The objective of the audit was to assess the effectiveness and value for money of Defence's acquisition of a Battle Management System and a Tactical Communications Network through Land 200 Tranche 2 Work Packages B–D.
7. Defence did not conduct fully effective acquisition processes for Land 200 Tranche 2 Work Packages B–D, but may ultimately achieve value-for-money outcomes if the contracted quality and quantity of goods and services are delivered according to the agreed schedule and successfully integrated by Defence. Defence established an appropriate review framework for the acquisition projects, but its effectiveness was undermined by a failure of governance.
8. Inadequate requirements definition and poor coordination between the two responsible project offices contributed to an ineffective 2015 procurement for the Army’s Tactical Communications Network, which required a lengthy post-tender refinement process to bring the acquisition within the approved budget. The 2015 sole-source procurement process for the Army’s Battle Management System was ultimately effective, but the procurement was delayed pending resolution of affordability issues affecting Land 200 Tranche 2 as a whole. Defence addressed affordability issues by adopting a ‘design to price’ strategy, significantly reducing project scope and assuming additional risk and cost by taking on the role of Prime Systems Integrator. Defence has assessed that it can achieve value-for-money outcomes following these adjustments.
9. The difficulties encountered in Land 200 Tranche 2 stem in large measure from one project office’s release of a Request for Tender with a scope that exceeded the approved cost and did not fully assess the budget consequences or governance and coordination arrangements at a program level. The desired outcome shifted from the procurement of radios to the procurement of a complex digital communications solution, as Army developed its understanding of how it would operate in a digital environment.
10. Defence did not establish fully effective project governance arrangements. Defence established an appropriate review framework, with successive reviews identifying project coordination risks from 2013. Defence management’s failure to implement the recommendations of these reviews until 2017 constitutes a failure of governance that negatively affected the 2015 tender outcomes.
11. Defence has established effective contract arrangements. However, vehicle integration costs were not included at contract signature because funding was insufficient, and Defence has now accessed contingency funding to reinstate this scope into the contract.
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