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Thursday, 25 September 2014
Page: 7154

Defence Procurement

Senator MADIGAN (Victoria) (14:19): My question is to the Minister representing the Minister for Defence, Senator Brandis. On August 28 this year, the Minister for Defence issued a press release regarding a $170 million upgrade to the soldiers' kit, known as LAND 125 phase 3B. The media release said that under the terms of the five-year contract the first of the contracts had been awarded to Bendigo based Australian Defence Apparel for the supply of load carriage equipment, including ballistic plate carriers, packs, basic pouches and equipment bags. My question is: how much of the $170 million contract has been or will be spent on Australian manufactured product?

Senator BRANDIS (QueenslandDeputy Leader of the Government in the Senate, Vice-President of the Executive Council, Minister for Arts and Attorney-General) (14:19): Thank you Senator Madigan, for the courtesy of advance notice to the minister's office of this question. Project LAND 125 phase 3B will deliver modernised individual soldier survivability equipment including enhancements to body armour and helmets, individual load carriage high protection and hearing protection. You are correct, Senator, in saying that the first contract, worth approximately $60 million, has been awarded to Australian Defence Apparel Pty Ltd, a company based in Victoria. The complete soldier combat ensemble capability will be delivered to the Australian Defence Force as three tranches of about 7,500 sets of equipment each over the period 2015 to 2017. The initial material release of approximately 1,000 sets of soldier combat ensembles will be delivered in May 2015.

Other than the contract with ADA, additional equipment is currently being sourced through a number of Australian distributors. Those include Frontline Safety Australia, a Queensland based business, for ballistic eye protection, J Blackwood and Son, who are providing combat the hearing protection, and Spearpoint Solutions, a Queanbeyan company, for combat helmets. The remaining element, body armour, is currently the subject of contract negotiations.

Senator MADIGAN (Victoria) (14:21): Mr President, I ask a supplementary question. On 18 September, the Bendigo Advertiser reported claims that the defence department had deliberately misled the Australian public with no real benefit to local jobs and no product made in Australia. Minister, has the defence department since confirmed that about $60 million worth of product under this contract would be manufactured in Vietnam?

Senator BRANDIS (QueenslandDeputy Leader of the Government in the Senate, Vice-President of the Executive Council, Minister for Arts and Attorney-General) (14:21): Senator Madigan, the claims reported by the Bendigo Advertiser were wrong. The contract winner, ADA Pty Limited, competed against four other tenderers for the load carriage requirement. They all offered overseas manufactured solutions. ADA offered an alternative tender for Australian manufacture in Bendigo. This offer was 67 per cent more expensive than the equivalent offshore offer and did not represent value for money. Defence seeks to provide the best capability to our service men and women, while taking into account value-for-money considerations, to provide a proper use of taxpayer funds.

The Australian option provided by ADA did not represent value-for-money for that particular contract. The contract has awarded $60 million of revenue to a Bendigo based company—a Victorian company. That is good news for local manufacturing.

Senator MADIGAN (Victoria) (14:22): I have a further supplementary question. In the same report, ADA chief executive Matt Graham said that specialised equipment, including vests and backpacks, would be designed and distributed by his company but manufactured by a Vietnamese company, which ADA would hire as a subcontractor. Why did the minister's press release not communicate the full picture on this important contract and state that this contract would do little, if anything, for Australian manufacturing, Australian workers or Australian jobs? (Time expired)

Senator BRANDIS (QueenslandDeputy Leader of the Government in the Senate, Vice-President of the Executive Council, Minister for Arts and Attorney-General) (14:23): Defence always seeks to acquire quality products that meet the required performance standards at a price that represents overall value for money and is in accordance with the Commonwealth procurement rules. The offered Australian manufactured tender did not represent value for money. The press release issued by the minister states that support services, including ongoing design and development will be provided by ADA in Australia, which is consistent with the comments made by the chief executive of ADA. ADA is a trusted supplier of defence equipment, providing the soldier combat uniform currently worn, which is, as you would know, manufactured here in Australia.