Statement of Intent 1 July 2006 - 30 June 2009
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 functions on behalf of the Crown from the initial identification of a requirement through ministerial "approval in principle" to the acquisition process involving project investigation, risk assessment, quality assurance, equipment selection, negotiation and execution of the contract arrangements, up to the point when the equipment is delivered to New Zealand Defence Force
- management of any warranty provisions beyond date of delivery
- investigation of associated financing arrangements
- arrangement of on-sale to 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 2007/08.
- In 2006/07 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 contract(s) are 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 planned to be in service in 2008 with the medium utility helicopter being available for introduction into service after 2009.
Medium Utility Helicopter
A preferred proposal was presented to Government in early 2006 and authority sought to negotiate a contract with the preferred supplier. Subject to further negotiations:
- It is planned in 2006/07 to take a final costed proposal back to Government.
- Project milestones will be established following the award of a contract.
Light/Training Utility Helicopter
Following on from the evaluation of an Invitation to Register Interest (ITR) an open competitive tendering process will be conducted 2006/07 to select a preferred supplier. Subject to the outcome of this tendering process:
- It is planned in 2006/07 to take a final costed proposal back to Government.
- Further project milestones will be established 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.
- This capability is still in development.
It will continue management of the following projects:
1. Acquisition of new vessels for the Royal New Zealand Navy (Project Protector)
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 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 for the Royal New Zealand Navy. The seven vessels are forecast to enter service by 2008.
- In 2006/07 it is planned to:
- take delivery of the MRV, one OPV and two IPVs and pass to the New Zealand Defence Force for introduction into service
- monitor the construction of the remaining OPV and two IPVs, to be delivered in 2007/08.
- continue to manage the project, including delivery of all logistic support and training material, until completion in early 2008.
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.
- In 2006/07 it is planned to complete deliveries of this weapon.
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.
- In 2006/07 it is planned to complete delivery of the weapon system.
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 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 2007 with the final aircraft scheduled to be completed in 2010.
- In 2006/07 it is planned to:
- monitor work on the modification of the prototype aircraft
- induct the first production aircraft (second of the fleet) into the programme.
5. 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 will be completed in 2008 with the final aircraft completed in 2010.
- In 2006/07 it is planned to:
- monitor the modification of the prototype aircraft.
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.
Both aircraft are scheduled to be completed by 2008.
- In 2006/07 it is planned to:
- complete the detailed design
- induct the first aircraft into the modification programme
- monitor the modifications process
- deliver the first modified aircraft to the New Zealand Defence Force
- induct the second aircraft into the modification programme.
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.
- In 2006/07 it is planned to:
- undertake project closure activities
- monitor the performance of the light operational vehicle fleet from a warranty perspective.
2. ANZAC Ships
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.
- In 2006/07 it is planned 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.
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 $3.773 million.
| Budgeted 2005/06 $000 |
Estimated Actual 2005/06 $000 |
Budget 2006/07 $000 |
|
|---|---|---|---|
| Revenue Crown | 3,547 | 3,393 | 3,725 |
| Revenue Other | 383 | 383 | 48 |
| Total revenue | 3,930 | 3,776 | 3,773 |
| Expenses | 3,930 | 3,776 | 3,773 |
| Surplus/(Deficit) | - | - | - |
