ESTIMATES COMMITTEE B
DEPARTMENT OF DEFENCE
Program 6–Acquisition and Logistics
Subprogram 6.1–Major capital equipment
Senator MacGIBBON –Table 1 says there is some risk of a schedule slippage on the electronic update for the F111 and the Anzac ship 01. Why will we have slippage on those two programs and how long will the slippage be?
Senator Robert Ray –In terms of the Anzac ship, I think I explained in a previous Estimates Committee that the major slippage has been in the design work by Blohm and Voss. At one stage that was projected to be in the area of 12 months. Blohm and Voss fortunately do not have a lot of work at the moment and are able to fully concentrate on this project. I think the slippage–and I will ask Mr Powell in a moment–is back to five months and continuing to contract.
Mr Powell –Between five and six months.
Senator MacGIBBON –Are they under any contractual penalty for slipping here?
Mr Powell –Not that I am aware of. There is no penalty other than liquidated damages which is included in normal contract procedures. There is no penalty as such. It really is the ship’s delivery which is the key milestone. The work-around arrangements which have been put in place are all aimed to achieve deliveries as per schedule.
Senator Robert Ray –The best penalty, of course, is that they get paid later and they do not like that.
Senator MacGIBBON –What is the slippage with the F111 update?
Senator Robert Ray –I have got a bit of a moveable feast here of people.
Air Vice-Marshal Graf –At the moment the expected slippage is somewhere between 12 and 15 months, which at the moment we cannot confirm. We have been in discussion with the contractors for the last three or four months trying to determine exactly what the revised schedule will be but it is somewhere between 12 and 15 months.
Senator MacGIBBON –I thought one aircraft had gone to Palmdale, was it?
Air Vice-Marshal Graf –It certainly has. That is the prototype aircraft. It has been there for probably four months, if my memory serves me correctly.
Senator MacGIBBON –But I thought that was pretty well thought through before it all started.
Air Vice-Marshal Graf –Yes, it is not the prototype aircraft that is the slippage; it is the development of the software and the design which has caused the slippage. It is not linked with the prototype aircraft.
Senator MacGIBBON –Will there be any penalty on the contractor?
Air Vice-Marshal Graf –It is much the same as with the Anzac ships. The penalty is in non-payment of milestones and liquidated damages in the end. There is no other specific penalty written into the contract.
Senator MacGIBBON –On page 325 under `Navy projects’ and `New submarines’ there is a statement that hull section 600 will also be completed in Sweden. That is for 02, is it?
Rear Adm. Hunt –No, that is for 01–two sections. Two significant sections, 300 and 600, were both built in Malmo. Section 600–and I cannot explain why the Swedes count backwards–is the fore part of the ship. It is the front end with the torpedo tubes and has had the most complex of the integrated welding techniques, so it was decided to do that section there and train Australian technicians alongside.
Senator MacGIBBON –That was the part they found hardest to design.
Rear Adm. Hunt –That is the part they have completed and are shipping out next month.
Senator MacGIBBON –The reason I asked the question was I thought that all those components were in Australia. What was the final price of the Australian frigates?
Rear Adm. Hunt –The current total project approval in today’s dollars is a little over $1,349,000,000.
CHAIRMAN –Are there any questions about page 326?
Senator MacGIBBON –Yes. On the DDG modification, a further period with the dockyard was necessary for the ship to rectify shakedown problems. Was that at Navy’s expense or Garden Island’s?
Rear Adm. Hunt –When the ship was handed over, the project cost allocation still had a reserve in it, and these rectifications were all accommodated within that reserve. Halfway through the modernisation of Hobart, we renegotiated the contract with ADI to a fixed price incentive, so that there was an efficiency line drawn. The total result was that we came in, even with these post-shakedown rectifications, under the estimated cost. So there was a bonus of 50 per cent to the company, and 50 per cent to the Commonwealth.
Senator MacGIBBON –I see. The design and development of the operations team training facility, based on the modernised DDG and to be sited at HMAS Watson, is on target for both cost and schedule. Given the finite life of the DDGs now, how much life do you expect to get out of the operational team training facility, and what does it cost?
Rear Adm. Hunt –Because that project is a subset of the DDG modernisation, I do not know that I have got the unit cost immediately to hand. I could find that for you and provide it. The last of the DDGs will be operating in 2001, so that we will get the best part of a decade. Noting that point, with the operational trainer that we are re-developing under this project, most of the system simulation is in fact by emulation, and will be able to be directed to train both DDG and FFG operational teams. When the DDG is paid off at the beginning of the next decade, the training unit we are paying for here will be still useable for FFG training.
Senator MacGIBBON –All right. What is the future aerial target system? That is based on Jindivik, is it?
Rear Adm. Hunt –It is the Jindivik update.
Senator DURACK –I am looking at the resources summary for acquisition and logistics on page 309. You set out the new figures. Particularly in relation to major capital equipment, the note says you have now attributed 686 Service office program staff involved in the achievement of A and L programs to program 6. There is a big shift in numbers into this program, away from Service programs. Looking at the staffing for the subprogram on major capital equipment, you show that with the total being the same, but setting out the number breakup between permanent force and civilian force. So I take it there have been numbers of both civilians and members of permanent forces moved into this. Is that right? It is not just all civilian or–
Mr Powell –May I comment?
CHAIRMAN –Yes, certainly.
Mr Powell –These are service officers, service staff, who have been working in the programs but in previous years they have been attributed to the individual Service–Army, Navy or Air Force–which they were doing the projects for. They were, indeed, parts of the projects team in those Services.
Senator DURACK –So they have all been service people that have been moved across?
Mr Powell –There are some civilians in those service groups, working on particular projects. They have now been shown against the capital equipment project in this program.
Senator DURACK –What I am interested in is getting the civilian and service people working more closely together in these decisions.
Mr Powell –They are working as teams.
Senator DURACK –Is this enhancing that?
Mr Powell –It has existed before; it merely is showing it in this program. In most capital projects there is a mix between civilians and service members as parts of the team. What is shown–
Senator DURACK –Are you saying that the working together has been a feature and is not a new feature?
Mr Powell –It is not a new feature, no.
Senator DURACK –Why do we still hear so many complaints, then, about various conflicts? I thought you might have been trying to improve the actual cooperation between the civilian and the service people in this area.
Mr Powell –You would find with most capital projects that the focus of military and civilian is to get the project completed. Perhaps what you are referring to has a lower position on the totem pole.
Senator DURACK –Has what?
Mr Powell –The concerns which you have expressed are submerged, if they ever existed, with the team’s objective to get the project actually completed and into service. A capital project, by its nature, has a very real focus effort and people react to achieve the objectives of the project’s delivery.
CHAIRMAN –We now move to page 326.
Senator MacGIBBON –I got back at 5 o’clock this morning from Cambodia and everyone is delighted with Raven, but there are a few questions I would like to ask about it. Where are we at in the program? Where are the VHF sets? They have not been funded yet.
Major-Gen. Jeffery –The VHF software trials will be undertaken in October this year. We expect those to be successful and the first production models of VHF will be produced in the UK in February next year. We expect Siemens Plessey to start producing in this country in about April of next year.
Senator MacGIBBON –Meanwhile, phase 4C for 1,226 HF radios still stands?
Major-Gen. Jeffery –Yes, that is true. It will complete in mid-1993 and 1,220 HF radios are in that order.
Senator MacGIBBON –Everyone is very happy with the performance of them. But do you think they were value for money? I ask that as someone who was quite a supporter of the program. I went to Plessey before the contract was signed in, I think, 1981 at Ilford and spent a day there looking at it. Do you think they were overspecified in any way at all?
Major-Gen. Jeffery –I think the proof of the pudding is in the eating. The fact that they are now performing to complete satisfaction in a number of areas of the world means that we have a good radio. I think they are a world leader at this point for that type of tactical radio, in both the high frequency and the VHF modes.
Senator MacGIBBON –They do have to be returned to the factory for any maintenance, do they not? You cannot fix them in the field at a RAEME workshop.
Major-Gen. Jeffery –The beauty of that is that they will not be returned to the factory, they will be returned to a base repair station probably at brigade or, if it is a more serious repair, to a base repair facility. But we do not expect a great deal of trouble with that radio. We think it will be very reliable and, because it is built in a modular context, it is easy to repair at the various levels of repair.
Senator MacGIBBON –What is project Wagtail and what is involved there?
Major-Gen. Jeffery –You will recall that the original Raven requirement was for about 12,500 radios. That was then capped by government to about 10,000 and the Chiefs of Staff Committee, after the recent force structure review, then decided that Raven would cease on completion of 4C, which was just over 7,000 radios. This left the Army liability still short and the chiefs have directed that a cheaper solution to Raven to make up the shortfall be found. The name of that project is Wagtail and we are in the process now of identifying, hopefully, cheaper solutions.
Senator MacGIBBON –How is the cheapness going to be achieved: through limitation in function with respect to the VHF radios of Raven, or are we going to go to a commercial spec instead of a military spec?
Major-Gen. Jeffery –A whole range of options have got to be looked at. It is not a simple task because, as you will appreciate, any solution that we get has got to be combat effective. It has got to be interoperable with the current Raven set-ups that we have got. We have got to look at questions such as maintenance and repair and life cycle costs for which we still do not have a solution. I think it will take probably another three or four months before we can put up a range of options for committee and government decision.
Senator MacGIBBON –Is there any possibility we could get a less capable radio for the same price? We have put a lot of money into the development costs of Raven. Are you quite confident that a cheaper solution exists?
Major-Gen. Jeffery –No, I am not confident that a cheaper solution exists. We are hoping that a cheaper solution exists. But, as I have intimated earlier, by the time you look at the maintenance processes–whether we have got to set up separate maintenance repair shops, train additional people in new technologies or different technologies, look at life cycle costs, or Australian industry involvement; and whether we are going to buy overseas or do something here–it is a very complex question. But the chiefs have directed us to look at potential cheaper options and to come up with options, which is what we are doing. I cannot give any guarantees at this stage because we simply do not know.
Senator MacGIBBON –Are you wedded indissolubly to a total mil spec on the thing rather than going commercial?
Major-Gen. Jeffery –Yes, because they are to meet a combat requirement. They are to meet the equipping of our operational brigades.
Senator MacGIBBON –If we move on to Perentie, Perentie has had a lot of good publicity from the users but it has also had a lot of bad publicity with respect to its accident rate. How many accidents have the latest Landrovers been involved in?
Major-Gen. Jeffery –The accident rate by comparison with the previous series 110s configuration is about the same, perhaps a little less for Perentie. In calendar year 1991, we had in the vicinity of 28 roll-overs and this year we have had nine.
The reason why, we believe, we have had the much smaller rate of roll-over accidents this year is that we have gone through an extensive period of driver retraining and I think the soldiers are becoming much more confident and au fait with the characteristics of the Perentie, it being a much more powerful vehicle than the series 110.
Senator MacGIBBON –Have you had the handling of the vehicle assessed by an independent expert in any way at all? It is assumed that there is driver inexperience but there is also an argument around that there is a handling problem with that vehicle.
Major-Gen. Jeffery –We have had the vehicle thoroughly tested, to my satisfaction and to Army’s satisfaction, by the Engineering Development Establishment, by Land-Rover themselves with their experts brought over from the United Kingdom, and by the military engineering agency, and we believe the vehicle to be absolutely fit for service. It does have different characteristics from other four-wheel drive vehicles because it has to carry out and sustain a whole range of functions which the commercial equivalents do not have to do.
Senator Robert Ray –I think one of the factors that bears out what Major-General Jeffrey is saying is that there was only one accident in Kangaroo 92 in these vehicles. I think I am right on that. Everyone was taken out for a two-day training course and what we have tended to discover was not so much a mechanical fault in the car but people not being used to its performance level. It was that sort of speeding and other things that were causing the accidents.
Senator MacGIBBON –That is a common allegation, that the vehicle is so fast for that type of vehicle–
Senator Robert Ray –I think by the end of this year virtually everyone who drives them would have been through this safety course and I think you will see it reflected in the figures. Certainly, it was a very successful exercise in K92, people having gone through the safety course. I think there was a side-on crash, not even a roll-over, as the only accident.
CHAIRMAN –Teach them a little defensive driving.
Senator Robert Ray –It is something I know that not only Major-General Jeffery but also the CGS have taken a special interest in tackling, because the early statistics were very worrying. It does not appear to be a mechanical fault of the Perentie.
Major-Gen. Jeffery –Virtually all the accidents have involved speed going around corners on gravel or bush roads, where young drivers have underestimated the speed at which they have been taking corners. It is very easy to do in that vehicle because it is such a pleasant vehicle to drive and you think you are doing 30 kilometres an hour and you are doing 60 or 65. That is where driver education is required, which we have done.
Senator MacGIBBON –Quite apart from the handling side, on the mechanical side is there any product improvement program?
Major-Gen. Jeffery –We have certainly carried out product improvement in the sense of putting roll-over bars across the top of the vehicle, which have been effective. We are looking at other aspects in terms of modification for the regional force surveillance units. They are special type vehicles up there where we have changed the exhaust configurations and put racks on the vehicle. It has been very successful. There is no other planned change to Perentie programmed at this stage.
Senator MacGIBBON –We move to the wheeled armoured fighting vehicle. I see the contract has been delayed through GM. Why do we not take the option and not contact them again?
Major-Gen. Jeffery –Because we are about to go into contract negotiations on Monday.
Senator MacGIBBON –But one of the determinants behind this thing was the need to get them; that was why it was driven so fast. Now, since the supplier cannot supply and inevitably delivery is going to be delayed, why do we not have a cup of tea, a Bex and a lie-down–
Major-Gen. Jeffery –We will still have the first vehicles received by Army in mid-1994. There is no other wheeled armoured fighting vehicle option that could be got into service in that time, that is, one that we would have tested and found effective. What it would mean, if we did delay further, is that we would have to use M113s, which operate at about five times the operating cost per vehicle of the LAV25.
Senator MacGIBBON –Where have you got to with the modification programs? Have you done the engineering work-up of those?
Major-Gen. Jeffery –The progress report is as follows: we go into contract negotiations next week with the diesel division of General Motors and Canadian Corporation of Canada. The RFT for the Australian fitouts, that is, all the bits and pieces that will go into each of the vehicle configurations, has been released to the two contending companies, British Aerospace of Australia and ADI. We would anticipate that there will be a response to those RFTs towards the end of November. We are confident that they will be good bids. The companies have been well briefed, and they know precisely what they have to do in terms of both fitout and the mods that we require to correct the earlier problems found on the evaluation.
Senator MacGIBBON –I see. So you have done no development work yourself on them.
Major-Gen. Jeffery –No.
Senator MacGIBBON –How are they going to tackle the tyre problem?
Major-Gen. Jeffery –The tyre problem is being looked at very seriously by Michelin. They have produced a new type tyre of stronger sidewall, and we think already a much improved tyre on the original, and Michelin will continue with that development process.
Senator MacGIBBON –What is going to happen about the climate control or air conditioning? That is for British Aerospace or ADI to work out a solution, is it?
Major-Gen. Jeffery –Yes. ADI and British Aerospace have got to come up with that solution, but we are confident that there are satisfactory solutions elsewhere in the world. For example, the Saudi Arabian National Guard are going to an air conditioned type system. We are not sure yet that we want air conditioning. We probably want an ambient temperature control configuration, but we believe that the principal Australian subcontractors will solve that problem quite readily.
Senator MacGIBBON –When you say an ambient control, you mean a big fan, do you?
Major-Gen. Jeffery –Something of that–
Senator Robert Ray –What we want is that the climate inside the light armoured vehicle be the same as outside, and it is not being stingy to go for that rather than air conditioning. I think sometimes air conditioning can have a deleterious effect on fighting capabilities.
Senator MacGIBBON –They might get colds, might they not? There might be respiratory problems.
Senator Robert Ray –There is that, and also it is the ability to then fight outside in the heat. So going for climate control is in fact a conscious decision.
Senator MacGIBBON –It just gets very hot in the sun in the Northern Territory, Minister, when you are in a steel box.
Senator Robert Ray –I did discover that earlier this year.
Senator MacGIBBON –Air Force projects. The Harris electro-optical test set is for the FLIRs, is it?
Air Vice-Marshal Graf –That is for the laser designator.
Mr Powell –Mr Chairman, a question was asked before by Senator Durack regarding the cost of the health centre at Cerberus. The cost of the health service will be between $8m and $9m. That is the estimate at this stage.
Senator MacGIBBON –I have a question on the Air Force projects. It is stated that the contract for the upgrade of the primary analysis processor, PAP3, will be signed in 1992-93. That is an upgrade of the ANAPG65, to take it to a later USN standard, is it?
Air Vice-Marshal Graf –Yes.