Annual Report for the year ended 30 June 2008
Part 3: Statement of service performance (continued)
Output Class - Management of equipment procurement
2. The Ministry continued management of the following projects:
2.1 Replacement Helicopter Capability: Medium Utility Helicopter
This project is the acquisition of eight operational TNZA NH90 helicopters. These helicopters will be delivered to the NZDF over a period from 2010 to 2011.
Objective
In 2007/08 it was planned to:
- hold a design review in mid November.
Performance
- The Critical Design Review meeting was held and the configuration baseline for the TNZA helicopter frozen.
- The second supply support conference reviewed the proposed lists of spares and support equipment.
- The first helicopter’s three fuselage sections were mated.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 108,323,930 |
| Ancillary contracts | (214,692) |
| Project management |
739,387 |
| Total net expenditure | 108,848,625 |
| GST payments | 1,865 |
| Total project expenditure in 2007/08 | 108,850,490 |
| [B] Project cost summary as at 30 June 2008 | Actual costs to 30 Jun 08 $ |
Future commitments & forecasts $ |
Estimated outturn 30 Jun 08 $ |
|---|---|---|---|
| Prime contract | 332,452,356 | 362,851,712 | 695,304,068 |
| Ancillary contracts | 3,519,923 | 16,791,395 | 20,311,318 |
| Project management | 1,638,784 | 7,891,463 | 9,530,247 |
| Contingency | - | 7,700,000 | 7,700,000 |
| Project net expenditure | 337,611,063 | 395,234,570 | 732,845,633 |
| GST | 23,144 | 96,439,748 | 96,462,892 |
| Estimated project outturn | 829,308,525 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | 37,993,962 | ||
| 867,302,487 | |||
| Project costs approved by Cabinet (net expenditure) | 771,710,326 | ||
| GST costs approved by Cabinet | 96,463,791 | ||
| Total costs approved by Cabinet | 868,174,117 |
2.2 Acquisition of new vessels for the Royal New Zealand Navy
This project is for the acquisition of a multi role vessel (MRV), two offshore patrol vessels (OPV) and four inshore patrol vessels (IPV) to meet inshore and offshore requirements for maritime surface surveillance in New Zealand’s Exclusive Economic Zone in the South Pacific. The MRV will provide tactical sealift for the NZDF, support disaster relief and peace support operations, provide diplomatic and military presence, and provide training for the Royal New Zealand Navy. The MRV was delivered on 31 May 2007. A number of MRV warranty claims are being pursued with the contractor. The Crown is waiting for the contractor to offer the remaining six vessels for delivery. This is expected when the vessels are fully compliant with the appropriate requirements.
Objective
In 2007/08 it was planned to:
- monitor the construction of ships during the period
- take delivery of two OPVs and four IPVs and pass to the NZDF
- continue to manage the project, including delivery of all logistic support and training material, until completion in early 2008
- monitor warranty issues with respect to the ships delivered.
Performance
- One OPV and three IPVs were launched. One OPV and two IPVs have completed sea trials.
- No vessels were delivered.
- Project management continued.
- An independent review of the safety and functionality of HMNZS Canterburywas commissioned.
- A number of warranty claims have been raised with and satisfied by the contractor. Others remain under discussion between the Crown and BAE.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 58,702,625 |
| Ancillary contracts | 13,509,666 |
| Project management |
2,746,509 |
| Total net expenditure | 74,958,800 |
| GST payments | 3,527,685 |
| Total project expenditure in 2007/08 | 78,486,485 |
| [B] Project cost summary as at 30 June 2008 | Actual costs to 30 Jun 08 $ |
Future commitments & forecasts $ |
Estimated outturn 30 Jun 08 $ |
|---|---|---|---|
| Prime contract | 415,443,336 | 31,710,491 | 447,153,827 |
| Ancillary contracts | 25,089,717 | 14,959,589 | 40,049,306 |
| Project management | 7,387,805 | 4,273,022 | 11,606,827 |
| Contingency | - | 2,465,000 | 2,465,000 |
| Project net expenditure | 447,920,858 | 53,408,102 | 501,328,960 |
| GST | 34,587,152 | 27,869,674 | 62,456,826 |
| Estimated project outturn | 563,785,786 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | (1,604,931) | ||
| 562,180,855 | |||
| Project costs approved by Cabinet (net expenditure) | 499,724,161 | ||
| GST costs approved by Cabinet | 62,466,000 | ||
| Total costs approved by Cabinet | 562,190,161 |
2.3 Acquisition of medium range anti-armour weapon for the New Zealand Army
This weapon will provide land forces with a medium range capability against armoured vehicles and other targets.
Objective
In 2007/08 it was planned to:
- complete deliveries of this weapon.
Performance
- This project is complete from an equipment delivery perspective. Financial closure is underway.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 121,115 |
| Ancillary contracts | 193,507 |
| Project management |
33,803 |
| Total net expenditure | 348,425 |
| GST payments | 635,517 |
| Total project expenditure in 2007/08 | 983,942 |
| [B] Project cost summary as at 30 June 2008 | Actual costs to 30 Jun 08 $ |
Future commitments & forecasts $ |
Estimated outturn 30 Jun 08 $ |
|---|---|---|---|
| Prime contract | 16,682,406 | 24,902 | 16,707,308 |
| Ancillary contracts | 910,765 | 16,055 | 926,820 |
| Project management | 248,241 | 143,489 | 391,730 |
| Contingency | - | 3,760,917 | 3,760,917 |
| Project net expenditure | 17,841,412 | 3,945,363 | 21,786,775 |
| GST | 1,575,069 | 1,406,931 | 2,982,000 |
| Estimated project outturn | 24,768,775 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | 2,069,225 | ||
| 26,838,000 | |||
| Project costs approved by Cabinet (net expenditure) | 23,856,000 | ||
| GST costs approved by Cabinet | 2,982,000 | ||
| Total costs approved by Cabinet | 26,838,000 |
2.4 Acquisition of very low level air defence system for the New Zealand Army
This project will purchase an alerting and cueing system to bring the Army’s Mistral air defence system up to an improved operational standard.
Objective
In 2007/08 it was planned to:
- complete delivery of the weapon system
- request a variation of Cabinet approval for an additional $550,000 to complete the acquisition.
Performance
- The weapon system is largely delivered with project closure underway. Monitoring of warranty items continues.
- Cabinet approved $550,000 to cover a number of additional critical items which were unidentified earlier in the project.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 34,608 |
| Ancillary contracts | 138,715 |
| Project management |
2,389 |
| Total net expenditure | 175,712 |
| GST payments | 19,652 |
| Total project expenditure in 2007/08 | 195,364 |
| [B] Project cost summary as at 30 June 2008 | Actual costs to 30 Jun 08 $ |
Future commitments & forecasts $ |
Estimated outturn 30 Jun 08 $ |
|---|---|---|---|
| Prime contract | 13,589,112 | 165,683 | 13,754,795 |
| Ancillary contracts | 335,391 | 334,622 | 670,013 |
| Project management | 260,137 | - | 260,137 |
| Contingency | - | 131,737 | 131,737 |
| Project net expenditure | 14,184,640 | 632,042 | 14,816,682 |
| GST | 1,524,130 | 260,667 | 1,784,797 |
| Estimated project outturn | 16,601,479 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | (538,307) | ||
| 16,063,172 | |||
| Project costs approved by Cabinet (net expenditure) | 14,278,376 | ||
| GST costs approved by Cabinet | 1,784,797 | ||
| Total costs approved by Cabinet | 16,063,173 |
2.5 Upgrade and refurbishment of C-130H aircraft for the Royal New Zealand Air Force
This project will extend the life of the Royal New Zealand Air Force C-130H Hercules aircraft by upgrading the aircraft mechanical and electrical equipment, undertaking a level of structural refurbishment work and an upgrade of communication/navigation systems.
The first aircraft is scheduled to be completed in 2008, with the final aircraft scheduled to be completed in 2011.
Objective
In 2007/08 it was planned to:
- deliver the prototype aircraft to the NZDF
- induct the first production aircraft into the programme.
Performance
- Delivery of the prototype aircraft originally scheduled for December 2007 is now forecast for September 2008 with Acceptance scheduled for October 2008. The delay is the result of late delivery of the Flight Management System Software, manufacture of out of production parts and additional corrosion and repairs discovered during the upgrade.
- The second aircraft has been inducted into the programme and is undergoing modification. The aircraft is currently forecast to be delivered in April 2009 following delays attributed to the discovery of corrosion. The corrosion work is outside the scope of the upgrade refurbishment project.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 28,660,133 |
| Ancillary contracts | 120,094 |
| Project management |
1,169,360 |
| Total net expenditure | 29,949,587 |
| GST payments | 4,426,167 |
| Total project expenditure in 2007/08 | 34,375,754 |
| [B] Project cost summary as at 30 June 2008 | Actual costs to 30 Jun 08 $ |
Future commitments & forecasts $ |
Estimated outturn 30 Jun 08 $ |
|---|---|---|---|
| Prime contract | 184,748,086 | 44,870,839 | 229,618,925 |
| Ancillary contracts | 3,372,547 | 3,543,959 | 6,916,506 |
| Project management | 3,873,000 | 3,437,189 | 7,310,189 |
| Contingency | - | 6,543,000 | 6,543,000 |
| Project net expenditure | 191,993,633 | 58,394,987 | 250,388,620 |
| GST | 4,669,815 | 27,197,185 | 31,867,000 |
| Estimated project outturn | 282,255,620 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | 3,111,430 | ||
| 285,367,050 | |||
| Project costs approved by Cabinet (net expenditure) | 254,939,000 | ||
| GST costs approved by Cabinet | 31,867,000 | ||
| Total costs approved by Cabinet | 286,806,000 |
2.6 Upgrade of P-3K Orion mission systems for the Royal New Zealand Air Force
This project will upgrade the sensors, mission management systems and communication/navigation system required for the Royal New Zealand Air Force’s P-3K Orion maritime patrol aircraft to conduct surface surveillance tasks.
The first aircraft, originally scheduled to be delivered in June 2008, is now forecast to be completed in mid-2009 with the final aircraft completed in late 2011. Delays have been caused by the late delivery of the radar, and problem resolution of the integration of individual sensors and of the total integrated system.
Objective
In 2007/08 it was planned to:
- monitor the modification of the prototype aircraft.
Performance
- Monitoring of the prototype aircraft modification is progressing.
- Testing of the integrated systems in the Systems Integration and Training Laboratory commenced.
- Radar Acceptance testing has been further delayed as the manufacturer develops and releases new software builds to rectify deficiencies identified in testing, carry out further performance flight testing and amendment to publications. Aircraft test bed availability has also contributed to the delay.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 12,164,082 |
| Ancillary contracts | 24,365 |
| Project management |
1,223,386 |
| Total net expenditure | 13,411,833 |
| GST payments | (562,200) |
| Total project expenditure in 2007/08 | 12,849,633 |
| [B] Project cost summary as at 30 June 2008 | Actual costs to 30 Jun 08 $ |
Future commitments & forecasts $ |
Estimated outturn 30 Jun 08 $ |
|---|---|---|---|
| Prime contract | 214,280,441 | 88,388,275 | 302,668,716 |
| Ancillary contracts | 8,306,332 | 1,407,297 | 9,713,629 |
| Project management | 4,878,083 | 2,349,766 | 7,227,849 |
| Contingency | - | 7,291,514 | 7,291,514 |
| Project net expenditure | 227,464,856 | 99,436,852 | 326,901,708 |
| GST | 870,297 | 45,685,348 | 46,555,645 |
| Estimated project outturn | 373,457,353 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | 41,674,400 | ||
| 415,131,753 | |||
| Project costs approved by Cabinet (net expenditure) | 373,069,314 | ||
| GST costs approved by Cabinet | 46,633,667 | ||
| Total costs approved by Cabinet | 419,702,981 |
2.7 Boeing 757 Acquisition/Modification for the Royal New Zealand Air Force
This project replaces the Boeing 727 aircraft with Boeing 757 aircraft to provide greater range and payload capacity. Two aircraft have been purchased and are being operated by the Royal New Zealand Air Force in a passenger configuration. The intention is to modify them to provide a dual passenger/freight capability. Both aircraft are scheduled to be completed by 2008.
Objective
In 2007/08 it was planned to:
- monitor the modification progress
- deliver the first modified aircraft to the NZDF
- induct the second aircraft into the modification programme and deliver the second modified aircraft to the NZDF.
Performance
- Progress was monitored during the financial year.
- Delivery of aircraft one took place 4 August 2008, shortly after the end of the financial year.
- Aircraft two is scheduled for delivery in December 2008.
- The delays to the modification result from the complexity of integration, labour force problems, together with design and schedule issues associated with Boeing supplied parts.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 128,643 |
| Ancillary contracts | 3,965,752 |
| Project management |
972,487 |
| Total net expenditure | 5,066,882 |
| GST payments | 13,496 |
| Total project expenditure in 2007/08 | 5,080,378 |
| [B] Project cost summary as at 30 June 2008 | Actual costs to 30 Jun 08 $ |
Future commitments & forecasts $ |
Estimated outturn 30 Jun 08 $ |
|---|---|---|---|
| Prime contract | 144,668,874 | 14,653,089 | 159,321,963 |
| Ancillary contracts | 36,009,838 | 10,534,786 | 46,544,624 |
| Project management | 3,636,224 | 1,041,270 | 4,677,494 |
| Contingency | - | 4,234,560 | 4,234,560 |
| Project net expenditure | 184,314,936 | 30,463,705 | 214,778,641 |
| GST | 13,116,089 | 14,459,286 | 27,575,375 |
| Estimated project outturn | 242,354,016 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | 5,825,130 | ||
| 248,179,146 | |||
| Project costs approved by Cabinet (net expenditure) | 220,603,771 | ||
| GST costs approved by Cabinet | 27,575,375 | ||
| Total costs approved by Cabinet | 248,179,146 |
