Australia may end up paying too much for the combined civil and military air traffic management system OneSky despite a tender process that was “capable of producing a value for money outcome”, the Australian National Audit Office (ANAO) says.
At the request of the Senate Rural Affairs and Transport Legislation Committee and the Minister for Infrastructure and Regional Development, the ANAO conducted an audit into Airservices’ oversight and implementation of OneSky, which aims to combine both the civil and military air traffic management systems into one program.
The ANAO performance audit examined whether the OneSKY tender was conducted so as to provide value with public resources and achieve required timeframes for the effective replacement of the existing air traffic management platforms.
It said the two-stage tender process involving a request for information (RFI) followed by request for tender (RFT) had been “appropriate for the scale, scope and risk of the joint procurement” and generated a healthy level of competition with 23 responses to the RFI and nine tender responses received from six tenderers.
Further, it found the OneSky tender process was “capable of producing a value for money outcome”.
However, the ANAO was critical of how the tenders were evaluated.
“It is not clearly evident that the successful tender offered the best value for money,” the ANAO report said.
“This is because adjustments made to tendered prices when evaluating tenders against the cost criterion were not conducted in a robust and transparent manner.
“Those adjustments meant that the tenderer that submitted the highest acquisition and support prices was assessed to offer the lowest cost solution.
“It is also not clearly evident that the successful tender is affordable in the context of the funding available to Airservices and Defence.”
The ANAO report noted “an overarching business case was not prepared for OneSKY”, with Defence and Airservices preparing separate business cases.
Further, the Airservices business case had not been reviewed or updated since January 2011.
The ANAO said in the report Airservices had informed it in December 2016 work to update the business case had commenced and was due for completion in the first quarter of 2017.
And the report said “shortcomings in Defence’s 2011 business case were identified by a review that was commissioned after Ministers became aware of a significant increase in the initial estimated acquisition costs when a 2014 business case was prepared (on the basis of tender responses)”.
The full report can be read on the ANAO website.
Airservices noted the ANAO report concluded the tender process was “appropriate for the scale, scope and risk of the project”.
“The ANAO report found that the tender process promoted a healthy level of competition and that the evaluation governance processes were appropriate,” Airservices said in a statement.
“Importantly, the ANAO also found that, consistent with Airservices’ longstanding position, the tender governance arrangements were effective in guarding against the potential perceived conflict of interest issues identified in an earlier ANAO audit.”
“With any complex procurement of this scale and scope, there will always be some potential improvements that, with hindsight, can be identified and we acknowledge and accept these and we will incorporate them in our future operations.”
It is the ANAO’s second audit into OneSky. In August 2016, it published a first audit which found Airservices did not follow its own policies and procedures in contracting an external organisation, the International Centre for Complex Project Management (ICCPM), to provide services related to the OneSky project.
The move to have ANAO look into the matter came after a parliamentary committee in August and September 2015 raised questions surrounding the OneSky tender process, particularly after Airservices contracted ICCPM in 2012 to establish the request for tender.
At the 2015 Avalon Airshow, the federal government named Thales as the successful supplier for OneSky. Since then Airservices has been continuing to negotiate with the the company ahead of signing formal contracts.