2.1
The Department of Defence (Defence) seeks approval from the Committee to proceed with the proposed project, AIR7000 Phase 1B Remotely Piloted Aircraft System Facilities. If approved, the project works will be delivered at RAAF Base Edinburgh, South Australia and RAAF Base Tindal, Northern Territory.
2.2
The project’s objective is to provide fit-for-purpose facilities and infrastructure to support the introduction into service of the MQ-4C Triton aircraft system (Triton). The Triton is a remotely piloted aircraft system capable of high altitude and long endurance flight, designed for maritime patrol and other surveillance roles.
2.3
In its submission, Defence outlined that the Triton would complement the in-service P-8A Poseidon aircraft system (Poseidon) acquired under Project AIR7000 Phase 2B. The Poseidon is an aircraft based on the Boeing B737-800 with modifications to incorporate maritime surveillance and attack capabilities. According to Defence, these aircraft will form a ‘family of systems that provide an integrated maritime intelligence, surveillance, reconnaissance and response capability’.
2.4
The operational concept for the Triton requires facilities at both RAAF Base Edinburgh in South Australia and RAAF Base Tindal in the Northern Territory. The operational planning, command, data handling, administration and training will occur at Edinburgh, while the aircraft will be home-based and maintained at Tindal.
2.5
The estimated cost of the project is $427.1 million (excluding GST).
2.6
The project was referred to the Committee on 3 August 2022.
Conduct of the inquiry
2.7
Following referral, the inquiry was publicised on the Committee’s website and via media release.
2.8
The Committee received five submissions, one supplementary submission and one confidential submission. A list of submissions can be found at Appendix A.
2.9
On 19 September 2022, the Committee attended a project briefing and site inspection at RAAF Base Tindal, which was followed by public and in-camera hearing at Katherine, Northern Territory. A transcript of the public hearing is available on the Committee’s website.
Need for the works
2.10
The AIR7000 Phase 1B project aligns with the 2020 Defence Strategic Update, which:
…highlighted the need for enhanced situational awareness through a strengthened intelligence, surveillance, reconnaissance and space capability, and the need to strengthen maritime, electronic warfare and cyber capabilities.
2.11
In its submission, Defence explained that the Triton will partially replace capabilities provided by the AP-3C Orion aircraft system. Further, Defence noted that the Triton, in combination with the MC-55A Peregrine electronic warfare support system (Peregrine) and Poseidon, will ‘enhance Australia’s defence by strengthening these capability needs, as highlighted in the 2020 Defence Strategic Update’.
2.12
The Triton will leverage facilities delivered for Poseidon under the AIR7000 Phase 2B – Facilities Requirement for the Maritime Patrol Aircraft Replacement Capability Project that was approved by Parliament in March 2015.
2.13
It will also leverage facilities currently being delivered for Peregrine under the AIR555 Phase 1 Airborne Intelligence Surveillance Reconnaissance Electronic Warfare Capability Facilities Works that was approved by Parliament in August 2020.
2.14
Fixtures required under this project include working facilities; operational support facilities; Triton Control Centre; and airfield works.
Options considered
2.15
Defence stated that planning for the project included ‘master planning, site investigations, stakeholder consultation, whole-of-life cost analysis and design development to establish the capital facilities and infrastructure works’.
2.16
In developing the project plan, Defence considered the four options outlined below.
2.17
Option 1 (do nothing) was discounted as Triton operations would be severely constrained without the availability of certain dedicated facilities.
2.18
Option 2 (significantly reduced facilities) was discounted as this option would not meet minimum capability requirements to support the Triton.
2.19
Option 3 (deployable mission control facility) was considered to offer a value for money solution that would successfully support the Triton as intended, and as such was identified as the preferred option. While similar to option 4, this option will provide a deployable mission control system facility at RAAF Base Tindal instead of both fixed and deployable mission control facilities.
2.20
Option 4 (fixed and deployable mission control facilities) would provide all the necessary facilities to successfully operate the Triton, but was rejected due to its higher cost. This option would have included new facilities that would provide for:
remote flight and payload control, operational planning and aircraft training of aircrew at Edinburgh
launch, control, recovery, and maintenance of air vehicles at Tindal.
2.21
Defence expressed the view that ‘Option 3 is the preferred option as it satisfies minimum requirements to support the capability and represents the best value for money from both an initial and whole of life perspective’.
Scope of the works
2.22
In its submission, Defence outlined the scope of works for the two project elements under Option 3.
Project Element 1 – RAAF Base Edinburgh:
training facilities and classrooms
internal access roads, car parking, general pavements and landscaping
local building services plant
site wide engineering services (reticulated services including high and low voltage electricity distributions, ICT, water and sewer connections).
Project Element 2 – RAAF Base Tindal:
a building for support and maintenance
a deployable mission control system to support operations
an aircraft wash and engine run-up area
a ground support equipment shelter
internal access roads, car parking, general pavements and landscaping
local building services plant
site wide engineering services (reticulated services including high and low voltage power distribution, ICT, water and sewer connections).
Community and stakeholder consultation
2.23
Defence recognises the importance of providing residents and other interested stakeholders with the opportunity to provide input or raise concerns regarding proposed project works. Accordingly, a community consultation and communication strategy was developed for this project.
2.24
According to the Defence Project Community Consultation Report, a range of stakeholder and community consultation activities were undertaken between June and September 2022. These activities included:
conducting a community information session on the proposed RAAF Tindal works in Katherine, Northern Territory, on 15 June 2022
establishing a project email address for the lodging of submissions and questions in respect to the RAAF Edinburgh works
providing an information telephone service for the public
inviting key stakeholders – including Federal and State Members of parliament and local councillors, and local industry business associations – to receive personal briefing on the project.
Community concerns
2.25
The consultation process revealed several areas of concern. The main issues include the impact of the project on the affordability of accommodation and housing, and the lack of investment in social infrastructure to assist with addressing the challenge of attracting and retaining skilled workers in Katherine over the longer term.
2.26
RAAF Base Tindal is located 15 kilometres outside Katherine. During the consultation process, members of the Katherine community raised concerns regarding the project’s potential impact on the local township.
2.27
In her submission to the inquiry Selena Uibo MLA, Local Member for Arnhem (which encompasses RAAF Base Tindal in the electoral boundary) asked the Committee to consider how the project could assist with alleviating local housing pressures. Katherine is the main hub for the Big Rivers region, and Ms Uibo submitted that the town has been struggling to provide housing that could meet public, private and industry needs.
2.28
The submission from the Katherine Town Council similarly identified the project’s impact on housing affordability as a key concern. The Council observed that the influx of contractors and construction workers into the Katherine region has stretched the housing market to ‘breaking point’. This situation, the Council noted, has in turn reduced the town’s ability to attract, employ, and retain Council staff, teachers, nurses, and retail workers, and has had a flow-on effect on other social infrastructure such as childcare and school capacity.
2.29
In its Community Consultation Report, Defence stated that it was aware of the significant accommodation issues in Katherine and had budgeted for the head contractor to provide its own accommodation.
2.30
During the public hearing, Air Commodore Ron Tilley noted that Defence expected between 550 and 600 workers to be employed for the Tindal portion of the works over the course of the project life cycle. With respect to the accommodation of the construction workforce, the Committee queried whether some of the workers could be accommodated on the base. In his response, Mr John McClement, Project Manager and Contract Administrator, stated:
It is possible. There is a camp there on the base and there is potential for some expansion of that; otherwise, it may be another commercial solution that is derived. There is already another accommodation camp in town, and the owner of that, under the right circumstances, is willing to expand it. Otherwise, there are a range of other options, and that will be part of the competitive environment and the commercial solutions that will come out of the tender process and that contractor that’s appointed.
2.31
In commenting on the accommodation options for the Defence personnel associated with the project, Air Commodore Tilley explained that depending on an individual family status, these personnel would be based in the live-in accommodation on the base, or in a service residence provided by Defence Housing Australia on the base and in Katherine.
2.32
With respect to social infrastructure, Defence pointed out in its Community Consultation Report that it could only expend funds on approved capability requirements, and thus could not undertake any expenditure on town facilities.
2.33
Concerns were also raised in connection with the Katherine recycling management capabilities. In its submission, the Katherine Town Council noted that while Katherine does not have domestic kerbside recycling or a dedicated materials recycling facility, the Council does encourage the separation of waste before it is taken to the Katherine Waste Management Facility, where some of it can be recycled. Due to matters of expediency, however, the contractors are reluctant to separate waste at the source.
2.34
At the public hearing, Defence witnesses noted that they plan to require the contractors to work with the Council and to separate the waste into different streams. Mr McClement stated:
Certainly, we’ll be asking the contractors to do that as part of the requirements that we put in place for them […] There are environmentally sustainable principles that have also been embedded in the design, and plans are put in place around those.
2.35
The Katherine Town Council submission also noted that the proposed project would include works within the Katherine Civil Airport, which is leased to the Council. The Council and Defence are working together to review the lease boundaries around the civil airport terminal, and to ensure that the project delivers broader economic benefits to the community, including through shared use of the Defence airport infrastructure for commercial operations.
2.36
In response to a question from the Committee as to whether Defence would take local community interests into consideration with respect to the airport upgrade, Air Commodore Ron Tilley stated:
[…] we will continue to work very closely with the Katherine Town Council. Regarding the lease boundaries around the civil airport terminal, we will work with the council to adjust those boundaries to ensure that we don’t interfere with any access to the terminal. We then take responsibility for maintaining, for example, one of the taxiways that used to be the responsibility of the council but that we’ll now be using for this new aircraft capability. We will look at taking responsibility for maintaining that taxiway going forward, for example.
As to everything else that we currently do with Katherine Town Council, we’ve already had a briefing session with them directly and we’ll continue to consult with them very closely as this project progresses from development into delivery and construction.
Cost of the works
2.37
Option 3 of the proposed works has an estimated cost of $427.1 million (excluding GST). This includes management and design fees, construction, information and communications technology, furniture, fittings, equipment, contingencies and a provision for escalation.
2.38
Defence noted in its submission that there would be ongoing operating and sustainment costs in relation to the work. These costs are associated with additional maintenance, cleaning and utilities expenses that will be required to maintain and operate the proposed facilities.
2.39
The Committee has also considered an anonymous submission that queried how the AIR7000 Phase 1B Remotely Piloted Aircraft System Facilities Project relates to the ongoing works at RAAF Tindal estimated at $1.174 billion (excluding GST), and whether there was any duplication of works or cost saving opportunities.
2.40
Defence provided further details on project costings in their confidential submission and during an in-camera hearing. The Committee is satisfied with the rationale underpinning the project costing.
Revenue
2.41
There will be no direct revenue generated by this Project.
Public value
2.42
Defence considers that the public value of the project will include:
Employment opportunities: It is expected that 1,150 personnel will be provided employment opportunities throughout the life of the project; with a diverse range of skills required and possibilities for up-skilling and job training.
Local industry and Indigenous business involvement: Defence will actively promote contract opportunities for small and medium local enterprises and, in line with the Indigenous Procurement Policy, there will be opportunities for Indigenous business involvement.
Infrastructure upgrades: Power supply upgrades are required for the project, and these will be provided by the Power and Water Corporation.
Committee comment
2.43
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.
2.44
The Committee acknowledges the submission made by the Australian National Audit Office and the observations from its review into the AIR7000 Phase 1B Remotely Piloted Aircraft System Facilities project.
2.45
The Committee also acknowledges the concerns shared by the Katherine community. The Committee notes that some of the identified issues are not within the remit of Defence, or the project budget. However, good relationships between the Council and Defence are critical, and the Committee has sought reassurance that a close dialogue between the parties will continue to be maintained.
2.46
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.
2.47
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: AIR7000 Phase 1B Remotely Piloted Aircraft System Facilities Project.
2.48
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.