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Report of the Review of the Safety and Functionality of HMNZS Canterbury

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Summary and Recommendations

Background

  1. Project Protector is the $500 million NZ project, managed by the Ministry of Defence, to acquire seven new ships for operation by the Royal New Zealand Navy. This fleet of ships will meet gaps in New Zealand’s military and civil surveillance and sealift capabilities.
  2. The context for this review is set out in the terms of reference which are appended to this report at annex A. In brief:
    • The requirements for the Protector fleet were identified in the 2000 Sealift Review and the 2002 Maritime Forces Review.
    • The Ministry of Defence issued and considered industry responses to an invitation to register in 2002. It then called for and evaluated detailed requests for proposals through 2003 and early 2004.
    • A proposal from Tenix Defence Systems Pty Limited was accepted in May 2004 and a fixed price contract was signed in July of the same year.
    • The contract called for the delivery of one multi role vessel (the MRV, now HMNZS CANTERBURY) for tactical sealift and patrol, two offshore patrol vessels and four inshore patrol vessels.
    • Tenix (now BAE Systems Australia) subcontracted the MRV construction to Merwede B.V. in the Netherlands. A Merwede subcontractor built the ship’s landing craft. Finishing work was undertaken by Tenix at its dockyard in Melbourne.
    • HMNZS CANTERBURY was accepted by the Ministry of Defence from Tenix on 31 May 2007 and commissioned into the RNZN on the same day.
    • After taking delivery of the HMNZS CANTERBURY two significant incidents involving the vessel resulted in Courts of Inquiry being established.
    • The first involved the loss of a rigid hull inflatable boat (RHIB) at sea on 10 July 2007, and the second the death of a crew member on 5 October 2007 during a manoeuvre at sea to deploy a RHIB.
    • On 20 December 2007, the Minister of Defence, the Hon Phil Goff, announced that the Secretary of Defence and the Chief of Defence Force were commissioning an independent review, on his instructions, into the ship’s acquisition and introduction into service.

The Review

  1. The purpose of the review is to identify any concerns relevant to the operation of HMNZS CANTERBURY or its design or performance, report whether it is capable of performing the functions for which it was acquired, and identify any remedial action that may be needed. The review may also provide lessons for future acquisition projects, or the introduction into service of equipment.
  2. Following initial preparations, the review started on 12 May 2008. It has been conducted by John Coles (Team Leader, formally Chief Executive of the UK MoD’s Warship Support Agency), John Clayton (formally Director of the UK MoD’s Project Rehabilitation Unit), and with assistance, during the initial phases of the review, from Captain Graham Baxter, Royal Navy (Admiralty Trials Master).
  3. The review has been undertaken in four phases:
    1. Planning and document review in the UK
    2. Interviews in New Zealand and Australia with staff of the MoD, NZDF, and Tenix Defence Systems Pty Limited (prime contractor, now BAE Systems Australia), including time spent on board the ship.
    3. Identification of issues, development of hypotheses, interviews with Merwede and Lloyd’s Register (sub-contractors).
    4. Clarification interviews, report drafting and submission.
  4. The methodology has been to gather facts, identify key issues and to develop hypotheses. All interviews were conducted on a non attributable basis to encourage open comment. A list of those interviewed is at Annex B and a summary of key events at Annex C. Part 1 of the report addresses the conduct of HMNZS CANTERBURY’s acquisition, including the introduction into service, Part 2 addresses the safety and functionality of the ship today and Part 3 suggests a way ahead.

Findings

  1. HMNZS CANTERBURY will meet almost all of the requirements of the NZDF’s Functional Performance Specification (FPS), and is intrinsically safe.
  2. HMNZS CANTERBURY’s acquisition has been constrained, however, by the initial choice of ship design; it has been managed to get the ship into service as soon as possible, and it has been characterised by shortcomings in project management and governance and collective wishful thinking. It is unlikely to meet all of the requirements of the contract.
  3. Our key observations are as follows:
    1. HMNZS CANTERBURY is intrinsically safe but remedial work will be required to enable her to perform military functions; some operating limitations will also have to be accepted. Sea keeping performance is likely to be poor in higher sea states.
    2. From the outset of the project, there was insufficient appreciation of the constraints to the ship’s operations imposed by the selection of a commercial Roll-on, Roll-off (Ro-Ro) design. This has been at the root of differences of opinion between Tenix, the MoD and NZDF and the shortfalls in performance being faced today.
    3. The programme has been managed with relentless determination to deliver to time despite evidence of likely performance shortfalls. There was, however, no explicit consideration of the risks of doing so.
    4. The complexity and challenges of the programme have been under-estimated in all respects. The project team has lacked the size and range of skills to manage a project of the complexity of HMNZS CANTERBURY.
    5. There have been significant shortcomings in the governance of the HMNZS CANTERBURY acquisition, exacerbated by some strained relationships between the MoD and NZDF. Reporting of project performance has been generally inadequate.
    6. Roles and responsibilities need to be clarified in a number of areas, notably for safety during the acquisition phase and design responsibility throughout a project’s life; improvements could also be made to the ship trials and acceptance process.

Recommendations (general)

  1. For future acquisition programmes, the risks of acceptance should be clearly identified and, as far as possible, quantified before the decision on acceptance is taken. Legal advice should be taken so that commercial risks can be taken into account.
  2. Acquisition programmes should be reviewed to ensure that they are adequately staffed both in terms of size and specialist skills.
  3. Commercial experts should be consulted on key correspondence with contractors and attend all key meetings with them.
  4. Deputy Secretary (Acquisition) (Dep Sec(A) should (a) hold quarterly reviews with his Project Directors and (b) provide written reports on project progress, issues, risks and their mitigation to the Integrated Capability Management Committee (ICMC).
  5. The ICMC should be tasked formally to review the progress of projects in the acquisition phase, noting that Dep Sec (A) remains responsible to Sec Def.
  6. CDF and Sec Def should issue a joint instruction to their staffs stressing the need to regard acquisition and in-service support as a continuum on which they should work together, and emphasising the importance of stakeholder management.
  7. The Naval Authority should be independent of the Chief of the Navy.
  8. The Executive Capability Board (ECB) should include one or more non-executive directors, drawn from outside the MoD/NZDF, to provide independent expertise and challenge in the conduct of acquisition programmes.
  9. For ship acquisition, consideration should be given to planning for an additional period of ship’s trials with the purpose of system proving before the formal acceptance off contract.
  10. An explicit responsibility for procuring safe equipment should be included in Acquisition Staffs’ terms of reference.
  11. The Design Authority role should be defined in future acquisition programmes.

Recommendations (specific to HMNZS CANTERBURY)

  1. Consideration should be given to entering into one or more arrangements for design support of the Protector Fleet to maintain the long-term sustainability of the supplier base.
  2. To enhance the safe operation of the MRV:
    1. The ship designer should be requested to provide additional guidance to the RNZN on machinery configuration and preferred headings/speed in high sea states, both to minimise ship motions and to reduce the risk of the loss of propulsion when such conditions are encountered.
    2. The sea boats should be relocated or, if relocation is not practical, they should be provided with protection.
  3. To improve the functionality of the vessel:
    1. Advice from Lloyd’s Register should be sought to secure Global Seas Operation for the desired operating profile.
    2. Additional ballast should be added to the ship to reduce vertical accelerations.
    3. Arrangements for ballasting the ship should be incorporated to maintain its design draught when lightly loaded.
  4. Assistant Chief Development (AC Dev) should be assigned formal responsibility for completing the work commenced on compliance of the Functional Performance Specification with the delivered ship.
  5. Work streams should be set up to implement the project management/governance recommendations in this report, implement a HMNZS CANTERBURY Get Well Programme, and develop a strategy for moving forward with Tenix.

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