$1.3bn Thales deal could have costed half with US - Auditor

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Ouch.

Coalition suppressed auditor's finding that $1.3bn Thales arms deal could have cost half with US


Exclusive: French group asked attorney general to use extraordinary powers to black out sections of report that criticised the deal

The Coalition suppressed the auditor general’s finding that Australia could have paid half the amount for its new $1.3bn combat vehicle fleet after pressure from a multinational arms manufacturer, documents reveal.

Documents obtained by Guardian Australia reveal that Thales, a French multinational arms company, was “aggrieved” at auditor general Grant Hehir’s finding that Australia could have saved hundreds of millions of dollars had it gone to the United States to buy its new fleet of light protected army vehicles, instead of buying 1,100 of Thales’s locally built Hawkeis.

Thales approached the attorney general, Christian Porter, in January and asked him to use extraordinary and largely unprecedented powers to black out sections of the auditor general’s report.

The arms manufacturer wanted six paragraphs in particular struck from the report, according to court documents it filed in a separate federal court action to block the report’s release.

Those six paragraphs found that Australia could have got a similar vehicle for half the price through the US joint light tactical vehicle (JLTV) program, according to Thales’ court documents. Australia had considered joining the JLTV program but pulled out and decided on a locally built option after what the auditor general described as “extensive lobbying” from Thales and the defence industry.

Thales wanted the six-paragraph cost-comparison between its Hawkei vehicle and the JLTV stripped from the report because it would impact its “marketability”.

https://www.theguardian.com/australia-news/2018/oct/22/coalition-suppressed-auditors-finding-that-13bn-thales-arms-deal-could-have-cost-half-with-us

 

[Colin Parkinson]

Same issue here, jobs and political wheeling and dealing.

 

[Kirkhill]

....It is disappointing that the ANAO places zero value on the maintenance of a life-saving defence industry capability in Australia, zero value on Australian content and zero value on Australian jobs.”

Australia budgeted $2.2bn for the Hawkei project. That budget included the $1.3bn contract with Thales....

His redacted report also found the government had not been made aware of a Monash University study commissioned by defence, which found the local benefits of the Hawkei were limited. The study found Thales would send most of its profits offshore in the long term, the job multiplier effect was relatively small and that the government faced a $452m premium for building the vehicles in Australia.

The price of votes while still paying foreigners.

 

[RDBZ]

Without a robust local industry the ADF would be dependent on supply lines stretching half way across the globe for the supply and major repair of vehicles. 

And while the US army's MRAP was no doubt cheaper than Bushmaster, the latter is probably a much better fit for their requirements and arguably a better platform.

 

[CBH99]

The crappy part about being a giant island that far away from the rest of the west is, their supply capabilities would be in trouble no matter what product they go with.

Even if the vehicle is built locally, for a premium - spare parts have to come from somewhere.  Materials to manufacture spare parts also have to come from somewhere.  The joys of being an island, far away from your western friends.


Building the vehicles locally, under pressure, is a common dilemma for a lot of governments.  Not just ours.  In the absence of a high intensity war in which vehicles need to be produced ASAP - supporting local jobs & having a portion of that money filter back into the economy & back into government tax coffers will always be the politically easy road in regards to voters.  It is what it is.

 

[RDBZ]

There wouldn't be much of the Hawkei that couldn't be produced domestically or sourced from a variety of alternative suppliers if need be, and Land 400 vehicles will be built in Aus as a strategic choice. 
Given the history of the programs, the ADF probably wishes it could control the supply and repair chain for Tiger and MRH-90 to the same extent.

 

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Update:

'This must not happen': Coalition's redaction of Thales arms deal audit condemned

The censoring of an audit critical of Australia’s lucrative arms deal with weapons manufacturer Thales must not be used as a precedent to hinder scrutiny of future defence contracts, a bipartisan committee has warned.

The attorney general, Christian Porter, drew criticism last year when he gagged the auditor general, Grant Hehir, from criticising Australia’s purchase of a $1.3bn combat vehicle fleet.

Porter had been urged to censor the report by Thales, a French multinational that was furious at a finding that Australia could have paid half the amount for a different vehicle through a United States military program.

The use of the attorney general’s gagging powers was unprecedented but in the space of months the auditor general was warned they could be used in at least two other audits.

The bipartisan joint committee of public accounts and audit, chaired by the Liberal Dean Smith, has now warned it would be “extremely concerned” if the Thales case was allowed to set a precedent.

“The committee would be extremely concerned if the application of section 37 as occurred in this instance established a precedent that prevents future robust scrutiny of defence acquisition or sustainment,” the committee warned.

The committee’s report, tabled this week, also proposed a number of reforms to temper the attorney general’s ability to redact audit reports.

That includes legislating a time limit for the attorney general to make redactions. The committee also proposed requirements that more detailed reasoning be given when the gag powers are exercised, and that greater consultation take place between the government and MPs on the committee.

Porter had justified his intervention because the audit report jeopardised Thales’s commercial interests and threatened Australia’s national security, defence or international relations.

The auditor general said his office was expert at handling sensitive national security and defence material, and had consulted the defence department before the audit’s release.

The committee’s deputy chair, Labor MP Julian Hill, said the committee’s report had finally accepted there was “no national security classified material in the report”.

“The most concerning implication is the possibility that Christian Porter’s decision may set a precedent to stop future scrutiny of other ‘sovereign capabilities’ such as submarine or shipbuilding programs worth over $100bn,” Hill said. “This must not happen.

“The auditor general’s suggestions for changes to legislation will be considered further in the next review of the Auditor General Act, expected in the next term of parliament.”

https://www.theguardian.com/australia-news/2019/apr/05/this-must-not-happen-coalitions-redaction-of-thales-arms-deal-audit-condemned

 

[RDBZ]

I suspect the two "sides" are just so far apart on fundamental issues of "fact" and "judgement" that consensus is most likely not possible.  There are a lot of audits undertaken in the defence procurement space, the vast majority never get close to this level of disputation. 

 

[dimsum]

Update: Not good.

Brake problems delay delivery of Army's billion-dollar Hawkei fleet

After much fanfare about a $1.3 billion locally built tactical vehicle, the Australian Defence Force has quietly stopped accepting the Hawkei amid fears for soldier safety.

www.abc.net.au

 

[Rifleman62]

CBH99: The crappy part about being a giant island that far away from the rest of the west is, their supply capabilities would be in trouble no matter what product they go with.

Even if the vehicle is built locally, for a premium - spare parts have to come from somewhere. Materials to manufacture spare parts also have to come from somewhere. The joys of being an island, far away from your western friends.

New Zealand history as an example