Annual Report 2003-04

Other Capital Purchases (+$101.9m)

Other capital purchases comprise minor capital equipment projects, purchase of repairable items and other plant and equipment exceeding the capitalisation threshold of $10,000 ($50,000 for grouped assets), other property, plant and equipment, software and intangibles. Repairable items are items such as engines, gearboxes and components of platforms. These items are acquired to sustain a pool of spares for use while worn and broken items are repaired, maintained or replaced.

Minor capital projects cover new equipment, modifications to existing equipment or enhancement to new equipment that are generally valued between $250,000 and $20m. Minor projects costing between $8m and $20m are approved jointly by the Ministers for Defence, and Finance and Administration. The Minister for Defence approves projects costing between $5m and $8m. The Service Chiefs and Group Heads, or their nominated delegates approve projects costing below $5m.

Other capital equipment also includes purchases of information technology and administrative assets costing more than $2,000 and other property, plant and equipment assets costing more than $10,000, and software and intangibles.

Total expenses on other capital purchases in 2003-04 were $101.9m higher than the projected result of $517.7m. The additional expenses included:

• the purchase of repairable items aimed at clearing backlogs in this area (+$23.7m);
• the purchase of information technology assets, which was offset by the Major Capital Facilities Program (+$17.9m);
• additional purchases of other property, plant and equipment assets by the Corporate Services and Infrastructure Group (+$5.7m);
• the Government-agreed settlement in relation to the intellectual property for the Collins-class submarine (+$25.0m);
• the enhancement of Defence's human resource software package, PMKeyS, including associated software licensing (+$5.0m);
• a change in accounting procedures for equipment purchases by the Defence Science and Technology Organisation (+$8.6m); and
• an underestimate of other plant and equipment purchases in the original budget, together with a range of other offsetting adjustments (+$16m).