrastructure will affect the activities conducted at the establishment, including unplanned interruptions, repairs and ongoing maintenance of ageing facilities, and lost productivity. This option does not meet the minimum viable capability required to support ongoing operations and activities on the base.
2In-Budget. This option would deliver minimal high priority scope that is critical to support base operations and activities within the project’s original budget. It does not meet the minimum viable capability required to support ongoing operations and activities on the base.
3Minimal Viable Product. This option would deliver all high priority scope elements to meet the minimum viable capability required to support ongoing operations and activities on the base.
4Full scope. This option would deliver all scope elements included in option 3, as well as an Ammunition Processing Building, additional living-in accommodation, and upgraded infrastructure at the Defence Explosive Ordnance Depot Myambat, New South Wales. This option exceeds the minimum viable capability required to support ongoing operations and activities, as well as the project’s budget.
2.15Option 3 (Minimal Viable Product) is the preferred option as it meets the minimum viable capability required to support ongoing operations and activities at the DEOH, is within the project’s approved budget and represents the best value for money.[12]
Scope of the works
2.16The proposed works under the preferred option are set out in the following work elements:
1upgrade and remediation of site infrastructure and engineering services, including potable and fire-water networks and electrical, ICT, and wastewater systems
2new and upgraded administration and working accommodation, and multi-purpose logistics facilities
3new and upgraded instructional and working facilities for the Defence Explosive Ordnance Training School
4new Living-In Accommodation
5new working accommodation for Defence and Contractor personnel currently accommodated in disaggregated facilities at DEOH and in leased accommodation in Penrith
6new and upgraded health and wellbeing facilities, including a small gymnasium and a multi-use sports court
7upgraded base entry and security, including reconfiguration of the base entry, perimeter fencing, lighting and closed circuit television
8a new multi-user Cadet facility to support existing Army and Navy Cadet Units displaced by other work elements, and to relocate an existing Air Force Cadet Unit from off-base to on-base
9demolition of surplus/obsolete facilities that have reached their end-of-life.[13]
2.17In the event the project has savings through tendering or retirement of risk provision during delivery, the following additional below the line items may be delivered:
- an Ammunition Process Building
- Defence Explosive Ordnance Training School Training Hub, Quartermaster’s Store, Instructors Workshop, additional truck shelter bays
- additional living-in accommodation
- a Combined All Ranks Mess
- a Ranges Training Facility
- civil works
- infrastructure upgrades at the Explosive Ordnance Depot Myambat.[14]
Potential impacts
2.18At the public hearing the Committee heard that the works, including construction trucks, are unlikely to impact the traffic congestion of the local region:
…the capacity of the northern road was upgraded, completed by New South Wales roads and maritime in December 2021, from memory… It went from one lane each way to two lanes each way with major shoulders on each side. So the capacity of the road is quite significant now. Again, I'd have to check this, but I think it's in excess of 2,000 vehicles per hour per lane. So we provide a small percentage—300 vehicles over eight hours, compared to 2,000 vehicles an hour per lane.
2.19The Committee ascertained that the critically endangered 900 hectares of Cumberland Plain Woodland situated on the base which has been set aside as an environmental offset for the Western Sydney Airport will not be subject to any clearing as a result of the works.
Stakeholder consultation
2.20In its submission, Defence reported engaging with a variety of internal and external stakeholders during project development to date, including:
- Federal Member for Lindsay, Mrs Melissa McIntosh, MP
- State Member for Penrith, Ms Karen Anne McKeown, OAM, MP
- State Member for Badgerys Creek, Ms Tanya Davies, MP
- Penrith City Mayor, Councillor Mr Todd Carney
- Penrith Valley Chamber of Commerce, President Mr Richard Fox
- Deerubbin Local Aboriginal Land Council, Mr Athol Smith, Chair
- Darug Ngurra Aboriginal Corporation, Ms Corina Wayali Norman.
- Defence ran community consultation to ensure local communities and other stakeholders were informed about the project and provided with the opportunity to raise concerns. Two community information sessions were held on 9 May 2024 at Glenmore Park Shopping Centre in New South Wales. The sessions addressed this project as well as the Guided Weapons and Explosive Ordnance Storage Program Tranche 2 project. The 12 attendees were a mix of local residents, Defence employees and job seekers. Key points raised by the community were:
- project scope and the inclusion of explosive ordnance training/activities
- the movement of personnel from Danallam House (Defence leased premises in Penrith, NSW)
- traffic management along The Northern Road
- Western Sydney Airport and the perception of impacts of new flight paths on the Project works
- opportunities for job seekers in the proposed work.
Cost of the works
2.22The total capital out-turned cost of the project is $359.3 million (excluding GST). In its confidential submission to the Committee, Defence included a cost breakdown of the project. The cost estimate includes project management and design fees, construction, information and communications technology, furniture, fittings, equipment, contingencies, and a provision for escalation.[19]
2.23There will be ongoing operating and sustainment costs as a result of the proposed works due to additional maintenance, cleaning and utilities to operate and maintain the proposed new facilities and infrastructure.[20]
2.24Defence provided further details on project costs at the in-camera hearing. The Committee heard the difference in cost of completing some of the below the line items along with this package of works, or later on, as a separate package of works.
Revenue
2.25No revenue is expected to be derived from this project.[21]
Public value
2.26Defence submits that this project’s public value includes:
- Economic impacts – the project expenditure will support the Australian economy in the construction and professional services sectors in the surrounding regions.
- Employment opportunities – the project will employ a diverse range of consultants, contractors and construction workers, and is expected to generate opportunities for up-skilling and job training to improve individual skills and employability on future projects. Defence anticipates that, over the life of the project, up to 300 full-time equivalent direct and indirect jobs are likely to be created in the Western Sydney Region.
- Local industry and Indigenous business involvement opportunities – Defence and the Managing Contractor anticipates providing local businesses with opportunities, including Indigenous businesses, to supply construction materials and labour. Defence and the Managing Contractor will actively promote opportunities for small to medium local enterprises through construction trade packages, and there may be opportunities for Indigenous business involvements in accordance with the Government’s Indigenous Procurement Policy.
- Health and Safety - the project will increase vehicle safety through the upgraded Base Entry precinct and provision of a modernised security access system. The new main entrance will incorporate improvements in traffic flow, reducing the impacts on wider community users of The Northern Road. The consolidation of Cadet Units close to the main entry will increase safety by reducing the movement of minors and families on base.
- Existing infrastructure services – the project proposes to connect the Defence Establishment Orchard Hills to the Sydney Water wastewater system network to modernise the wastewater management system. This will enable the on-site Wastewater Treatment Plant to be decommissioned, remediate the site and eliminate on-site wastewater treatment.
Committee comment
2.27No issues or concerns with the proposal were identified by the Committee, and the Committee is satisfied that the project has merit in terms of need, scope, and cost.
2.28The Committee notes that there has been substantial residential building since the military area was established 80 years ago, and this is likely to continue to increase. Given that the base now has a large neighbouring population, the Committee urges Defence to maintain a high standard of community consultation about these works, as well as upcoming DEOH activities as they relate to guided weapons and explosive ordnance. Defence should ensure that its communications are on the channels that people use, including social media, traditional media and community groups, as well as direct mailing and in person outreach.
2.29While the Committee understands the necessity of the works, and the requirement that they take place at this particular site, the Committee encourages Defence to think long term about the safety of the surrounding community in the next 50 years and beyond, as urban redevelopment continues in the region.
2.30Having 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.
2.31The 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: Department of Defence — Explosive Ordnance Facilities Northern NSW Redevelopment project.
2.32The Committee notes that Defence proposes an extra 60 rooms of living-in accommodation (in addition to the 60 rooms already proposed) as a below-the-line item to be constructed if savings can be made during the project. Given the likelihood the accommodation will be needed, and the cost savings that would be made if the two blocks were built together, the Committee considers it would be cost effective to increase the project budget to deliver the second accommodation element.
2.33The Committee recommends that the project budget be increased to allow a second block of 60 additional living-in accommodation rooms to be completed as part of the project.
2.34Proponent 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 project completion. A report template can be found on the Committee’s website.