The Ministry of Defense has admitted it had a “poorly executed” process to select a British company to build Australia’s future $45 billion frigates, where “sufficient consideration” was not given to the risks associated with choosing an immature design.
Key points:
- Defense admits its processes were poor in selecting the supplier for its future frigate program
- The $45 billion program has been plagued by delays and technical problems
- Defense Secretary says successive ministers were closely involved in a process with many flaws
In 2018, the Turnbull government announced BAE Systems had beaten competing bids from Spain and Italy for the lucrative project to build up to nine high-tech anti-submarine warships in Adelaide.
A scathing Auditor General report released in May found that the Hunter-class program was “suffering an 18-month delay and additional costs due largely to the immaturity of the design” and that defense had failed to failed to retain key documents.
Departmental Secretary Greg Moriarty has now highlighted numerous shortcomings of Defense during the competitive assessment process between 2014 and 2018, where officials reported that “successive government ministers have been closely involved in the development of the process and that iterative advice was provided.”
“These senior defense officials considered, throughout this period, that the government had received sufficient advice to enable it to undertake a value for money assessment,” Mr Moriarty said in a submission submitted to Parliament’s Public Accounts and Audit Committee.
Mr Moriarty was appointed Defense Secretary in 2017, succeeding veteran bureaucrat Dennis Richardson who was recently appointed by Labor to “oversee the implementation of the recommendations of the Defense Strategic Review (DSR)”.
The secretary also observed that his department “did not use all information available during the bidding process to undertake a comparative evaluation in a manner consistent with defense acquisition policy.”
Parliament’s joint Public Accounts and Audit Committee is due to hold a further hearing on the issue next week.
“By failing to do so, Defense has failed to meet the value for money requirements of the Commonwealth Procurement Rules,” the secretary wrote in a submission dated November 10.
“The focus on meeting capacity requirements has shifted sufficient focus to risks as well as the review of bids against other criteria for which information has been assessed and documented as part of the process.”
Uncertainty is growing over the Hunter-class program as the government considers the findings of a much-anticipated study of the Navy’s surface fleet led by retired US Admiral William H Hilarides.
Last week, BAE Systems unveiled a radical overhaul of the design of its anti-submarine warship that would triple the number of missile cells on board following criticism that the frigate does not currently have sufficient fire.
