A NEED TO COMBAT DEFENCE PROJECT COST OVERRUNS

Senator Rex Patrick congratulates Lockheed Martin on contract award but calls for major reform on Defence procurement The Nick Xenophon Team congratulates Lockheed Martin and offers cautious support to the Federal Government in the wake of the announcement that Lockheed Martin will integrate the United States AN/BYG-1 Tactical Weapon Control System into our Future Submarines. NXT is pleased that much of the work in the contract will be carried out in South Australia but Senator Patrick has expressed reservations about the cost. "We have no idea what's included in the $700 million contract. That's something we'll have to unpack at Estimates," said Rex. "Noting this work is for integration and installation, the number seems high." Former Senator Xenophon asked questions about the actual tactical weapon control system that Lockheed Martin will integrate but no answers have been provided (see attached). "On the evidence, the Government has not established a price for the actual tactical weapon control system that will be installed and integrated by Lockheed Martin. It seems we've committed to a system where we don't understand the price. That approach is somewhat cavalier," said Rex. In recent days, Defence has released information to the Senate showing that, on average, major defence projects are delayed by four and a half years. "These delays come at a considerable cost to the taxpayer," said Rex. The Auditor-General has also tabled its audit of Defence Major Projects for 2016-17 and that audit confirms the cost overruns. "Defence's management of major equipment procurement is bleeding billions of dollars," said Rex. "While the Government has been cutting cost to welfare, health, education and other important community programs, major blowouts in Defence are almost going unnoticed." On 27 June 2017, Minister Pyne wrote to former Senator Nick Xenophon stating he was: satisfied that Defence's existing tendering and contracting practices and templates provide an appropriate framework for the selection and management of subcontractors on Defence contracts. "In the face of recent confirmation of blowouts, I find this comment troubling," said Rex. Senator Patrick is calling on major reform to the way Defence does business.