Cyclic Hotline
19th Oct 2006, 15:05
Helicopter row blame game
By Sarah Smiles October 20, 2006
A DEFENCE contractor has admitted partial blame for massive cost blow-outs in the $1.96 billion European Tiger armed reconnaissance helicopter program.
Grilled by a parliamentary audit committee yesterday, Australian Aerospace said the bulk of $365 million in extra costs stemmed from "poor estimates" it made in its initial tender. It could not confirm when six delivered helicopters of a total 22 on order would be fully operational.
An Australian National Audit Office report released in May highlighted operational flaws in the French-made helicopters designed for reconnaissance in battle and providing air support to troops in combat.
It said the Tigers had problems flying at night and in bad weather, and tipped a replacement of under-powered engines at an additional $110 million.
While the company has paid for fixing the engines, it continues to haggle over the $365 million in extra costs that the defence department has so far refused to cover.
The Defence Materiel Organisation estimates the $365 million will spiral to $625 million for the "whole of capability costs" needed to maintain the helicopters through their contract lifespan. Thirty to 40 per cent of the increases relate to new capability requirements like updated fittings, which the company expects the department to cover.
"The remainder is our fault because we made poor estimates five years ago," said Brendan Roberts, the CEO of Aerospace's parent company, EADS Australian Pacific. "It gives us no joy to come up with this . . . (But) we had absolutely no idea," he said, blaming increases on false cost estimates provided by suppliers.
The increases relate to "through-life support" costs or maintenance of the helicopters over their contract lifespan.
Labor's spokesman on defence procurement, Mark Bishop, criticised the department for approving a "dodgy" contract without conducting proper risk analysis. "The Government has failed to protect the interests of the taxpayer because of inadequate contract scrutiny," he said.
By Sarah Smiles October 20, 2006
A DEFENCE contractor has admitted partial blame for massive cost blow-outs in the $1.96 billion European Tiger armed reconnaissance helicopter program.
Grilled by a parliamentary audit committee yesterday, Australian Aerospace said the bulk of $365 million in extra costs stemmed from "poor estimates" it made in its initial tender. It could not confirm when six delivered helicopters of a total 22 on order would be fully operational.
An Australian National Audit Office report released in May highlighted operational flaws in the French-made helicopters designed for reconnaissance in battle and providing air support to troops in combat.
It said the Tigers had problems flying at night and in bad weather, and tipped a replacement of under-powered engines at an additional $110 million.
While the company has paid for fixing the engines, it continues to haggle over the $365 million in extra costs that the defence department has so far refused to cover.
The Defence Materiel Organisation estimates the $365 million will spiral to $625 million for the "whole of capability costs" needed to maintain the helicopters through their contract lifespan. Thirty to 40 per cent of the increases relate to new capability requirements like updated fittings, which the company expects the department to cover.
"The remainder is our fault because we made poor estimates five years ago," said Brendan Roberts, the CEO of Aerospace's parent company, EADS Australian Pacific. "It gives us no joy to come up with this . . . (But) we had absolutely no idea," he said, blaming increases on false cost estimates provided by suppliers.
The increases relate to "through-life support" costs or maintenance of the helicopters over their contract lifespan.
Labor's spokesman on defence procurement, Mark Bishop, criticised the department for approving a "dodgy" contract without conducting proper risk analysis. "The Government has failed to protect the interests of the taxpayer because of inadequate contract scrutiny," he said.