Defence’s participation in the Airservices Australia-led OneSky program to acquire a joint civil and military air traffic management system has been placed onto the government’s Projects of Concern list.
As a consequence, the project, which aims to replace the currently separate civil and Defence air traffic management systems under a single program, and is known to Defence as Project AIR 5431 Phase 3 Civil Military Air Traffic Management System, now faces increased ministerial involvement and oversight.
“This is a highly complex, inter-departmental project of national significance that has experienced some substantial challenges getting into contract,” Minister for Defence Industry Christopher Pyne and Minister for Defence Senator Marise Payne said in a joint statement on Friday.
“The challenges revolve around issues with ensuring value for money for the taxpayer.”
The move is thought to be unprecedented for a project to be added to the Projects of Concern list before it has gone to contract.
The federal government named Thales as the successful supplier for OneSky at the 2015 Avalon Airshow.
Since then, Airservices has been negotiating with the the company ahead of signing formal contracts, with some preliminary work undertaken via a series of “advanced work orders”.
Last week Airservices chair Sir Angus Houston told a Senate committee the contracts are close to being ready.
“We’re getting close, 99 per cent of the paperwork is contract ready, that means we’re getting very close,” Sir Angus told members of the Senate Rural and Regional Affairs Transport Legislation Committee on August 9.
Sir Angus also told the Senate Committee Defence would be shortly seeking government approval for its share of the program from the National Security Committee (NSC) of Cabinet.
With Parliament sitting in Canberra this past week, NSC may have met to discuss OneSky, among other matters, possibly prompting the joint ministerial announcement on Friday.
Defence and Airservices are jointly funding the OneSky project, with the total cost estimated to be near $1 billion.
An Australian National Audit Office (ANAO) report published in April questioned OneSky’s value for money, suggesting Australia could end up paying too much for the combined civil and military air traffic management system .
Specifically, 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.
Further, the ANAO said it was “not clearly evident that the successful tender is affordable in the context of the funding available to Airservices and Defence”.
Airservices’ most recent five-year corporate plan noted “OneSky and its enabling projects account for $652 million” in capital expenditure over the next five financial years, through to the end of 2021-22.
While Defence had previously capped its financial commitment at a “not to exceed” price of $244 million, Sir Angus told the Senate Committee Defence would seek from the NSC final approval for some form of cost increase.
Parts of the new OneSky system were expected to be operating by 2018, with the full operating capability expected in 2023, two years later than the original 2021 completion date.
Meanwhile, the AIR 5431 Phase 1 Deployable Defence Air Traffic Management and Control System project has also been added to the Projects of Concern list.
Indra was awarded this project in 2014 to deliver a mix of mobile and transportable air traffic control radars and supporting equipment to allow Defence to control and monitor air traffic while deployed on operations.
“The project has experienced schedule delays since approval, and initial delivery is expected almost two years later than originally planned,” the Ministers said.
The addition of the two projects to the Projects of Concern list is unrelated, although they are part of the same program.