3.1
The Department of Defence (Defence) seeks approval from the Public Works Committee to proceed with the Armoured Fighting Vehicles Facilities Program Stage 1 Project. The project proposes to deliver works at the following three locations:
Puckapunyal Military Area (Victoria)
Lavarack Barracks (Queensland)
Edinburgh Defence Precinct (South Australia)
3.2
Defence state that the aim of the proposed Armoured Fighting Vehicles Facilities Program Stage 1 Project is to:
…provide fit for purpose facilities and infrastructure to support and sustain, and train Army personnel on the generation of Armoured Fighting Vehicles capability being procured for the Australian Defence Force. The Project is the first stage of several proposed stages to deliver facilities under a rolling program of work.
3.3
The estimated cost of the project is $235.1 million (excluding GST).
3.4
The project was referred to the Committee on 27 November 2019.
Conduct of the inquiry
3.5
Following referral, the inquiry was publicised on the Committee’s website and via media release.
3.6
The Committee received one submission, one supplementary submission and one confidential submission. A list of submissions can be found at Appendix A.
3.7
On 6 May 2020, the Committee conducted a project briefing, public and in-camera hearing via teleconference. A transcript of the public hearing is available on the Committee’s website.
3.8
The project briefing, public and in-camera hearings for the project were not held until May 2020 following a request from the Department of Defence.
Need for the works
3.9
The Defence White Paper 2016 states that ‘under the Armoured Fighting Vehicles Capability Program, the Australian Army will replace its current fleet of Armoured Fighting Vehicles over the next decade, including the acquisition of new armoured engineering capability’.
3.10
In their submission Defence state that:
An important element for implementing the Armoured Fighting Vehicles Capability Program is being able to effectively and efficiently maintain the new vehicle fleets and train the workforce. The new vehicle types will be more complex and expensive to operate than the current fleet. To allow for these factors, the Armoured Fighting Vehicles Capability Program must increase reliance on simulation to achieve readiness outcomes. Current maintenance facilities are insufficient to support the new vehicle fleets. While industry will play an important role in supporting the maintenance requirements of the new vehicle fleets, Defence must still retain the ability to carry out a range of maintenance tasks.
3.11
At the public hearing Defence told the Committee that the Armoured Fighting Vehicles Facilities Program Stage 1 project would ‘provide facilities and infrastructure to support the Land 100 phase 2 capability project that was approved in 2018 with a total value of $5.2 billion. This capability project is acquiring the Boxer combat reconnaissance vehicle…’
3.12
Defence further stated that the ‘focus of the facilities project is on providing timely facilities to meet the training and joint support requirements of the armoured fighting vehicle’s capability.’ The project includes ‘simulation and training facilities, workshops and wash points along with supporting infrastructure’ at three defence sites across Australia.
3.13
In response to the Committee’s questions regarding if Defence had enough skilled staff to facilitate the positions at the three sites, Defence stated that:
…the risk that we're tracking, being ready to set this up and train people, as it relates to the facilities, is a simulation piece. That's because our long-term mature solution for training individuals and collective training is really focused on harnessing those new simulation facilities and simulators in order to train people. That's our mature solution. If those facilities are not available, then we go back to the historic solution, which is training people on the equipment—which we can do and we are used to doing—but it's not the solution we have identified for the long term. Therefore, we would need to find workarounds whilst we await those facilities and simulators to be stood up and made available. So we have a plan.
Options considered
3.14
Defence state in their submission that ‘in the early development phase of the Project, Defence developed a comprehensive Armoured Fighting Vehicles Facilities Program scope that meets the requirement across all new capability platforms proposed to be acquired over the next decade.’ From this overall scope, Defence developed the Stage 1 Facilities Project scope from ‘within the Project’s available approved budget.’ Defence state that the full facilities scope is intended to be delivered through later stages of the facilities program’ and will incur separate Government and Parliamentary approval.
3.15
Defence considered the following four options for the Stage 1 Facilities Project:
Option 2: prioritise training requirements
Option 3: prioritise sustainment requirements
Option 4: balanced approach to address immediate critical training needs and enhanced sustainment requirements
3.16
Defence state that option 1 (do nothing) was not a viable course of action as ‘the state of the current facilities and infrastructure would not enable an initial level of capability.’ Additionally, Defence state that option 1 ‘would severely restrict the incoming capabilities and influence areas well outside the scope’ of the project by creating ‘interdependencies of other Defence elements requiring intelligence, surveillance, reconnaissance and firepower’.
3.17
Option 2 (prioritise training requirements) was discounted as, although it presented the best training outcomes, it did not address the maintenance and storage shortfalls identified at the Edinburgh Defence Precinct (South Australia).
3.18
Option 3 (prioritise sustainment requirements) was discounted by Defence as it ‘did not meet the growth in facilities requirement from both a capacity and throughput perspective. In addition, the option failed ‘to treat the immediate training needs for the more technical complex vehicle types that are proposed under the Armoured Fighting Vehicles Capability Program.’
3.19
Option 4 (balanced approach) was assessed by Defence as the preferred option as it addresses the immediate critical training needs as well as the enhanced sustainment requirements of the vehicle fleets.’
3.20
Defence state that option 4:
…represents the best value for money for the Commonwealth, addressing the capability need from a whole of life perspective and is affordable within the Project budget. Option four incorporates the critical facilities and infrastructure requirements to support the capability's introduction into service, starting with the entry of the Combat Reconnaissance Vehicle from 2020.
Scope of the works
3.21
The proposed scope of the Armoured Fighting Vehicles Facilities Program Stage 1 Project is comprised of three project elements:
1
Project element 1 – Puckapunyal Military Area (Victoria):
Facilities proposed to be delivered at Puckapunyal under the Project involve two of the military area's four precincts: the School of Armour and its associated Range Area, and the Logistics Unit - Victoria Workshop.
a.
The School of Armour – Refurbish three buildings to accommodate driver and servicing training; construct two new vehicle shelters; refurbish gunnery training building; and construct a new training simulation centre
b.
The School of Armour Range Area - construct a new wash point facility with cleaning and preparation areas
c.
The Joint Logistics Unit - extend a workshop to include additional maintenance workshop bays; and site wide engineering services (Reticulated Services including high and low voltage power distribution, ICT, water and sewer connections)
2
Project element 2 – Lavarack Barracks (Queensland):
The works proposed at Lavarack Barracks include constructing a main building simulation centre, including simulators, classrooms and training areas, to support ongoing training liabilities associated with the Armoured Fighting Vehicle Capability.
3
Project element 3 – Edinburgh Defence Precinct (South Australia):
The works proposed under the Project at the Edinburgh Defence Precinct's Joint Logistics Unit - South Workshop include:
b.
site wide engineering services (Reticulated Services including high and low voltage power distribution, ICT, water and sewer connections).
3.22
Defence noted in their submission that ‘some facilities elements have been identified and approved by Government to be delivered but are currently not affordable within the Project's $235 million budget.’
3.23
Defence stated that should funds become available within the budget, ‘for example through competitive tendering or retired risk provision savings’, the funds may be able to be allocated to the unfunded elements:
Enhanced existing driver training area at Puckapunyal Military Areas Range (Victoria)
Refurbishment of Building 21 communication rooms at Puckapunyal Military Areas Range (Victoria)
New simulation site and external works at Edinburgh defence Precinct (South Australia)
Grit blast maintenance facility at Albury Wodonga Military Area (Victoria)
3.24
When asked by the Committee if the four additional elements would have any serious adverse effects on the overall program if they remained unfunded, Defence stated that:
We've identified those opportunities where those below-the-line scope elements would benefit the overall program in terms of how we train, how we operate the platforms and how we maintain the platforms. That's not to say we can't manage without them. Indeed, noting where they sit, they're already looking for those alternative solutions. What I would suggest is that, over the life of type, things become less efficient and we start to consume elements of things like the sustainment funding through life of type at the trade-off for those facilities that are unable to be provided within the budget allocated.
Community consultation
3.25
In their supplementary submission to the Committee, Defence stated it had conducted a number of ‘stakeholder and community consultation activities… in accordance with the project’s comprehensive community engagement strategy.
3.26
In response to the community consultation activities conducted by Defence, Brigadier Galton noted that:
Information about the Project was well received at the community and stakeholder consultation sessions. Defence is not aware of any objection to the proposed works at any of the three project locations.
3.27
When questioned by the Committee as to what job opportunities and how many apprentices Defence estimated to see engaged on the project, Defence responded that:
…we have estimated that at Puckapunyal there’ll be a workforce of around 560 personnel. That would be spread across, we estimate, 60 subcontract packages. At Lavarack Barracks we estimate a workforce of 360. That is spread across, we estimate, 50 subcontract packages. Finally, at the Edinburgh Defence Precinct, we estimate a workforce of 190 across around 40 subcontract packages. For apprentices, we don't mandate targets, although we do encourage the prime contractors to have a plan in place to have apprentices on board.
3.28
At the public hearing Defence told the Committee that most of the prime contractors ‘have some manner or form of plan to have apprentices engaged, especially for projects extending out over the two-or-three year period’.
Cost of the works
3.29
The proposed Armoured Fighting Vehicles Facilities Program Stage 1 Project has an estimated cost of $235.1 million, exclusive of GST.
3.30
Defence noted in their public submission that an increase in net operating costs is expected as a result of the proposed works. Defence explained that this is ‘due to the addition of new facilities and infrastructure which will increase the associated facilities maintenance, cleaning and utilities expenses’.
3.31
Defence provided further details on project costings in its confidential submission and during an in-camera hearing.
3.32
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.
Revenue
3.33
There will be no direct revenue generated by the project.
Committee comment
3.34
The Public Works Committee acknowledges the phased approach of the Armoured Fighting Vehicles Facilities Program, and looks forward to observing the rollout of the project over the next few years.
3.35
The Committee recognises the important role that large-scale Defence projects, such as the works proposed as part of the Armoured Fighting Vehicles Facilities Program Stage 1 project, play in creating job opportunities and advancing local industry in regional areas across Australia.
3.36
The Committee encourages Defence to continue to work with its contractors to ensure that local industry continues to be engaged and the participation of local contractors is maximised as per the Commonwealth Procurement Rules.
3.37
The Committee did not identify any issues of concern with the proposal and is satisfied that the project has merit in terms of need, scope and cost.
3.38
Having regard to its role and responsibilities contained in the Public Works Committee Act 1969, the Committee is of the view that this project signifies value for money for the Commonwealth and constitutes a project which is fit for purpose, having regard to the established need.
3.39
The Committee recommends that the House of Representatives resolve, pursuant to Section 18(7) of the Public Works Committee Act 1969, that it is expedient to carry out the following proposed works: Armoured Fighting Vehicles Facilities Program Stage 1.
3.40
Proponent entities must notify the Committee of any changes to the project scope, time, cost, function or design. The Committee also requires that a post-implementation report be provided within three months of project completion. A report template can be found on the Committee’s website.