2012 – 13 Defence budget

Government takes the axe to Defence

Byline: Geoff Slocombe / Victoria

Budget 2012-13 impacts on sustainment and new capabilities

Amongst the headlines of Defence’s contribution of $5,454 million across the Forward Estimates, announced in the Budget, little has been said about the impact on sustainment and approved new capabilities, even less about projects in the latest Defence Capability Plan which have not yet reached First Pass Approval.

Two days after the Budget, the Defence Minister announced that ‘the Government had agreed to purchase 10 Alenia C-27J Spartan Battlefield Airlift aircraft at a cost of $1.4 billion.’ This AIR 8000 Phase 2 expenditure is hidden in Table 14 Unapproved Capability Investment Programs (!) of the Defence Budget, apparently for First Pass Approval before 30 June 2012. It does not appear in the Top 30 projects on DMO’s website, and did not form any part of the Minister’s announced changes to Defence spending, including contribution to creating a budget surplus. Such is politics.

“There will be no adverse effects on equipment provided for overseas operations by Defence’s contribution of $971 million in 2012-13” stated Defence Minister, Stephen Smith, when announcing details of the Defence Budget Overview. “The reprioritisation of Defence expenditure has been designed to have minimum impact on the delivery of core Defence capabilities. A number of lower-priority capability projects will be deferred with a small number cancelled where they have been superseded by alternative capabilities. Other capability and facility programs will be subject to re-scoping. A range of administrative and minor capital equipment savings will also be made.”

What effect will the Budget have on sustaining major existing capabilities and the development of new capabilities in large projects?

Some have been rescheduled, like the JSF. Some have been dropped like the self-propelled artillery and later acquisition of JSF aircraft. Capital facilities programs have been deferred. Civilian Defence employee numbers will be reduced. Administrative costs will be cut savagely. C-130H Hercules aircraft will be retired earlier than planned.

Of the $24,188 million Defence budget, $1,543.3 million will go towards overseas operations; $4,604.9 million for the capital investment program; $4,600.7 million for sustainment; and $10,385.4 million for the total defence force both uniformed (79.3%) and civilian (20.7%).

Defence’s Top 10, Top 20 and Top 30 selections are all based on estimated expenditures during 2012-13.

Top 20 Sustainment Products

2012-13 sustainment estimates (2011-12 in brackets) consist of $2,974 million ($2,995 million) which has been allocated to the Top 20 products, with a further $1,268 million ($1,293 million) for other sustainment products, and $359 million ($599 million) contribution to operations.

Although the total funds available for sustainment are similar year-on-year, there are significant differences in the detail.

Sustainment products in the 2011-12 budget estimates which no longer make the Top 20 in 2012-13 include LAND 125 Phase 3A for Dismounted Battlegroup and Below Command, Control Communication System which is now proceeding towards IOC; AIR 5333 New Air Defence Command and Control Systems for Control Units 2 & 3 which is effectively complete; AIR 5418 Phase 1 Follow-on Standoff Weapon has been a Project of Concern but has now achieved IOC; JP 2077 Phase 2B.2 ADF Deployable Logistics System which has moved to the build and delivery stage ; LAND 112 Phase 3 Additional Australian Light Armoured Vehicles where this project has delivered the bulk of the capability with 212 vehicles in different variants; and SEA 1390 Phase 4B Standard Missile Replacement to acquire the SM-2 Stage 2 mid-course guidance system for Adelaide Class frigates, conduct acceptance testing and evaluation, and to provide missile technician training.

The most important sustainment product is for Collins Class submarines, with the Minister claiming that a decision has been made to invest an additional $700 million in sustainment, with $100 million allocated 2012-13, $210 million the next year, $218 million in 2014-15 and finally $181 million in 2013-14 and beyond.

The 2012-13 Budget shows a Collins sustainment product estimated expenditure in 2012-13 of $516 million, presumably including the extra $100 million already identified in the paragraph above.

The objective of the Collins Program is to sustain the Collins Class Submarine (CCSM) materiel capability, minimise the logistic costs of ownership, and provide sustainable and cost effective design, engineering and logistics support for platform systems and combat systems, through agreements with industry partners including ASC Pty Ltd (ASC), Raytheon Australia, Thales and BAE Systems.

The planned outcome for 2012-13 is to improve the availability and reliability of the CCSM.

This will be achieved through a range of initiatives focussed on safety and reliability, optimising the maintenance program, supply support reform and establishing the performance based In-Service Support Contracts (ISSC) for platform and mission systems.

The Phase 3 Coles Review report will help to direct further the Collins Reform program and will guide the ISSC transition activities undertaken during 2012-13. In parallel the Collins Program will work collaboratively with Navy in the implementation of the Rizzo Review and Continuous Improvement Program.

Other major sustainment expenditures include $412 million for fuels and lubricants across the ADF and $323 million for explosive ordnance used by the three services.

Air capability receives $161 million for Airborne Early Warning and Control (Wedgetail); $153 million for F/A-18A Hornet Weapons System; $111 million for F/A-18F Block II Super Hornet Weapons System; $105 million for P-3C/AP-3C Orions Weapons System; $81 million for C-130J-30 Weapons System; and $73 million for Lead-in Fighter Hawk 127 Weapons System.

Navy capability receives $206 million for Anzac frigates for ongoing materiels for operational requirements, maintenance, inventory management and preparation of designated ships for work under SEA 1448 Phase 2 (anti-ship missile defence). Adelaide class frigates get $139 million for sustainment of material capability and maintenance.

There are numerous other smaller sustainment products in the Top 20 listing, none of which are more than $100 million. One surprise is that there are no individual land products above $100 million although the Army’s Tiger ARH, MRH-90 and Black Hawk helicopters are allocated $275 million between them, and no doubt the Army consumes its share of explosive ordnance, fuel and lubricants which are the two major sustainment products.

The Smart Sustainment Stream is a Defence-wide reform program that includes Defence industry. It consists of reforms in three disciplines:
• maintenance reforms to improve the operation, support and maintenance of fleets
• inventory reforms to optimise stock holdings, improve stock target setting and apply a risk
weighted approach to inventory management
• Non-Equipment Procurement reforms to establish better demand management arrangements, change the way fleets are operated, improve governance, reduce waste, remove duplication in requirements between Defence Groups and Services, and establish smarter procurement practices to deliver savings in fuel, clothing and explosive ordnance.

Top 30 Major Projects

The total expenditure estimated for Top 30 projects in 2012-13 (2011-12 in brackets) is $3,007 million ($4,465 million), a drop of 33%. What are the major changes to cause such a huge drop?

Almost all of this reduction can be accounted for by four major projects.

JP 2048 Phases 4A/4B Amphibious Deployment and Sustainment (LHDs) drops $549 million as the first hull is finished in Spain, while work is well advanced there on the second hull, and the Australian-based work starts to ramp up. SEA 4000 Phase 3 Air Warfare Destroyer reduces by $219 million as initial preparations are completed prior to block integration getting started.

AIR 5439 Phase 1 Bridging Air Combat Capability (Super Hornets) drops by $128 as this project is nearing completion. AIR 9000 Phase 2 (MRH-90 helicopters) drops $133 million because of delays in this Project of Concern.

As well as a number of projects vanishing from the Top 30, there are seven new projects in for the first time. The most significant of these is $145 million estimated expenditure in 2012-13 on AIR 9000 Phase 8 to procure 24 MH-60R naval combat helicopters. This project has approved expenditure of $2,943 million so it will become a much more important Budget item in future years.

Where there has been a significant article involving the project in APDR over the last 12 months, the issue’s reference is given in the text.

The figures in brackets in $ million after the project number and phase are, respectively, approved project expenditure, estimated cumulative expenditure to 30 June 2012 and budget estimate 2012-13. For example, AIR 5402 has $1,801 million approved, $1,477 million already spent, and $174 million to be spent in 2012-13.

Air to Air Refuelling Capability AIR 5402 (1,801/1,477/174)
Prime Contractor: EADS CASA (Trading as Airbus Military – Spain)

This project will deliver five new generation Airbus A330 Multi-Role Tanker Transport (MRTT) aircraft, to be known as the KC-30A in RAAF service, and the associated through-life support infrastructure for the new fleet.

During 2012-13, the project will complete operational testing of the pod refuelling system with RAAF F/A-18 Hornet receivers in Australia; undertake Australian military certification and service release of the aircraft systems, training, publications and other elements necessary to support achievement of an Initial Operational Capability (for pods air-to-air refuelling and air logistics services); complete testing of modifications to the military avionics and Aerial Refuelling Boom System in Spain; complete final conversion activities and delivery of the fifth aircraft; refurbish and re-deliver the first (prototype) aircraft on the completion of testing in Spain; and deliver upgrades to the simulation training devices in line with modifications to the aircraft fleet.

The key risk for the project is the schedule for completion of testing and documentation for acceptance and introduction into service of the boom refuelling system.

This project continues to be managed as a Project of Concern.

Additional C-17A Globemaster III AIR 8000 Phase 4 (554/395/51)
Prime Contractor: Boeing, through a Foreign Military Sales case with the United States Air Force

This project provides an additional two C-17 Globemaster III aircraft and related provisions, including an enhanced US-common electronic warfare self-protection system to the existing global heavy airlift capability acquired under Project AIR8000 Phase 3. The fifth C-17 aircraft is now in service with the Royal Australian Air Force and the sixth aircraft is on schedule for delivery by December 2012. Final Operational Capability is expected in June 2013 upon installation of the enhanced US-common electronic warfare self-protection system.

During 2012-13, the project will take delivery of the sixth aircraft and will install an enhanced US-common electronic warfare self-protection system in each of the aircraft.

On schedule installation of the enhanced US-common electronic warfare self-protection system represents a major risk to the project as it is managed by a number of different organisations, and the United States export licence process is now more rigorous.

Bridging Air Combat Capability AIR 5349 Phase 1 (3,275/2,699/49)
Prime Contractor: Boeing, through a Foreign Military Sales case with the United States Navy

Phase 1 of the project acquired and delivered 24 F/A-18F Block II Super Hornet multi-role aircraft and associated support systems and services. This air combat capability will be maintained through to the transition to the F-35 Joint Strike Fighter.

During 2012-13, the project will deliver all remaining elements of the aircraft mission and support systems, along with a number of software updates, to achieve Final Operational Capability scheduled for late 2012.

There are no key risks identified for 2012-13 as the project is near completion.

C-17 Globemaster III AIR 8000 Phase 3 (1,846/1,334/40)
Prime Contractor: Boeing, through a Foreign Military Sales case with the United States Air Force

This project provides a global heavy airlift capability based around the Boeing C-17 Globemaster III aircraft and related provisions, including an enhanced US-common electronic warfare self-protection system.

During 2012-13, the project will continue maturing C-17 sustainment requirements, including spares and the procurement of ancillary items such as training devices, role expansion equipment, ground support equipment and materiel handling equipment.

The key risk for the project is the complex design, building integration and transportation challenges associated with achieving delivery of the Cargo Compartment Trainer in time to commence in-country C-17 loadmaster training by the end of 2014.

Maritime Patrol and Response Aircraft AIR 7000 Phase 2 (172/72/31)
Prime Contractor: Boeing (United States), through a cooperative arrangement with the United States Navy

Defence continues to participate with the United States Navy in the cooperative development of the first upgrade to the P-8A Poseidon capability under the Increment 2 Memorandum of Understanding.

Defence has also entered into the Production, Sustainment and Follow on Development Memorandum of Understanding with the United States Navy that provides the framework for the acquisition, sustainment and upgrade of the P-8A, following Government approval.

During 2012-13, the project will focus on informing the AIR 7000 Phase 2 acquisition business case for second pass Government approval in 2014. Activities include the design of the P-8A mission support system and integration into Defence’s Single Information Environment and further developing the Logistics Support Strategy for the P-8A. Defence also expects to finalise a project agreement with the United States Navy for the cooperative development of the Increment 3 upgrade to the P-8A capability.

Airborne Surveillance for Land Operations JP 129 Phase 2 (93/31/27)
Prime Contractor: AAI Corporation through a Foreign Military Sales case with the United States Army

This phase of the project delivers two Tactical Uninhabited Aerial Systems; each comprising five air vehicles, two ground control stations, a tactical launch and recovery element, associated tactical support systems, logistics and training. Two Shadow 200 systems, based on a four air vehicle United States Army configuration, have been delivered under an accelerated arrangement with the United States Army, with the first deployed to Afghanistan.

Additional equipment to meet the Australian configuration will be delivered in 2012 and 2013.

During 2012-13, the project will establish a Shadow 200 Australian Based Training Centre, install Australian Combat Network Radios into the Ground Control Stations and complete installation of system shelters on Unimog vehicles.

The key risk for the project is incorporation of the accelerated radio modification to meet Army’s deployed operational requirement which may face unexpected technical challenges or schedule issues.

Battlespace Communications System (LAND) JP 2072 Phase 2A (437/53/156)
Prime Contractor: Harris Corporation

This project will deliver combat net radios to replace many of the current land based, dismounted radios in use by the ADF. The current dismounted radio fleets are approaching end-of-life and these legacy, analogue radios will be replaced by modern, digital radios, maximising commonality with the radio fleet procured under the previous JP 2072 Phase 1.

The acquisition contract was signed in January 2012.

During 2012-13, this project will commence delivery and introduction into service of the first radios, as well as establishing a support infrastructure for ongoing support of the radios and ancillaries.

The key risk for this project is managing the smooth transition into service and support of the new capability.

For more information on this project see ‘Battlespace Communications: Evolution and problems of Battlespace Communications’ APDR November 2011

Next Generation Satellite Communications System JP 2008 Phase 4 (865/485/116)
Prime Contractor: Boeing through a Foreign Military Sales case with the United States Government

This project will deliver the next generation satellite communication system. The capability is being delivered under a Memorandum of Understanding with the United States Government and has delivered Wideband Global SATCOM System (WGS) Service Initial Operational Capability and Interim Anchoring Capability.

The focus for 2012-13 will be:
• the finalisation of production and testing of the WGS 6 satellite and the Remote Monitoring and Control system at HMAS Harman and Geraldton to allow the control of a WGS satellite in the Indian Ocean Region
• achievement of material release for the activation of satellite 104oE slot and progression towards Final Materiel Release to the United States operational acceptance of WGS 6.

The key risk for 2012-13 is the successful coordination of an international telecommunications union orbital slot to position a WGS satellite.

For more information see ‘Wideband Global SATCOMM network expands’ APDR February 2012.

Joint Command Support Environment JP 2030 Phase 8 (256/138/47)
Prime Contractors: System Integrator Contractor: CSC Australia; Capability Development & Support
Contractor: Lockheed Martin Australia

JP 2030 Phase 8 is an evolutionary acquisition project established to deliver a cohesive and integrated Joint Command Support Environment for the efficient and effective planning and conduct of ADF operations for Headquarters Joint Operations Command (HQJOC). Two of the three evolutions have been approved.

During 2012-13, this project will implement the first two hardware and software capability releases as part of evolution 2. The first evolution 2 releases include business artefacts generation, enhancements to the planning capability and the initial delivery of the Situational Awareness – Common Operating Picture capability.

Key risks are evolving business process and user needs at HQJOC and ensuring the delivered solution provides an efficient and effective user interface. These risks are mitigated by the user-centric software development process and multiple release cycles allowing user feedback based on use in service.

Ultra High Frequency Satellite Communications JP 2008 Phase 5A (433/282/43)
Prime Contractor: Intelsat LLC

This project is scoped to deliver UHF satellite communications to the ADF via a hosted payload on a commercial Intelsat satellite. The project will also deliver essential ground infrastructure to provide network control. The launch of the Intelsat satellite occurred in March 2012.

During 2012-13, this project will achieve in-orbit testing of the Intelsat-22 satellite and delivery of ground infrastructure.

The key risk to this project is delivering a Network Control System that provides interoperability with United States infrastructure.

Battle Management System LAND 75 Phase 3.4 (307/144/33)
Prime Contractor: Elbit Systems Limited

This project will deliver Mounted Battle Management Systems including command post systems to the ADF in cooperation with LAND 125 Phase 3A (delivering the dismounted Battle Management System) and JP 2072 Phase 1 (providing the Combat Radio System).

The project is delivering into a Brigade group in support of land network-centric warfare roadmap milestones. Initial Materiel Release was achieved in June 2011, and initial operational test and evaluation activities will be conducted in mid 2012. The Final Materiel Release for the system is due in 2013.

During 2012-13, this project will complete the majority of remaining acceptance and quality assurance procedures for installation of the Battle Management System into a number of platforms, and achieve full-rate installation into priority variants of the Protected Mobility Vehicle.

The key risk is finalising the complex design acceptance processes with the respective platform design authorities. Risk mitigation activities include implementation of a detailed technical certification plan, close management of the commercial arrangements with the platform design authorities and formation of contracts between Elbit and platform design authorities for the provision of expert support.

Bridging Air Combat Capability AIR 5349 Phase 2 (274/124/54)
Prime Contractor: United States Government through Foreign Military Sales cases

This project will introduce into service a number of new weapons and countermeasures under the Australian Super Hornet program. These weapons will significantly enhance the RAAF’s ability to conduct air, land and maritime strike operations. This project is running concurrently with AIR 5349 Phase 1 to deliver the Bridging Air Combat Capability.

During 2012-13, the United States Navy and United States Air Force will undertake weapon integration testing. Delivery of the Joint Stand-off Weapon C-1 is due to commence in 2013.

The key risk for this project is schedule. Both the United States Air Force and United States Navy are under budgetary pressure and have identified early indications of schedule slip for their test programs and production contracts.

Lightweight Torpedo Replacement JP 2070 Phase 2 (337/249/33)
Prime Contractor: EuroTorp, Thales

This project will deliver MU90 Anti-Submarine Lightweight Torpedoes, integrated with the Anzac and Adelaide class frigates.

JP 2070 Phase 2 is being managed as a Project of Concern in conjunction with JP 2070 Phase 3.

During 2012-13, this project will continue to support operational test and evaluation, complete ship modifications, establish in-service support arrangements and deliver essential spares.

The key risk for this project is delay to the successful completion of operational test and evaluation. Elements of this risk include availability of fleet assets and adverse weather conditions.

Mulawala Redevelopment Project JP 2086 Phase 1 (369/322/28)
Prime Contractor: Lend Lease

This project will deliver a modernised propellant manufacturing facility at Mulwala, to replace the existing but now obsolete plant that dates back to the 1940s. The modernised facility will meet more stringent and contemporary environmental and work, health and safety standards.

The existing Commonwealth owned Mulwala Facility, which manufactures propellants for incorporation into ADF munitions, is operated by Thales Australia Limited.

During 2012-13, the design and construction contractor will continue the task of commissioning the modernised facility using trained operators from the Thales workforce. This commissioning process will include the manufacture and qualification of military grade propellants. Following acceptance by the Commonwealth in 2013, the modernised facility will be transitioned to Thales for operation.

The key risk for this project is the successful transition of propellant production from the existing facility to the modernised facility.

Multi Role Helicopter AIR 9000 Phase 2 (3,656/2,098/260)
Prime Contractor: Australian Aerospace

This project is acquiring 46 MRH90 helicopters for the Army and Navy. Phase 2 represents 12 Army MRH90 (additional Squadron to support Army lift capability). Fifteen aircraft have been accepted as at 28 February 2012.

The MRH90 program has suffered delays of over two years and was declared a Project of Concern in late 2011.

During 2012-13, this project aims to achieve Initial Operational Capability for Navy, and introduce full flight and mission simulators into service.

The key risks for this project will be rectifying a range of technical issues and to generate the necessary flying rates to meet Navy and Army requirements.

Future Naval Aviation Combat System Helicopter AIR 9000 Phase 8 (2,943/216/145)
Prime Contractor: Foreign Military Sales

The MH-60R Seahawk Romeo, 24 of which are being acquired under Project AIR 9000 Phase 8, will replace the current 16 S-70B-2 Seahawk helicopters and the 11 cancelled SH-2G(A) Seasprite helicopters.

The aircraft will be equipped with a highly sophisticated avionics suite designed to employ Hellfire air-to-surface missiles and Mark 54 anti-submarine torpedoes. The aircraft will provide Navy with a contemporary helicopter based anti-submarine and anti-surface warfare capability.

The acquisition of 24 aircraft will enable the Navy to deploy at least eight Seahawk Romeo flights across the Anzac class frigates and the new Hobart class Air Warfare Destroyers.

During 2012-13, introduction into service training for aircrew and maintainers will commence in the United States, Australian certification activities will be progressed, and the detailed design for facilities, predominately at HMAS Albatross, will be finalised and construction will commence.

The key risk to meeting the Initial Operational Capability lies in coordinating the facilities construction schedule with the aircraft delivery schedule.

For more information see ‘AIR 9000 Phase 8 Seahawk replacement: limited local opportunities’ APDR October 2011.

Armed Reconnaissance Helicopter AIR 87 Phase 2 (2,031/1,818/72)
Prime Contractor: Australian Aerospace

This project has acquired an Armed Reconnaissance Helicopter system for Army. The system consists of 22 aircraft (which have been accepted into service), a software support facility, electronic warfare mission support system, ground mission equipment, facilities, a training system and training devices including full flight and mission simulators.

The major objectives for 2012-13 will be the completion of the retrofit aircraft program, delivery of supplies under the acquisition contract and to commence close-out of the acquisition contract.

The key risks for this project are delivery of the remaining capabilities and retrofit program on schedule and effectively improving the performance of maintenance and supply support networks.

Field Vehicles and Trailers – Overlander Program LAND 121 Phase 3 (3,191/216/132)
Prime Contractor: Light/Lightweight Vehicle Capability: Mercedes-Benz Australia-Pacific, Light/ Lightweight Trailer Capability: Haulmark Trailers Australia, Medium/Heavy Vehicle Capability: Rheinmetall MAN Military Vehicles Australia (preferred tenderer as at December 2011); Medium/ Heavy Trailer Capability: Haulmark Trailers Australia (preferred tenderer as at December 2011); Additional Bushmaster vehicles: Thales Australia

Project Overlander is a multi-phased project to deliver the ADF’s future field vehicles, modules and trailers. Under this phase Defence plans to acquire:
• unprotected light lightweight/Mercedes G-Wagon vehicles, light lightweight and medium/heavy trailers
• protected and unprotected medium/heavy vehicles and specialist modules
• Bushmaster protected mobility vehicles (reported under LAND 116).

Light/lightweight capability: Key activities for 2012-13 will be the continued receipt and delivery of production vehicles and trailers into service, refinement of the through-life support capability and the continued training of vehicle operators and maintenance personnel.

Medium/heavy capability: During 2012-13 the Offer Definition Activity and contract negotiation with Rheinmetall MAN Military Vehicles Australia will be finalised and Defence will present a Second Pass submission to Government for approval.

Bushmaster Protected Mobility Vehicles LAND 116 Phase 3 (1,032/771/58)
Prime Contractor: Thales Australia

This project, referred to as Project Bushranger, will deliver 838 vehicles in seven variants (troop, command, mortar, assault pioneer, direct fire weapon, ambulance and air defence).

The vehicles will provide protected land mobility to Army units and Air Force Airfield Defence Guards. All 300 troop, command, assault pioneer, mortar, direct fire weapon and ambulance variants under the original contract have been delivered. Delivery of 144 Enhanced Land Force vehicles was completed in April 2009 and delivery of 293 Production Period 3 (project LAND 121) vehicles was completed in February 2012.

The prime focus of the project for 2012-13 is the completion of the delivery of 101 protected mobility troop variants approved as Production Period 4 to address attrition and future operational requirements. Delivery of these vehicles commenced in February 2012.

A key risk is that fitment of External Composite Armour buttons to the protected mobility vehicle will be affected by vehicle availability impacting on schedule; however this risk is being mitigated by comprehensive liaison between the Prime Contractor and Army to establish fitment priorities and schedule.

Counter Rocket, Artillery & Mortar (C-RAM) LAND 19 Phase 7A (253/147/55)
Prime Contractors: Saab AB (Sweden), Northrop Grumman (United States), SRC Tech (United States) and Coopers Notifications (United States)

This project will deliver a Counter Rocket Artillery and Mortar (C-RAM) sense and warn capability for Australian bases in Afghanistan to provide early warning against enemy indirect fire attacks.

The project has achieved Initial Operational Capability and during 2012-13 will deliver Final
Operational Capability consisting of additional giraffe radars for the Multi National Base at Tarin Kowt. The first two of three radars will be delivered to Afghanistan in September 2012, with the third and final radar being delivered to Australia in January 2013 for training use. These deliveries are on schedule.

The capability has been fielded operationally since December 2010 and is operating effectively at all bases where it is present. Defence is now examining the introduction of the C-RAM capability into service.

The key risks include completing the full introduction into service, and the ability to establish an Australian training capability in order to support domestic ADF based training for C-RAM in 2012.

Digital Terminal Control System LAND 17 Phase 1B (115/38/35)
Prime Contractor: Not in contract

This project will deliver 152 digital terminal control systems. This capability allows artillery forward observers and joint terminal attack controllers to identify targets with greater accuracy through the use of precision targeting software. It also provides the means to digitally request fire support from land, sea or airborne weapon systems.

During 2012-13, this project will be in contract and commence acquisition of core system components and the peripheral items that constitute the digital terminal control system capability. The project will also conduct system engineering activities to comply with the technical regulatory requirements of the design acceptance process.

The key risk for this project is in delivering a digital terminal control system that meets the integration and interfacing requirements of the joint fires environment. This risk is being treated through the rigorous application of systems engineering processes, with comprehensive stakeholder engagement.

Artillery Replacement 155MM Howitzer LAND 17 Phase 1A (322/122/29)
Prime Contractor: through several United States Government Foreign Military Sales cases

This project will deliver 35 M777A2 lightweight towed howitzers, a command and control battle management system and course correcting fuzes.

The 35 M777A2 howitzers have now been received and the final version of the battle management system software has been delivered. During 2012-13, this project will complete deliveries of the howitzers and the battle management systems into Army units. The project will also establish a Foreign Military Sales case for the acquisition of the course correcting fuze element of the capability.

The key risk for this project is achieving complete integration and interoperability within the ADF Joint Fires digital command and control environment.

Australian Protected Route Clearance Capability JP 154 Phase 3A (74/15/29)
Prime Contractor:
• US Foreign Military Sales – HUSKY Ground Penetrating Radar (GPR) and Interrogator Arm (IA)
• JCB Construction Equipment Australia – High Mobility Engineer Excavator (HMEE)
• Pearson Engineering – Self Protected Adaptive Roller Kit (SPARK) Mine Roller mark II (SMRII)

This project will provide a Protected Route Clearance Capability to significantly improve force
protection to counter the evolving Improvised Explosive Device threat. Four route clearance systems, including support systems, will be procured. Each system will consist of the following vehicle types:
• three HUSKY Mark 3.3 protected vehicles (two fitted with GPR and one fitted with an IA)
• two SMRII (integrated onto Protected Mobility Vehicles (PMV), supplied by Land 116
• two protected HMEE.

During 2012-13, this project will deliver 12 HUSKY (eight fitted with GPR and four fitted with IA); a SMRII support system (11 SMRII have been delivered under an extant Operational User Requirement); and eight HMEE – two to Australia and six to theatre.

The key risk for this project is the potential for delay in releasing a required amendment to the Foreign Military Sales Case for HUSKY vehicles, which would adversely impact delivery of the vehicles and Initial Materiel Release.

Upgrade to M-113 Armoured Vehicles LAND 106 (884/763/26)
Prime Contractor: BAE Systems Australia Defence

This project will deliver 431 M113 AS4 vehicles in seven variants namely personnel, fitters, recovery, command, ambulance, logistics and mortar. The project is upgrading the Army’s M113 A1 vehicles to improve protection, lethality, mobility and habitability. The upgrade replaces most of the vehicle, retaining only the hull, hatches, rear door and communications systems. The final contracted delivery date for all 431 vehicles is December 2012, but the contractor is delivering ahead of schedule.

During 2012-13, this project will complete delivery of the final vehicles (logistic and mortar variants) and associated technical publications. Final deliveries of project related spare parts will also be achieved, as the project moves towards project closure by June 2013.

The key risk for this project is production slippage, which will remain until all production is complete. The production schedule relies on the contractor maintaining the current manufacturing capacities of its Bandiana and Wingfield facilities.

Anzac Ship Anti-Ship Missile Defence SEA 1448 Phase 2B (676/351/52)
Prime Contractor: CEA Technologies Proprietary Limited and the Anzac Ship Integrated Material Support Program Alliance (comprising the DMO, Saab Technologies Australia and BAE Systems)

This project will deliver a phased array radar system to the Anzac class frigate for target indication/tracking, mid-course guidance and target illumination for the Evolved Sea Sparrow Missile in conjunction with other sensor and combat management system upgrades delivered under SEA 1448 Phase 2A.

During 2012-13, the project will continue to develop the Stage 2 final phased array radar software capability, for delivery by mid 2013 with sea acceptance testing in late 2013.

The project will also progress installation in HMAS Arunta and prepare for subsequent ship

The key risk for this project is successfully achieving the upgrade to meet capability software
requirements within the planned scheduled program given the nature of software development risks.

Air Warfare Destroyer Build SEA 4000 Phase 3 (7,870/3,733/622)
Prime Contractor: the AWD Alliance

The Air Warfare Destroyer program is being delivered under an alliance-based contracting arrangement between ASC AWD Shipbuilder Pty Ltd, Raytheon Australia Pty Ltd and the Government, represented by the DMO.

This project will deliver three Hobart Class Air Warfare Destroyers and their support system to the Royal Australian Navy, providing a significant increase in defence capabilities, from area air-defence and escort duties, right through to peacetime national tasking and diplomatic missions.

During 2012-13, this project will achieve a number of key milestones, including keel-laying and commencement of hull consolidation for the first ship. Final deliveries of Foreign Military Sales equipment for the first ship’s Aegis combat system will be received, testing of the Australian Tactical Interface hardware and software will be carried out and the integration of the Combat System Through-Life Support Facility will be complete by mid 2013.

Areas of risk and opportunity for the project in 2012-13 include managing the recruiting and training of people to ensure a sensible workforce profile is achieved, a work plan that develops core shipbuilding skills and improves the long term performance of the shipyards.

A key area for workforce development in 2012-13 will be building the team that will consolidate blocks and integrate equipment to build the complete warship, which will be done on the Government of South Australia’s Common User Facility adjacent to the ASC shipyard in Adelaide.

Delivery of hull blocks to Adelaide and maintaining a safe workplace in the shipyards will also be important.

For more information related to this capability see ‘Australia at the Nexus of 21st Century Power: Keeping Aegis BMD Options Open’ APDR May 2012

Amphibious Deployment and Sustainment JP 2048 Phase 4A/4B (3,066/2,192/158)
Prime Contractor: BAE Systems Australia Defence

This project will acquire two Canberra Class Amphibious Ships referred to as Landing Helicopter Dock (LHD). This project is one of a number of projects grouped under the Amphibious Deployment and Sustainment (ADAS) Program, designed to replace and enhance Navy’s amphibious and afloat support capability.

Navantia, a subcontractor to BAE Systems, is constructing the LHD hulls in Spain. BAE Systems is constructing the superstructures in Williamstown dockyard. L3 Communications is subcontracted to BAE to supply the communications system and Saab Systems Australia to provide and integrate the combat management system. BAE will deliver the first ship to the DMO in early 2014 and the second ship in the third quarter of 2015.

The hull of the first ship will be transported to Australia via Heavy Lift Ship arriving in the third quarter of 2012. Superstructure consolidation and installation of Combat and Communications systems will be undertaken in Williamstown after the hull arrives. The hull of the second ship will be launched in Spain in mid 2012.

The key risks for this project remain the change in requirements from either regulatory change or requirements creep and the risk associated with the complex system integration.

For more information on this project see ‘JP 2048 Phases 4A/4B – LHD Update’ APDR April 2012.

Amphibious Watercraft Replacement JP 2048 Phase 3 (230/23/59)
Prime Contractor: Navantia

This project will acquire 12 new watercraft to operate with the LHD ships. The watercraft (LHD Landing Craft) provide an organic ship to shore connection in support of Defence’s amphibious capability. The LHD Landing Craft will interface and operate with the two Canberra class LHDs and enable transport of personnel and equipment between the LHDs and the shore, including where there are no fixed port facilities or prepared landing facilities.

The project entered Contract for the acquisition of the LHD Landing Craft in December 2011.

A number of key milestones are forecast to occur during 2012-13, including system design reviews and cutting of steel for the first LHD Landing Craft.

The most significant milestone and risk for this project is the potential for late delivery of the first four LHD Landing Craft in 2014, thus failing to support the delivery of the first LHD to Defence.

Airborne Early Warning and Control Aircraft AIR 5077 Phase 3 (3,837/3,286/289)
Prime Contractor: Boeing (United States)

This phase, referred to as Project Wedgetail, will provide the ADF with an Airborne Early Warning and Control (AEW&C) capability comprising six aircraft and associated supplies and support.

Project Wedgetail is being managed as a Project of Concern due to the significant schedule slippage and technical risks that have been encountered in the delivery of this capability.

Ongoing issues with subsystem technical maturity and integrated system performance have resulted in Boeing not meeting the revised delivery dates of December 2010 and subsequently March 2012. Boeing now plans to deliver the first aircraft in its final operating configuration in mid 2012.

During 2012-13, this project will deliver the final operating configurations for the six aircraft and associated ground support systems. The project will also deliver the final elements of the logistics support requirements by mid 2013.

The key risk for this project is completion of the test and evaluation program.

Joint Strike Fighter Aircraft AIR 6000 Phase 2A/B (2,362/130/103)
Prime Contractor: Lockheed Martin is contracted to the United States Government for the development and production of the F-35 Joint Strike Fighter (JSF). Australia is procuring the aircraft through a government-to-government agreement

This phase of the program will deliver 14 Conventional Take Off and Landing F-35 aircraft and associated support systems. The first two aircraft will be delivered in 2014-15 in the United States for testing and training purposes.

Purchase of another 12 aircraft will occur two years after the previously anticipated timetable.

A related article on this project can be found in ADR April 2012, see ‘Electronic Warfare: JSF EW capabilities – sensor fusion the key’

Acquisition Projects not in the Top 30

These do not make the Top 30 for estimated spend in 2012-13. The budget has provided $218 million for almost complete projects which have an originally approved expenditure of $14,018 million.

Some examples, with approved project expenditures in brackets, are F/A-18 Hornet Upgrade ($1,877 million); HF Modernisation ($671 million); additional ASLAVs ($690 million); Tank Replacement Project ($559 million); Anzac Ship Project ($5,381 million); Armidale Class Patrol Boat ($537 million); Guided Missile Frigate Upgrade Implementation ($1,450 million); Collins Class Submarine Reliability and Sustainability SEA 1439 Phase 3 ($411 million); and Collins Replacement Combat System ($450 million).

Top 10 Minor Capital Investments Projects

These minor projects for 2012-13 (2011-12 in brackets) amount to $58 million ($44 million), up 32%. As might be expected these are usually of short duration from approval to delivery.

The only significant ones persisting are Australian Light Armoured Vehicle Crew Procedural Trainers for $14 million ($3 million) and the Air Force’s Traffic Alert and Collision Avoidance System nearly complete at $3 million ($10 million).

In Conclusion

Anyone wishing to read the full details of the Defence Budget 2012-13 can find them at http://www.defence.gov.au/budget/12-13/index.htm. This 240 page document lists in great detail tables and explanations of past expenditure, 2012-13 estimates, and forward estimates of expenditure through to 2015-16.

The Defence Minister’s view of the budget is that although there are changes in priorities, Defence will continue to have sufficient capability in the near-term to meet the missions set for it by Government.

The more serious long-term problem is that cutting new project expenditure will cause the Australian defence industry to lose hard won expertise rapidly. Why would a firm persist with such a stop-go customer as Defence? Does industry, better supported by Defence, have to become much more export-oriented? Team Australia is a start, but more effort is required.

The 2013 Defence White Paper will need to offer much more substance to industry if Australia is not to become simply a customer for imported COTS and MOTS equipment or assembler of overseas sourced materials and systems. A much more realistic strategic view and clearer programming of capabilities, which will be needed in the 2020s and 2030s, is the very least that the Government should deliver.

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