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Damages claim to sue over Seasprites "signed away".



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Mark Bishop MP Shadow Minister for Defence Industry, Procurement & Personnel

15th May 2006

ref:defipp.m&pr/012-06

Damages claim to sue over Seasprites "signed away"

Provisions to claim damages against the US suppliers of the failed Seasprite helicopters were signed-away by the Government, according to statements by officials at Senate Estimates on February 15.

This concession appears to repudiate Defence Minister Brendan Nelson’s threat to sue contractors, Shadow Defence Minister for Defence Industry, Procurement and Personnel, Senator Mark Bishop said. “The Government knew back in February it could not sue for damages over the Seasprite contract.”

Earlier today, Defence Minister Brendan Nelson said he was banning the Seasprites from flying because of software and technical problems, telling reporters in Melbourne he was also considering legal action against the contractors.

"The Gov't knew back in February it could not sue over the contract" But Defence had already ruled out legal action in February, when the Seasprite project manager “speculated” Defence had “negotiated away” a provision for damages “in exchange for some other benefit”.

“The contract does not have liquidated damage provisions in it,” Senate Estimates was told.

The Government also said it expected to supply the Navy with a Super Seasprite helicopter by next month.

“Now we’re being told the Defence Minister is looking at not only scrapping the helicopters altogether -- a move that could expose our Navy in the Gulf - but also putting in a ambit claim to sue,” Senator Bishop said.

Seasprite helicopters are supposed to be used by Anzac frigates. Together, they can protect civilian shipping lanes against piracy and the threat of terrorism on the seas.

The Government agreed to buy 11 Seasprite helicopters nearly nine years ago, with a current price tag of $1 billion.

But the Seasprites have been plagued from the start, Senator Bishop said, since they are old mechanical platforms, some dating back to 1963.

Senator Bishop tried to hold the Government to account at February’s Senate Estimates, when it was revealed the whole project could cost $1 billion.

“Now, the Minister is saying he is looking at scrapping the entire project. He is also quoted as admitting he will have to spend another $1 billion to buy a replacement for the Seasprites.”

Senator Bishop will again ask the Government about the Seasprite “mistake” at the next round of Senate Estimates, scheduled for the end of the month.

He said he would be asking the Government why it failed in its procurement of a major defence project, so soon after the blunder surrounding the acquisition of the Tiger Armed reconnaissance helicopter.