A ‘partnership’ between Air Services and Defence with Thales on the other side. What could possibly go wrong?
The not-so-glossy Auditor-General’s report on its assessment of whether the contract for the acquisition of the system represents value for money concluded:
10. Important changes were made, after the successful tenderer was selected, to the timeframe for delivery, scope of work, type of contract and price. An appropriate governance framework was established to evaluate whether negotiations had resulted in contract terms that represent value for money. Shortcomings in the application of that framework mean that value for money has not been adequately demonstrated.11. If the current contracted timeframes are achieved, there will be a more than ten year delay (from 2015 to 2026
5) in the replacement of the existing separate civil and military systems compared with the timeframe envisaged at the start of the procurement process. The capability baseline for the new combined system was established in advance of issuing the Request for Tender through appropriate engagement with industry. Delays with tender evaluation activities were exacerbated by even longer delays in the negotiation phase. Negotiations took so long that the offer submitted by the successful tenderer expired and the lives of the existing separate systems needed to be further extended. Negotiations also resulted in a late change in the contracting model from the one that had been presented to the market in June 2013.
12. There is inadequate assurance that the acquisition price is consistent with a value for money outcome:
- For the June 2016 offer, a comprehensive evaluation report was produced that included a clear conclusion that value for money had not been achieved. This was principally due to concerns about the $1.449 billion estimated acquisition cost.
- Through further negotiations, changes were made to delivery timeframes, the scope of work and the contract model, leading to a September 2017 final offer (with an estimated target price of $1.23 billion with the ceiling price to be 10 per cent higher) followed by further negotiation on scope, price and commercial terms. An evaluation report addressing each criterion, the expected total cost of ownership and whether the negotiated outcome represented value for money, was not prepared by the CMATS Review Board (CRB) and provided to the Airservices Board to inform the decision to sign the acquisition contract. Rather, the Board was provided with a report prepared by the Lead Negotiator6, who was not authorised to and did not undertake a full evaluation of the offer.7 The records of the relevant Board meeting do not identify or discuss the provision of the February 2018 Lead Negotiator’s Report8, and do not outline the value for money considerations of the Board.
13. Price risk is dealt with in the terms of the acquisition contract.
[Footnotes omitted.].
But I’ve strayed way too far from the subject of this thread. I anticipate that OneSky will become the subject of its own thread, sooner or later.