- Fishermans Bend Redevelopment
Department of Defence
2.1The Department of Defence (Defence) seeks approval from the Committee to proceed with the proposed Fishermans Bend Redevelopment Project.
2.2The project will upgrade the existing facilities and infrastructure at the Defence Science and Technology Group (DSTG) Fishermans Bend, Victoria site to sustain operations at the site and ensure that the infrastructure is fit-for-purpose.
2.3Defence will invest in ‘high-priority infrastructure and engineering services upgrade works to address safety, security and compliance deficiencies on the site…The proposed works include an upgrade to the entry precinct and upgrades to infrastructure and engineering services, including electrical, water, stormwater, sewer, information and communications technology, natural gas and compressed air’.
2.4The estimated cost of delivery of the project is $160.9 million (excluding GST).
2.5The project was referred to the Committee on 20 June 2023.
Conduct of the inquiry
2.6Following referral, the inquiry was publicised on the Committee’s website and via media release.
2.7The Committee received one submission, one confidential supplementary submission, and one confidential submission. A list of submissions is at Appendix A.
2.8On 16 August 2023, the Committee conducted a site visit and public and in-camera hearings. A transcript of the public hearing is available on the Committee’s website.
Need for the works
2.9The DSTG site is a specialist science and technology research establishment of national significance. The site provides support to Australia’s Defence Force (ADF) in conduct of operations, acquisition of future Defence capabilities and Australia’s broader national security requirements.
2.10Defence notes the extensive works that need to be undertaken on the site:
The condition of existing engineering services infrastructure is poor, approaching end of life, have capacity and compliance issues and pose a risk to the current and future capability of the site.
2.11Defence’s proposal will invest high priority engineering services infrastructure upgrade works to sustain the site, and address safety and security compliance requirements to support the continued operations of DSTG as a fundamental input to ADF capability.
Options considered
2.12Defence advised that four overarching options were considered:
- Option 1 (do nothing) was discounted as it does not rectify the current site issues, nor does it maintain the site to current Australian Standards, including safety and security standards.
- Option 2 (in-budget option) was recommended as the preferred option as it delivers the replacement of ageing infrastructure necessary to maintain the operationality of the site, and upgrades the entry precinct to meet safety and security compliance requirements.
- Option 3 (prioritised scope option) includes all requirements in Option 2 but also introduces provisions for high priority additional works including new working accommodation, office refurbishment and roof replacement works. This Option was discounted as it exceeds the available budget.
- Option 4 (full scope option) includes all provisions in Options 2 and 3 in addition to an extension to an existing hangar and refurbishment of an additional office for an additional laboratory. This Option includes all scope requirements for the site, however, was discounted as it exceeds the available budget.
- Defence considered Option 2 to represent the best value money solution to the Commonwealth as it provides the critical minimal requirements that are needed to maintain continued operations of the DSTG site.
Scope of the works
2.14The scope of work for Option 2 has seven elements:
- Project Element 1 – Entry Precinct
- Upgrade the existing entry precinct, including a new guardbox, refurbished guardhut, upgraded perimeter security, and vehicle and pedestrian access to improve accessibility and traffic flow entering and exiting the site.
- Project Element 2 – Electrical Infrastructure
- Upgrade the existing site electrical infrastructure in line with the site’s High Voltage Master Plan, including new substations, cabling, switchboards, and a new power control and monitoring system.
- Project Element 3 – Potable and Fire Fighting Water Infrastructure
- Upgrade the existing site water supply infrastructure with new independent potable and fire fighting water systems, including a new fire pump and tank arrangement.
- Project Element 4 – Stormwater Infrastructure
- Upgrade the existing site stormwater infrastructure, including new pipework, pits to expand stormwater capacity, and devices to improve stormwater quality flowing out of the site.
- Project Element 5 – Wastewater Infrastructure
- Upgrade the existing site sewer infrastructure to a new low pressure sewer system, including new sewer pods, pipework and sleeving of some existing pipework.
- Project Element 6 – Information and Communications Technology Infrastructure
- Upgrade the existing site information and communications technology infrastructure to include new network capability to support existing reconfigured entry and new electrical infrastructure monitoring system. Compliance and safety issues will be remediated to bring the infrastructure up to current Defence standards.
- Project Element 7 – Natural Gas and Compressed Air Infrastructure
- Upgrade the existing site gas infrastructure to replace all gas pipework between the authority meter and supplied buildings, including new isolation valves, regulators and test points. The compressed air infrastructure will be upgraded to replace the central system plant and pipework.
- In addition to the elements listed above, the project also includes the following general scope items:
- Structure: structures have been designed according to the local geotechnical profile and structural loads. The new structures will be compliant with all relevant Australian Standards, Defence design guidelines and the National Construction Code. Structures have been developed using low maintenance and durable construction materials, with a consideration for buildability and proposed materials availability, strength of materials and site classification.
- Mechanical services: mechanical services for refurbishment of office accommodations will meet relevant ventilation, thermal comfort and air quality requirements.
- Electrical services: upgrade works will be conducted in accordance with Australian Standards and Defence engineering requirements, which will promote a safe, reliable and flexible electrical system. Services have been designed to minimise maintenance and operational costs.
- Hydraulic services: upgrades to wastewater, stormwater, potable and fire fighting water will be rendered in accordance with Australian Standards and Defence engineering requirements.
- Fire protection: will be made in accordance with the Manual of Fire Protection Engineering and the Building Code of Australia, and in consultation with Fire Rescue Victoria.
- Information and Communications Technology (ICT): upgrades will be made in accordance with Australian Standards and Defence’s engineering requirements, including the Information Security Manual, Defence Cabling Standards, and Defence’s Communication Room Standards.
- Gas services: upgrades will replace existing aged infrastructure within the site and improve maintainability that is in line with Federal, State, Defence and Energy Safe Victoria codes and guidelines.
- Compressed air services: upgrades will replace and relocate existing compressed air services to improve maintenance outcomes and energy usage for Fishermans Bend and meeting work, health and safety obligations of Defence employees.
- Security measures: upgrades will meet the needs of the reconfigured facilities whilst infrastructure for the entry precinct will be in accordance with Defence regulation and standards and the National Construction Code.
- Acoustics: works will comply with the National Construction Code and Australian Standards for noise and acoustics. Acoustic separation has been considered in construction elements and surface finishes are being designed to meet user requirements.
- The project proposal includes provisions to deliver additional works as ‘below the line’ items. These may be included in the final scope if the project makes savings through tendering or retiring risk provision. If funds become available, Defence will refurbish office accommodation for two existing laboratories and undertake roof replacement works that have been identified under Option 3.
- The natural gas supply pipework is in a poor condition. Site inspections by the Managing Contractor and the design engineers were completed during design development. The inspections concluded that repairing and maintaining the natural gas pipeline in its current deteriorated state is not recommended due to safety and operational reasons.
- Safety issues with a failing natural gas reticulation network include leaking gas infrastructure (both internal and external to buildings) with a risk of inhalation by personnel and/or the chance of an explosion. The current natural gas infrastructure system cannot be relied upon to support DSTG’s operational needs for supply of natural gas.
- Defence further explains the condition of the gas infrastructure:
There's a lot of rusting and corrosion in the lines, which is causing issues with the system. Generally speaking, it is at its end of life, which is really driving the requirement to replace the system as it is.
2.20It is anticipated that in time, existing gas-powered building services on the site will reach the end of their useful life and be replaced by electric appliances, in line with the new Defence Net Zero Strategy policy. However there is an enduring need for in-ground natural gas reticulation systems at the site to support some gas-powered specialist equipment, as there is currently no viable electric alternative.
Potential impacts
2.21The Department of Defence anticipates that there may be noise impacts on site during the works; however, mechanical plant selection and location of plant rooms should minimise this impact. There will be no material noise impacts to local communities.
2.22Defence have made provisions for traffic, transportation and road impacts. The construction of a new entry precinct will alleviate existing traffic congestion on Lorimer St by providing additional vehicle throughput capacity. The works will establish a temporary entry to segregate construction traffic from base users during construction works. The temporary entry will mitigate traffic safety risks, consider additional traffic as the result of the construction workforce and facilitate an expedited construction program.
2.23The Victorian Government is currently developing 230 acres of land for the Fishermans Bend National Employment and Innovation Cluster as part of the Fishermans Bend urban renewal area valued at $179.3 million. The precinct currently includes several commercial and industrial partners including Boeing, Siemens, Blackmagic design, ARRB and the University of Melbourne. The Victorian Government envisages the Fishermans Bend precinct as a centre for innovation in advanced manufacturing, engineering and design that will be home to at least 40,000 jobs and 20,000 students by 2050. An objective of the site is to ‘encourage a critical mass of advanced manufacturing and engineering industries including in the key sectors of aerospace, transport, defence, clean tech and creative technologies’.
Community and stakeholder consultation
2.24Defence has developed a community consultation and communications strategy and has engaged with a variety of internal and external stakeholders during the project development phase including:
- Federal and Local Members of Parliament in affected electorates
- the Melbourne City Council
- the Bunurong Land Council Aboriginal Corporation
- the State Department of Transport and Planning (VicRoads)
- Fire Rescue Victoria
- local utility providers, and
- local community and business groups.
- Defence undertook community consultations throughout the project’s development with a range of local stakeholders. Defence held a community information session on 15 June 2023. These consultations provided an opportunity for local community members to engage with the project team, ask questions and raise any concerns regarding the project.
- The University of Melbourne appeared at the public hearing in support of Defence’s proposed works with a request that the ‘design and facilities planned should consider how to optimise the benefits of the location, including by providing the opportunity for efficient deployment of resources in terms of new infrastructure and capabilities’.
Site security and access
2.27The University of Melbourne has purchased 7.2 hectares of land from the Victorian Government to deliver an advanced manufacturing, engineering and design campus at Fishermans Bend, adjacent to DSTG. The campus has been designed for large experimental engineering research.
2.28At the public hearing, the University of Melbourne suggested that Defence consider greater connectivity between DSTG and the University when planning its redevelopment of the site. To allow DSTG staff mobility to and from the site, the University proposed that Defence build a pedestrian access gate to the eastern boundary of the site on the arterial road Turner Street. The University hopes this will enable DSTG staff easier access to the University of Melbourne’s campus.
2.29Defence stated that the construction of Turner Street and a possible tramway are still several years away, projecting a date around 2030. The proposed works are due to finish construction in 2026. Defence told the Committee it would consider installing a pedestrian gate for site access from Turner Street as a future work and roughly estimated cost as approximately $1.6 million.
2.30Defence indicated that should a gate be installed, a current Defence Common Access Card would be required to access the site and use would be restricted to on-site employees. This would allow for the movement of pedestrians from public transport and between work sites.
2.31At the public hearing, the University of Melbourne clarified to the Committee that it has security procedures in place that dictate who can access secure areas of the Fishermans Bend campus, and that the campus complied with Australian Government restrictions on who can work with particular technologies.
Cost of the works
2.32The estimated total capital delivery cost of the project is $160.9 million (excluding Goods and Services Tax). This includes management and design fees, construction, information and communications technology, furniture, fittings, equipment, contingencies and a provision for escalation.
2.33Defence noted that they expect an increase in future sustainment and employment costs due to the nature of the works.
2.34Defence provided further details on project costs in its confidential submission and during an in-camera hearing.
Revenue
2.35There will be no revenue generated by this project.
Public value
2.36Defence considers that the public value of the proposed works will include:
- Economic Impacts: promotion of subcontract packages for small to medium enterprises in the Melbourne area
- Employment opportunities: generation of a diverse range of consultants, contractors and construction workers, and opportunities for upskilling and job training. Defence projects that over one hundred personnel could be provided with employment opportunities over the life of the proposed works
- Local industry and Indigenous business involvement opportunities: the head contractors will also develop a Local Industry Capability Plan and an Indigenous Participation Plan. Defence intends to engage local suppliers where possible to complete the proposed works
- Health and Safety: the proposed works will reduce health and safety risks at the site and for local road users by improving the interface between base users and local traffic at the existing entry point
- Existing infrastructure services: the proposed works will address existing critical issues at the site, which is located within Commonwealth land. The project is not expected to impact Victorian Government-provided infrastructure services within existing on-site capacities.
- Defence advised the Committee that the ‘in accordance with Commonwealth procurement requirements, local industry participation on the project will be encouraged through the development of a local industry capability plan. The proposed works will also provide opportunities for small and medium enterprises to deliver work packages. Indigenous businesses and individuals will also have opportunities to be involved on the project in accordance with the requirements of the government's Indigenous Procurement Policy.’
Committee comment
2.38The Committee did not identify any issues or concerns with the proposal, and it is satisfied that the project has merit in terms of need, scope, and cost.
2.39The Committee understands that Option Two is the preferred option for this project, but Defence will deliver some of the below-the-line options in the event of cost reductions or the retirement of risk provisions. The Committee supports this, as the additional scope elements will further increase the longevity of the site.
2.40The use of natural gas is being phased out in Victoria and also as part of Defence’s net zero strategy. The Committee suggests that Defence monitor Victorian Government policies on natural gas usage for industrial purposes with a view to replacing the natural gas on site when the HVAC reaches its end of life with an alternative energy source.
2.41The Committee understands that future works will likely take place on the DSTG site, including the installation of a gate on the eastern boundary on Turner Street. The Committee acknowledges the issues raised by the University of Melbourne and thanks them for their appearance at the public hearing. The Committee notes the advantages to pedestrian traffic for a gate at that location, however urges both Defence and the University of Melbourne to seriously consider the security implications of introducing an additional access point.
2.42The Committee understands that the Victorian Government is currently undertaking the Fishermans Bend National Employment and Innovation Cluster project to stimulate jobs and innovation in Port Melbourne. The Committee asks that Defence monitors which companies acquire land in the former General Holden Motors site, which sits adjacent to the DSTG site, and liaises with the Victorian Government regarding any risks associated with the sale of the land.
2.43Having 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.
2.44The 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: Department of Defence - Fishermans Bend Redevelopment Project.
2.45Proponent 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.
Mr Graham PerrettMP
Chair