Reports and Publications

• Annual Report 2006
  • Contents
  • Part 1 Overview
  • Part 2: Statement of responsibility and audit report
  • Part 3: Departmental financial statements
  • Part 4: Non-departmental schedules
  • Part 5: Other information

Within this section

Output Class - Management of equipment procurement

• Description
• Outcome
• Service performance
  • Quantity and timeline

1. Army Engineering Equipment

2. Replacement Helicopter Capability

3. Acquisition of direct fire support weapon (area)

Annual Report for the year ended 30 June 2006

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Part 3: Departmental financial statements (continued)

Statement of objectives and service performance
For the year ended 30 June 2006

Output Class - Management of equipment procurement

Description

Under this output class the Minister of Defence will purchase the following:

• management of procurement, or refurbishment, on behalf of the Crown, of significant equipment contributing to a capability of the New Zealand Defence Force. This will involve:
  • management of procurement functions from the initial identification of a requirement through ministerial approval-in-principle and commitments
  • the subsequent acquisition process, including project investigation, risk assessment, quality assurance, equipment selection, negotiation and execution of contract arrangements up to the point when the equipment is delivered to the New Zealand Defence Force
  • advice on introduction into service and the management of any warranty provisions
  • investigation of associated financing arrangements and on-sale to the New Zealand Defence Force
• maintenance of an information base on industrial capability, and the provision of advice to industry on defence requirements.

Outcome

New Zealand armed forces equipped to the level appropriate for the protection of New Zealand and its external interests according to the Government's defence policy.

Service performance

Quantity, quality and timeliness

It will progress some or all of the following projects, subject to appropriate Government approval for each:

1. Army Engineering Equipment This project will improve the Army's engineering equipment and its ability to support the mobility of the motorised land force with the acquisition of combat engineering tractors, rapid gap-crossing system and water purification/storage equipment. This equipment is expected to enter service in 2006/07.
Target	Delivered
In 2005/06 it is planned to: take costed proposals back to the Government negotiate a contract with a preferred supplier, or suppliers.	This project is under review within the New Zealand Defence Force as part of an update of the Defence Long-term Development Plan (LTDP). The Ministry of Defence awaits the outcome of the review.
Further project milestones will be known once a contract is awarded.	No contracts have been awarded.

Financial summary of pre-acquisition costs charged to departmental output class - Management of equipment procurement in 2005/06 (GST exclusive)
	$
Budget for pre-acquisition costs	222,000
Expenditure to 30 June 2006	39,000

2. Replacement Helicopter Capability This project proposes the replacement of the Iroquois utility helicopter and the Sioux training helicopter with a capability that meets the New Zealand Defence Force's contemporary needs. The training helicopter is expected in service in 2006 with the medium utility helicopter entering service 2008/09.
Target	Delivered
In 2005/06 it is planned to: take costed proposals back to the Government negotiate a contract with a preferred supplier, or suppliers.	A response to a Best and Final Offer (BAFO) with NH Industries was received in October 2005. Cabinet directed in April 2006 that the Ministry of Defence enter into non-binding negotiations with NH Industries to determine the overall cost of acquiring NH90 helicopters, based on options for numbers and delivery dates. In July 2006 Cabinet authorised Ministry of Defence to enter into contract negotiations with NH Industries. These negotiations were completed and a contract with NH Industries was signed by the Minister of Defence on 31 July 2006.
Further project milestones will be known once a contract is awarded.	Project milestones will now be developed. The delivery of aircraft are scheduled between November 2009 and June 2011.

Financial summary of pre-acquisition costs charged to departmental output class - Management of equipment procurement in 2005/06 (GST exclusive)
	$
Budget for pre-acquisition costs	118,000
Expenditure to 30 June 2006	322,625

• Pre-acquisition costs are recovered from NZ Defence Force and are fiscally neutral in Vote Defence. The additional costs for this project were provided for in the total NZ Defence Force budget for new project activities.

3. Acquisition of direct fire support weapon (area) for the New Zealand Army This weapon will provide land forces with the ability to engage targets at a range of up to two kilometres.
Target	Delivered
In 2005/06 it is planned to: enter into a contract for the acquisition of this equipment.	This project is on hold as a satisfactory combined weapon and sighting system was not available. The New Zealand Army has had to reconsider its requirements and a restructured project is included in the 2006 update of the Defence Long-term Development Plan (LTDP) due to be released shortly. No costs were incurred during 2005/06.
Further project milestones will be known once a contract is awarded.	No contract has been awarded.

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