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Auditor-General—Audit report no. 13 for 2021-22—2020-21 major projects report: Department of Defence—Corrigendum


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16 December 2021

The Honourable the President of the Senate The Honourable the Speaker of the House of Representatives Parliament House CANBERRA ACT 2600

Dear Mr President Dear Mr Speaker

In accordance with section 19A(6) of the Auditor-General Act 1997, I tabled Auditor-General Report No.13 2021-22 2020-21 Major Projects Report on 13 December 2021. Errors have been identified in the material on pages 257 to 266. The attached pages in the corrigendum at Attachment A replace pages 257 to 266 in the tabled version, which I present to the Parliament.

Following the presentation and receipt of the corrigendum, the report will be updated on the Australian National Audit Office’s website — http://www.anao.gov.au.

Yours sincerely

Grant Hehir

GPO Box 707, Canberra ACT 2601 38 Sydney Avenue, Forrest ACT 2603 Phone: +61 2 6203 7300 Email: grant.hehir@anao.gov.au

Attachment A. Corrigendum

Errors have been identified in the material on pages 257 to 266 of Auditor-General Report No.13 2021-22 2020-21 Major Projects Report. The attached pages replace pages 257 to 266 in the tabled version.

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Project Data Summary Sheet159

Project Number LAND200 Tranche 2

Project Name BATTLEFIELD COMMAND

SYSTEM

First Year Reported in the MPR 2019-20 Capability Type Upgrade

Capability Manager Chief of Army

Government 1st Pass Approval Aug 13 Government 2nd Pass Approval

Sep 17

Budget at 2nd Pass Approval (or key Government pre-Second Pass Approval)

$930.0m

Total Approved Budget (Current) $962.3m 2020-21 Budget $116.6m

Complexity ACAT I

Section 1 - Project Summary 1.1 Project Description

LAND200 is delivering the Battlefield Command System (BCS) capability that provides Army with a Battle Management System (BMS) and an integrated Tactical Communications Network (TCN) that is transforming command and control of Land forces into a modern networked system. The BCS will provide fast, accurate, secure and reliable digital communications that will enable tactical Land forces to make better informed decisions, by distributing the right information to the right people at the right time, increasing the likelihood of operational success and soldier safety via friendly force tracking.

LAND200 Tranche 2 (LAND 200-2) is: expanding and evolving the LAND200 Tranche 1 (LAND 200-1) capability across Army with new collaborative planning, control and monitoring tools for Brigade and Divisional-level headquarters; integrating the BCS into an additional 540 platforms: including M1A1 tank, M88 armoured recovery vehicle, Hawkei, Bushmaster and Medium Heavy Cargo trucks; and the Program will embed BCS training into Army’s training institutions to evolve from a paper based to a digital based learning capability.

The Commonwealth is the LAND 200-2 Program’s Prime System Integrator (PSI) supported by two prime contractors: Elbit Systems (Israel) Ltd (Elbit) is the contractor for the BMS; and Harris Communications (Australia) Pty Ltd (L3Harris) is the contractor for the TCN.

1.2 Current Status

Cost Performance In-year For financial year 20/21 the project spent $67.5m against a planned budget of $116.6m, resulting in a variance of -$49.070m. The variation is due to the Battle Management System (BMS) contract experiencing significant delay. The delay is a result of the Project being unable to achieve the exit criteria associated with the Release 1.1 Software Release Review milestone. The Commonwealth is working with Elbit to address this delay.

Project Financial Assurance Statement As at 30 June 2021, project LAND 200-2 has reviewed the project’s approved scope and budget for those elements required to be delivered by Defence. Having reviewed the current financial contractual obligations of Defence for this project, current known risks and estimated future expenditure, Defence considers, as at the reporting date, there is sufficient budget, including contingency, remaining for the project to complete against the agreed scope.

Contingency Statement The project has not applied contingency in the financial year. Schedule Performance LAND 200-2 has established contracts with Elbit for the delivery of the BMS and L3Harris for delivery of the TCN. Elbit has completed the integration and installation of the Tranche 1 components onto the Medium Heavy Cargo trucks and has delivered BMS training systems and Release 1 of the BMS software. L3Harris has completed Preliminary Design and Detailed Design, however Stop Payments were invoked in October 2020, due to an inability to achieve the exit criteria associated with the Detailed Design Review milestone. The Commonwealth worked with L3Harris to achieve the exit criteria and the Stop Payment condition was lifted in late October 2020.

LAND 200-2 has experienced schedule delays under both the Elbit contract for the BMS and the L3Harris contract for the TCN. The delays have resulted from the Commonwealth’s inability to provide all the required Government Furnished Material (GFM) and contractor delays in meeting contract milestones.

159 Notice to reader

Forecast dates and Sections: 1.2 (Materiel Capability Delivery Performance), 1.3 (Major Risks and Issues), 4.1 (Measures of Materiel Capability Delivery Performance), and 5 (Major Risks and Issues) are excluded from the scope of the ANAO’s review of this Project Data Summary Sheet. Information on the scope of the review is provided in the Independent Review Report by the Auditor-General in Part 3 of this report.

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Project Data Summary Sheet159

Project Number LAND200 Tranche 2

Name BATTLEFIELD COMMAND

SYSTEM

First Year Reported in the MPR 2019-20 Capability Type Upgrade

Capability Manager Chief of Army

Government 1st Pass Approval Aug 13 Government 2nd Pass Approval

Sep 17

Budget at 2nd Pass Approval $930.0m Total Approved Budget (Current) $962.3m

2020-21 Budget $116.6m

Complexity ACAT I

Section 1 - Project Summary 1.1 Project Description

LAND200 is delivering the Battlefield Command System (BCS) capability that provides Army with a Battle Management System (BMS) and an integrated Tactical Communications Network (TCN) that is transforming command and control of Land forces into a modern networked system. The BCS will provide fast, accurate, secure and reliable digital communications that will enable tactical Land forces to make better informed decisions, by distributing the right information to the right people at the right time, increasing the likelihood of operational success and soldier safety via friendly force tracking.

LAND200 Tranche 2 (LAND200-2) is: expanding and evolving the LAND200 Tranche 1 (LAND200-1) capability across Army with new collaborative planning, control and monitoring tools for Brigade and Divisional-level headquarters; integrating the BCS into an additional 540 platforms: including M1A1 tank, M88 armoured recovery vehicle, Hawkei, Bushmaster and Medium Heavy Cargo trucks; and the Program will embed BCS training into Army’s training institutions to evolve from a paper based to a digital based learning capability.

The Commonwealth is the LAND200-2 Program’s Prime System Integrator (PSI) supported by two prime contractors: Elbit Systems (Israel) Ltd (Elbit) is the contractor for the BMS; and Harris Communications (Australia) Pty Ltd (L3Harris) is the contractor for the TCN.

1.2 Current Status

Cost Performance In-year For financial year 20/21 the project spent $67.5m against a planned budget of $116.6m, resulting in a variance of -$49.1m. The variation is due to the BMS contract experiencing significant delay. The delay is a result of the Project being unable to achieve the exit criteria associated with the Release 1.1 Software Release Review milestone and the Commonwealth being unable to provide some items of Government Furnished Materials (GFM)). The Commonwealth is working with Elbit to address these delays.

Project Financial Assurance Statement As at 30 June 2021, project LAND200-2 has reviewed the project’s approved scope and budget for those elements required to be delivered by Defence. Having reviewed the current financial contractual obligations of Defence for this project, current known risks and estimated future expenditure, Defence considers, as at the reporting date, there is sufficient budget, including contingency, remaining for the project to complete against the agreed scope.

Contingency Statement The project has not applied contingency in the financial year. Schedule Performance LAND200-2 has established contracts with Elbit for the delivery of the BMS and L3Harris for delivery of the TCN. Elbit has completed the integration and installation of the Tranche 1 components onto the Medium Heavy Cargo trucks and has delivered BMS training systems and Release 1 of the BMS software. L3Harris has completed Preliminary Design and Detailed Design, however Stop Payments were invoked with L3Harris in October 2020, due to an inability to achieve the exit criteria associated with the Detailed Design Review milestone. The Commonwealth worked with L3Harris to achieve the exit criteria and the Stop Payment condition was lifted in late October 2020.

159 Notice to reader

Forecast dates and Sections: 1.2 (Materiel Capability Delivery Performance), 1.3 (Major Risks and Issues), 4.1 (Measures of Materiel Capability Delivery Performance), and 5 (Major Risks and Issues) are excluded from the scope of the ANAO’s review of this Project Data Summary Sheet. Information on the scope of the review is provided in the Independent Review Report by the Auditor-General in Part 3 of this report.

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A CCP was finalised with L3Harris in financial year 19/20 that recognised a 10 month delay to the L3Harris contract, with costs shared between the Commonwealth and L3Harris. A CCP is currently being workshopped with Elbit to remove the integration and installation scope from the PMV-M, M1A1 and M88. A CCP for the integration of the Mission Partner Environment (MPE) in lieu of the Defence Secret Network has been finalised with the introduction of a new milestone, covering BMS Release 1.1. The progress of BMS Release 1.1 has been delayed because of an inability to exit the Software Release Review milestone. The Commonwealth and Elbit are continuing to work through known issues. In June 2021, Elbit advised that completion of the BMS Contract’s Final Acceptance milestone would not occur until February 2024, at the earliest. The Commonwealth is assessing the impact of this delay.

Materiel Capability Delivery Performance LAND 200-2 has delivered: 150 Medium Heavy Cargo trucks fitted with the Tranche 1 BCS node; Foundation Training Classroom requirements, and new and retrofitted BMS Training Assemblages. LAND 200-2 will deliver a further 390 vehicle BCS node integrations and installations with the M1A1, M88, PMV-M and PMV-L platforms. Additionally, LAND200-2 will deliver the BMS-HQ software hosted on the MPE, Syndicate Room/Tactical Exercise Without Troops (TEWT) training requirements, BMS simulator systems and L3Harris AN/PRC-158 multi-channel multi-band radios.

The remaining node design descriptions are being updated to accommodate network architecture changes requested by the Army Program Sponsor.

Limited availability of required Government Furnished Data in support of the Weapons Integrated BMS (WINBMS) for the M1A1 has resulted in a request from Army to remove this scope item from the Elbit contract. Based on direction from the Army program sponsor, the project does not expect to deliver the Hawkei GSV node: this is offset by the direction from the Army Program Sponsor to increase the delivered quantities of Hawkei C2V and MNV nodes. CASG and Army are undertaking a technical review of the contract with Elbit to consider the remaining scope to be delivered under the contract. Note

Forecast dates and capability assessments are excluded from the scope of the Auditor-General’s Independent Assurance Report.

1.3 Project Context

Background The LAND 200 program is a core program that fundamentally influences the way Land Forces plan, command and control operations from frontline soldiers and combat vehicles up to and including deployed Joint Force Headquarters. LAND 200 systems provide war-fighters with common battlefield awareness and information superiority through a highly capable, mobile and secure networked environment.

In August 2013, LAND 200-2 was presented to Government as a federation of two projects; JP 2072 Phase 3 and LAND 75 Phase 4. At this time, LAND 200-2 received Government Combined Pass Approval for the continuation of LAND 75 Phase 3.4, LAND 125 Phase 3A and JP 2072 Phase 1 (approved as LAND 200-1) and First Pass Project Approval for new work to be delivered under LAND 200-2.

L200-1 and LAND 75 Phase 4 Work Package A delivered the Battle Group and Below Command, Control and Communications System (BGC3) for approximately one-third of the Land force. The BGC3 was primed by Elbit which integrated Raytheon and L3Harris radios acquired by JP 2072 Phases 1 and 2. LAND 200-1 and LAND 75 Phase 4 Work Package A:

Installed the BGC3 into dismounted commanders, Bushmaster PMV, Unimog, G-Wagon and Armoured Personnel Carrier M113AS4. Delivered a Track Management System (TMS) as the primary interface between the BMS and Joint and US Coalition systems providing an exchange of situational awareness data and the Land Forces common operational picture. LAND 75 Phase 3.4 and LAND 125 Phase 3A achieved Initial Operating Capability (IOC) in April 2012 and Final Operating Capability (FOC) in March 2015. FMR for LAND 75 Phase 4 Work Package A (the final deliverable for the project) was achieved in December 2017.

LAND 200-2 put forward a procurement decision for the further development of the BMS, which commenced under LAND 75. No MOTS BMS product was available that provided all of the Army requirements.

In September 2017, Second Pass Government Approval was provided for LAND 200-2. This Government Approval draws together both projects to formulate under the name LAND 200 Tranche 2 (Phase 2) Battlefield Command Systems. Under this approval, LAND 200-2 will deliver:

An integrated Battle Management System - Command and Control (BMS-C2) with a supporting TCN into new vehicle platforms as part of the digitised land force. In addition to this, a modernised TCN with a new vehicle mounted communications system solution will be acquired by current and future LAND 200 platforms programs. Institutionalised BMS-C2 and TCN training and simulation across land forces. Expanded functionality of the BMS-C2 to incorporate additional decision and planning tools for use at the Joint Task Force and Brigade Headquarters level.

The project was not approved under the revised Capability Life Cycle model and therefore did not undergo a Smart Buyer review. The project was subsequently the subject of a Smart Buyer workshop in September 2019, in order to consider the architecture changes requested by Army. The Project has not been considered by a Smart Buyer assessment this financial year. The project was listed as a Project of Interest in September 2018 due to issues associated with vehicle integration and the drawdown of 30% of the Project’s contingency to treat the issues. Uniqueness LAND 200 is delivering the core of Army’s digital Command, Control and Communications capability. It is a highly complex project in part due to the integration of new leading edge technologies but also of programmatic interdependencies associated with the BCS being integrated into all the Land Forces deployable headquarters from Platoon to the Division and nearly all of Army’s Land

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LAND200-2 has experienced schedule delays under both the Elbit contract for the BMS and the L3Harris contract for the TCN. The delays have resulted from the Commonwealth’s inability to provide all the required Government Furnished Material (GFM) and contractor delays in meeting contract milestones. A Contract Change Proposal (CCP) was finalised with L3Harris in financial year 19/20 that recognised a 10 month delay to the L3Harris contract, with costs shared between the Commonwealth and L3Harris. A CCP is currently being workshopped with Elbit to remove the integration and installation scope from the PMV-M, M1A1 and M88. A CCP for the integration of the Mission Partner Environment (MPE) in lieu of the Defence Secret Network has been finalised with the introduction of a new milestone, covering BMS Release 1.1. The progress of BMS Release 1.1 has been delayed because of an inability to exit the Software Release Review milestone. The Commonwealth and Elbit are continuing to work through known issues. Defence and Elbit are undertaking a technical review to consider the remaining scope to be delivered under the BMS Contract. In June 2021, Elbit advised that completion of the BMS Contract’s Final Acceptance milestone would occur no earlier than February 2024, due to a number of issues including availability of GFM and the inability to meet milestone exit criteria. The Commonwealth is assessing the impact of this delay and continues to work with Elbit to progress delivery of capability

Materiel Capability Delivery Performance LAND200-2 has delivered: 150 Medium Heavy Cargo trucks fitted with the Tranche 1 BCS node; Foundation Training Classroom requirements, and new and retrofitted BMS Training Assemblages, BMS C2 Software Release 0 and BMS C2 Software Release 1. LAND200-2 will deliver a further 390 vehicle BCS node integrations and installations with the M1A1, M88, PMV-M and PMV-L platforms. Additionally, LAND200-2 will deliver the BMS-HQ software hosted on the MPE, Syndicate Room/Tactical Exercise Without Troops (TEWT) training requirements, BMS simulator systems and L3Harris AN/PRC-158 multi-channel multi-band radios.

The remaining node design descriptions are being updated to accommodate network architecture changes requested by the Army Program Sponsor.

Limited availability of required Government Furnished Data in support of the Weapons Integrated BMS (WINBMS) for the M1A1 has resulted in a request from Army to remove this scope item from the Elbit contract. Based on direction from the Army program sponsor, the project does not expect to deliver the Hawkei GSV node: this is offset by the direction from the Army Program Sponsor to increase the delivered quantities of Hawkei C2V and MNV nodes.

Defence and Elbit are undertaking a technical review to consider the remaining scope to be delivered under the BMS contract. Note Forecast dates and capability assessments are excluded from the scope of the Auditor-General’s Independent Assurance Report.

1.3 Project Context

Background The LAND200 program is a core program that fundamentally influences the way Land Forces plan, command and control operations from frontline soldiers and combat vehicles up to and including deployed Joint Force Headquarters. LAND200 systems provide war-fighters with common battlefield awareness and information superiority through a highly capable, mobile and secure networked environment.

In August 2013, LAND200-2 was presented to Government as a federation of two projects; JP2072 Phase 3 and LAND75 Phase 4. At this time, LAND200-2 received Government Combined Pass Approval for the continuation of LAND75 Phase 3.4, LAND125 Phase 3A and JP2072 Phase 1 (approved as LAND200-1) and First Pass Project Approval for new work to be delivered under LAND200-2.

LAND200-1 and LAND75 Phase 4 Work Package A delivered the Battle Group and Below Command, Control and Communications System (BGC3) for approximately one-third of the Land force. The BGC3 was primed by Elbit which integrated Raytheon and L3Harris radios acquired by JP2072 Phases 1 and 2. LAND200-1 and LAND75 Phase 4 Work Package A:

Installed the BGC3 into dismounted commanders, Bushmaster PMV, Unimog, G-Wagon and Armoured Personnel Carrier M113AS4. Delivered a Track Management System (TMS) as the primary interface between the BMS and Joint and US Coalition systems providing an exchange of situational awareness data and the Land Forces common operational picture. LAND75 Phase 3.4 and LAND125 Phase 3A achieved Initial Operating Capability (IOC) in April 2012 and Final Operating Capability (FOC) in March 2015. Final Materiel Release (FMR) for LAND75 Phase 4 Work Package A (the final deliverable for the project) was achieved in December 2017.

LAND200-2 put forward a procurement decision for the further development of the BMS, which commenced under LAND75. No Military Off-The-Shelf BMS product was available that provided all of the Army requirements.

In September 2017, Second Pass Government Approval was provided for LAND200-2. This Government Approval draws together both projects to formulate under the name LAND200 Tranche 2 (Phase 2) Battlefield Command Systems. Under this approval, LAND200-2 will deliver:

An integrated Battle Management System - Command and Control (BMS-C2) with a supporting TCN into new vehicle platforms as part of the digitised land force. In addition to this, a modernised TCN with a new vehicle mounted communications system solution will be acquired by current and future LAND200 platforms programs. Institutionalised BMS-C2 and TCN training and simulation across land forces. Expanded functionality of the BMS-C2 to incorporate additional decision and planning tools for use at the Joint Task Force and Brigade Headquarters level.

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platforms and several Naval amphibious capabilities. Major Risks and Issues The project is currently managing the following major risks: x Incorporation of PMV-L modifications with the LAND 121-4 deliveries.

x Contract impacts resulting from delayed Land Data Model development. x Funding for the combined implementation of LAND 200-2 modifications with PMICA. x Delay to the security accreditation of TCN software. x A delay to the BMS SIM TTP Capability. The project is also managing the following project issues:

x PMV-M installation delay. x Delayed implementation of the M1A1 and M88 modifications. x Node design architecture changes. x Funding pressure associated with the procurement of Vehicle Installation Kits for PMV-m Gateway. x Delayed delivery of BMS Release 2. x BMS Release 1.1 has been assessed as being unfit for operational use. x Delay to TCN System Acceptance.

Other Current Related Projects/Phases LAND 200-2 has direct BCS integration interdependencies with several other Defence Projects and Products, including: LAND 121 Phase 4 Protected Mobility Vehicle (Light) Hawkei; Mounted Combat System Program Office (Product CA01 M1A1 Tank and M88 Armoured Recovery Vehicle); and Commercial and General Service Vehicle Systems Program Office (Product CA-04 Protected Mobility Vehicle - Medium Bushmaster).

Note Major risks and issues are excluded from the scope of the Auditor-General’s Independent Assurance Report.

Section 2 - Financial Performance 2.1 Project Budget (out-turned) and Expenditure History Date Description $m Notes

Project Budget

Sep 17 Original Approved (Second Pass Approval) 930.0 1

Total at Second Pass Approval (or key

Government pre-Second Pass Approval)

930.0

Jun 21 Exchange Variation 32.3

Total Budget 962.3

Project Expenditure

Prior to Jul 20 Contract Expenditure - L3Harris Communications 270.7

Contract Expenditure - Elbit Systems

Contract Expenditure - Downer EDI Engineering Power Pty Ltd160 Contract Expenditure - Thales Australia Limited

276.3 8.3 0.0

Other Contract Payments / Internal Expenses 18.7 2

574.0

FY to Jun 21 Contract Expenditure - Elbit Systems 2.0

Contract Expenditure - L3Harris Communications

Contract Expenditure - Downer EDI Engineering Power Pty Ltd Contract Expenditure - Thales Australia Limited

39.3 12.7 2.9

Other Contract Payments / Internal Expenses 10.6 3

67.5

Jun 21 Total Expenditure 641.5

Jun 21 Remaining Budget 320.8

Notes 1 The Second Pass budget excludes First to Second Pass Approval funding for Work Packages B, C and D (these prices were combined with the Combined Pass Approval for Work Package A captured within the JP 2072 Phase 3 and LAND 75 Phase 4 projects). 2 Other expenses for prior years includes $8.7m for Technical Services, $3.2m for Specialist Military Equipment, $2.3m for

Operational Plant & Equipment, $1.6m for Travel, $1.6 for Software Licenses and $1.2m for Miscellaneous. 3 Other expenses for FY 20/21 include $5m for Technical Services, $3.2m for Specialist Military Equipment, $0.7m for Operational Plant & Equipment, $0.5m for Freight, $0.4m for Project Maintenance Contracts, $0.3m for General Stores Inventory and $0.5m for Miscellaneous.

160 This is the Team Downer Major Service Provider (MSP) arrangement for the provision of a multi-discipline workforce to deliver the LC4S Branch Integrated Works Package (IWP).

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The project was not approved under the revised Capability Life Cycle model and therefore did not undergo a Smart Buyer review. The project was subsequently the subject of a Smart Buyer workshop in September 2019, in order to consider the architecture changes requested by Army. The Project has not been considered by a Smart Buyer assessment this financial year. The project was listed as a Project of Interest in September 2018 due to issues associated with vehicle integration and the drawdown of 30% of the Project’s contingency to treat the issues. Uniqueness LAND200 is delivering the core of Army’s digital Command, Control and Communications capability. It is a highly complex project in part due to the integration of new leading edge technologies but also of programmatic interdependencies associated with the BCS being integrated into all the Land Forces deployable headquarters from Platoon to the Division and nearly all of Army’s Land platforms and several Naval amphibious capabilities. Major Risks and Issues The project is currently managing the following major risks:

x Incorporation of PMV-L modifications with the LAND 121 Phase 4 deliveries. x Contract impacts resulting from delayed Land Data Model development. x Funding for the combined implementation of LAND200-2 modifications with PMICA. x Delay to the security accreditation of TCN software. x A delay to the BMS SIM TTP Capability resulting from issues with external interdependencies. The project is also managing the following project issues:

x PMV-M installation delay. x Delayed implementation of the M1A1 and M88 modifications, and necessary de-scoping of Elbit contract. x Node design architecture changes. x Funding pressure associated with the procurement of Vehicle Installation Kits for PMV-M Gateway. x Delayed delivery of BMS Release 2. x BMS Release 1.1 is yet to satisfy the release criteria associated with the Software Release Review 1.1. x Delay to TCN System Acceptance.

Other Current Related Projects/Phases LAND200-2 has direct BCS integration interdependencies with several other Defence Projects and Products, including: LAND 121 Phase 4 Protected Mobility Vehicle (Light) Hawkei; Mounted Combat System Program Office (Product CA01 M1A1 Tank and M88 Armoured Recovery Vehicle); and Commercial and General Service Vehicle Systems Program Office (Product CA-04 Protected Mobility Vehicle - Medium Bushmaster).

Note Major risks and issues are excluded from the scope of the Auditor-General’s Independent Assurance Report.

Section 2 - Financial Performance 2.1 Project Budget (out-turned) and Expenditure History Date Description $m Notes

Project Budget

Sep 17 Original Approved (Second Pass Approval) 930.0 1

Total at Second Pass Approval 930.0

Jun 21 Exchange Variation 32.3

Total Budget 962.3

Project Expenditure

Prior to Jul 20 Contract Expenditure - L3Harris Communications 270.7

Contract Expenditure - Elbit Systems

Contract Expenditure - Downer EDI Engineering Power Pty Ltd160 Contract Expenditure - Thales Australia Limited

276.3 8.3 0.0

Other Contract Payments / Internal Expenses 18.7 2

574.0

FY to Jun 21 Contract Expenditure - Elbit Systems 2.0

Contract Expenditure - L3Harris Communications

Contract Expenditure - Downer EDI Engineering Power Pty Ltd Contract Expenditure - Thales Australia Limited

39.3 12.7 2.9

Other Contract Payments / Internal Expenses 10.6 3

67.5

Jun 21 Total Expenditure 641.5

Jun 21 Remaining Budget 320.8

160 This is the Team Downer Major Service Provider (MSP) arrangement for the provision of a multi-discipline workforce to deliver the LC4S Branch Integrated Works Package (IWP).

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2.2A In-year Budget Estimate Variance Estimate PBS $m Estimate

PAES $m

Estimate Final Plan $m Explanation of Material Movements

216.5 118.5 116.6 PBS to PAES: The variation is primarily due to the need to

finalise a number of contract change proposals, which will update the payment and delivery schedules for both the BMS and TCN prime contracts PAES to Final Plan: A stronger Australian dollar has resulted in a minor variance to the $AUD equivalent planned Budget for 20/21.

Variance $m (98.0) (1.9) Total Variance ($m): (99.9)

Variance % (45.3) (1.7) Total Variance (46.1%):

2.2B In-year Budget/Expenditure Variance Estimate Final Plan $m Actual

$m

Variance $m

Variance Factor Explanation

49.1 Australian Industry The delay is a result of the inability to

achieve the exit criteria for the Release 1.1 Software Release Review milestone.

Foreign Industry Early Processes Defence Processes

Foreign Government Negotiations/Payments Cost Saving Effort in Support of Operations

Additional Government Approvals

116.6 67.5

49.1 Total Variance

(42.1) % Variance

2.3 Details of Project Major Contracts Contractor Signature Date Price at Type (Price

Basis)

Form of Contract Notes

Signature $m

30 Jun 21 $m

Elbit Systems Limited Sep 17 365.2 406.7 Fixed Standard Defence

Contract

1,3

L3Harris Communications Australia Sep 17 330.0 356.7 Fixed Standard Defence

Contract

1,2

Downer EDI Engineering Power Pty Ltd Aug 19 17.7 47.3 Variable Integrated Work

Package

4

Thales Australia Limited May 21 12.7 12.5 Fixed Standard Defence

Contract

5

Notes 1 Contract value as at 30 June 2021 is based on actual expenditure to 30 June 2021 and remaining commitment at current exchange rates, and includes adjustments for indexation (where applicable). 2 Contract value at 30 Jun 2021includes the cost of CCPs to address changes in system requirements. 3 The value of this contract may be reduced, via negotiation and agreement of a contract change proposal with Elbit to

remove the integration and installation from some platforms. 4 Provision of multi-discipline workforce to deliver the LC4S Branch Integrated Work Package via the CASG Major Service Provider Arrangement. In addition the directed establishment of a PSI and improved governance measures

lead to an increase in the contracted workforce. 5 This procurement occurred via Contract Change Proposal Number 078 (CCP078) to the L121-4 Acquisition Contract with Thales. L200-2 will pay Thales to produce the L200-2 BCS integration design solution within Hawkei vehicles. Contractor Contracted Quantities as at Scope Notes

Signature 30 Jun 21

Elbit Systems Limited N/A N/A Development of BMS software and integration and

installation of systems into the M1A1, M88 and PMV-M.

1,3

L3Harris Communications Australia N/A N/A Development TCN software and provision of

AN/PRC-158 radios. 2

Downer EDI Engineering Power Pty Ltd N/A N/A Provision of multi-discipline workforce to deliver

the LC4S Branch Integrated Work Package via the CASG Major Service Provider Arrangement.

4

Thales Australia Limited N/A N/A Delivery of the design solution for integration of

the L200-2 BCS within Hawkei vehicles. 5

Major equipment accepted and quantities to 30 Jun 21 150 x MHC vehicles have been modified with BMS 162 x New and 50 x Upgraded BMS Training Assemblages. 36 x Foundation Training Classroom Kits.

Notes 1 This contract is for the provision of BMS systems for installation in the following: GSV Node PMV-L x 108, MNV Node M1A1 x 59, MNV Node M88 x7, MNV Node PMV-L x126, GSV Node MHC x 150, C2V Node PMV-M x 57, C2V Node PMV-L x33, BMS-HQ hosted on MPE x 33, BMS Training System and BMS SIM. 2 The contract is for the provision of TCN systems for installation in the following: GSV Node PMV-L x 108, MNV Node M1A1 x

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Notes 1 The Second Pass budget excludes First to Second Pass Approval funding for Work Packages B, C and D (these prices were combined with the Combined Pass Approval for Work Package A captured within the JP2072 Phase 3 and LAND75 Phase 4 projects). 2 Other expenses for prior years includes $8.7m for Technical Services, $3.2m for Specialist Military Equipment, $2.3m for

Operational Plant & Equipment, $1.6m for Travel, $1.6 for Software Licenses and $1.2m for Miscellaneous. 3 Other expenses for FY 20/21 include $5m for Technical Services, $3.2m for Specialist Military Equipment, $0.7m for Operational Plant & Equipment, $0.5m for Freight, $0.4m for Project Maintenance Contracts, $0.3m for General Stores Inventory and $0.5m for Miscellaneous.

2.2A In-year Budget Estimate Variance Estimate PBS $m Estimate

PAES $m

Estimate Final Plan $m Explanation of Material Movements

216.5 118.5 116.6 PBS to PAES: The variation is primarily due to the need to

finalise a number of contract change proposals, which will update the payment and delivery schedules for both the BMS and TCN prime contracts. PAES to Final Plan: A stronger Australian dollar has resulted in a minor variance to the $AUD equivalent planned Budget for 20/21.

Variance $m (98.0) (1.9) Total Variance ($m): (99.9)

Variance % (45.3) (1.7) Total Variance (%): (46.1)

2.2B In-year Budget/Expenditure Variance Estimate Final Plan $m Actual

$m

Variance $m

Variance Factor Explanation

49.1 Australian Industry The variance is a result of the

inability to achieve the exit criteria for the Release 1.1 Software Release Review milestone and the inability to finalise Contract Change Proposals (CCP) to the Elbit BMS contract.

Foreign Industry Early Processes Defence Processes

Foreign Government Negotiations/Payments Cost Saving Effort in Support of Operations

Additional Government Approvals

116.6 67.5

49.1 Total Variance (42.1) % Variance

2.3 Details of Project Major Contracts Contractor Signature Date Price at Type (Price

Basis)

Form of Contract Notes

Signature $m

30 Jun 21 $m

Elbit Systems Limited Sep 17 365.2 406.7 Fixed Standard Defence

Contract

1,3

L3Harris Communications Australia Sep 17 330.0 356.7 Fixed Standard Defence

Contract

1,2

Downer EDI Engineering Power Pty Ltd Aug 19 17.7 47.3 Variable Integrated Work

Package

4

Thales Australia Limited May 21 12.7 12.5 Fixed Standard Defence

Contract

5

Notes 1 Contract value as at 30 June 2021 is based on actual expenditure to 30 June 2021 and remaining commitment at current exchange rates, and includes adjustments for indexation (where applicable). 2 Contract value at 30 Jun 2021 includes the cost of CCPs to address changes in system requirements. 3 The value of this contract may be adjusted, via negotiation and agreement of a contract change proposal with Elbit to

remove the integration and installation from some platforms. 4 Provision of multi-discipline workforce to deliver the LC4S Branch Integrated Work Package via the CASG Major Service Provider Arrangement. In addition the directed establishment of a PSI and improved governance measures

lead to an increase in the contracted workforce. 5 This procurement occurred via CCP078 to the LAND121 Phase 4 Acquisition Contract with Thales. LAND200-2 will pay Thales to produce the LAND200-2 BCS integration design solution within Hawkei vehicles.

Contractor Contracted Quantities as at Scope Notes

Signature 30 Jun 21

Elbit Systems Limited N/A N/A Development of BMS software and integration and

installation of systems into the M1A1, M88 and PMV-M.

1,3

L3Harris Communications Australia N/A N/A Development TCN software and provision of AN/PRC-

158 radios. 2

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59, MNV Node M88 x7, MNV Node PMV-L x126, GSV Node MHC x 150, C2V Node PMV-M x 57, C2V Node PMV-L x33. 3 The scope of this contract is expected to change, via negotiation and agreement of a contract change proposal with Elbit to remove the installation and integration from some platforms. 4 As a Project within LC4S Branch, L200-2 pays for its share of the workforce provided via this arrangement. 5 Installation of the L200-2 BCS within Hawkei vehicles will be the subject of a separate procurement.

Section 3 - Schedule Performance 3.1 Design Review Progress Review Major System/Platform Variant Original

Planned

Current Contracted Achieved / Forecast

Variance (Months) Notes

System Requirements TCN Systems Requirement Review Jul 18 N/A Aug 18 1 8

BMS Systems Requirements Review N/A N/A N/A N/A 1

Preliminary Design

TCN Preliminary Design Review May 19 N/A Sep 19 4 2

BMS Preliminary Design Review (Various Reviews) N/A N/A N/A N/A 1

Preliminary Design ReviewM1A1/M88 Jan 20 N/A N/A NA 5

Preliminary Design Review PMV-L Oct 21 N/A Oct 21 0 4

Preliminary Design Review PMV-M Sep 19 N/A Jun21 21 6

BCS Preliminary Design Review Feb 21 N/A Oct 21 8 11

Detailed Design

TCN Detailed Design Review Sep 19 Aug 20 Oct 20 13 3

BMS R1 Detailed Design Review Nov 19 N/A Mar 20 4 9

BMS R1.1 Detailed Design Review Aug 20 N/A Aug 20 0 10

BMS R2 Detailed Design Review Nov 20 N/A Oct22 23 7

Detailed Design ReviewM1A1/M88 Jul 20 N/A Dec 20 5 5

Detailed Design Review PMV-L Jan 22 N/A Jan 22 0 4

Detailed Design Review PMV-M Feb 21 N/A Feb 22 12 6

BCS Detailed Design Review Jun 21 N/A Mar 22 9 11

Notes 1 There is no discrete BMS Systems Requirements Review. BMS software does not follow the traditional Systems Engineering Review process. The Commonwealth has implemented a series of Software specific agile reviews. 2 TCN Preliminary Design Review variance resulted from the late entry into and exit from the Systems Definition Review.

3 The TCN Detailed Design Review contract date was updated with the approval of TCN CCP021. Stop Payments were invoked in October 2020 due to an inability to achieve the exit criteria associated with the Detailed Design Review milestone. The Commonwealth worked with L3Harris to achieve the exit criteria and the Stop Payment condition was lifted in late October 2020.

4 Contract Change Proposal Number 078 (CCP078) to the L121-4 Acquisition Contract with Thales was signed in May 2021. L200-2 will pay Thales to produce the L200-2 BCS integration design solution within Hawkei vehicles. Installation of the BCS nodes within Hawkei vehicles will be the subject of a separate procurement.

5 This scope item was originally planned to be delivered under the under the Elbit contract, however, this was not able to be progressed because of an inability to obtain original design information from the US OEM. Instead of a formal PDR/DDR, a tailored TCN Node will be installed in the M1A1/M88 in response to an immediate obsolescence and risk mitigation request from AHQ, to replace the current radios. This work will be performed as an internal CASG Engineering Change Proposal (ECP), supported by HCA. The full BCS node functionality will be realised in the M1A1/M88 by Final Materiel Release (FMR). A tailored design review was conducted to confirm the functional baseline into the platform. 6 This scope item will not be performed under the Elbit contract. Instead, alignment of the LAND200-2 and the

Protected Mobility Integration and Capability Assurance (PMICA) Non-Recurring Engineering (NRE) design requirements and installation will be performed by Thales. HCA will be engaged as a subcontractor to Thales. 7 The Commonwealth implemented a change to the hosting for the secure environment from the Defence Secret Network to the Mission Partner Environment, requiring revised work requirements Delay of Release 2 Detailed Design Review is linked

to the delay in delivery of Release 1.1 achievement. Some concurrent work has continued in the development and design of software. 8 System Requirements Review was delayed due to the rejection by the Commonwealth of the System Specification when first submitted for approval and the need for revisions by the contractor. 9 BMS R1 Detailed Design Review milestone event was delayed due to delayed completion of key design artefacts that were

required to accurately describe the R1 capability. 10 A BMS software Release 1.1 was required due to a change in requirements requested by the Commonwealth. This was confirmed at BMS CCP004. The Commonwealth noted a number of Action Items requiring remediation at the conclusion of the Detailed Design Review milestone. The Commonwealth endorsed progress to commence T&E

activities in order to provide Elbit with an opportunity to demonstrate the performance of the Release 1.1 software. 11 The Commonwealth is the Prime Systems Integrator (PSI) responsible for the integration of the BMS and the TCN to realise the Battlefield Command System (BCS). This is not supported by a contract because this is an internal to

Commonwealth responsibility. The achievement of this milestone is not dependent upon the achievement of platform Design Reviews.

3.2 Contractor Test and Evaluation Progress Test and Evaluation Major System / Platform Variant Original

Planned

Current Contracted Achieved / Forecast

Variance (Months) Notes

System Integration

TCN Acceptance Test &Evaluation May 21 N/A Sep 21 4 1

BMS R1 Acceptance Test &Evaluation Jun 19 N/A Mar 20 9 7

BMS R1.1 Acceptance Test & Evaluation Aug 20 N/A Jun 21 10 9

139

Downer EDI Engineering Power Pty Ltd N/A N/A Provision of multi-discipline workforce to deliver

the LC4S Branch Integrated Work Package via the CASG Major Service Provider Arrangement.

4

Thales Australia Limited N/A N/A Delivery of the design solution for integration of the

LAND200-2 BCS within Hawkei vehicles. 5

Major equipment accepted and quantities to 30 Jun 21 150 x MHC vehicles have been modified with BMS 162 x New and 50 x Upgraded BMS Training Assemblages. 36 x Foundation Training Classroom Kits.

Notes 1 This contract is for the provision of BMS systems for installation in the following: GSV Node PMV-L x 108, MNV Node M1A1 x 59, MNV Node M88 x7, MNV Node PMV-L x126, GSV Node MHC x 150, C2V Node PMV-M x 57, C2V Node PMV-L x33, BMS-HQ hosted on MPE x 33, BMS Training System and BMS SIM. 2 The contract is for the provision of TCN systems for installation in the following: GSV Node PMV-L x 108, MNV Node M1A1 x

59, MNV Node M88 x7, MNV Node PMV-L x126, GSV Node MHC x 150, C2V Node PMV-M x 57, C2V Node PMV-L x33. 3 The scope of this contract is expected to change, via negotiation and agreement of a contract change proposal with Elbit to remove the installation and integration from some platforms. 4 As a Project within LC4S Branch, LAND200-2 pays for its share of the workforce provided via this arrangement. 5 Installation of the LAND200-2 BCS within Hawkei vehicles will be the subject of a separate procurement.

Section 3 - Schedule Performance 3.1 Design Review Progress Review Major System/Platform Variant Original

Planned

Current Contracted Achieved / Forecast

Variance (Months) Notes

System Requirements TCN Systems Requirement Review Jul 18 N/A Aug 18 1 8

BMS Systems Requirements Review N/A N/A N/A N/A 1

Preliminary Design

TCN Preliminary Design Review May 19 N/A Sep 19 4 2

BMS Preliminary Design Review (Various Reviews) N/A N/A N/A N/A 1

Preliminary Design ReviewM1A1/M88 Jan 20 N/A N/A N/A 5

Preliminary Design Review PMV-L Oct 21 N/A Oct 21 0 4

Preliminary Design Review PMV-M Sep 19 N/A Jun 21 21 6

BCS Preliminary Design Review Feb 21 N/A Oct 21 8 11

Detailed Design

TCN Detailed Design Review Sep 19 Aug 20 Oct 20 13 3

BMS R1 Detailed Design Review Nov 19 N/A Mar 20 4 9

BMS R1.1 Detailed Design Review Aug 20 N/A Aug 20 0 10

BMS R2 Detailed Design Review Nov 20 N/A Oct 22 23 7

Detailed Design ReviewM1A1/M88 Jul 20 N/A Dec 20 5 5

Detailed Design Review PMV-L Jan 22 N/A Jan 22 0 4

Detailed Design Review PMV-M Feb 21 N/A Feb 22 12 6

BCS Detailed Design Review Jun 21 N/A Mar 22 9 11

Notes 1 There is no discrete BMS Systems Requirements Review. BMS software does not follow the traditional Systems Engineering Review process. The Commonwealth has implemented a series of Software specific agile reviews. 2 TCN Preliminary Design Review variance resulted from the late entry into and exit from the Systems Definition Review.

3 The TCN Detailed Design Review contract date was updated with the approval of TCN CCP021. Stop Payments were invoked in October 2020 due to an inability to achieve the exit criteria associated with the Detailed Design Review milestone. The Commonwealth worked with L3Harris to achieve the exit criteria and the Stop Payment condition was lifted in late October 2020.

4 Contract Change Proposal Number 078 (CCP078) to the LAND121 Phase 4 Acquisition Contract with Thales was signed in May 2021. LAND200-2 will pay Thales to produce the LAND200-2 BCS integration design solution within Hawkei vehicles. Installation of the BCS nodes within Hawkei vehicles will be the subject of a separate procurement.

5 This scope item was originally planned to be delivered under the under the Elbit contract, however, this was not able to be progressed because of an inability to obtain original design information from the US OEM to allow for WINBMS development. Instead of a formal PDR/DDR, a tailored TCN Node will be installed in the M1A1/M88 in response to an immediate obsolescence and risk mitigation request from AHQ, to replace the current radios. This work will be performed as an internal CASG Engineering Change Proposal (ECP), supported by HCA. The full BCS node functionality will be realised in the M1A1/M88 by FMR. A tailored design review was conducted to confirm the functional baseline into the platform.

6 This scope item will not be performed under the Elbit contract. Instead, alignment of the LAND200-2 and the Protected Mobility Integration and Capability Assurance (PMICA) Non-Recurring Engineering (NRE) design requirements and installation will be performed by Thales. HCA will be engaged as a subcontractor to Thales.

7 The Commonwealth implemented a change to the hosting for the secure environment from the Defence Secret Network to the Mission Partner Environment, requiring revised work requirements Delay of Release 2 Detailed Design Review is linked to the delay in delivery of Release 1.1, as well as issues with external interdependencies. Concurrent work has continued in the development and design of software to minimise further delay.

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BMS R2 Acceptance Test &Evaluation Dec 20 N/A Nov 22 23 6

M1A1/M88 Platform Integration Acceptance Test & Evaluation Apr 21 N/A Mar 21 (1) 5

PMV-L Acceptance Test &Evaluation Jan 22 N/A Jan 22 0 3

PMV-M Acceptance Test &Evaluation Feb 20 N/A Dec 22 34 4

BCS Acceptance Test & Evaluation Oct 21 N/A Jul 22 9 10

Acceptance TCN System Acceptance Jun 20 Aug 21 May 22 23 2

BMS Acceptance R1 Jan 20 N/A Mar 20 2 8

BMS Acceptance R1.1 Sep 20 N/A Jun 21 9 9

BMS Acceptance R2 Mar 21 Aug 21 Mar 23 24 6

M1A1 Tank Feb 22 N/A Jul 21 (7) 5

M88 May 22 N/A Jul 21 (10) 5

PMV-L May 22 N/A May 22 0 3

PMV-M Apr 21 N/A Mar23 23 4

BCS Acceptance May 22 N/A Mar 23 10 10

Notes 1 TCN System Integration delay is directly driven from delays to progress through the Test Readiness Review (TRR). 2 TCN System Acceptance has been affected by delays in the availability of some GFM and further delays in milestones. The TCN System Acceptance milestone was updated with CCP021. TCN System Acceptance has been further delayed because

of contractor delays in the completion of test procedures required for entry into Acceptance Test and Evaluation. 3 Contract Change Proposal Number 078 (CCP078) to the L121-4 Acquisition Contract with Thales was signed in May 2021. L200-2 will pay Thales to produce the L200-2 BCS integration design solution within Hawkei vehicles. Installation of the BCS nodes within Hawkei vehicles will be the subject of a separate procurement. 4 This scope item will not be performed under the Elbit contract. Instead, alignment of the LAND200-2 and the

Protected Mobility Integration and Capability Assurance (PMICA) Non-Recurring Engineering (NRE) design requirements and installation will be performed by Thales. HCA will be engaged as a subcontractor to Thales. 5 This scope item will not be performed under the Elbit contract. Instead, a Tailored TCN Node will be installed in the M1A1/M88 in response to an immediate obsolescence and risk mitigation request from AHQ to replace the current

radios. This work will be performed as an internal CASG ECP, supported by HCA. The full BCS node functionality will be realised in the M1A1/M88 by Final Materiel Release (FMR). 6 The Commonwealth implemented a change to the hosting for the secure environment from the Defence Secret Network to the Mission Partner Environment, requiring revised work requirements. Delay of Release 2 Acceptance Test & Evaluation

is linked to the delay in delivery of Release 1.1 achievement. Some concurrent work has continued in the development of software. 7 The BMS AT&E delay flows from the delay to the Detailed Design Review. 8 The delay to the Software Release Review and associated acceptance for BMS Release 1 resulted from delays in achieving

the Release 1 Software Design Review/Test Readiness Review (DD/TRR). 9 Deficiencies were identified during Acceptance Test and Evaluation activities. Elbit has provided a Resolution Plan aimed at resolving the technical issues impeding the Commonwealth’s ability to accept the Release 1.1 capability.

The Commonwealth has yet to accept Release 1.1. 10 The Commonwealth is the Prime Systems Integrator (PSI) responsible for the integration of the BMS and the TCN to realise the Battlefield Command System (BCS). This is not supported by a contract because this is an internal to Commonwealth responsibility. The achievement of this milestone is not dependent upon the achievement of

platform acceptance.

3.3 Progress Toward Materiel Release and Operational Capability Milestones Item Original Planned Achieved / Forecast Variance (Months) Notes

Initial Materiel Release (IMR) Sep 20 Aug 22 23 1,2

Initial Operational Capability (IOC) Sep 21 Apr 23 19 1,2

Final Materiel Release (FMR) Jan 22 Jan 23 12 1,2

Final Operational Capability (FOC) Jun 22 Oct 23 16 1,2

Notes 1 IOC and FOC delays are being driven by time taken to establish new contracts for platform integration; availability of GFM; materiel and data from interdependent projects that are in separate, but parallel delays and contractor performance. 2 The forecast achievement of these milestones is expected to change as a result of delays to design and acceptance

milestones. The magnitude of this delay is being considered.

Schedule Status at 30 June 2021

Note Forecast dates in Section 3 are excluded from the scope of the Auditor-General’s Independent Assurance Report.

Approval

Approval

IMR IOC FMR FOC

IMR FMR IOC FOC

Achieved / Forecast Original Planned

140

8 System Requirements Review was delayed due to the rejection by the Commonwealth of the System Specification when first submitted for approval and the need for revisions by the contractor. 9 BMS R1 Detailed Design Review milestone event was delayed due to delayed completion of key design artefacts that were required to accurately describe the R1 capability. 10 A BMS software Release 1.1 was required due to a change in requirements requested by the Commonwealth. This

was confirmed at BMS CCP004. The Commonwealth noted a number of Action Items requiring remediation at the conclusion of the Detailed Design Review milestone. The Commonwealth endorsed progress to commence T&E activities in order to provide Elbit with an opportunity to meet the exit criteria of SWRR 1.1. 11 The Commonwealth is the Prime Systems Integrator (PSI) responsible for the integration of the BMS and the TCN to realise the Battlefield Command System (BCS). This is not supported by a contract because this is an internal to Commonwealth responsibility. The achievement of this milestone is not dependent upon the achievement of platform Design Reviews.

3.2 Contractor Test and Evaluation Progress Test and Evaluation Major System / Platform Variant Original

Planned

Current Contracted Achieved / Forecast

Variance (Months) Notes

System Integration

TCN Acceptance Test &Evaluation May 21 N/A Sep 21 4 1

BMS R1 Acceptance Test &Evaluation Jun 19 N/A Mar 20 9 7

BMS R1.1 Acceptance Test & Evaluation Aug 20 N/A Jun 21 10 9

BMS R2 Acceptance Test &Evaluation Dec 20 N/A Nov 22 23 6

M1A1/M88 Platform Integration Acceptance Test & Evaluation Apr 21 N/A Mar 21 (1) 5

PMV-L Acceptance Test & Evaluation Jan 22 N/A Jan 22 0 3

PMV-M Acceptance Test & Evaluation Feb 20 N/A Dec 22 34 4

BCS Acceptance Test & Evaluation Oct 21 N/A Jul 22 9 10

Acceptance TCN System Acceptance Jun 20 Aug 21 May 22 23 2

BMS Acceptance R1 Jan 20 N/A Mar 20 2 8

BMS Acceptance R1.1 Sep 20 N/A Jun 21 9 9

BMS Acceptance R2 Mar 21 Aug 21 Mar 23 24 6

M1A1 Tank Feb 22 N/A Jul 21 (7) 5

M88 May 22 N/A Jul 21 (10) 5

PMV-L May 22 N/A May 22 0 3

PMV-M Apr 21 N/A Mar23 23 4

BCS Acceptance May 22 N/A Mar 23 10 10

Notes 1 TCN System Integration delay is directly driven from delays to progress through the Test Readiness Review (TRR). 2 TCN System Acceptance has been affected by delays in the availability of some GFM and further delays in milestones. The TCN System Acceptance milestone was updated with CCP021. TCN System Acceptance has been further delayed

because of contractor delays in the completion of test procedures required for entry into Acceptance Test and Evaluation. 3 Contract Change Proposal Number 078 (CCP078) to the LAND121 Phase 4 Acquisition Contract with Thales was signed in May 2021. LAND200-2 will pay Thales to produce the LAND200-2 BCS integration design solution within

Hawkei vehicles. Installation of the BCS nodes within Hawkei vehicles will be the subject of a separate procurement. 4 This scope item will not be performed under the Elbit contract. Instead, alignment of the LAND200-2 and the Protected Mobility Integration and Capability Assurance (PMICA) Non-Recurring Engineering (NRE) design

requirements and installation will be performed by Thales. HCA will be engaged as a subcontractor to Thales. 5 This scope item will not be performed under the Elbit contract. Instead, a Tailored TCN Node will be installed in the M1A1/M88 in response to an immediate obsolescence and risk mitigation request from AHQ to replace the current

radios. This work will be performed as an internal CASG ECP, supported by HCA. The full BCS node functionality will be realised in the M1A1/M88 by FMR. 6 The Commonwealth implemented a change to the hosting for the secure environment from the Defence Secret Network to the Mission Partner Environment, requiring revised work requirements. Delay of Release 2 Acceptance Test & Evaluation

(AT&E) is linked to the delay in delivery of Release 1.1 achievement, as well as issues with external interdependencies. Concurrent work has continued in the development of software to minimise further delay. 7 The BMS AT&E delay flows from the delay to the Detailed Design Review. 8 The delay to the Software Release Review and associated acceptance for BMS Release 1 resulted from delays in achieving

the Release 1 Software Design Review/Test Readiness Review (DD/TRR). 9 Issues were identified during Acceptance Test and Evaluation activities. Elbit has provided a Resolution Plan aimed at resolving the technical issues impeding the Commonwealth’s ability to accept the Release 1.1 capability. The

Commonwealth has yet to accept Release 1.1. As at 30 June 2021, the Commonwealth and Elbit continue to work to achieve the exit criteria of SWRR 1.1. 10 The Commonwealth is the Prime Systems Integrator (PSI) responsible for the integration of the BMS and the TCN to realise the Battlefield Command System (BCS). This is not supported by a contract because this is an internal to

Commonwealth responsibility. The achievement of this milestone is not dependent upon the achievement of platform acceptance.

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Section 4 - Materiel Capability Delivery Performance 4.1 Measures of Materiel Capability Delivery Performance Pie Chart: Percentage Breakdown of Materiel Capability Delivery Performance

Green: The project expects to meet Materiel Capability requirements as expressed in the Materiel Acquisition Agreement. Amber: N/A.

Red: Based on direction from the Army program sponsor, the project does not expect to deliver the WINBMS capability within the M1A1. Further, also based on direction from the Army program sponsor, the project does not expect to deliver the Hawkei GSV node: this is offset by the direction from the Army Program Sponsor to increase the delivered quantities of Hawkei C2V and MNV nodes. This approach is expected to be confirmed following Government consideration.

Note This Pie Chart represents Defence’s expected capability delivery. Capability assessments and forecast dates are excluded from the scope of the Auditor-General’s Independent Assurance Report.

4.2 Constitution of Materiel Release and Operational Capability Milestones Item Explanation Achievement

Initial Materiel Release (IMR) IMR comprises the delivery of: x Foundation Training Classroom requirements x Training Integration Syndicate Rooms x BMS HQ hosted on MPE x BGC3 Training Assemblage x BMS Simulator

x MNV Nodes fitted to 16 x M1A1 Tanks x MNV Nodes fitted to 2 x M88 Hercules x C2V nodes fitted to 11 x PMV-L Hawkei x MNV Nodes fitted to 42 PMV-L Hawkei x GSV Nodes fitted to 36 PMV-L Hawkei GW Nodes fitted to 19

PMV-M Bushmaster x GSV Node fitted to 50 MHC Trucks IMR is forecast to be achieved in Aug 22.

Not yet achieved

Initial Operational Capability (IOC) x IOC incorporates the components of FIC sufficient to constitute an operational capability. x Commander and staff in a Brigade Headquarters are able to use the BMS to support the planning and conduct of operations. x The data network includes sufficient material to support a BG

sized force to plan and conduct operations using the BMS and weapons integrated BMS. x The TCN is established using Tranche 1 and Tranche 2 solutions to support a BG deployment. x The BMS is able to interface with JCATS and VBS systems to

establish an initial simulation system.

Capability Manager sign-off of IOC.

IOC is forecast to be achieved in Apr 23.

Not yet achieved

Final Materiel Release (FMR) FMR comprises the delivery of: x Foundation Training Classroom requirements x Training Integration Syndicate Rooms x BMS HQ hosted on MPE x BGC3 Training Assemblage x BMS Simulator MNV Nodes fitted to 59 M1A1 Tanks x MNV Nodes fitted to 7 M88 Hercules x C2V nodes fitted to 33 PMV-L Hawkei x MNV Nodes fitted to 126 PMV-L Hawkei x GSV Nodes fitted to 108 PMV-L Hawkei GW Nodes fitted to 57

PMV-M Bushmaster x GSV Node fitted to 150 MHC Trucks

FMR is forecast to be achieved in Jan 23.

Not yet achieved

91%

9%

141

3.3 Progress Toward Materiel Release and Operational Capability Milestones Item Original Planned Achieved / Forecast Variance (Months) Notes

Initial Materiel Release (IMR) Sep 20 Aug 22 23 1,2

Initial Operational Capability (IOC) Sep 21 Apr 23 19 1,2

Final Materiel Release (FMR) Jan 22 Jan 23 12 1,2

Final Operational Capability (FOC) Jun 22 Oct 23 16 1,2

Notes 1 IOC and FOC delays are being driven by time taken to establish new contracts for platform integration; availability of GFM; materiel and data from interdependent projects that are in separate, but parallel delays and contractor performance. 2 The forecast achievement of these milestones is expected to change as a result of delays to design and acceptance

milestones. The magnitude of this delay is being considered.

Schedule Status at 30 June 2021

Note Forecast dates in Section 3 are excluded from the scope of the Auditor-General’s Independent Assurance Report.

Section 4 - Materiel Capability Delivery Performance 4.1 Measures of Materiel Capability Delivery Performance Pie Chart: Percentage Breakdown of Materiel Capability Delivery Performance

Green: The project expects to meet Materiel Capability requirements as expressed in the Materiel Acquisition Agreement. Amber: N/A.

Red: Based on direction from the Army program sponsor, the project does not expect to deliver the WINBMS capability within the M1A1. Further, also based on direction from the Army program sponsor, the project does not expect to deliver the Hawkei GSV node: this is offset by the direction from the Army Program Sponsor to increase the delivered quantities of Hawkei C2V and MNV nodes. This approach is expected to be confirmed following Government consideration.

Note This Pie Chart represents Defence’s expected capability delivery. Capability assessments and forecast dates are excluded from the scope of the Auditor-General’s Independent Assurance Report.

Approval

Approval

IMR IOC FMR FOC

IMR FMR IOC FOC

Achieved / Forecast Original Planned

91%

9%

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Final Operational Capability (FOC) x FOC incorporates the components of FIC sufficient to constitute full operational capability. x Each of Army’s three Combat Brigades has one digitised BG and a small number of combat support vehicles. x Defence will be able to deploy a digitised BG and Brigade HQ. x Defence could also configure and group all three BG under the

digitised BHQ, all at the same readiness notice. x Capability Manager sign-off of FOC.

FOC is forecast to be achieved in Oct 23.

Not yet achieved

Section 5 - Major Risks and Issues 5.1 Major Project Risks Identified Risks (risk identified by standard project risk management processes) Description Remedial Action

There is a risk that the BMS software version V9.1 may not be available in time for Army to conduct its planned confidence testing at the LNIC in September 2020 causing a delay to the release of the software and to the achievement of IMR and IOC.

A Contract Change Proposal CCP4 was developed to integrate the revised scope into the Elbit contract. A further Contract Change Proposal was developed with the supplier of the BMS-C2 Enclave to provide support to additional CoA confidence testing activities.

This risk has been retired due to further testing which took place in November 2020.

There is a schedule risk that the design solution for integrating BCS nodes within PMV-L will be delayed because of coordination problems between AHQ, LAND 200-2, LAND 121-4 and Thales resulting in a delay to the achievement of IMR..

Close coordination between all stakeholders will be maintained through the conduct of fortnightly Integrated Project Team (IPT) meetings and adherence to the Contract’s schedule of Mandated System Reviews.

There is a risk that the PSI function will not be fully functional in time to address the systems integration requirements for the BMS and the TCN for full operation within the modified vehicles.

This risk has been retired because CASG has established a dedicated team to serve as the Commonwealth PSI across both the BMS and TCN capability scope and to work with Army to deliver BCS as a single integrated system.

There is a risk that the required updates to the Australian Land Data Model will be released by LNIC after the Elbit and L3Harris contract development gates have passed resulting in additional costs and schedule delay to delivering the FOC capability.

Coordinated briefings have been established with the LNIC, the LAND 200-2 Project Office and the two major contractors.

Future updates to the Australian Land Data Model will involve negotiation between the LAND 200-2 Project Office and the LNIC regarding the required level of compliance and the schedule for implementation so that commercial considerations can be addressed with the contractors.

Defence may need to seek additional contingency and inform Government of the new schedule to incorporate new requirements that have a significant capability realisation benefit to Army.

There is a risk that there will be a funding shortfall for the combined implementation of the LAND 200-2 modification and the Protected Mobility Integration Assurance (PMICA) upgrades on the PMV-M vehicles.

The Project Sponsor in Army has been advised of the likely funding shortfall, with further consideration to be held following the availability of costs from PMICA and Thales.

Emergent Risks (risk not previously identified but has emerged during 2020-21) Description Remedial Action

There is a schedule risk due to the length of time to achieve security accreditation of TCN software that may delay the achievement of TCN Systems Acceptance.

Additional resourcing will be allocated to the security accreditation team within the Commonwealth to minimise the impact.

There is a schedule risk that the BMS Simulation - Tactics, Training and Procedures (SIM TTP) Capability will be delayed resulting in a delay to the capability delivery and a delay to the completion of the BMS contract.

Discussions from the outcomes of a Technical Review and a Finance Review are underway to determine the best way forward.

5.2 Major Project Issues Description Remedial Action

The delivery of the modification to the PMV-M vehicles will be delayed due to the need to combine the integration and installation activity with the vehicle upgrades being progressed under the PMICA program.

An interim fit of the new capability is currently being trialled in the G-Wagon Command Post Mobile vehicles. At a cost of approximately $3m, this will allow Army to gain experience with the TCN waveform and software as part of an interim Gateway capability, pending the delivery of the full capability on the PMV-M vehicles. The interim fit is being managed as a Survey and Quote task to the L3Harris contract.

The Weapons Integrated Battle Management System (WINBMS) software is not able to be fully implemented in the M1A1 tank due to the non-availability Government Furnished interface data.

Army has agreed a proposal to reduce the WINBMS scope for the M1A1 tank and transfer the integration of the full WINBMS to another Army platform. Accordingly, this issue is retired.

The progression of the M1A1 Tank and M88 platform integration and installation under the Elbit contract has been delayed. Discussions from the outcomes of a Technical Review and a Finance Review are underway to determine the best way forward.

The Army Program Sponsor has requested architecture In order to understand the impact of these changes,

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4.2 Constitution of Materiel Release and Operational Capability Milestones Item Explanation Achievement

Initial Materiel Release (IMR) IMR comprises the delivery of: x Foundation Training Classroom requirements x Training Integration Syndicate Rooms x BMS HQ hosted on MPE x BGC3 Training Assemblage x BMS Simulator

x MNV Nodes fitted to 16 x M1A1 Tanks x MNV Nodes fitted to 2 x M88 Hercules x C2V Nodes fitted to 11 x PMV-L Hawkei x MNV Nodes fitted to 42 PMV-L Hawkei x GSV Nodes fitted to 36 PMV-L Hawkei x GW Nodes fitted to 19 PMV-M Bushmaster x GSV Node fitted to 50 MHC Trucks IMR is forecast to be achieved in Aug 22.

Not yet achieved

Initial Operational Capability (IOC) x IOC incorporates the components of FIC sufficient to constitute an operational capability. x Commander and staff in a Brigade Headquarters are able to use the BMS to support the planning and conduct of operations. x The data network includes sufficient material to support a BG

sized force to plan and conduct operations using the BMS and weapons integrated BMS. x The TCN is established using Tranche 1 and Tranche 2 solutions to support a BG deployment. x The BMS is able to interface with JCATS and VBS systems to

establish an initial simulation system.

Capability Manager sign-off of IOC.

IOC is forecast to be achieved in Apr 23.

Not yet achieved

Final Materiel Release (FMR) FMR comprises the delivery of: x Foundation Training Classroom requirements x Training Integration Syndicate Rooms x BMS HQ hosted on MPE x BGC3 Training Assemblage x BMS Simulator MNV Nodes fitted to 59 M1A1 Tanks x MNV Nodes fitted to 7 M88 Hercules x C2V nodes fitted to 33 PMV-L Hawkei x MNV Nodes fitted to 126 PMV-L Hawkei x GSV Nodes fitted to 108 PMV-L Hawkei x GW Nodes fitted to 57 PMV-M Bushmaster x GSV Node fitted to 150 MHC Trucks

FMR is forecast to be achieved in Jan 23.

Not yet achieved

Final Operational Capability (FOC) x FOC incorporates the components of FIC sufficient to constitute full operational capability. x Each of Army’s three Combat Brigades has one digitised BG and a small number of combat support vehicles. x Defence will be able to deploy a digitised BG and Brigade HQ. x Defence could also configure and group all three BG under the

digitised BHQ, all at the same readiness notice. x Capability Manager sign-off of FOC.

FOC is forecast to be achieved in Oct 23.

Not yet achieved

Section 5 - Major Risks and Issues 5.1 Major Project Risks Identified Risks (risk identified by standard project risk management processes) Description Remedial Action

There is a risk that the BMS software version V9.1 may not be available in time for Army to conduct its planned confidence testing at the LNIC in September 2020 causing a delay to the release of the software and to the achievement of IMR and IOC.

A Contract Change Proposal CCP4 was developed to integrate the revised scope into the Elbit contract. A further Contract Change Proposal was developed with the supplier of the BMS-C2 Enclave to provide support to additional CoA confidence testing activities.

This risk has been retired due to further testing which took place in November 2020.

There is a schedule risk that the design solution for integrating BCS nodes within PMV-L will be delayed because of coordination problems between AHQ, LAND200-2, LAND121 Phase 4 and Thales resulting in a delay to the achievement of IMR.

Close coordination between all stakeholders will be maintained through the conduct of fortnightly Integrated Project Team (IPT) meetings and adherence to the Contract’s schedule of Mandated System Reviews.

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OFFICIAL: Sensitive

OFFICIAL: Sensitive

changes to the implementation of the node designs, requiring contract changes for some platform integration activities. progression of a Survey and Quote task to the L3 Harris contact is ongoing. AHQ endorsement of the resultant

updated System Specification is anticipated in Q4 2021.

Pending the finalisation of an agreed CCP to the BMS contract to remove from some platform elements, there is currently insufficient funds to progress the procurement of PMV-M Gateway Vehicle Installation Kits (VIKS) resulting in a delay to the modification of the vehicle.

Discussions from the outcomes of a Technical Review and a Finance Review are underway to determine the best way forward.

There is a schedule issue that the delivery of BMS Release 2 has been delayed resulting in a delay to the capability delivery and a delay to the completion of the BMS contract.

Discussions from the outcomes of a Technical Review and a Finance Review are underway to determine the best way forward.

There is a BMS software schedule issue that the Release 1.1 delivered BMS Command and Control (BMS-C2) software has been assessed as being unfit for operational use by Army, resulting in further re-work and delays to acceptance.

Discussions from the outcomes of a Technical Review and a Finance Review are underway to determine the best way forward.

There is a delay to TCN System Acceptance (SA) stemming from an inability to exit the Test Readiness Review (TRR). Discussions from the outcomes of a Technical Review and a Finance Review are underway to determine the best way forward.

Note Major risks and issues in Section 5 are excluded from the scope of the Auditor-General’s Independent Assurance Report.

Section 6 - Lessons Learned 6.1 Key Lessons Learned Description Categories of Systemic Lessons

Complex projects that involve multiple delivery contracts for different elements of the capability need to establish clear strategies for the systems integration requirements across the project. Where the Commonwealth selects an in-house option for the implementation of the systems integration function, this needs to be resourced appropriately at an early stage of the project.

Resourcing

ICT Security Accreditation activities are complex, expensive, time consuming and require specialist staff with ICT security accreditation qualifications and experience. Without a clear understanding of the scope, process and boundaries, there is a high probability that there will be confusion between the Commonwealth and the Contractor regarding who is responsible for the conduct of ICT Security Accreditation Activities. In order to avoid confusion, ambiguity, rework and delay, before releasing the Request for Tender, the Commonwealth must have a clear understanding of these matters, and that understanding must be reflected in the Statement of Work.

Resourcing

The integration of complex ICT systems onto platforms, especially complex, developmental platforms, should not be the responsibility of the ICT acquisition project. This is because coordination and alignment of outcomes between both complex projects becomes increasingly difficult and unmanageable. Instead, the scope of the ICT acquisition project should be limited to delivery of the ICT mission system (hardware and software) to the platform acquisition project. The platform acquisition project should then assume responsibility for integrating the ICT mission system onto the platform.

Schedule management

Section 7 - Project Line Management 7.1 Project Line Management as at 30 June 2021 Position Name

Division Head Mr Gavin Rawlins

Branch Head Ms Rosemary Gauci

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There is a risk that the PSI function will not be fully functional in time to address the systems integration requirements for the BMS and the TCN for full operation within the modified vehicles.

This risk has been retired because CASG has established a dedicated team to serve as the Commonwealth PSI across both the BMS and TCN capability scope and to work with Army to deliver BCS as a single integrated system.

There is a risk that the required updates to the Australian Land Data Model will be released by LNIC after the Elbit and L3Harris contract development gates have passed resulting in additional costs and schedule delay to delivering the FOC capability.

Coordinated briefings have been established with the LNIC, the LAND200-2 Project Office and the two major contractors.

Future updates to the Australian Land Data Model will involve negotiation between the LAND200-2 Project Office and the LNIC regarding the required level of compliance and the schedule for implementation so that commercial considerations can be addressed with the contractors.

Defence may need to seek additional contingency and inform Government of the new schedule to incorporate new requirements that have a significant capability realisation benefit to Army.

There is a risk that there will be a funding shortfall for the combined implementation of the LAND200-2 modification and the Protected Mobility Integration Assurance (PMICA) upgrades on the PMV-M vehicles.

The Project Sponsor in Army has been advised of the likely funding shortfall, with further consideration to be held following the availability of costs from PMICA and Thales.

Emergent Risks (risk not previously identified but has emerged during 2020-21) Description Remedial Action

There is a schedule risk due to the length of time to achieve security accreditation of TCN software that may delay the achievement of TCN Systems Acceptance.

Additional resourcing will be allocated to the security accreditation team within the Commonwealth to minimise the impact.

There is a schedule risk that the BMS Simulation - Tactics, Training and Procedures (SIM TTP) Capability will be delayed resulting in a delay to the capability delivery and a delay to the completion of the BMS contract.

Discussions from the outcomes of a Technical Review and a Finance Review are currently underway and will determine the best way forward.

5.1 Major Project Issues Description Remedial Action

The delivery of the modification to the PMV-M vehicles will be delayed due to the need to combine the integration and installation activity with the vehicle upgrades being progressed under the PMICA program.

An interim fit of the new capability is currently being trialled in the G-Wagon Command Post Mobile vehicles. At a cost of approximately $3m, this will allow Army to gain experience with the TCN waveform and software as part of an interim Gateway capability, pending the delivery of the full capability on the PMV-M vehicles. The interim fit is being managed as a Survey and Quote task to the L3Harris contract.

The Weapons Integrated Battle Management System (WINBMS) software is not able to be fully implemented in the M1A1 tank due to the non-availability of Government Furnished interface data.

Army has agreed a proposal to reduce the WINBMS scope for the M1A1 tank and transfer the integration of the full WINBMS to another Army platform. Accordingly, this issue is retired. Discussions from the outcomes of a Technical Review and a Finance Review are currently underway and will determine the best way forward on this matter.

The progression of the M1A1 Tank and M88 platform integration and installation under the Elbit contract has been delayed.

Discussions from the outcomes of a Technical Review and a Finance Review are currently underway and will determine the best way forward.

The Army Program Sponsor has requested architecture changes to the implementation of the node designs, requiring contract changes for some platform integration activities.

In order to understand the impact of these changes, progression of a Survey and Quote task to the L3 Harris contact is ongoing. AHQ endorsement of the resultant updated System Specification is anticipated in Q4 2021.

Pending the finalisation of an agreed CCP to the BMS contract to remove from some platform elements, there is currently insufficient uncommitted funds to progress the procurement of PMV-M Gateway Vehicle Installation Kits (VIKS) resulting in a delay to the modification of the vehicle.

Discussions from the outcomes of a Technical Review and a Finance Review are currently underway and will determine the best way forward.

There is a schedule issue that the delivery of BMS Release 2 has been delayed resulting in a delay to the capability delivery and a delay to the completion of the BMS contract.

Discussions from the outcomes of a Technical Review and a Finance Review are currently underway and will determine the best way forward.

There is a BMS software schedule issue that the Release 1.1 delivered BMS Command and Control (BMS-C2) software has been unable to satisfy the release criteria associated with the Software Release Review 1.1, , resulting in further re-work and delays to acceptance.

Discussions from the outcomes of a Technical Review and a Finance Review are currently underway and will determine the best way forward.

There is a delay to TCN System Acceptance (SA) stemming from an inability to exit the Test Readiness Review (TRR). The Commonwealth and L3Harris continue to work collaboratively to determine the best way forward.

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Note Major risks and issues in Section 5 are excluded from the scope of the Auditor-General’s Independent Assurance Report.

Section 6 - Lessons Learned 6.1 Key Lessons Learned Description Categories of Systemic Lessons

Complex projects that involve multiple delivery contracts for different elements of the capability need to establish clear strategies for the systems integration requirements across the project. Where the Commonwealth selects an in-house option for the implementation of the systems integration function, this needs to be resourced appropriately at an early stage of the project.

Resourcing

ICT Security Accreditation activities are complex, expensive, time consuming and require specialist staff with ICT security accreditation qualifications and experience. Without a clear understanding of the scope, process and boundaries, there is a high probability that there will be confusion between the Commonwealth and the Contractor regarding who is responsible for the conduct of ICT Security Accreditation Activities. In order to avoid confusion, ambiguity, rework and delay, before releasing the Request for Tender, the Commonwealth must have a clear understanding of these matters, and that understanding must be reflected in the Statement of Work.

Resourcing

The integration of complex ICT systems onto platforms, especially complex, developmental platforms, should not be the responsibility of the ICT acquisition project. This is because coordination and alignment of outcomes between both complex projects becomes increasingly difficult and unmanageable. Instead, the scope of the ICT acquisition project should be limited to delivery of the ICT mission system (hardware and software) to the platform acquisition project. The platform acquisition project should then assume responsibility for integrating the ICT mission system onto the platform.

Schedule management

Section 7 - Project Line Management 7.1 Project Line Management as at 30 June 2021 Position Name

Division Head Mr Gavin Rawlins

Branch Head Ms Rosemary Gauci

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