Statement of Intent 1 July 2005 - 30 June 2008
Part 2: Departmental forecast report (continued)
Statement of forecast service performance - output performance statements 2005/06
Management of equipment procurement
Description
Under this output 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.
Quantity and timeliness
The Ministry will meet the following requirements:
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.
- In 2005/06 it is planned to:
- take costed proposals back to the Government
- negotiate a contract with a preferred supplier, or suppliers.
- Further project milestones will be known once a contract is awarded.
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.
- In 2005/06 it is planned to:
- take costed proposals back to the government
- negotiate a contract with a preferred supplier, or suppliers.
- Further project milestones will be known once a contract is awarded.
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.
- In 2005/06 it is planned to:
- enter into a contract for the acquisition of this equipment.
- Further project milestones, including delivery, will be known once a contract is awarded.
It will continue management of the following projects:
1. Acquisition of new maritime forces 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 multi role vessel, in addition to carrying out patrol duties, will provide tactical sealift for the New Zealand Defence Force, support disaster relief and peace support operations, provide diplomatic and military presence, and provide training. The vessels are forecast to enter service by 2008.
- The project milestones in 2005/06 are to:
- complete all design activity on all three vessel types
- progress the MRV build from initial keel lay to launch in preparation for fit out
- commence the build of both OPVs
- commence the build of the first two IPVs.
2. 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.
- Deliveries are scheduled to be completed in the second half of 2006.
3. 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.
- Deliveries are scheduled to be completed in the second half of 2006.
4. 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 systems and undertaking some structural refurbishment work.
The first aircraft will be completed in 2007 with the final aircraft completed in 2010.
- The project milestones in 2005/06 are to:
- complete all design activity for aircraft upgrade
- commence work on the modification of the prototype aircraft.
5. Upgrade of P-3K Orion mission systems for the Royal New Zealand Air Force
This project will upgrade the sensors and mission management systems required for the Royal New Zealand Air Force's P-3K Orion maritime patrol aircraft to conduct surface surveillance tasks.
The first aircraft will be completed in 2008 with the final aircraft completed in 2010.
- The project milestones in 2005/06 are to:
- complete an interim installation of the electro-optics system on three aircraft
- commence work on the full modification for the first aircraft in Greenville, Texas
- complete all detailed design work for the upgrade.
6. 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.
The first aircraft will be completed in 2007 with the final aircraft completed in 2010.
- The project milestones in 2005/06 are to:
- have the modification programme engineering design phase completed and accepted
- induct the first aircraft into the contractor's facility for modification.
It will complete the following projects:
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.
- The project milestones in 2005/06 are to:
- complete the delivery of the second and final tranche of 133 vehicles by 30 June 2006
- complete the delivery of spares and training.
2. ANZAC Ship
This project was to procure two ANZAC class frigates from the 10-ship build programme, to replace two existing surface combatants complete with spares and training facilities.
New Zealand ships, HMNZS Te Kaha and HMNZS Te Mana have been delivered and are in service.
- The project milestone in 2005/06 is to:
- discontinue New Zealand's involvement in this project and settle any outstanding obligations.
Defence Industry
- The Ministry of Defence will continue to facilitate effective communication between Defence and New Zealand industries to provide appropriate goods and services as required.
- It will provide support for the Defence Industry Committee of New Zealand.
- It will ensure that local, including domestic, suppliers are afforded opportunities to compete for work consistent with the government procurement policy as set out in the Office of the Controller and Auditor-General's 2001 publication Procurement: A Statement of Good Practice and Policy Guide for Purchasers, issued by the Ministry of Economic Development in July 2002.
- It will complete material for the Australia and New Zealand Industry Defence Equipment and Capability Catalogue database and update databases on industrial capability.
- It will conduct industry briefing sessions on current Defence projects and activities.
- Using the Industry Capability Network as an agent 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.
Quality
Delivery of this output will be subject to the following quality standards in accordance with good practice:
- new capabilities and major refurbishment will be acquired within approved budgets, to the quality standards negotiated for each project, and within the agreed delivery schedule
- all acquisitions and contracts will meet the Government's policy requirements
- all contracts will be negotiated in a timely manner, and payments will be made on time if the provider is meeting the terms of the contract
- contract awards will be subject to considerations of through-life cost, quality and delivery schedules
- prices agreed for projects will be based on a competitive tender process where possible
- payments will be made at the agreed sum, to the correct supplier, and no payments will be made in excess of the agreed sum
- any significant variations or potential risks will be identified, together with corrective actions required or taken
- assumptions behind advice will be explicit, and arguments will be logical and supported by facts
- evidence will be provided about consultation with interested parties, and possible objections to proposals will be identified
- problems of implementation, technical feasibility, timing, and consistency with other policies will be addressed
- defence industry advice reports will clearly state their purpose and address any issues raised by the Minister
- 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.
The quality of management of equipment procurement will be assessed in terms of whether it is credible, effective, respected and contributes to the achievement of the Government's defence and security policy objectives by:
- seeking the Minister's views
- seeking the views of key stakeholders in management of equipment procurement.
In addition, the Acquisition Division will implement recommendations agreed by the Ministry from audits or reviews.
Cost
This output will be provided within the appropriated sum of $3.574 million.
| Budgeted 2004/05 $000 |
Estimated Actual 2004/05 $000 |
Budget 2005/06 $000 |
|
|---|---|---|---|
| Revenue Crown | 3,458 | 3,344 | 3,547 |
| Revenue Other | 630 | 630 | 27 |
| Total revenue | 4,088 | 3,974 | 3,574 |
| Expenses | 4,088 | 3,974 | 3,574 |
| Surplus/(Deficit) | - | - | - |
Departmental capital expenditure
The forecast capital expenditure for the 2005/06 financial year is primarily routine replacement and upgrade of the department's information technology and office equipment, to help our staff efficiently deliver the services set out in this Statement of Intent.
| Departmental Capital Expenditure ($) | Forecast 2005/06 |
Estimated
Actual 2004/05 |
Budget 2004/05 |
Actual 2003/04 |
Actual 2002/03 |
Actual 2001/02 |
Actual 2000/01 |
|---|---|---|---|---|---|---|---|
| Computer systems | 144,000 | 453,690 | 453,690 | 386,769 | 165,081 | 86,573 | 337,722 |
| Leasehold improvements | - | - | - | - | 20,837 | 96,669 | 81,359 |
| Plant and equipment | 106,000 | 6,310 | 6,310 | 33,407 | - | 47,986 | 36,674 |
| Total | 250,000 | 460,000 | 460,000 | 420,176 | 185,918 | 231,228 | 455,755 |
