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
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
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
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
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
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
The Australian Government and the contractor Kaman are working towards provisional
acceptance of an interim training helicopter capability in the second half
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
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.
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
Lightweight Torpedo replacement
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
The revised estimate was not fully achieved due to the later than anticipated
signing of the alliance agreement.
Submarines Sustainability and Reliability Improvements
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
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
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
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
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
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
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
|Armed Reconnaissance Helicopter
|Strategic Airlift Capability
|Lead-In Fighter Capability
|Minehunter Coastal Project
|Armidale-class Patrol Boat
- The figure of 1,869 was published in
the Portfolio Budget Statements 2003-04. This was an error.
- 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
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
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
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
|Collins-class Submarine Augmentation
|Underwater and Surface Warfighting Upgrade
|Bushranger Infantry Mobility Vehicles
|Air to Air Weapons Capability(1)
|Tactical Air Defence Radar Systems
- 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
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
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
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
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.
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
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
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.