Thales was announced as the successful supplier for the Airservices Australia-led OneSky project at the Avalon Airshow in February 2015. However, negotiations between Airservices and the French-headquartered aerospace and defence company have become increasingly protracted, and 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 project.
“In June last year they [Thales] submitted an offer based on their original tendered offer that had gone through a further negotiation phase,” Rear Admiral Tony Dalton told the Senate’s Foreign Affairs, Defence and Trade committee on Wednesday evening.
“The assessment of that offer in June last year was it didn’t represent value for money,” RADM Dalton, who is now general manager ships at Defence’s Capability Acquisition and Sustainment Group (CASG) but retains responsibility for Defence’s portion of the OneSky program, told the committee.
“There has been a degree of work done on that offer with Thales in the intervening period that culminated with a revised price being offered by Thales last month. That is currently under assessment.”
Defence’s share of the OneSky program is known as ‘Project AIR 5431 Phase 3 Civil Military Air Traffic Management System’, and was added to the government’s Projects of Concern list of Defence acquisition programs requiring special remediation, in August, a near unprecedented move for a program yet to be contracted.
RADM Dalton explained that the delay in signing contracts was one reason OneSky was added to the Projects of Concern list, and that further delays might force Defence to seek an alternative supplier to replace its existing Australian Defence Air Traffic System (or ADATS).
“Well certainly the timeframe has slipped. That’s been part of the issue and that’s why it’s been elevated to a Project of Concern,” RADM Dalton said.
“But inside our budget, we have some allowances to cater for the obsolescence emerging in the current defence system. That clearly is a concern for us and there is a finite amount of time that the process can go on before we have to look at alternatives.”
Further, RADM Dalton confirmed the cost of Defence’s share of the program could be higher than first expected.
“Our contribution to the overall OneSky program may need to increase. We have made some allowances in the revised Integrated Investment Program to accommodate for that increase. Our negotiations with Airservices have said that there’s a finite amount of money that we’re prepared to increase.
“Part of the discussions that we’ve had with Thales, through the Project of Concern process, has made that abundantly clear to Thales.”