Jindalee Operational Radar Network

Senator Chris Evans asked the Minister for Defence, upon notice, on 21 March 2002:

With reference to the Jindalee Operational Radar Network and the Defence Department's Portfolio Additional Estimates statements 2001-02 which state that there is a significant anticipated schedule slippage by the contractor with respect to this project:

1. What was the anticipated schedule prior to the slippage being identified.
2. What is the schedule, taking into account the significant anticipated slippage.
3. Will the slippage result in additional costs for the project overall; if so, what is the extent of any additional overall project costs.
4. Will the contractor, the Commonwealth, or both be liable for any additional costs incurred as a result of the slippage.
5. What are the causes for the anticipated schedule slippage.

Senator Hill - The answer to the honourable senator's question is as follows:

1. The contracted schedule completion date was 3 January 2002.
2. The schedule slippage has resulted in an expected completion date of mid 2003.
3. The Jindalee Operational Radar Network (JORN) prime contract has been on a firm price basis since September 1997, and Defence's financial exposure under that contract is therefore limited to exchange rate adjustments. Defence staff numbers in the System Program Office that manages the project will be maintained at a higher level for longer than otherwise planned for the acquisition phase, due to the slippage. However, the impact will be relatively minor since a considerable portion of that organisation's current workforce will be needed to perform the ongoing Through Life Support of the Network when delivered, and to manage future enhancement phases of JORN programmed in the Defence Capability Plan. The entitlement under the contract to liquidated damages is expected to cover additional project office costs, and other costs, arising from the delay.
4. Because of the JORN contract's firm price, the contractor is liable for any additional contract costs incurred due to the slippage. The Defence Materiel Organisation has initiated a program to mitigate consequential Defence impacts and meet expenses through the application of liquidated damages provisions in the contract.
5. By mid 2001 it was clear that the contractor had under-estimated the level and complexity of the technical integration effort required for JORN. Attempts by the contractor RLM to reduce schedule impact by undertaking integration and test activities, essentially in parallel, proved unsuccessful. The contractor has now opted for a more conventional lower risk integration and test strategy. Based on experience to date the contractor has replanned and rescheduled its activities to develop a realistic, but still demanding schedule, aimed at achieving delivery between February and June of 2003.

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