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T h e A u d i t o r - G e n e r a l Audit Report No.41 200809
Performance Audit
The Super Seasprite
Department of Defence
A u s t r a l i a n N a t i o n a l A u d i t O f f i c e
ANAO Audit Report No.41 200809 The Super Seasprite 2
Commonwealth of Australia 2009 ISSN 10367632 ISBN 0 642 81074 5
COPYRIGHT INFORMATION This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: Commonwealth Copyright Administration Attorney-Generals Department 35 National Circuit Barton ACT 2600 http://www.ag.gov.au/cca
ANAO Audit Report No.41 200809 The Super Seasprite 2
Commonwealth of Australia 2009 ISSN 10367632 ISBN 0 642 81074 5
COPYRIGHT INFORMATION This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: Commonwealth Copyright Administration Attorney-Generals Department 35 National Circuit Barton ACT 2600 http://www.ag.gov.au/cca
ANAO Audit Report No.41 200809
The Super Seasprite
3
Canberra ACT 17 June 2009 Dear Mr President Dear Mr Speaker The Australian National Audit Office has undertaken a performance audit in the Department of Defence in accordance with the authority contained in the Auditor-General Act 1997. I present the report of this audit and the accompanying brochure to the Parliament. The report is titled The Super Seasprite. Following its tabling in Parliament, the report will be placed on the Australian National Audit Offices Homepagehttp://www.anao.gov.au. Yours sincerely Ian McPhee Auditor-General The Honourable the President of the Senate The Honourable the Speaker of the House of Representatives Parliament House Canberra ACT
ANAO Audit Report No.41 200809 The Super Seasprite 4
AUDITING FOR AUSTRALIA The Auditor-General is head of the Australian National Audit Office. The ANAO assists the Auditor-General to carry out his duties under the Auditor-General Act 1997 to undertake performance audits and financial statement audits of Commonwealth public sector bodies and to provide independent reports and advice for the Parliament, the Government and the community. The aim is to improve Commonwealth public sector administration and accountability. For further information contact: The Publications Manager Australian National Audit Office GPO Box 707 Canberra ACT 2601 Telephone: (02) 6203 7505 Fax: (02) 6203 7519 Email: [email protected] ANAO audit reports and information about the ANAO are available at our internet address: http://www.anao.gov.au
Audit Team Greg Little
Stewart Ashe Tara David
Fran Holbert
ANAO Audit Report No.41 200809
The Super Seasprite
5
Contents Abbreviations .................................................................................................................. 8
Summary and Recommendations ........................................................................... 11
Summary ...................................................................................................................... 13Introduction ............................................................................................................. 13Audit objective ......................................................................................................... 15Conclusion .............................................................................................................. 16Key findings by chapter ........................................................................................... 18Summary of responses ........................................................................................... 48
Recommendations ....................................................................................................... 50
Audit Findings and Conclusions ............................................................................. 55
1. Introduction ............................................................................................................. 57Introduction ............................................................................................................. 57Project phases ........................................................................................................ 58Contractual arrangements ...................................................................................... 61Squadron commissioned to operate the aircraft ..................................................... 62Procurement reform process .................................................................................. 62Audit approach ........................................................................................................ 65Report structure ...................................................................................................... 68
2. Tender Evaluation and Contract Negotiation .......................................................... 69Introduction ............................................................................................................. 69The tender process ................................................................................................. 69Software development risks .................................................................................... 72Capability traded off ................................................................................................ 75Deliverables under the Prime Contract ................................................................... 79Protections to be provided by contractual arrangements ....................................... 81
3. Financial Management ............................................................................................ 85Introduction ............................................................................................................. 85Project expenditure ................................................................................................. 85Expenditure against the Prime Contract ................................................................. 88Cost schedule performance .................................................................................... 91Payment of critical milestones ................................................................................ 93Management of earned value method payments ................................................... 97
4. Interim Capability Accepted .................................................................................. 101Introduction ........................................................................................................... 101ITAS development ................................................................................................. 102Schedule slippage ................................................................................................. 105Provisional acceptance ......................................................................................... 114Progress towards full Capability ............................................................................ 121
ANAO Audit Report No.41 200809 The Super Seasprite 4
AUDITING FOR AUSTRALIA The Auditor-General is head of the Australian National Audit Office. The ANAO assists the Auditor-General to carry out his duties under the Auditor-General Act 1997 to undertake performance audits and financial statement audits of Commonwealth public sector bodies and to provide independent reports and advice for the Parliament, the Government and the community. The aim is to improve Commonwealth public sector administration and accountability. For further information contact: The Publications Manager Australian National Audit Office GPO Box 707 Canberra ACT 2601 Telephone: (02) 6203 7505 Fax: (02) 6203 7519 Email: [email protected] ANAO audit reports and information about the ANAO are available at our internet address: http://www.anao.gov.au
Audit Team Greg Little
Stewart Ashe Tara David
Fran Holbert
ANAO Audit Report No.41 200809 The Super Seasprite 6
5. Aircraft Sustainment .............................................................................................. 126Introduction ........................................................................................................... 126Capacity to address aircraft attrition ..................................................................... 126Management of the In Service Support Contract .................................................. 128Aircraft rate of effort .............................................................................................. 132Availability of spare parts ...................................................................................... 138Issues with materiel and maintenance manuals ................................................... 143
6. Aircraft Certification ............................................................................................... 151Introduction ........................................................................................................... 151The Airworthiness timeline for the Super Seasprite .............................................. 151The introduction of the ADF airworthiness arrangements .................................... 15