Statement of Intent 1 July 2007 - 30 June 2010
Part 2: Departmental forecast report (continued)
Statement of forecast service performance - output performance statements 2007/08
Management of equipment procurement
Description
Under this output the Minister of Defence will purchase the following:
- management of military equipment procurement functions on behalf of the Crown once equipment needs are determined and accepted by Government. The acquisition process involves acquisition investigation, risk assessment, quality assurance, equipment selection, negotiation and execution of the contract arrangements, up to the point when the equipment, initial training and spares are delivered to New Zealand Defence Force
- management of any warranty provisions beyond date of delivery
- management of financing commitments
- arrangement of 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. 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.
Medium Utility Helicopter
This project is the acquisition of eight operational TNZA NH90 helicopters. These helicopters will be delivered to the New Defence Force over a period from 2010 to 2011.
- In 2007/08 it is planned to:
- conduct design reviews
- monitor manufacturing.
Training Light Utility Helicopter
This project is to acquire up to six training/light utility helicopters.
- In 2007/08 it is planned to:
- complete the tender process initiated in 2006
- further project milestones will be determined subject to Government approvals being provided
- manufacturing and delivering milestones will be established once a contract is awarded.
It will continue management of the following projects:
2. 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 2007/08 it is planned to:
- take delivery of two OPVs and four IPVs and pass to the New Zealand Defence Force
- continue to manage the project, including delivery of all logistic support and training material, until completion in 2008
- monitor the construction of ships during the period
- maintain warranty issues with respect to the ships delivered during 2006/2007.
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.
- In 2007/08 it is planned to complete deliveries of this weapon.
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.
- In 2007/08 it is planned to complete delivery of the weapon system.
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 2007 with the final aircraft scheduled to be completed in 2010.
- In 2007/08 it is planned to:
- deliver the prototype aircraft to the New Zealand Defence Force
- induct the first production aircraft into the modification programme.
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 will be completed in 2008 with the final aircraft completed in 2010.
- In 2007/08 it is planned to:
- monitor the modification of the prototype aircraft.
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.
- In 2007/08 it is planned to:
- monitor the modifications process
- deliver the first modified aircraft to the New Zealand Defence Force
- induct the second aircraft into the modification programme
- deliver the second modified aircraft to the New Zealand Defence Force.
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 2007/08 it is planned to:
- complete project closure activities
- monitor the performance of the light operational vehicle fleet from a warranty perspective.
Defence Industry
- The Ministry of Defence will continue to facilitate effective communication between Defence and New Zealand industries to provide appropriate goods and services to defence.
- 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 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 contracted 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
- maintaining ISO accreditation.
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 $3.792 million.
| Budgeted 2006/07 $000 |
Estimated actual 2006/07 $000 |
Budget 2007/08 $000 |
|
|---|---|---|---|
| Revenue Crown | 3,725 | 3,725 | 3,665 |
| Revenue Other | 338 | 328 | 48 |
| Total revenue | 4,063 | 4,053 | 3,713 |
| Expenses | 4,063 | 4,053 | 3,713 |
| Surplus/(Deficit) | - | - | - |
Departmental capital expenditure
The forecast capital expenditure for the 2007/08 financial year reflects the Ministry's share of capital expenditure in the new defence building in Wellington and routine replacement and upgrade of the department's information technology and office equipment, to help our staff efficiently deliver the services set out in this Statement of Intent.
| Departmental Capital Expenditure ($) | Forecast 2007/08 |
Estimated Actual 2006/07 |
Budget 2006/07 |
Actual 2005/06 |
Actual 2004/05 |
Actual 2003/04 |
Actual 2002/03 |
|---|---|---|---|---|---|---|---|
Other assets |
20,000 | 85,000 | 85,000 | 61,995 | 139,248 | 386,769 | 165,081 |
| Leasehold improvements | - | - | - | - | - | - | 20,837 |
| Office and computer equipment | 10,000 | 100,000 | 100,000 | 29,583 | 195,255 | 33,407 | - |
| New Defence building | 20,000 | 2,652,000 | 1,920,000 | 729,305 | 94,743 | - | - |
| Total | 50,000 | 2,837,000 | 2,105,000 | 820,883 | 429,246 | 420,176 | 185,918 |
