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Catalogue of financial mismanagement over ASLAV contract.



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Senator Mark Bishop Shadow Minister for Defence Industry, Procurement and Personnel Media Release 26th October, 2006

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Catalogue of financial mismanagement over ASLAV contract

Surveillance equipment needed for Defence's fleet of Light Armoured vehicles will not be delivered until 2008 -- nearly five years behind schedule, an independent audit found today. The latest Auditor-General's report on a key Defence procurement project (ASLAVs) also found:

• Defence has not paid a $12.4 million GST bill for the project • There is no up-to-date contract for the $280 million-plus ASLAV contract • Defence had to pay forensic accountants $350,000 to show how much had been spent under the contract

• It over-paid more than $7 million to the contractor - which kindly handed back the money • It broke Australian Accounting Standards over the contract's foreign exchange mechanism • It failed to take up an offer of a 10 per cent discount on up to 150 vehicles,

which would have reduced the price of each vehicle from $1.3 million to $1.15 million

Senator Mark Bishop, Shadow Minister for Defence Industry, Procurement and Personnel, said this latest audit of a Defence procurement project showed the Government's "ineptitude and mismanagement of the Defence Materiel Organisation, the largest contracting agency in the Southern Hemisphere". "I will be asking the Government at next week's Senate Estimates to explain how it could have been so incompetent in the procurement of this vehicle," Senator Bishop said. The report is into the acquisition of 257 Australian Light Armoured Vehicles (ASLAVs). The vehicles are used in Iraq and have been deployed to East Timor; their features include a Remote Weapon Station, integrated laser range finders and a ballistic steel armour. But the audit found a major upgrade of the vehicles - Phase 2 - had so far not delivered an essential part of the vehicle's surveillance capability (the MSSS) and this would not be delivered until July, 2008. Auditors were also critical of the contract, finding DMO had managed it "less than satisfactorily". Embarrassingly, it also found DMO had to reimburse the supplier more than $213,000 it had spent on GST registration - even though the DMO failed to pay GST on the contract between 2000 and 2002.

"Defence agrees with the single ANAO recommendation that DMO review its measures for document management and control," Senator Bishop said. "But this is yet another audit report which has major criticisms of the way Defence does business and shows a bad record of economic mismanagement on the Government's behalf."

Media Details: Lydia Roberts 0415 374 983 Parliament House Office (02) 6277 3101