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Major Capital Equipment

The following table and descriptions provide details on the approved project cost, the cumulative expenditure to 30 June 2003 and the actual expenditure for 2002-03, of the top 20 (by 2002-03 expenditure) major capital equipment projects for Defence.

Table 3.3: Top 20 Projects by Actual 2002-03 Expenditure
Approved Project Cost Cumulative Expenditure to 30 June 2003 2002-03 Budget Estimate 2002-03 Revised Estimate 2002-03 Actual
$m $m $m $m $m
Airborne Early Warning and Control 3,623 1,026 404 464 567
F/A-18 Hornet Upgrade - Phase 1 292 254 35 44 33
F/A-18 Hornet Upgrade - Phase 2.1 and 2.2 1,606 533 222 207 194
P-3 Avionics Update Implementation 916 757 91 122 86
Anzac Ship Helicopter 1,030 850 72 67 57
Anzac Ship(1) 5,333 4,666 258 263 247
FFG Upgrade - Implementation 1,445 809 165 208 144
Evolved SeaSparrow Missile - Phase 2A 358 340 41 44 35
Evolved SeaSparrow Missile - Phase 2B/3 299 141 58 84 102
Replacement Heavyweight Torpedo Project 466 55 22 25 55
New Submarine 5,115 5,039 55 48 43
Lightweight Torpedo Replacement 293 41 42 43 38
Collins-class Submarines Sustainability and Reliability Improvements 349 75 102 106 36
Collins-class Submarines Replacement Combat System 454 26 0 30 26
Australian Light Armoured Vehicles 700 316 134 167 155
M113 Armoured Vehicles Upgrade 550 107 7 64 58
Joint Logistics
Air-to-Surface Stand-off Weapons Capability 449 300 78 97 61
Electronic Systems
Jindalee Operational Radar Network 1,227 1,055 62 64 71
Military Satellite Communication - Military Satellite Payload 378 329 60 63 46
High Frequency Modernisation 587 270 83 44 30
  1. Project approval and cumulative expenditure figures are the net cost of the ten-ship program after deducting New Zealand revenue. 2002-03 figures are based on the ten-ship program estimates.

Fifteen of the projects in Table 3.3 constitute the top 20 projects by total approved project cost. Details concerning the remaining five projects which make up the top 20 by total approved project cost are provided later in this section.

Top 20 Projects by 2002-03 Expenditure

Airborne Early Warning and Control


This project will provide an airborne early warning and control capability, with the provision of four aircraft and associated supplies and support. The contract was signed with the Boeing Company in December 2000 and the project remains on schedule, with a planned in-service date of 2007. The design for the airborne element is essentially complete.

The first Boeing 737 aircraft commenced modification activity in January 2003 and the second in May 2003. The first production radar commenced testing in November 2002 and was delivered to Boeing in September 2003. Preliminary design reviews for the mission support segment and mission simulator were completed successfully in April/May 2003 and Build 4 of the mission computing software entered test in June 2003. Construction of the squadron headquarters building commenced in May 2003 as part of Stage 1 of the RAAF Williamtown redevelopment.

The actual spend exceeded estimates due primarily to three significant system acquisition contract milestones being achieved and paid earlier than planned, resulting in the payments being recorded in 2002-03 rather than 2003-04.

F/A-18 Hornet Upgrade -- Phase 1, 2.1 and 2.2

Partially Achieved

Phase 1 modifications included new mission computers and radios, a global positioning system and new mission software for the F/A-18 fleet. Incorporation of Phase 1 in the F/A-18 fleet was achieved in June 2002, six months later than the original schedule. Residual Phase 1 activities, such as ground training system enhancement and technical manual amendment, are expected to be completed by late 2004. Phase 1 is planned to be closed by the end of 2005 once United States' Foreign Military Sales cases are closed.

Phase 2.1 provides new radars and upgraded mission software. The fleet modification commenced in June 2002. This reflected a delay of six months resulting primarily from the schedule slip in Phase 1 production. Some elements of Phase 3.1 structural refurbishment are now being included in the Phase 2.1 production to optimise overall aircraft availability. The Phase 2.1 aircraft modification was completed in August 2003.

Phase 2.2 is a further avionics upgrade that will increase the situational awareness of the pilot in the air combat role. It involves integration of a colour display, a digital moving map capability, a Link 16 data link and a helmet-mounted cueing system, together with a counter measures dispensing set. Aircraft critical design review was completed in March 2003. Phase 2.2 upgrades are scheduled to be completed by December 2007.

The lower than planned expenditure was due primarily to lower than anticipated Foreign Military Sales disbursements and the strong performance of the Australian dollar against the US dollar.

P-3 avionics Update Implementation

Partially Achieved

This project has delivered eight out of 18 upgraded AP-3 aircraft, and achieved supplementary type certification and full service release. The remaining ten production aircraft are scheduled for progressive delivery up until December 2004. The operational mission simulator was accepted in December 2002. The system engineering laboratory is not expected to be delivered until the last quarter of 2003.

The project did not achieve its 2002-03 revised expenditure estimate due to the delay in acceptance of the system engineering laboratory.

Anzac Ship Helicopter

Not Achieved

The program to acquire Super Seasprite helicopters has suffered major schedule slippage (three and a half years) due to problems with software systems development on the part of a major subcontractor. Given the mature state of airframe development, the contracting of the new software developers and the prospect of acceptance of a compliant product in December 2004, the current project continues to be the best option for acquiring the capability in the shortest time possible.

Contract changes were negotiated, and approved, in early 2003 for the future direction of the project. Revised payment schedules were formalised and an agreement was reached to make reduced payments against the in-service support contract until closer to commencement of flying. Acquisition contract payments were also changed to retain an increased sum until delivery of the full capability helicopter.

The Australian Government and the contractor Kaman are working towards provisional acceptance of an interim training helicopter capability in the second half of 2003.

Anzac Ship


This project involves the delivery of ten Anzac-class frigates, associated shore facilities and logistic support. The ten Anzac-class frigates include two ships (02 and 04) for the Royal New Zealand Navy. Seven ships have been delivered, including both New Zealand ships. Ship 07 (Parramatta) was delivered in June 2003, ahead of contracted schedule, and Tenix plans the delivery of Ship 08 (Ballarat) ahead of contract in mid-2004. Ship 09 (Toowoomba) was launched successfully in May 2003. Capability enhancements, including the Nulka active missile decoy system, Milsatcom ships communications equipment and an upgraded air weapons magazine, continue to be progressively included in the ships.

FFG Upgrade - Implementation

Partially Achieved

This project seeks to regain the Navy's six FFG guided missile frigates' comparative regional capability and to ensure that they remain effective and supportable through to their end of life in the period 2013-21. ADI commenced the upgrade of HMAS Sydney (FFG 03) at its Garden Island facility on 22 September 2003 and will conclude with HMAS Newcastle (FFG 06) in 2008.

There is an overall schedule delay of up to 24 months. A significant contributing factor for this schedule delay relates to the design, development and delivery of the combat system software. The critical design reviews for both the combat and platform systems design have now been conducted, with a number of minor design considerations still requiring further work. This did not affect the handover to the contractor of the lead ship (HMAS Sydney) Contractor delivery of the lead ship is planned for the fourth quarter of 2004.

The revised budget estimate was not achieved due to lower than anticipated Foreign Military Sales disbursements and spares down payments.

Evolved SeaSparrow Missile -- Phase 2A and 2B/3


This project involves the modification of selected Anzac ship combat system elements and the procurement of the Evolved SeaSparrow Missile and canisters for both Anzac and FFG classes of ship. The first Australian missile firing was conducted successfully from HMAS Warramunga in January 2003 and further trials were successfully undertaken in September 2003.

Some manufacturer technical issues have delayed missile deliveries, which commenced in January 2003. Progressive missile deliveries will occur throughout 2003 and subsequent years. Anzac Ship 05 (Warramunga), Ship 06 (Stuart) and Ship 07 (Parramatta) are Evolved SeaSparrow missile capable. The remaining Anzac ships under construction are being modified to fire missiles and the in-service ships will be upgraded during future maintenance periods.

The actual spend exceeded estimates in Phase 2B/3 due primarily to a management strategy which saw payments for the 2003-04 missile contract occur earlier than originally planned as a method of achieving value for money. Phase 2A spending was less due to favourable United States exchange rates.

Replacement Heavyweight Torpedo Project


This project seeks to acquire a replacement heavyweight torpedo for the Collins-class submarines. The new weapon will replace the United States Navy Mark 48 Mod 4 torpedo currently in service. The new torpedo will be acquired by collaboration between the Australian and United States' navies. Defence signed a memorandum of understanding with the United States Navy in March 2003 to jointly develop, produce and support the torpedoes. This approach offers a range of benefits, including substantial savings through using existing United States' production lines and contracts.

The scope of Phase 2 includes the acquisition of the weapons, associated logistic support, weapon system interface equipment, operational support and test equipment and transition into service. The in-service date for the torpedoes is scheduled for 2006-07.

The actual spend exceeded estimates due to greater than originally anticipated Foreign Military Sales mobilisation payments.

New Submarine


All six submarines have been delivered and provisionally accepted by the Navy. The sixth submarine, HMAS Rankin, was delivered in March 2003, with the class shock trial completed in June 2003. The first two submarines, HMAS Collins and HMAS Farncomb, have completed their first operational cycles and are presently undergoing full-cycle dockings at the Australian Submarine Corporation's premises in Adelaide. The other four in-service submarines have been participating successfully in local and overseas exercises and trials, as well as undergoing periodic maintenance at their base in Western Australia.

Lightweight Torpedo replacement

Partially Achieved

The new MU90 lightweight torpedo will be integrated into all ADF anti-submarine warfare platforms (Anzac ships, FFG frigates, AP-3 maritime patrol aircraft, Seahawk and Seasprite helicopters). The lightweight torpedo project is managed under an alliance agreement among the Australian Government, Eurotorp and Thales Underwater Systems Pty Limited.

Anzac Ship 07 (Parramatta) received the MU90 lightweight torpedo capability as part of its build program. Integration into the FFG frigates has been delayed to avoid interference with the FFG upgrade program and will now be conducted on an opportunity basis during depot-level maintenance periods commencing in 2004. Integration into the AP-3 aircraft has also been delayed. This delay is due to dependencies on other initiatives under the P3-C continuing upgrades to mission hardware and software. The initial batch of MU90 lightweight torpedoes will be manufactured in Europe, with planned acceptance in July 2005.

The revised estimate was not fully achieved due to the later than anticipated signing of the alliance agreement.

Collins-class Submarines Sustainability and Reliability Improvements

Partially Achieved

This project is providing platform and weapon system reliability and sustainability improvements to the Collins-class submarines. A number of individual enhancements are being implemented in HMAS Collins and HMAS Farncomb during their current full-cycle dockings.

The project was interrupted by delays in decisions on the related replacement combat system and heavyweight torpedo projects and intellectual property issues with the submarine designer, Kockums. Consequently, the planned expenditure for the year was not achieved. Implementation will be achieved during full cycle dockings, and hence is dependant on submarine availability.

Collins-class Submarines Replacement Combat System

Partially Achieved

This project is to provide a replacement combat system for the Collins-class submarines. This will contribute to the development of the submarines' full capability, in conjunction with other phases of the Collins-class through-life improvement project that implement a program of modifications and enhancements to the submarine platform.

The second of the initial design studies conducted in conjunction with Australian companies and the United States Navy has been completed. A major part of the system is being procured from the United States Navy, initially via a Foreign Military Sales case signed in June 2003, and later via an armaments cooperative project. The first of four major contracts with Australian industry was signed in June 2003. Remaining contracts will be signed during the third and fourth quarters 2003. Installation of the first replacement combat system is planned for 2006, with all submarines to be upgraded by the end of the decade.

Australian Light Armoured Vehicles


This project is for the acquisition of wheeled light armoured vehicles that provide the basis of the Army's armoured reconnaissance and surveillance capability.

As a result of previous phases, the Army has a fleet of 113 vehicles in service. Primarily, these vehicles equip 2 Cavalry Regiment which is located in Darwin and 2 Cavalry Brigade vehicles have been deployed successfully to East Timor and Iraq. Phase 3 of the project includes incomplete elements of Phase 2 (surveillance suite, gunnery trainer and commander's weapon station) and the acquisition of an additional 144 vehicles. These vehicles will be used to equip both 2 Cavalry Regiment and 2/14 Light Horse Regiment, which is located in Brisbane. Phase 3 is proceeding on schedule. Vehicle deliveries to units will commence in late 2003.

M113 Armoured Vehicles upgrade


This project is upgrading 350 of the Army's fleet of M113 armoured vehicles to improve protection, firepower, mobility and habitability. A contract for the upgrade was signed in July 2002 and the project remains on schedule, with two demonstration vehicles nearly completed. Full production is to commence in 2005 and the first Company group of vehicles is due into service in 2006.

Air-to-Surface Stand-off Weapons Capability

Partially Achieved

The project is intended to bring into service the AGM-142E stand-off weapon for fitment to the F-111C fleet. Aircraft integration is being undertaken by Boeing Australia Limited at RAAF Amberley in Queensland. The missiles have been delivered and are either in storage in the United States or Australia. Delivery of support and test equipment is continuing. The project schedule and expenditure achievements have been delayed due to difficulties with software integration.

Jindalee Operational Radar Network


In May 2003, Defence commenced full unconditional operational use of the Jindalee Operational Radar Network. The network consists of the radar network coordination centre at RAAF Edinburgh near Adelaide and two over-the-horizon radars: one near Longreach in Queensland, the other outside Laverton in Western Australia. These radars allow coverage of the approaches to Australia in an arc from Cairns in Queensland around to Geraldton in Western Australia at ranges of 800 to 3,000 kms, and are now key contributors to the ADF's capability for wide-area surveillance.

In May 2003, final acceptance of the acquisition phase of the contract was completed and the project moved into its maintenance and support phase. The radar network is now in full operational service within the ADF.

Military Satellite Communication - Military Satellite Payload

Substantially Achieved

Defence established contracts with Optus in October 1999 for supply and support of a Defence-owned payload on board the shared Optus and Defence C1 communications satellite, together with fixed terrestrial infrastructure for control and management of the Defence payload and associated communications networks. Defence and Optus are sharing the costs, benefits and risks of acquiring, launching and operating the shared C1 communications satellite.

The C1 communications satellite was launched successfully in June 2003. Dependent upon operational requirements Defence can now commence operational use of the satellite following completion of post-launch test and evaluation activities.

The revised estimate was not achieved due to deferred contract payments because of a delay in the C1 satellite's launch.

High Frequency Modernisation

Not Achieved

This project will replace naval high-frequency radio stations in Canberra, Darwin, Exmouth, Sydney, Cairns and Perth and the Air Force high-frequency radio stations in Sydney, Townsville, Darwin and Perth. The new network will provide enhanced high-frequency radio communications capabilities and will provide compatible high-frequency equipment in selected ADF mobile platforms. The project will deliver the new capability in two stages. The first stage will replace the existing facilities. The second stage will build on the first and provide increased levels of automation, improved capability and enhanced security and survivability. It will also reduce operating staff numbers and incorporate the new equipment into the mobile platforms.

Integration and system testing of the first stage system components, scheduled for 2003-04, will not be achieved due to continuing contractor delays in software development and integration, and is now scheduled to occur in 2004-05. The transition of Navy and Air Force radio network operational capability and staff to the integrated system is scheduled for 2004-05. The second stage is planned to be introduced progressively during the period from 2005 to 2007.

Due to the delays incurred the contractor is now accruing a liability for liquidated damages. Contractual payments were stopped in mid-2002 for failure to achieve a critical milestone and are not expected to resume until the end of 2003.

Top 20 Projects by 2002-03 Expenditure

Table 3.4: Remaining Top 20 Projects by Total Approved Project Cost
Approved Project Cost Cumulative Expenditure to 30 June 2003 2002-03 Budget Estimate 2002-03 Revised Estimate 2002-03 Actual
$m $m $m $m $m
Armed Reconnaissance Helicopter 1,879(1) 140 176 23 15
Strategic Airlift Capability 1,097 963 21 21 10
Lead-In Fighter Capability 1,020 926 26 26 11
Minehunter Coastal Project 1,245(2) 1,085 61 66 24
Armidale-class Patrol Boat 350-450 4 0 3 4
  1. The figure of 1,869 was published in the Portfolio Budget Statements 2003-04. This was an error. |
  2. The figure of 1,242 was published in the Portfolio Budget Statements 2003-04. This was an error.

Armed Reconnaissance Helicopter


The program to acquire 22 Eurocopter Tiger armed reconnaissance helicopters has suffered minor schedule slippage due to early problems experienced with the execution and initialisation of the contract. Consequently, nine out of a planned 23 milestone payments were made by 30 June 2003. Not achieving all 23 milestone payments will result in the milestone not being offset against the advance payment as early as originally expected. The scheduled introduction-into-service date of December 2004 for the first two helicopters remains achievable. The two helicopters delivered will be used to achieve Australian military type certification and for training purposes. The original expenditure estimate of $176m was developed before finalisation of the contract and payment schedule. This was revised to $23m post contract. The reduced expenditure of $15m reflects minor delays in acquisition of Government furnished equipment from the United States and Europe.

Strategic Airlift Capability

Partially Achieved

The C-130J Hercules is now fully integrated into the Airlift Group, where it is currently certified for the roles of air logistic support, search and survivor assistance, Papua New Guinea operations and restricted medical evacuation.

The Department of Defence and the United Kingdom Ministry of Defence have commenced a collaborative long-term venture involving full-scale fatigue testing of the C-130J wing assembly and a modified (used) C130K fuselage.

Deliveries of aircraft spares, ground servicing equipment and mission planning systems are continuing, but delays have been encountered due to longer than previously anticipated delivery lead times.

The lower than expected expenditure in 2002-03 was due primarily to the longer lead times for spares and a delay in procurement of mobile engine test stands.

Lead-In Fighter Capability

Partially Achieved

This project involves the acquisition of 33 Hawk 127 aircraft to perform the lead-in fighter and ADF support roles. Aircraft delivery was completed in October 2001 and the upgrade to meet advanced training requirements was completed in January 2002. The third and final level of contracted capability, which includes radar simulation and emulation for the ADF support role, has been delayed due to difficulties with the proposed technical solutions. Radar emulation development is under way, with initial capability expected to be achieved in mid-2004. The initial radar simulation capability is planned for 2005.

The lower than expected expenditure in 2002-03 was due primarily to delays in the delivery of full contracted capability.

Minehunter Coastal Project


The project involves the acquisition and through-life support of six Huon-class minehunter coastal vessels and associated supplies, including combat system and platform trainers. The sixth and final ship, HMAS Yarra, was provisionally accepted in December 2002 and is home-based with the other five vessels at HMAS Waterhen in Sydney. Extant configuration changes and remaining functionality have continued to be incorporated into the other ships to bring them up to the HMAS Yarra configuration baseline. Current expectations are for the project to close in June 2004.

Actual expenditure was less than estimated due to the redirection of resources to the delivery of HMAS Yarra. In addition, a proportion of the delivery payment for HMAS Yarra was withheld, and a revised payment schedule developed, for the rectification of defects and remaining capability. The project is now 98 per cent complete.

Armidale--class Patrol Boat


This project will deliver a new patrol boat, to be known as the Armidale-class patrol boat, to replace the 15 ageing Fremantle-class patrol boats. The single contract for acquisition and support is planned to be signed in late 2003, with the first boat to be delivered in 2004-05, in accordance with the White Paper. The contractor will also provide associated through-life support to provide required levels of availability for a 15-year minimum operating term.

In total, the new vessels will provide an availability of 3,000 days per year to Defence, plus a surge capacity of up to 600 days per annum available on notice. The new boat will be larger than the Fremantle-class, some 57m in length, and capable of operating effectively in higher sea states.

The table below provides details on those projects that were reported as top 20 projects in the Defence Portfolio Budget Statements 2002-03 and Portfolio Additional Estimates Statements 2002-03 but whose expenditure was not sufficient to be included in the previous tables.

Former Top 20 Projects

Table 3.5: Former Top 20 Projects
Approved Project Cost Cumulative Expenditure to 30 June 2003 2002-03 Budget Estimate 2002-03 Revised Estimate 2002-03 Actual
$m $m $m $m $m
Collins-class Submarine Augmentation 229 182 40 34 20
Underwater and Surface Warfighting Upgrade 174 58 43 34 26
Bushranger Infantry Mobility Vehicles 329 87 60 18 17
Joint Logistics
Air to Air Weapons Capability(1) 507 332 96 100 23
Electronic Systems
E-Defence 107 49 50 43 22
Tactical Air Defence Radar Systems 207 126 42 23 9
  1. Incorporates the Air-to-Air Weapons Follow-On Buy project that was listed separately in the Portfolio Budget Statements 2003-04(page 136 [PDF]).

Collins-class Submarine Augmentation

Substantially Achieved

This project is providing combat system augmentation and propeller and hull improvements to specified submarines to bring them to an improved level of operational capability. HMAS Collins (submarine 01) completed initial hull improvements in August 1999. Work to upgrade two further submarines (submarine 04, HMAS Dechaineux and submarine 05, HMAS Sheean) was completed to schedule in December 2000. Progressive improvements to the combat system commenced in August 2002. The second phase has been completed in HMAS Sheean, and HMAS Dechaineux subject to satisfactory completion of sea trials planned for November 2003. Work to bring submarine 06, HMAS Rankin, to the same level of platform improvements was completed prior to delivery in March 2003. Actual expenditure was less than estimated due primarily to agreed changes in the implementation schedule.

Underwater and Surface Warfighting Upgrade

Substantially Achieved

The Underwater and Surface Warfighting Upgrade project will enhance the Anzac ships' surface and sub-surface warfare capabilities. This phase of the project has been split into three sub-phases:

Phase 3A - Harpoon anti-ship missile launch system is the standard ADF anti-ship missile used by other Navy and Air Force platforms. The Harpoon launch capability is being acquired through the Anzac ship alliance between the Australian Government, Tenix Defence Systems and Saab Systems. Equipment delivery commenced in mid June 2003 and the capability will enter service in late 2004. Missiles will be acquired under a separate joint project.
Phase 3B - Sea Defender torpedo self defence system. This phase has been deferred for consideration due to it being considered a lower priority than the Petrel mine and obstacle avoidance sonar. Phase 3B is now expected to be considered during 2005-06.
Phase 3C - Petrel mine and obstacle avoidance sonar. This phase was approved in the 2003-04 budget. Installations are planned to commence in late 2004 and delivery of the capability in the first Anzac ship is expected in mid-2005. The Petrel system is also being fitted to the guided missile frigates under the FFG Upgrade project.

Bushranger infantry mobility vehicles


Project Bushranger Phase 3 aims to acquire 299 infantry mobility vehicles. The vehicles, when delivered, will provide two motorised infantry battalion groups to the Army. The infantry mobility family of vehicles will consist of six variants: troop, command, assault pioneer, mortar, direct fire weapons and ambulance. Twelve troop variants will also be provided to Airfield Defence guards.

The infantry mobility vehicle underwent reliability qualification testing from October to December 2002. The vehicle passed the required reliability levels of this testing and the project has entered the low rate initial production stage of the contract. This and the next three vehicles will begin further reliability and acceptance testing in October 2003. The final result of this testing will be known early in 2004 and if successful, will result in the commencement of full rate production in the second half of 2004.

Air-to-Air Weapons Capability

Partially Achieved

This project seeks to maintain a credible air-to-air weapons capability for F/A-18 aircraft through the acquisition and integration of new beyond-visual-range and within-visual-range missiles.

The second batch of beyond-visual-range missile deliveries was affected by a reduced United States' military airlift to Australia during the war in Afghanistan and Iraq. A partial delivery was achieved in April 2003. The development of a costed proposal for the establishment and operation of in-country software and maintenance support for the within-visual-range missile commenced in January 2003. The proposal will not be completed, nor a decision on these capabilities made, until later in 2003. Initial integration and test of the within-visual-range missile on the F/A-18 aircraft was achieved, with the final testing elements to be completed in the second half of 2003.

The prime contract was re-baselined in October 2002 and resources have been directed towards achieving introduction into service of the missile. This has resulted in the delay of some elements that contribute to the in-service support of the delivered capability which, in turn, accounts for a major portion of the underspend in expenditure. Another factor in the underspend was the lower than anticipated Foreign Military Sales disbursements for the beyond-visual-range missiles and related F/A-18 launches and support equipment.


Partially Achieved

The e-Defence project seeks to provide a secure (trusted) email based military messaging system that would replace the Defence integrated secure communications network. E-Defence also provides an authentication framework and directory to support secure email/military messaging, and internal and external e-Business/e-Commerce capability. Included in these capabilities are messaging services, corporate directory, gateways and smart cards.

The project has developed and piloted a secure email capability, corporate directory, and a supporting certificate management infrastructure. Full-scale rollout of the corporate directory is now complete and enhanced corporate directory functionalist is under development and scheduled to be implemented by the end of 2003. A core gateway product will complete functional testing in November 2003, and is scheduled for common criteria security evaluation to security level 4 by June 2004.

Further major procurement activities have been paused, pending a review of the latest available options for the provision of email based secure military messaging, and e-Business/e-Commerce capabilities. The review is to be completed by October 2004. As a result of this delay, the existing messaging system will need to remain in service.

The project has yet to achieve its core scope. Delays have occurred due to a number of internal Defence issues yet to be resolved, the unavailability of appropriate proven military messaging solutions, the slower than expected take-up of e-Business technologies by business, and the higher than anticipated support costs of e-Business technologies.

Tactical Air Defence Radar Systems

Partially Achieved

This project will acquire four tactical air defence radar systems to replace existing RAAF air defence radars. It will also procure heavy-lift trucks to provide a ground transport capability for the new systems, as well as a satellite communications interface between the new systems and the fixed regional air defence sites.

Good advances have been achieved in delivery of the heavy-lift trucks, but progress for the tactical electronic components of the project that support the radars has been limited during 2002-03. Final system assembly and integration have been delayed considerably due to the United States prime contractor experiencing significant management and technical difficulties with its major Australian sub-contractor. Because the time needed to correct the contractor's problems could not be retrieved within the current project schedule, Defence has recently negotiated a new schedule with the prime contractor to extend the delivery dates of the four systems by up to an additional 24 months. In return, the Australian Government has received significant financial and in-kind consideration that will enable Defence to appropriately mitigate the impact of the delay on existing systems.

Because of this delay, the contractor has not been paid at the planned level, resulting in a significant underspend against the estimates for 2002-03. Relevant milestone and progress payments have been rescheduled into 2003-04 to match the new schedule. An aggressive test and evaluation program for the radar systems commenced in September 2003. Operational evaluation of the radar and communications systems is now planned to be finalised in late 2004, with final acceptance occurring in early 2005.