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Saturday, December 12, 2009

Defence to buy equipment off the shelf

AUSTRALIA will buy a growing proportion of its military equipment ready-made from overseas as a way of ensuring that multi-billion dollar purchases are delivered on time and on budget, according to Defence secretary Ian Watt. 

Collins class Drawing

Dr Watt said recent success stories such as the trouble-free purchase of C-17 heavy airlifter aircraft and Abrams tanks from the US had convinced Defence that so-called off-the-shelf military purchases from overseas were a viable, cost-effective way of funding future Defence capability.

"I think there is a greater appreciation of the benefits of off-the-shelf (purchases)," he told The Weekend Australian in his first interview since becoming Defence secretary on August 31.

"We didn't have off-the-shelf success stories (in the past) but now we do,' he said.

Dr Watt's comments confirm a steady sea-change in Defence thinking away from Australian-based programs such as the failed modifications to the navy's Seasprite helicopters which forced the government to write off the entire $1.2 billion project.

However, greater emphasis on overseas purchases is likely to alarm the nation's $5bn defence industry which is hoping to reap lucrative contracts from the $100bn-plus defence equipment program outlined in this year's Defence white paper.

"There is a concern (in the defence industry) to the extent that you don't want a mindset in the defence bureaucracy that automatically buys off the shelf," said John O'Callaghan, executive officer of the peak defence industry body, the Australian Industry Group Defence Council.

"You want careful analysis of the reasons for buying off the shelf and the costs and benefits of doing so."
Dr Watt said the decision to buy off-the-shelf military equipment would be made on a case-by-case basis, but he would like to see the balance tilt towards buying ready-made equipment from overseas. "The issue we have as an organisation is, yes, to make more use of off the shelf, but some things you can get off the shelf and some things you can't.'

Defence has traditionally found itself facing the greatest blowout in costs when it invests in development defence projects, such as the F-111 strike bomber in the 1960s, the Collins Class submarine project in the 1980s, and the current Joint Strike Fighter project and Wedgetail early warning aircraft projects which are both late and over budget.

Although the government has said it will construct the next generation of submarines in Australia, it is unclear how much Australian input there will be to the design, weaponry, communication and combat systems of the new boats.

Collins launch

The decision to build the Collins Class submarines from scratch resulted in a sub-standard combat system, unreliable main engines, noisy machinery, cracked propeller blades, poor communications and a problem-plagued periscope.

Dr Watt said the $2bn C-17 purchase and the $500 million Abrams tanks order, which were both delivered on time and on budget, had convinced Defence it could buy off the shelf successfully.
"Replicate these and the balance shifts," he said. "(The debate) becomes, `why wouldn't you buy off the shelf?" (Original News)

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