Contractual Acceptance of HMAS Newcastle,

Fleet Base East, Garden Island, NSW 2011

Monday 21 September 2009, 11.00am to 12.30pm

- Check against Delivery -

Acknowledgements 

·               Mr Chris Jenkins – Managing Director of Thales Australia.

·               Mr Warren King, General Manager Programs, representing Dr Stephen Gumley the CEO of the Defence Materiel Organisation.

·               Mr Chris Lloyd, Vice President of Naval Systems, Thales Australia

·               RADM Boyd Robinson, Head of Maritime Systems in the Defence Materiel Organisation.

·               Commodore Ian Middleton, Commander Surface Forces, Royal Australian Navy

·               Commander Justin Jones, the Commanding Officer of HMAS Newcastle and Ship’s company

·               Commonwealth and Thales employees on the FFG Upgrade Project

The FFG Upgrade program, formally known as Project SEA 1390 Phase 2.1, has been a very complex, sophisticated naval systems integration task. The activity involved the development of new technology systems and the integration of those systems with legacy FFG equipment.

At this occasion it is worthwhile to understand how we came to this point. Twenty four days before the election of the Rudd Labor Government the Australian National Audit Office released a performance audit of the FFG program.

This report concluded that this $1.5 billion upgrade was over four and half years behind schedule. This represented one of the most concerning episodes of defence procurement in recent times.

So concerned was the new Government regarding projects like the FFG upgrade, the Sea Sprite and the Airborne Early Warning and Control Aircraft that we established the ‘Projects of Concern’ process.

From those early days much has changed. Where we are now is a direct product of increased levels of cooperation between all parties – Thales, Defence Materiel Organisation (DMO), the Navy, other elements of Defence and the Government.

The oversight provided by the 'Projects of Concern' unit was very important in improving cooperation between the parties. The involvement of the General Manager-Major Programs was especially important in elevating this issue.

Today’s Event

It is a pleasure to be able to attend today and celebrate the Contractual Acceptance by the DMO from Thales Australia of HMAS Newcastle, the last of the FFGs to proceed through the Upgrade program.

Contractual Acceptance signifies that the DMO, on behalf of the Department Of Defence, has determined that the material properties of the ship and associated documents are in accordance with contracted requirements.

The FFG Upgrade has a long history – longer than was expected – and the achievement of Contractual acceptance of the final ship has not been without significant work and effort by many. This Contractual Acceptance has been achieved three months ahead of the milestone established during the 2006 review of the program.

While this project is still delivered years behind schedule, it is important to acknowledge that Thales has managed to deliver in advance of the rebaselined schedule.

Leadership and Skills

Very good leadership and a clear willingness of all stakeholders to cooperate in the development of solutions to many of the complex problems has been a feature of the recent history of the program.

The development and implementation of solutions to these complex problems in a contractual environment has been a testament to the skills of all personnel involved and their drive and determination to deliver the required capability.

In particular I would like to highlight the very constructive roles of Chief of Navy, Vice Admiral Crane, and CEO of Thales, Chris Jenkins. Both realised that the successful delivery of the FFG upgrade was crucial to the future of their respective organisations.

Chris realised that the reputation of Thales was at risk and showed strong leadership to improve contractor performance. This project also highlights one of the advantages of having multinational companies active in Australia. Thales was able to reach back into their parent corporation to access specialists who helped resolve some of the issues around the upgrade.

Capability

For the Royal Australian Navy, the delay in this program has been disappointing and frustrating; however it is now delivering world-class frigates.

Most importantly, the upgraded FFGs represent Navy’s migration path to introduction into service of the Air Warfare Destroyer, introducing area air defence and advanced data link capabilities with the integration of the Standard Missile 2 and Link-16 capabilities respectively.

Where to from Here

Thales, in close consultation with the DMO, Navy and other Defence agencies has continued to work collaboratively on a program to deliver the Electronic Surveillance and Underwater Warfare system operational performance required by the Navy.

As these capabilities are further developed and tested they will be demonstrated to the Navy and, it is hoped, progressed by Navy through rigorous Operational Evaluation programs.

The Contract Final Acceptance milestone for all deliverables of the FFG Upgrade contract remains on schedule for achievement prior to 31 December 2009.

Lessons for the future

The Government is acutely aware of the delay in this project and we are determined to learn from it. This contract was signed in 1999 well before the Kinnaird and Mortimer reforms were put in place; having said that we can learn from mistakes that were made.

The acquisition strategy we have adopted for the ANZAC Anti-Ship Missile Defence (ASMD) upgrade reflects the lessons learnt from the FFG upgrade. The Government decided to adopt a “one plus seven” strategy whereby all Anzac ships will be upgraded, subject to the successful outcome of sea trials on the first ship.

By completing the development and trials of the highly innovative Australian designed technology in this project on one ship before looking at the other seven ANZACs we will avoid the problems that plagued the entire FFG fleet.

Conclusion

I would again like to congratulate everyone involved in the upgrade of the FFG upgrade. This capability when accepted by the Navy will be of considerable value to the ADF. I wish you every success in the future.