Minister for Defence and Minister for Defence Materiel – Joint Media Release – Update to the Projects of Concern list

Minister for Defence Stephen Smith and Minister for Defence Materiel Jason Clare today updated the Projects of Concern list.

The Airborne Early Warning & Control (AEW&C) Wedgetail Aircraft Project and the Lightweight Torpedo Project have been removed from the Projects of Concern list and the Mulwala Redevelopment Project and the Direct Fire Support Weapon Project have been added to the list.

The two projects removed together represent a combined value of $4.5 billion, bringing the total value of projects removed from the list to over $14 billion since the Projects of Concern process was created in 2008.

The Projects of Concern process was established by the Government to focus the attention of the highest levels of Government, Defence and Industry on remediating problem projects.

Since the Projects of Concern process was established, 21 projects have been put on the list. Fifteen have since been removed – 13 due to remediation and two due to cancellation.

In June 2011, Mr Smith and Mr Clare announced reforms to strengthen the Projects of Concern process, including:

  • The establishment of a more formal process for adding projects to the list;
  • The establishment of a formal process for removing projects from the list;
  • The development of agreed remediation plans, including formal milestones for the removal of a project from the list;
  • Increased Ministerial involvement and oversight of the process; and
  • Incentives for companies to fix projects on the list by taking into account the performance of companies in addressing Projects of Concern when evaluating their tenders for other projects.

Airborne Early Warning & Control (AEW&C) Wedgetail Aircraft

Wedgetail was approved in 2000 with a budget of $3.8 billion (in today’s dollars) to procure six 737-700 commercial aircraft which were then fitted with an advanced multi-role electronically scanned radar and 10 mission crew consoles.

The project was listed as a Project of Concern in January 2008 due to schedule delays and increasing complexity of the technical development of the project.

A formal remediation plan was agreed to in 2011, with a number of key objectives identified, including the achievement of Initial Operating Capability ( IOC).

IOC was declared by the Chief of Air Force last month and the project has now delivered all six aircraft.

 Following the declaration of IOC, the Chief Executive Officer of the Defence Materiel Organisation has recommended the removal of this project from the Projects of Concern list.

The Government has agreed to this recommendation.

Joint Project 2070 (Lightweight Torpedo)

JP 2070 was approved to acquire the MU90 Anti-submarine Lightweight Torpedo to replace the existing MK46 torpedo, and integrate it with the ANZAC and ADELAIDE Class frigates.

JP 2070 was added to the Projects of Concern list in 2008 due to delay in weapons testing, integration challenges and emerging cost risks.

A formal remediation plan was agreed to in 2011, with a number of key objectives identified, including the achievement of Initial Operating Capability (IOC).

Following the declaration of IOC by Chief of Navy last month, the Chief Executive Officer of the Defence Materiel Organisation has recommended the removal of this project from the Projects of Concern list.

The Government has agreed to this recommendation.

JP 2086 Ph 1 (Mulwala Redevelopment Project)

JP 2086 was approved in 2006 to deliver a propellant manufacturing facility in Mulwala, NSW to replace the existing facility.

Last year technical and equipment issues during the commissioning phase resulted in a significant delay. A comprehensive Gate Review recommended the project not be added to the Projects of Concern list pending a status review in late 2012.

Since that Gate Review JP 2086 has fallen further behind schedule and there is an increasing risk that the current budget will not be enough to complete the project.

Based on the importance of this national capability project, the Chief Executive Officer of the Defence Materiel Organisation has recommended the project be listed as a Project of Concern.

The Government has agreed to this recommendation.

Land 40 Ph 2 (Direct Fire Support Weapons)

Land 40 Ph 2 was established in 2006 to provide weapons with specific range and target effects to improve Defence’s close combat capability. This included an advanced version of the M3 Carl Gustav and a new Light Weight Automatic Grenade Launcher.

While the M3 Carl Gustav has been successfully procured, the Light Weight Automatic Grenade Launcher was rejected due to non-conformances identified during contract negotiations.

Initial Operating Capability for the Light Weight Automatic Grenade Launcher has now slipped by almost five years.

Due to the troubled commercial history of this project the Chief Executive Officer of the Defence Materiel Organisation has recommended Land 40 Ph 2 be listed as a Project of Concern.

The Government has agreed to this recommendation

A summary of the current Projects of Concern list is below:

Project Description Date Added
CN10 Collins Class Submarines Nov 2008
AIR5402 Multi-role Tanker Transport aircraft – Air to Air Refuelling Capability Oct 2010
AIR5276/8B Electronic Support Measures upgrade for AP-3C Orion aircraft Oct 2010
AIR9000/2,4&6 Multi-Role Helicopter Nov 2011
JP2086 Ph 1 Mulwala Redevelopment Project Dec 2012
Land 40 Ph 2 Direct Fire Support Weapons Dec 2012

Projects removed from Projects of Concern list:

Project Description Date Removed
SEA1411 Sea Sprite Helicopter (Project cancelled) Mar 2008
AIR87 Armed Reconnaissance Helicopter (Remediated) Apr 2008
LAND106 M-113 Armoured Personnel Carrier Upgrade (Remediated) May 2008
JP2088/1A SF Air Drop Rigid Hull Inflatable Boat Trailers (Remediated) Sep 2009
SEA1390/2.1 Guided Missile FFG Upgrade (Remediated) Jan 2010
AIR5416/2 Project  ‘Echidna’ (Scope reduced) Jul 2010
JP2048/1A LCM2000 Watercraft for Amphibious Ships (Project cancelled) Feb 2011
JP2043/3A High Frequency Communications Modernisation (Remediated) Jun 2011
AIR5333 Air Defence Command and Control System ‘Vigilare’(Remediated) Jun 2011
SEA1448/2B ANZAC-class Anti-Ship Missile Defence (ASMD) (Remediated) Nov 2011
LAND121/3B Medium and heavy vehicles, trailers and modules(Remediated) Dec 2011
JP129/2 Tactical Unmanned Aerial Vehicles (Remediated) Dec 2011
AIR5418/1 Joint Air-to-Surface Standoff Missile (JASSM) (Remediated) Dec 2011
Air 5077/3 Wedgetail Airborne Early Warning and Control Aircraft (Remediated) Dec 2012
JP 2070/2&3 Lightweight torpedo replacement (Remediated) Dec 2012

Media contacts:

Minister Smith’s Office: Sacha Fenton 0467 784 528

Minister Clare’s Office: Annie Williams 0428 040 522

 


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