Senate Notice Paper Question Nos 2433 & 2462 (42nd Parliament)

Senate Notice Paper Question Nos 2433 & 2462 Schedule Number: 300263 & 300264	Publication Date: 22 February 2010 Hansard: Pages 778-80
Defence: Program Funding		Senator: Ronaldson

Senator Ronaldson asked the Minister for Defence, upon notice, on 23 November 2009:

For the 2008-09 financial year, what is the department’s top five program: (a) overspends and their costs; and (b) underspends and their costs.

Senator Faulkner - The answer to the honourable Senator’s question is as follows:

(a) and (b) Table 1 below details the top five major capital equipment project overspends and the top five major capital equipment project underspends for financial year 2008-09.

It should be noted that “overspend” does not refer to a breach of project approval, but rather to a greater expenditure for the period than was planned at its start. The overspend most often reflects payments made for work completed earlier than anticipated. Underspend most often reflects completion of work by industry later than, or completion of the work at less than, anticipated in the project’s cash flow plan.

Table 1: Approved Major Capital Investment Projects FY2008-09 Summary
Project No.	Project Name	Plan 2008/09 $m	Actual 2008/09 $m	Variation $m	Reasons for Variation
Overspend
AIR 5349 Phase 1	Bridging Air Combat Capability Super Hornet (BACC)	560	935	375	The variation in FY2008/09 was due to acceleration of US Navy activities under the Foreign Military Sales (FMS) case resulting in contracts being signed earlier than originally forecast.
SEA 4000 Phase 3	Air Warfare Destroyer (AWD) Build Phase 3	694	734	40	Procurements and placement of contracts earlier than anticipated in the budget.
LND 0106	Upgrade of M113 Armoured Vehicles (RPT)	105	144	38	The approval to upgrade an additional 81 armoured vehicles was received after the submission of the FY2008/09 plan. The resulting contract change added approximately $17m to the FY2008/09 expenditure. The remaining difference resulted from the early delivery of sub-systems from overseas suppliers.
JNT 2008 Phase 5A	Indian Ocean Region UHF SATCOM	4	39	35	The plan for $4m was an advance from Capability Development Group to procure long lead items prior to contract signature. The project received 1st and 2nd pass approval later in FY2008/09.
JNT 2008 Phase 4	Next Generation Satellite Program	61	96	35	Variation mainly due to exchange rate fluctuations $10.123m, and acceleration of work ahead of schedule.
Underspend
JNT 2086 Phase 1	Mulwala Redevelopment Project	144	75	-69	Significant delay of up to 4-6 months was experienced in the Prime Contract due to design issues and the delays in the commencement of construction.
JNT 0129 Phase 2	Tactical Unmanned Aerial Vehicle	29	-6 (2)	-35	On September 2008 DMO executed a Deed of Settlement and Termination with Boeing Australia, terminating the procurement of the I-View 250 tactical UAV system.
AIR 5077 Phase 3	Airborne Early Warning and Control Aircraft Phase 3	38	17	-21	System Acquisition Contract slippage and other minor variations.
JNT 2097 Phase 1A	Special Operations Vehicle (SOV) (RPT)	36	17	-20	Delays in the delivery of the Special Operations Vehicle Communication System.
AIR 8000 Phase 3	C-17 Globemaster Heavy Air Lift Capability	22	12	-10	Savings and revised programming for a number of minor project support activities into FY2009/10.

Notes:

Some totals may not add up due to rounding.
There was a net reduction in total expenditure by the project in FY2008-09 due to recovery of damages from the contractor for contract delays.

Defence: Program Funding