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Parliamentary Standing Committee on Public Works
11/05/2018
Stage 2, Garden Island (East) Critical Infrastructure Recovery Program

FOX, Lieutenant Colonel Douglas, Project Director New South Wales, Capital Facilities and Infrastructure Branch, Department of Defence

GALTON, Brigadier Matthew, Director-General, Capital Facilities and Infrastructure Branch, Department of Defence

SPEDDING, Commodore Philip, Director-General, Navy Program Support and Infrastructure, Royal Australian Navy

WINDER, Mr Mark, Project Director, RPS Group

WU, Mr Douglas, Managing Contractor’s Representative, Lendlease Building Pty Ltd

Committee met at 13:08

CHAIR ( Mr Buchholz ): Welcome. I declare open this public hearing of the Parliamentary Standing Committee on Public Works into the Department of Defence Stage 2 of the Garden Island (East) Critical Infrastructure Recovery Program, Sydney, New South Wales, now open. Although the committee does not require each of you to give evidence under oath, I should advise you that these hearings are formal proceedings of the parliament and consequently warrant the same respect as proceedings of the parliament itself. Giving false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. Brigadier, would you like to make some brief introductory remarks before we proceed to questions.

Brig. Galton : Thank you, Mr Buchholz. This proposal seeks approval of Stage 2 of the Garden Island (East) Critical Infrastructure Recovery Program for the Department of Defence. Navy operations at Garden Island date back to the First Fleet. Since that time, the base has grown and continues to grow with the evolution of Navy's capability. Defence must urgently address condition, capacity and compliance issues with the wharves and base-wide engineering services at Garden Island. The key issues include: electrical supply and reticulation across the base, which will reach maximum demand by 2021. Key wharves are facing potential downgrading of operational loading in the next five years due to critical structural condition, and the fuel reticulation across the island is inefficient and does not meet Navy's current and future needs. From 2020, Navy intends to home-port 10 ships across Garden Island's 12 wharves. This effectively means Garden Island must be able to support 50 per cent of the Navy's major fleet units in the near future. With the current condition and capacity of Garden Island's base-wide engineering services and wharves, this will not be possible.

The committee has previously considered Stage 1 of the Garden Island (East) Critical Infrastructure Recovery Program, addressing the production wharves in May last year. That project has since been granted parliamentary approval and is finalising design and preparing for construction. You may remember stage 1 was done earlier due to the poor condition and criticality of the production wharves. Defence proposes to address condition, capacity and compliance issues with this critical infrastructure. This includes upgrading the base-wide electrical supply and reticulation to meet increased base demand, remediating and protecting wharf structures to ensure they can support ship berthing and maintenance activities, upgrading the existing fuel system to provide efficient and reliable fuelling and defuelling capability and upgrading site-wide hydraulic services to meet the demands of each existing and future planned ship class. The proposed works will enable Navy to securely and efficiently berth, replenish, maintain and repair its current and future planned ships at Garden Island. This will in turn ensure that Defence has the capacity to provide a maritime force that can meet government-directed requirements.

The total cost of the proposed works is $286.5 million, excluding goods and services tax. The cost estimate includes construction costs, professional management and design fees and appropriate allowances for contingencies and escalation. Subject to parliamentary approval, design finalisation will occur mid to late 2018, with construction expected to commence by the end of the year. The works are expected to be completed by late 2020-23. That concludes the Defence opening statement. The Defence witnesses are now ready for any questions from the committee.

CHAIR: Thank you, Brigadier, and thank you to the other witnesses who are appearing today. We've just concluded the in camera hearings, and there was a question put forward by Mr Goodenough, which I think has a public interest. I ask Mr Goodenough to restate the question in and around the long-term strategic benefit of the Garden Island precinct.

Mr GOODENOUGH: Commodore Spedding, for the record, could you outline the strategic importance of the works to Australia's overall naval capabilities.

Cdre Spedding : The Garden Island defence precinct is the only home port for major fleet units on the east coast of Australia. By major fleet units, I mean frigates, destroyers, amphibious ships and replenishment ships. It is one of only two main support bases in Australia for those types of vessels and submarines. The two main support bases are Garden Island here in Sydney and HMAS Stirling in Western Australia, in the vicinity of Perth.

Key to the requirement for a main support base is the ability to safely berth, replenish, sustain and conduct the required maintenance of those units in a secure defence location. Without the planned works under the scope of stage 2 of this critical infrastructure recovery program, the operational wharves and two of the maintenance production wharves at Garden Island will continue to deteriorate. That will lead in time to operational loading restraints being imposed upon those wharves and untreated will eventually lead to failure, as indeed was seen in the case of two of the production wharves on the island, which have been addressed through stage 1 of these critical infrastructure recovery works. Similarly, without the engineering services being addressed through the proposed works, those services will continue to deteriorate; some of them have already failed. It will induce increased inefficiencies and ultimately lead to the risk of failure of those services. The project's scope is required in order to return Garden Island to be the east coast home port and main support base for major fleet units so as to allow us to generate the naval forces to meet the government's direction.

CHAIR: Thank you, Commodore. I think that was important to get on the record because, in any type of public interest test, fear is normally driven by the unknown. The unknown in this situation could have been, from a government perspective, are we going to go and spend a bucketload of money if you're strategic vision was 15 years or 20 years? I think it was important for us to get a sense of how long the strategic assets intention is. Having said that, the fear of the unknown is normally driven by those who are not close to what the plans are, in particular to stage 2. I want to invite Brigadier Galton to advise the committee to what extent public consultation has been undertaken. Has the community raised any concerns with you? And have those concerns been addressed by you or your team?

Brig. Galton : We undertook the routine extensive consultation we do for all of the projects we bring before you. It started off with advertisements in all local papers, including the smaller ones as well—the Wentworth Courier, the Central Sydney, the Mosman Daily and The Australian. There were 14,000 project newsletter letter drops done in the surrounding area and then invitations for private briefings were sent out to state and local members of parliament, state authorities and departments, community groups and members of the public. On top of that, a project website has been launched with an email address where the community can put questions.

There have also been two community information sessions run in this facility, where we had 38 members of the community come in to learn about the project. On the whole, the community response to the project was positive. The issue of noise though was certainly raised. We know that noise from Garden Island in general is an ongoing concern that the commanding officer and his hierarchy deal with on a daily basis. Noise is particularly a concern for both stage 1 and this project as well. Noise was the key concern people, members of the community, had. During the information sessions, my team went through all the acoustic studies that we have done so we can understand where the noise will be, when and at what level. We then work through a number of mitigation measures we have. I will pass you across to Lieutenant Colonel Fox who can give you a bit more detail about what happened in those particular sessions.

Lt Col. Fox : We had two very well attended—for us—community sessions in this hall. The community, on the whole, were interested in what we were doing. They were particularly interested if there were going to be any visual impacts such as large buildings, which, as you saw today, there will not be. The continued interest in the island usually is to do with noise from daily operations. It is a large space. There is an ongoing community interest in noise generated by the island through normal operations. The biggest interest for our project is the additional noise by the construction works. We mentioned those to the public. Our storyboards indicated they are the three areas of concern in particular—the environmental side, that noise side and the traffic and vibration—and we briefed the public on what we were doing in that regard.

CHAIR: The time frame the public can expect to be inhibited by noise during construction is?

Lt Col. Fox : At various times, probably across five years but not consistently. So it is small bursts at small points in time during working-hours only.

Mr Wu : When we are working along the wharves, that is probably going to create the most noise and vibration, starting at Fleet Base East 5 where we are doing the sheet piling works for the wharves and signs to address that issue. The program along that area is forecast to take about nine months. Out of that nine months, there's a two-month period when we'll be doing sheet piling. During that process it's five to 10 minutes of sheet piling, a 30-minute respite and then we start again with five to 10 minutes. So for a two-month period along Fleet Base East 4 to 5 that will occur. Then we move to Fleet Base East 3, which is estimated to be about a 1½ month period over a period of about six months. It is followed by Fleet Base East 2, which is forecast to be about six to eight months, with 1½ months where it's interim sheet-piling works. It's vibration, not hammering. I'd like to add for the record that approximately three years ago Lendlease did some sheet-piling and bollard-piling works in the vicinity of Fleet Base East 2 to 3, directly opposite the finger wharves, where there are residents. Out of those construction works, which went on for about three months, there were no complaints received in relation to the construction works.

CHAIR: Brigadier, what's the appetite for Defence to continue ongoing consultation, because it's quite a long construction period? What consultation will be ongoing with community? Will it just be responsive to complaints? Or will there be regular contact and updates? If I'm planning a holiday and I'm going to be away for two months, I want to be going when the banging's happening.

Brig. Galton : No, we certainly don't want to be reactive. We want to be proactive and as we get closer to when this sort of work will happen—and Lendlease will do a lot of work on this—be able to put out some more precise time frames of when that will be going on. So we will be proactively engaging with the community as the project unfolds. Yes, certainly we will not be reactive on that but be proactive.

Mr WALLACE: Touching on the noise aspect, Mr Wu, could you explain to the group the difference between sheet piling and pile driving.

Mr Wu : The technique that we plan to implement is vibration. What that means is a series of quick vibration, whereas pile driving is literally a heavy hammer that just bangs it. It's a loud noise. It's literally someone smashing a hammer on a wall constantly, whereas the vibration technique is a hammer—if you vibrate it with your hands, that's what you do here. It's certainly less intrusive, and people don't notice it as much.

Mr WALLACE: The new wharves that are being built will be done on concrete piers. How are they being embedded into the surface bed?

Mr Wu : As part of the stage 2 works, the only component we're doing that's a new component is the infill to the dolphin area.

Mr WALLACE: That's it, is it?

Mr Wu : Yes, that's the only bit we're doing. The rest of it is all remediation of the existing wharf. We're not actually building any new wharves, as such, as part of the stage 2 project apart from that small infill. In that instance, we are using steel piles driven into the rock bed, and then it's filled with concrete to provide structure. They are small piles compared to traditional wharves. The piles about 450 in diameter. There are not the large ones that you would do for a pilot structure of up to a metre.

Mr WALLACE: You might want to explain what that infill of the dolphin area looks like, how large it is and how many piles it might be.

Mr Wu : A dolphin is an island structure that's away from the wharf edge. Where infilling that for work health and safety reasons and also to provide more flexibility for the berthing of ships. The technique that we intend to use is driving 20 piles into the seabed and filling them with concrete. Then we will put a pre-cast structure on top—planks and beams—and then we infill that with concrete.

Mr WALLACE: Would it be fair to say that in the broader scheme of things, for this project that's quite a minor piece of work?

Mr Wu : That is a very minor component of the entire project.

Cdre Spedding : If I could add to that, that mooring dolphin is at the northern end of the fleet base wharves, which is actually less proximate to the residents than if similar work was being done at the higher numbered wharves 4 or 5. This is right at the north end of Fleet Base East 1.

Mr WALLACE: This is an issue that we picked up last week at the Larrakeyah precinct I don't know whether you've had an opportunity to look any further into the issue of the costs of providing the assets of water and electricity reticulation. Given that the Commonwealth is paying for the services to be provided on the base—on the precinct—what discounts or what steps are being taken to ensure that the Commonwealth gets a better price for water and power with the service providers?

Brig. Galton : For electrical, we have had a chance to look into this. For this base specifically, we looked at the difference in where we can get a saving for the Commonwealth. The option is either having 33 kilovolts or 11 kilovolts, depending on which customer we are. In this instance, by us being a customer of 33 kilovolts that does give about a 33 per cent discount to start off with, rather than if we were 11 kilovolts. So that does come down a lot. We are talking about a difference between say 12c and 9c a kilowatt, but when Garden Island's usage is over 53 million kilowatts that's where we do get a saving. On top of that, Ausgrid, which is the electrical authority that owns the feeders, have stated that the remaining design life for the existing feeders goes out to about 2027. They themselves did not have a requirement to be doing any more on that, which is why we are doing those external works. But as part of doing those external works there will still be negotiations with them on discounts. We haven't got a price from them on that as yet, but that negotiation will certainly be done. They will recognise the works we've done off-site. Unfortunately, though, Ausgrid did not have a requirement to have that getting done—that was purely driven by a Defence need, which is why it ends up being called what's known as contestable works, where we need to be the ones who are delivering it. Mr Winder might be able to add a bit more to that.

Mr WALLACE: Just before you do, that discount you have spoken about is only in relation to or arising from the fact that you're a heavy user—that's not by virtue of the fact that we are actually paying for the hardware?

Brig. Galton : No, that's correct. We still need to do the negotiations with them to bring that down. I suppose we're not exactly negotiating from a position of strength, as such, but that is negotiated nationally as well. Within my organisation the service delivery division will do that. I don't have prices now because that hasn't started.

Mr Winder : We have that minuted from Ausgrid: the fact that because the Commonwealth is delivering those new cables—those 33kV cables—that would be taken into consideration in the negotiation of the tariffs when the time comes to do that.

Mr WALLACE: Mr Winder, would you like to explain to the committee and the members of the public present what your role is in this project.

Mr Winder : Regarding the way that capital facilities and infrastructure engages the managing contractor, in the managing contractor form there is also what's referred to as a project manager contract administrator, which, under the contract form for the MC, the PMCA acts as the Commonwealth's agent. So we have a role to act on behalf of CFI for the Commonwealth—to manage the managing contractor. We act independently of the managing contractor and we have an obligation to be independent and to act in the principal's best interests. We administer the contract, we issue direction and we oversee the construction works. We do what would traditionally be referred to as a superintendent role.

Brig. Galton : I'll add a bit to that on the why the Commonwealth does go down that path. My branch sits at around 80 to 90 people, and within that there are around 16 the project teams, which are generally only three or four people each. Across those project teams we are managing about 148 projects. There is well over $10 billion in contract at any one time. The project manager contract administrator is, in effect, those project teams' arms and legs. One of my project directors, at any one time, might have seven projects under him or her. With two staff, obviously, that would be very difficult to do in a professional and thorough manner, but, by outsourcing to the PMCAs, we are able to get their professionalism and their business nous and also add capacity to our teams. We don't engage them randomly. We have the Defence Infrastructure Panel—these 15 companies had to competitively bid to get onto that panel. We then access that panel and, again, go and competitively bid to get companies to come on board from there. We may sometimes go to all 15 members of the panel to put a bid in for a contract or sometimes we might go to a smaller number of them. In effect the PMCAs have gone through two competitive selection processes to get on one of these projects. RPSPM, for instance, is currently the PMCA of 23 of the 148 major contracts. They've proven themselves to be very effective in the role.

Mr WALLACE: Mr Wu, can you inform the committee where you're at in relation to the letting of your subcontracts?

Mr Wu : In relation to the—

Mr WALLACE: The second project.

Mr Wu : At the moment we haven't engaged any subcontractors. All design consultants have been engaged as part of the design phase. As part of the delivery phase, I will advertise in the market, in the paper, asking people to register interest in the project. From there, we will shortlist a list of contractors as suitable for the particular trade or work elements. We will send contractors on that shortlist a copy of the tender documentation. One point of note is that the shortlisting process is vetted by the PMCA. When we go out to tender and receive the tenders, again, the PMCA independently reviews our recommendations of the recommended tenderers.

Mr WALLACE: Are you waiting on parliamentary approval?

Brig. Galton : Correct. After the other parliamentary approval, we go into what's termed the delivery phase negotiations with Lendlease—

Mr WALLACE: It may in fact not be Lendlease that gets the job.

Brig. Galton : Correct. If they're not putting a value-for-money offer to us, then we do have the option to go with a different company in the delivery phase. It's generally rare that that would happen because they are very well experienced on the project. They have every incentive to give us a value-for-money offer because they know we're not bound to go with them. Once we have that delivery phase agreement, they can then start the procurement process.

Mr WALLACE: Thank you, and thank you for your service, gentlemen.

CHAIR: Before I go to Senator Stoker, we've got some community members at the back. Would you like me to allocate some time for questions towards the end of our hearing? It's quite unprecedented, but I'm happy to take questions.

Member of the audience interjecting

CHAIR: We can do that at the end. I'll allocate some time, just to put you on notice. Your comments will be to the committee.

Senator STOKER: Brigadier, what safety risks to personnel, if any, are posed by the current condition of the parts of the site on which you propose to do these works?

Brig. Galton : As in the safety risks now, if they weren't touched?

Senator STOKER: Yes, as they are now, and going into the future if these works don't happen.

Brig. Galton : There are a number of them. I'll start from the top down. As you saw when we walked around, the decks of many of those wharves have become quite uneven. Whilst it doesn't look so bad to the naked eye, as soon as you have forklifts going over them with heavy loads, it doesn't take much to have one of them tip. That is quite a danger for many parts of the wharf decking at the moment. Underneath that, due to the condition of the piles, there's already been quite a bit of subsidence. If we continue to use heavy vehicles and heavily load those wharves, there is a risk of catastrophic failure of one of those wharves. There's already a limit on how much load can go on them now. As far as the services go, you saw as we walked around today that there were some briefings on the condition of the substations. Some of them have had fires previously, so they're in a condition where there is a safety risk; hence why we're looking at addressing those. I think Mr Wu's got a bit more to add to that.

Mr Wu : Another one, on the electrical theme, is the substations. A lot of them are oil-filled transformers, over 30 years old and at the end of their service life. They're earmarked to be replaced. Within the substations, there are transformers. Access around them is limited, so some of the projects are looking to improve that. Where substations in their entirety are going to be replaced, we're going to fully rebuild them in full compliance with the Australian standards.

Senator STOKER: But what risks do those items pose if they're not—

Mr Wu : The risks are obviously electrocution and, as mentioned by the Brigadier, fire. That equipment has points of failure. If it does fail, there is a risk of fire and a risk to the safety of the people operating the substations.

Cdre Spedding : If I could add one more point to it: along each of the wharf faces there are things called cope points. The cope points are like junction boxes within which we connect the services that are provided from the base to the ships alongside. They're not of a consistent design. There are numerous ones that were built at different times across the island. They're not compliant with many modern contemporary standards. The difficulty comes from the fact they're not the same, so it's hard for the dockyard operators and the ship staff to apply consistent standards which are an underpinning part of safety culture. With varying standards you're exposing people to trip hazards, to electrical risks and to electrocution as they're working with these cables in these cope points which don't even point in the right orientation to where the ships tie-up alongside. It's a relatively minor scope item, but it's an important one, because the physical interface between the wharf surfaces and the ships are through those cope points.

Mr GOODENOUGH: For the record, do you have a construction management plan to avoid disruption to the operations of the base?

Brig. Galton : Yes. Certainly we do. Mr Wu will take that one.

Mr Wu : We do have a site management plan where we will engage with the stakeholders. The stakeholders include the port services and the superintendent managing the berthing of the ships. We also liaise with the HV electrical operators and the fuel operators—we engage with them. During the construction phase of the project, the intention is we'll meet weekly with the base to run through the current programmed activities, any potential disruptions and the planned disruptions. Also, at the sametime, it's an opportunity where they make us aware of current operations that are going on on base that we should be aware of that may impact on construction.

Mr Winder : Just one more very quick one: all of those project plans, including the construction management plan, is assessed by all of the stakeholders on site as part of the managing contractors delivery phase agreement, which is their green light to proceed into the delivery phase.

Mr GOODENOUGH: My final question is on energy fuel security, which has been an issue raised quite recently. Is there sufficient capacity to meet future fuel needs?

Brig. Galton : Yes, certainly. I will start that one off, and then I might hand over to Commodore Spedding. The fuel holdings at the base are not part of the overall strategic holdings that are often spoken about in the media. What's held at Garden Island is what's termed the operational requirement for Garden Island, and the fuel reserves there are sufficient to be able to have a task force to be able to be deployed, be it in the near region or beyond. Fuel reserves for what we need to do, specifically just from Garden Island, with the upgrade will be sufficient. I will just pass to Commodore Spedding for a bit more on that.

Cdre Spedding : Just to clarify: it is very much an operational fuel supply at Garden Island, rather than any sort of bulk fuel storage. Navy does have a larger fuel storage facility: Defence has a Defence Fuel Installation (Maritime) over in Chowder Bay. We can also draw upon the commercial fuel supply in Sydney over at Gore Cove. The specifications or the need, which is identified by Navy, for the project to satisfy was, as the brigadier mentioned, the ability to refuel Naval task group of a defined size within a defined time window, which actually meets our preparedness requirements to government. The proposed facility has sufficient fuel reserves to meet that operational need.

Senator STOKER: Other than noise, which has been canvassed already, what environmental risks, if any, are posed by the works that are proposed?

Brig. Galton : As part of the planning phase that went on for this we did a significant number of environmental and heritage investigations to try to uncover what those risks may be. We engaged the services of a specialist environmental heritage sub-consultant to look through that. A heritage impact assessment has been done, a biodiversity survey, construction noise and vibration impact assessments, a construction traffic impact assessment, ecological field surveys and contamination and geotechnical investigations. With all of those done, some of the environmental topics that came up were that there is some seagrass and, I think it is the black cod, that exist around the area. The risk to that is quite low, though. There is also a grey-headed flying fox in the area, but the risk to that animal is quite low, as well. I might just go across to Mr Wu for a bit more on this. But, ultimately, the environmental and heritage risk, after all those investigations, is low. But we are aware of a number of ones that we will monitor throughout.

Mr Wu : The other item we looked at during construction is the contamination risk. We undertook two stages of inground investigations. In the first one we took 26 bore samples around the entire base. We found that there are contaminants within the ground. They mainly relate to hydrocarbons exceeding a certain level. Every time we excavate the ground in limited areas we will have to dispose of that material as general solid waste or restricted waste, which goes to a licensed landfill facility for disposal. The second item in the investigations we undertook concerned the existing fuel facilities. We identified that there were contaminants in there—it was around PFAS. There were contaminants within the concrete slab—low levels of it—and there was some minor leaching in the ground. Again, that material will be undergoing further testing. Once we demolish the facilities we will test the actual inground material that is exposed and dispose of it in the appropriate manner.

Senator STOKER: Are there environmental risks associated with deciding not to go ahead with these works?

Brig. Galton : Yes, I suppose so. With the subsidence of the walls, if we didn't do anything they would eventually fail. So, I would suspect there would be some risks to, say, the seabed grasses or something like that, if the walls were to catastrophically fail.

Mr Wu : On that theme, if the seawalls fail the ground material actually leaches into the harbour. That is a contaminant from the land to the sea. Any contaminants in the ground will leach out to the sea. By providing a new seawall we can stop that process. Another aspect of it is the existing fuel facilities, which are over 100 years old. We will remove existing contaminants. The existing bunt of the oil tank is porous—it is in sandstone and it is not in good condition. As part of our works we will be reconstructing the bunt so that it is concrete, with a waterproof barrier, so that if the fuel does leak it is contained within the bunt. That applies to both the larger storage facilities as well as the quarantine facilities. By doing the work it is actually improving the risk in terms of contamination and environmental issues.

Brig. Galton : The topic of noise comes into this one as well. Whilst there is noise by way of construction, at the end of the project the ships now will not need to run their own ship systems when they are over at Garden Island. They are going to what is termed as 'hotel mode', where they are powered from the shore, which means that that will actually be reduction in noise that happens, once the project is completely finished.

Cdre Spedding : To add to that, we mentioned before the electrical system. A number of transformers are oil filled and they have leakage issues now. That will continue unabated and will increase with age. The other part is that one of the major elements of work being done is replacement of the sewer system—renewal of the sewer system. At the moment there is only a single point of failure. The sewerage system is aged and it has significantly deteriorated. The works proposed under the scope of this project will remediate that risk of serious leak, as well.

Mr WALLACE: Following up on the question in relation to the environmental damage or the risk if works aren't done—if option 5 were taken. I don't know if this applies in relation to naval vessels, but certainly with cruise liners, for example, if they are at dock they burn what's called bunker oil, don't they?

Cdre Spedding : It is a heavy fuel oil.

Mr WALLACE: If we weren't able to provide that hotel service to the ships, in that they are running off the land-based electricity and hooked up to the sewer et cetera, would you be burning that heavy fuel?

Cdre Spedding : No, our naval fleet doesn't operate that same heavy fuel you are describing. Part of the criticism of commercial shipping is that it is a much more sulphurous fuel. We previously burnt a marine diesel designated F-76, which was a marine fuel. We are now using automotive distillate—the same as commercial users in your diesel powered car. So, we don't have the same emissions output that a heavy commercial ship or a cruise liner would have. But, when operating on ship's systems there is a noise element to it, which is noticeable to the nearby residents. For that reason, and also to reduce the maintenance load on our ships' staff and to reduce the maintenance load on our ships' systems, we have a preference to go to the shore power system. And sometimes you need to be on the shore power system so that you can progress the maintenance of those fitted generation system.

Mr WALLACE: Mr Wu, would you explain to us what the plans are in relation to local business engagement for subcontractors?

Mr Wu : As part of the procurement process we have identified 53 packages. It is anticipated that 51 of those 53 packages will involve engaging local contractors to undertake the works.

Mr WALLACE: 51 out of 53?

Mr Wu : Correct. The reason is that the two packages are for specialist equipment that is available overseas only. They relate to the rotary frequency converters and the high-voltage generators, which aren't made in Australia. However, it is anticipated that the installers and the agents will be based locally to help with the installation and commissioning process. The process is that we approach the market and those who are interested will register their interest with us or set aside a set of questions. If they are deemed suitable in terms of their capability and their experience we will shortlist them for the tendering process.

Mr WALLACE: What security steps are put in place to ensure that subcontractors with criminal convictions and other undesirables won't be walking around Garden Island?

Brig. Galton : Defence dictates all the procedures that must be followed and our managing contractor then follows those to a T to ensure they are done. To be working on a base for the length of time that many of these subcontractors will be, they will need to have a base-level security clearance, or a base security clearance, which in effect is the same thing that I, and my uniformed colleagues, need to go through to actually join the military in the first place. As part of that a police check is done and that can then be stepped up to have interviews with the individuals and to have referee reports checked. There can be AFP checks done and ASIO checks done, if need be. So, it is layered, depending on what level of risk is on the base.

Mr WALLACE: How is that determined?

Brig. Galton : As in?

Mr WALLACE: How is it determined whether a simple criminal history check is done or whether it goes all the way through to an ASIO check?

Brig. Galton : If a flag came up initially then it would get looked into further and further. We consult with the Government Security Vetting Agency, which gives us advice on this, as well. If there is ever any doubt about an individual those deeper checks will be done. We don't automatically exclude someone from being able to work on a base if there is just a criminal conviction. That will get looked into to see what it is and whether or not it poses a risk to an individual working on the base.

Mr WALLACE: Mr Wu, this is probably a question for you: what assurances can you give the committee that the works that will be done under the second contract won't conflict with the first contract?

Mr Wu : The first contract? Are you referring to Stage 1?

Mr WALLACE: Yes.

Mr Wu : In stage 1, so that there is no overlap in work we have been doing some design interface with the stage 1 team during the initial planning phase. There are interface points where we provide a service to the junction where the crew's oil wharf work is finished. We provide the junction for services connections and the like. We closely coordinate. We also have common designers across the two projects. The marine designer is common. So, we do have a level of coordination there so that there is no overlap in scope and nor are there any abortive works. All of it is planned at particular interface points.

CHAIR: I want to pick up on Mr Wallace's point on local impact. How do you define 'local'? Is local within the suburbs or the adjoining precincts?

Mr Wu : In Sydney it's typically the Sydney metropolitan area, which extends up to probably about 50 kilometres from where the site is. The Sydney region is quite large.

CHAIR: I see under 'local impact' your submission notes that, 'Projects will generate short-term employment opportunities in the building, construction and labour markets as well as opportunities for businesses involved in manufacturing and distribution, construction materials and equipment.' Then you make a greater reference in subsection 1 paragraph 74. Are they the 54 different contractors that you alerted to with Mr Wallace's report?

Mr Wu : Yes, the 51 out of the 53. So it's anticipated that that 51—

CHAIR: Fifty-one out of 53—

Mr Wu : Yes.

CHAIR: What would some of those businesses or Australian names look like?

Mr Wu : I'm not sure if I should be disclosing names of companies. I don't think it's appropriate.

CHAIR: A bit local—types?

Mr Wu : Types include electrical contractors. There will also be hydraulic contractors that are based in Sydney. We also have a number of marine contractors that are based in Sydney. We also have concrete suppliers, subcontractors that place the concrete and subcontractors that place the reinforcement—they're the type. We also have fit-out contractors. We have small fuel facilities and they fit-out contracts in there. We have civil contractors and demolition contractors. There's a large base within the Sydney area.

CHAIR: Whilst the scope of works in stage 1 and stage 2 are underway, what's the workforce and the expected traffic during construction on the island expected to look like? I know that some of the pushback at Enoggera in Queensland is around traffic movements in and out whilst significant construction is underway.

Mr Wu : Often construction is also about the amount of people you have coming on to the base. At peak we expect 200 people for stage 2. Two-hundred additional people at Garden Island is not a large amount.

CHAIR: Two-hundred that would be—

Mr Wu : The peak—

CHAIR: Stage 2 is far more labour intensive than stage 1?

Mr Wu : Absolutely. Stage 1 is a lot more about heavy machinery and a lot of the material coming in. Whereas, in stage 2, because we're on such a dispersed area where we'll be working on multiple fronts, we'll have different teams on different parts of the island. I think the island peaks at 7,000 people at times, so 200 is not a big increase. Furthermore, Lendlease have done some previous works at Garden Island as part of the AWD project. Again, our peak workforce was in the order of 200 and there weren't significant traffic complaints received from the base, so, from past experience, those numbers aren't significant at all.

Brig. Galton : We do have that as being an issue, in particular with Enoggera. The team did do a traffic impact assessment. Mr Winder can talk through some of the results of that.

Mr Winder : There were very minor results in relation to traffic movement. At our peak, we assessed the cumulative effect of stage 1 and stage 2. At our peak the cumulative light vehicles would be 46 on the base over one day and then seven heavy vehicles, so a minor impact. We've done assessments of each of the key intersections around the Woolloomooloo area and the traffic impact assessment has reported that there will be minor impact.

CHAIR: Thank you. I'm sure that's interesting to the public.

Cdre Spedding : With regard to people movements on and off the island—that scale of contractor—to put it in perspective, when we're doing a major maintenance activity in the Captain Cook Graving Dock, that could spike up to an additional 350 subbies working just on that project. So this sustainment work will be less than the pulse during a major maintenance activity.

Mr WALLACE: Mr Wu, is it Lendlease's intention to subcontract the contract to another contractor, which will become in effect another subhead contractor, if I can put I that way?

Mr Wu : There certainly is not that intention. We've broken up two trade packages at the moment. However, there is direction from Defence that we should also give opportunities for smaller contractors. So where we have small building fit-out works, we will potentially engage a smaller fit-out contractor to do the works rather than engage another builder. We very much see that as our scope, and that's something that we would do. We typically would do it as a subcontractor package, but we are also looking at smaller packages for fit-out purposes.

Mr WALLACE: Excellent, thank you.

Mr Winder : That would really be my role too, in that I would make sure that that wouldn't happen. For our works packages that we let, each part of the procurement process calls for approval from the PMCA with input from Capital Facilities and Infrastructure at any time, so we wouldn't allow that to occur.

Brig. Galton : We now report routinely on local industry participation with percentages that our contractors are targeting and then the performance that we get from there. As I said, whilst this one isn't one of the Local Industry Capability Plan pilots, we're still using all the same tenets and intent of that. That's why five or 10 years ago, rather than having 53 smaller works packages, there might have been a smaller number of larger trade packages. But we've gone away from that to endeavour to give maximum opportunity to local business.

Mr WALLACE: That's great news. Thanks, Brigadier.

CHAIR: Thank you.