The Defence Force believes it does well controlling the costs of acquisitions and ensuring they meet requirements, but schedule blow-outs of more than two years are not unusual, a report shows.The Major Projects Report said acquiring assets, such as ships
The Defence Force believes it does well controlling the costs of acquisitions and ensuring they meet requirements, but schedule blow-outs of more than two years are not unusual, a report shows.
The Major Projects Report said acquiring assets, such as ships and aircraft, allowed the Defence Force to maintain a suitable range of capabilities.
The three main aspects of any acquisition were time, money and performance, it said.
"Defence has generally adhered to the original contract budget and delivered the contracted capability requirement in accordance with the Cabinet approval, albeit on a delayed schedule."
The Defence Force preferred to focus on controlling the price and ensuring the goods were fit for purpose, the report said.
Delays could be caused by technical factors, software integration issues and industry capacity.
Often such factors were outside the control of the Defence Force, the report said.
It gave the example of delays to the upgrade of the C-130 Hercules when the facility where the work was being done in Canada was closed down.
The report said the New Zealand Defence Force was not alone in acquisition delays with cost over-runs and delays commonplace in Australia, the United Kingdom and the United States.
The report explored the acquisition process for eight projects.
It said the information gathered would help the Defence Force to improve processes for future projects.
Of the eight projects examined, the C-130 Hercules life extension project was delayed by 39 months, the P-3K Orion mission systems upgrade was delayed 30 months and the off-shore patrol vessels project was delayed 31 months.
In some cases delays were caused in ensuring the capability delivered was in accordance with contracted specifications.
"Size also matters. In a global context, the small size of New Zealand's contracts reduces its capacity to influence large defence industry companies on schedule or requirements issues," the report said.
The report said the Defence Force recognised the need for greater scrutiny of contractors and sub-contractors' capacity and commitment to deliver project specifications on time.
"Identifying areas and decision points where project progress can be better controlled or directed by Defence is essential."
Seven of the eight projects had only minor differences in forecast expenditure and their approved budgets, due to the Defence Force's preference for fixed price contracts.
