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Thursday, 9 February 2012
Page: 621

Senator JOHNSTON (Western Australia) (16:19): by leave—I move:

That the Senate take note of the document.

This government response was to an inquiry of the Senate Foreign Affairs, Defence and Trade References Committee into Defence's request for tender for aviation contracts wherein we questioned the veracity and the probity of the air sustainment contract conveying our troops from Australia into Afghanistan. I start off by saying it is not too much to ask I would not have thought that, given we only have one combat engagement, thankfully, when we fly our troops from Australia into the MEAO and into the theatre where we are conducting combat operations, the aircraft is airworthy, the seats are not broken, there is adequate food and supplies for what is usually beyond an 11-hour trip, the aircraft is safe and the pilots do not smoke. The fact is that this contract has been a significant problem in terms of probity. Indeed, I am thankful that the Department of Defence has acknowledged all but one of the recommendations and apparently embraced them. I congratulate it on that.

However, this contract was a problem from the very beginning. It had an aura and an aroma about it that was most concerning. Indeed, I wrote to the then secretary and said so at the time of the caretaker mode back in 2011. I was virtually ignored. Save for some steps taken, the contract continued. The department persisted. My prediction is that there will be problems with this contract. There already have been. I thank the secretary of the committee, and all of her team, for the way she conducted and assisted in this inquiry. As I have said, it is a good response.

The aircraft that flies our troops to the MEAO is a Portuguese aircraft manned predominantly by Portuguese personnel. It is not subject to Australian aviation standards; it is subject to European aviation standards. I am told by our soldiers that the quality of this aircraft is substandard, the quality of the food is substandard and there are safety issues with it. I am sure these will come out in due course. The Senate inquiry focused upon the probity associated with the awarding of this $100 million contract. The Portuguese company is being contracted by the tender winner. In fact, the tender winner has no planes and no wherewithal to fly aircraft. We raised concerns with the secretary and the CDF way back when this contract was first seen. It was not a matter that a minister had to sign off on; it was a decision of the secretary. I was so concerned that I persuaded senators to undertake the references committee inquiry. Whilst no smoking gun of corruption was found in that inquiry, the report of the committee was pretty damning as to the fact that there was a very problematic probity evaluation.

For $600,000 Deloitte conducted an integrity inquiry into the tender process. They admitted that they were limited by their terms of reference. Serious allegations as to accountability and integrity were at the bottom of all of our concerns. A member of defence personnel was involved in awarding the previous contract and who subsequently worked for the successful tenderer. The rumour and the inference was that he was involved in the second contract, and indeed he had worked for the eventual winner for some time. Alarm bells were ringing.

The $100 million contract in question was awarded to a company that, as I said, owns no planes, employs few Australians and brokers a Portuguese charter operator who does not provide regular public transport operations, a minimum requirement under the tender specifications. The aviation industry has a clear understanding of how much this contract should cost. Nobody that I speak to in the industry can understand how the successful tenderer is able to perform the contract at the price being paid by defence, especially when it is using such a fuel-inefficient aircraft as the A340.

Defence has spent close to $1 million investigating itself and the entire process, which does nothing to inspire confidence in the integrity of contract administration or tender administration. Indeed, the Senate committee's inquiry has a number of matters that it puts on the table which are concerning. But, as I said, the department appears to accept the committee's response and appears to want to do the right thing in response to the recommendations.

In closing, I return to the fact that these are our best Australians. They are committed to our welfare. They get on this aircraft to go into battle for us. It should not be a crappy plane, the food should be good, the seats should not be broken and the pilots should not be smoking their heads off all the way for 11 hours. Safety should be a priority. It is a problem. I said to the secretary way back when, 'This will bite defence on the backside.' I maintain that and I stand by what I have said. It is a concern—it has always been a concern. You cannot broker out to a foreign country a responsibility that we should be carrying out personally so that we know that our people are properly looked after.

Question agreed to.