Annual Report for the year ended 30 June 2008
Part 3: Statement of service performance (continued)
Output Class - Management of equipment procurement
3. The Ministry completed the following projects:
3.1 Acquisition of light operational vehicles (LOV) for the New Zealand Army
This project provides the Army with a modern, light operational, military vehicle. They are the primary means of transport in peacekeeping operations, peace enforcement operations (including in support of the light armoured vehicle) and may provide support for evacuation operations in the South Pacific.
Objective
In 2007/08 it was planned to:
- continue to manage the project including all aspects of logistic support and training until completion in late 2008
- monitor the performance of the light operational vehicle fleet against warranty obligations.
Performance
- Spares for the reworked air conditioning system have been delivered.
- Warranty issues are being attended to by the contractor as and when they arise.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 610,120 |
| Ancillary contracts | 325,249 |
| Project management | 180,343 |
| Total net expenditure | 1,115,712 |
| GST payments | 79,247 |
| Total project expenditure in 2007/08 | 1,194,959 |
| [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 | 91,645,664 | 284,059 | 91,929,723 |
| Ancillary contracts | 1,236,494 | - | 1,236,494 |
| Project management | 1,110,708 | - | 1,110,708 |
| Contingency | - | 241,720 | 241,720 |
| Project net expenditure | 93,992,866 | 525,779 | 94,518,645 |
| GST | 10,506,668 | 1,159,332 | 11,666,000 |
| Estimated project outturn | 106,184,645 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | (1,185,645) | ||
| 104,999,000 | |||
| Project costs approved by Cabinet (net expenditure) | 93,333,000 | ||
| GST costs approved by Cabinet | 11,666,000 | ||
| Total costs approved by Cabinet | 104,999,000 |
3.2 Light armoured vehicles (LAV) for the New Zealand Army
These Army vehicles are intended to provide protected mobility for light infantry manoeuvre groups in combat or when undertaking peace support operations.
Deliveries are complete except for some additional support equipment. The Contractor is addressing all latent defect issues raised under the terms of the Prime Contract. None of these issues affect the operation of the LAV fleet.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | 0 |
| Ancillary contracts | 663,331 |
| Project management | 3,544 |
| Total net expenditure | 666,875 |
| GST payments | 69,956 |
| Total project expenditure in 2007/08 | 736,831 |
| [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 | 494,176,974 | - | 494,176,974 |
| Ancillary contracts | 91,182,359 | 29,499 | 91,211,858 |
| Project management | 2,582,801 | 56,961 | 2,639,762 |
| Contingency | - | 209,407 | 209,407 |
| Project net expenditure | 587,942,134 | 295,867 | 588,238,001 |
| GST | 53,376,116 | 353,425 | 53,729,541 |
| Estimated project outturn | 641,967,542 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | (13,543,795) | ||
| 628,423,747 | |||
| Project costs approved by Cabinet (net expenditure) | 580,296,353 | ||
| GST costs approved by Cabinet | 72,537,044 | ||
| Total costs approved by Cabinet | 652,833,397 |
3.3 Replacement or Upgrade of Tactical Mobile Communications for the Army
The project replaces and/or upgrades existing Army short range communications systems to provide high band width (higher capacity) digital theatre communication systems to support command and control requirements of the NZDF Battalion Group operations.
Financial closure of the project is progressing with final figures being requested from the United States Foreign Military Sales system.
| [A] Project expenditure in 2007/08 | Actual $ |
|---|---|
| Prime contract | (12,266) |
| Ancillary contracts | 0 |
| Project management | 628 |
| Total net expenditure | (11,638) |
| GST payments | 118,167 |
| Total project expenditure in 2007/08 | 106,529 |
The reduction in project cost in 2007/08 relates to a recovery from NZDF for tactical chargers supplied to the New Zealand Army in the previous financial year (2006/07). The recovery is not offset by other project expenditure in 2007/08.
The purchase for the New Zealand Army could only be obtained through the United States Foreign Military Sales (FMS) system using an existing Ministry Case for similar Tactical Mobile Communication System project items.
| [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 | 108,480,304 | - | 108,480,304 |
| Ancillary contracts | 10,999,818 | - | 10,999,818 |
| Project management | 587,440 | 3,351 | 590,791 |
| Contingency | - | 220,703 | 220,703 |
| Project net expenditure | 120,067,562 | 224,054 | 120,291,616 |
| GST | 11,571,294 | 3,331,706 | 14,903,000 |
| Estimated project outturn | 135,194,616 | ||
| Effect of foreign exchange movements against the foreign exchange rates used for the Cabinet approval | (1,068,616) | ||
| 134,126,000 | |||
| Project costs approved by Cabinet (net expenditure) | 119,223,000 | ||
| GST costs approved by Cabinet | 14,903,000 | ||
| Total costs approved by Cabinet | 134,126,000 |
