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Tuesday, 24 February 1987
Page: 509


Senator VIGOR(4.03) —I rise to support some of the points which have been made by Senator MacGibbon. The proposal by the Department of Defence to buy computer equipment for project DESINE-the defence electronic data processing systems integrated network environment-plus computing systems for specific defence requirements for the services offered to manufacturers by the Office of Defence Production and small office general computers was referred to the Joint Committee of Public Accounts for assessment. The Public Accounts Committee reported its findings to the Minister for Defence (Mr Beazley) who has, as Senator MacGibbon said, reported very briefly to the Parliament in the ministerial statement that we are debating.

I differ from Senator MacGibbon in agreeing, generally, with the Minister's response as far as it goes. I believe that it could have gone a lot further in areas such as Australian content. I take this opportunity to express my admiration for the careful and time-consuming assessment that the Committee made. However, I must say that some of the premises on which it based its recommendations do not accord with my technical assessment of the problem.

The reality of the computer industry in Australia is that it is pretty unrealistic at this time to expect local manufacturing capacity to meet the requirements for such a large computer system as is envisaged by the Department of Defence, especially as many of the features of such a system are unique to the Defence Department. The market for computer systems of this size in Australia is far too small to support a viable Australian enterprise specialising in such computer systems. Even with the best will in the world to support local industry, it is a fact that many small systems do not perform in an equivalent way to large ones.

At this stage I take as an analogy the transport area, which is much better understood and which will perhaps make this matter clearer to honourable senators. While it would be possible for 1,000 Minis to transport a load of sand from place A to place B, it is much more efficient to do so with a truck. However, it would be completely impossible for these same 1,000 Minis to transport one large power generator which the same truck could do with ease equal to that of transporting the sand. Minis and trucks, while being transport vehicles at the small and big end of the market, are not built for the same purpose.

One must realise that all computers are not the same. We have a whole range of computers which are highly specialised for specific tasks and Australian computer manufacturers have, very reasonably, concentrated on supplying micro- and mini-computers to meet the mass demands in the Australian market. To split the purchasing contract for the DESINE system into smaller parts would not necessarily achieve the objectives that the designers would be looking for.

I support the Minister's conclusion that the request for tender for the DESINE project should go ahead as planned. At the same time, I share the Committee's concerns about the possible failure of the contractors to meet the specifications, possible blowouts in price and other such problems which always beset large computer projects in Australia. In particular, I am deeply committed to encouraging local industry through government purchasing policy, since the long term interests of Australia depend on having a strong local industry. In defence, as perhaps in no other area, it is vital that we secure our lines of supply in both components and know-how.

I recommend that the Department include a performance clause in the contract which would allow the Department to cancel the contract outright at the end of the proving phase for network architecture if performance, price, or Australian content proves unsatisfactory. The Minister is silent on this subject. Should the contract be cancelled at that stage, it should be put out again to open tender but modified so as to take account of new developments and technologies available at that stage. Under those circumstances, I believe that the successful tenderer would be successful in keeping costs contained while taking every advantage of the latest technology which will be needed to meet the performance requirements.

Another recommendation of the Committee which the Government has endorsed is the separation of the tender for the Office of Defence Production manufacturing computer system from that for the DESINE project and other Defence Department purchases. Manufacturing information systems are quite different in nature and requirements from other defence systems. In fact, they are similar to those required in the manufacturing industry, and there is a market in Australia. The computer suppliers and manufacturers specialising in this area are different from those who specialise in the defence area. It makes good sense to treat this purchase individually and to make certain that the standards of intercommunication are followed through.

The Committee also recommended that the contract should be tendered in parts with no prime contractor. The Government has chosen to ignore this part of the Committee's recommendation. I believe, again, that it is probably correct. Even though software and hardware systems may be manufactured in parts and in many different places, it is no longer sensible to buy components and build up a whole. To use another analogy, one would never buy a washing machine or a car in parts and assemble it oneself. A prime contractor which has assembly experience, preferably in an assembly line for mass production, is likely to be the most successful supplier of such a system.

The other major system which the Department of Defence requires is a computer system to handle the supply and manpower systems redevelopment projects. The Committee questions the fact that there has not been an adequate cost-benefit appraisal of this project. In an Estimates committee hearing last year and again in the debate on the Defence Department's finance appropriations for the year I raised the problem of inadequate control of spares and stores in the Army in the PISCES system. In particular, I raised the problem of 62,076 usage-based items which the present computer system has identified in Army stores as being inactive, that is, which nobody is using. Apparently, none of these items had been used for 3 years or more. An explanation given was that these items would be used only in time of war but no answer could be given as to how many items had lain idle for a large number of years and how many had lain idle for the last year only.

In view of the enormous turnover of surplus Army equipment and the horrendous examples I have raised over the last couple of years concerning the reordering of equipment already disposed of at auction as obsolete; the ordering of spare parts for such obsolete equipment; the ordering of several years supply of uniforms, for example, when the decisions had already been made to change the uniform in 12 months; and the purchase of contracts for supply which differ in detail in their Australian and United States versions by detailing out some type of kickback on the United States version, I cannot but hope that the new system for control of stores at depots and bases which is the proposed first phase of this project will greatly improve the control in this area.

I endorse the Committee's remarks that it would be useful to get a full cost-benefit study of this investment were it possible to do so. However, I am unfortunately only too aware of the scandalous lack of control which is apparent in the management of stores and spares and am sceptical whether the Department would even be prepared to hazard a guess as to the savings which can be achieved through tighter control over stores and spares.

I reiterate my concern about the split responsibility for purchasing and disposals between the Army and the Department of Local Government and Administrative Services which I believe the Government needs to tackle and which is not mentioned in the ministerial statement. Currently there is no control over loss or profit on disposal, nor apparently is there feedback from disposal to purchasing of the items now declared to be obsolete.

According to the last report of the Auditor-General, 1985-86, nearly $52m was written off by the Department of Defence as `lost, deficient, condemned, unserviceable or obsolete stores'. This is a substantial sum of money and obviously quite a lot of savings are to be made from efficient control in this area. The capital cost of the computer system proposed is $30m over 6 years. It is expected that operational costs will be around twice the capital costs over the same period, based on experience. This produces an annual cost of $15m a year, which is a feasible saving of just over 25 per cent of the write-offs in this area. I do not believe that anybody, even if a full cost-benefit study were done, could do much better than that thumbnail sketch in determining the savings, given the current state of stores management in Defence.

I come lastly to the small, stand-alone systems contract proposal. The Government has accepted the Committee's recommendation that this proposal not be proceeded with. Once again I find myself in agreement with both the Committee and the Government. In particular, there is a mass market for standardised office computers which are available from a myriad of manufacturers. Most of them are reasonably compatible with one another, within certain limits, because of the requirements of the mass market. It is in this area that Australian industry has a real place. I commend to the Department the Committee's concern that preference be given to Australian industry where possible in this area.

I wish to raise a matter which I believe to be utterly scandalous. It is mentioned right in the middle of the very large report by the Committee but is a matter which the Minister fails to address in his statement-the inadequacy of planning and/or procurement processes for computer accommodation. I believe that it is scandalous that the Department of Defence should have a computer sitting idle in a warehouse because the Department of Local Government and Administrative Services is unable to accommodate it and that Defence should, at the same time, envisage paying $1.85m for the use of a Commonwealth Bank computer which is housed by the Bank to carry out the same type of process. This underlines the cost of such apparent administrative inefficiencies and I believe is worthy of comment by the Minister. I shall be following up this matter in Estimates committee hearings if no further statements are made by the Minister on this matter. I look forward to further investigations by the Committee of the circumstances surrounding this problem.

Although the Minister's statement is very short, it is to the point. If we are going to have effective computer services we have to act now. I would have been much happier if the Minister had responded at greater length and shown much greater consideration for the Australian content which must be contained in all these projects. It is only by politicians and Ministers showing their determination that departments should buy Australian that the public servants in those departments will take up the banner and give up the cultural cringe which over the years has meant that we have bought overseas goods in preference to buying Australian made goods. I commend the statement to the Senate.

Question resolved in the affirmative.