Annual Report for the year ended 30 June 2004
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Part 3: Departmental financial statements (continued)
Output Class D3 - Management of equipment procurement
Defence Industry
Target |
Delivered |
- It will provide support for the Defence Industry Committee of New Zealand.
|
- Meetings of the Defence Industry Committee of New Zealand (DICNZ) were held on 4 September 2003, 29 January 2004 and 4 May 2004.
- The Ministry also supported the Defence Industry Committee Awards of Excellence in November 2003.
|
- It will ensure that local, including domestic, suppliers are afforded opportunities to compete for work consistent with the government procurement policy set out in Policy Guide for Purchasers issued by the Ministry of Economic Development in July 2002.
|
- Government policy on procurement, published by the Ministry of Economic Development, is applied to Defence procurement. This policy requires that Defence give "full and fair" opportunity for local suppliers to participate in Defence projects.
- The Ministry has engaged with Industry Capability Network to ensure domestic industry capabilities are promoted to the major international companies under consideration for the supply of equipment.
|
- It will complete material for the Australia and New Zealand Industry Defence Equipment and Capability Catalogue database and update databases on industrial capability.
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- The Ministry of Defence and New Zealand Defence Force have added 180 companies to the database and continue to promote the database as a respected catalogue of industrial capability.
|
- It will conduct industry-briefing sessions on current defence projects and activities.
|
- The Ministry provided regular briefings at New Zealand Defence Industry Association meetings.
- Assistance was also provided to the New Zealand Industry Association as sponsors of the Annual Defence Industry Seminar as well as organisational input for the annual 2 day Defence Forum usually held at Te Papa in Wellington in late October.
|
- By using the Industry Capability Network as an agent, it will ensure that prospective overseas-based prime contractors are fully aware of the abilities of domestic industry to participate in the supply and support of capability being acquired through projects managed by the Ministry.
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- Suppliers and prime contractors have been referred to the Industry Capability Network database.
|
Output Quality Measures and Standards
| |
Comment
|
- The 2004 Statement of Intent detailed the quality standards intended.
|
- The Ministry has maintained quality control procedures to support the expectations for acquisition activities under this output class.
- prices agreed for new projects approved by the Government during the financial year have been based on a competitive tender process, and contract awards have been subjected to consideration of through-life costs, quality, delivery schedule and local industrial participation
- potential risks for all projects have been identified together with corrective actions required or taken
- all payments made have been at the contracted prices to the correct suppliers upon the achievement of agreed milestones
- assumptions behind advice have been explicit, logical and supported by facts, adequate consultation has taken place with interested parties and objections to proposals identified
- problems with implementation, technical feasibility and time have been addressed
- ISO 9001 certification has been maintained.
|
In addition: |
|
- the Defence Industry Committee of New Zealand will be asked to confirm annually that the Ministry and its agent, the Industry Capability Network have appropriately promoted domestic suppliers' capabilities to prospective overseas-based prime contractors
|
- Industry Capability Network (ICN) has outlined the activities it conducted on four major projects during the financial year to ensure that competitive local industry was given full, fair and reasonable opportunity to compete for Ministry project work. This included ensuring local capability was a consideration in the bids of potential overseas prime contractors.
- ICN advises that a good working relationship exists.
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- the quality of management of equipment procurement will be assessed in terms of whether it is credible, respected, and contributes to the achievement of the Government's defence policy objectives by:
- seeking the Minister's views
- seeking the views of key stakeholders in management of equipment procurement.
|
- Process management issues are discussed regularly with the Minister.
- The views of other stakeholders are obtained at Executive Capability Board and DICNZ meetings.
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- The Acquisition Division will implement recommendations agreed by the Ministry from audits or reviews.
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- Recommendations from three audits are being implemented.
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Cost of Output Class D3 - Management of equipment procurement (GST exclusive)
For the year ended 30 June 2004
| |
30/6/2003 Actual
$000
| 30/6/2004 Actual
$000 |
30/6/2004 Main
estimates
$000 |
30/6/2004 Supp.
estimates
$000 |
| Revenue |
|
|
|
|
| Crown |
3,375 |
3,300 |
3,369 |
3,369 |
| Other |
4,338 |
1,727 |
1,866 |
2,921 |
| Total revenue |
7,713 |
5,027 |
5,235 |
6,290 |
| Expenditure |
|
|
|
|
| Personnel |
882 |
1,061 |
964 |
964 |
| Operating |
4,605 |
2,025 |
2,224 |
3,279 |
| Other |
1,954 |
1,866 |
2,047 |
2,047 |
| Total expenditure |
7,441 |
4,952 |
5,235 |
6,290 |
| Surplus /(deficit) |
272 |
75 |
- |
- |
Project financial performance
For the year ended 30 June 2004
Project payments capitalised against Crown appropriations in 2003/04, and recoveries from the New Zealand Defence Force, were:
Expenditure |
Recoveries
from NZ
Defence Force
|
| |
2003/04
Main
estimates
$000
|
2003/04
Supp.
estimates
$000
|
30/6/2004
Actual
$000 |
2003/04
Supp.
estimates $000 |
30/6/2004
Actual
$000 |
| ANZAC Ships |
11,231 |
9,883 |
6,611 |
20,910 |
20,910 |
| Maritime helicopter |
- |
422 |
1,273 |
3,067 |
3,067 |
| P3 Orion autopilot |
- |
- |
- |
28 |
28 |
| B-757 aircraft |
44,055 |
28,974 |
14,540 |
98,071 |
98,071 |
| Light armoured vehicles |
291,112 |
277,542 |
262,766 |
331,782 |
331,782 |
| Tactical communications |
- |
8,711 |
8,878 |
7,706 |
7,706 |
| Light operational vehicles |
- |
5,660 |
3,628 |
- |
- |
| Medium range anti-armour weapon |
- |
1,731 |
2,136 |
679 |
679 |
| Air defence system |
- |
2,947 |
1,631 |
- |
- |
| Other projects |
- |
- |
3 |
55 |
55 |
| GST on imported goods and NZ payments |
63,656 |
48,224 |
47,272 |
- |
- |
| Total |
410,054 |
384,094 |
348,738 |
462,298 |
462,298 |
(Figures are GST exclusive)
The appropriation (GST inclusive) for this output class was increased by $1,187,000 for:
| |
$(000)
(GST incl) |
Light operational vehicles
New provision for pre-acquisition costs in 2003/2004. Funded by recovery from New Zealand Defence Force as Revenue Other.
|
157 |
Joint command and control systems
Study complete. Budget under spent.
|
(428) |
Automatic grenade launcher
New provision for pre-acquisition costs in 2003/04. Funded by recovery from New Zealand Defence Force as Revenue Other.
|
64 |
New Naval ships - Project Protector
Additional provision for pre-acquisition costs in 2003/2004. Funded by recovery from New Zealand Defence Force as Revenue Other.
|
761 |
C-130 Hercules aircraft-life extension programme
Additional provision for pre-acquisition costs in 2003/04. Funded by recovery from New Zealand Defence Force as Revenue Other.
|
169 |
P-3 Orion aircraft upgrade
Additional provision for pre-acquisition costs in 2003/04. Funded by recovery from New Zealand Defence Force as Revenue Other.
|
135 |
Identification, alerting and cueing systems
New provision for pre-acquisition costs in 2003/04. Funded by recovery from New Zealand Defence Force as Revenue Other.
|
131 |
Helicopter capability
New provision for pre-acquisition costs in 2003/04. Funded by recovery from New Zealand Defence Force as Revenue Other.
|
198 |
| Total change for financial year |
1,187 |
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