One of the most drawn out evaluations in the history of Australian defence acquisitions reached a merciful climax on July 23 with contract signatures in Brisbane.
26th Aug 2013
LAND 121 Phase 3B
Truck contract – is this finally the end?
Byline: Kym Bergmann / Canberra
One of the most drawn out evaluations in the history of Australian defence acquisitions reached a merciful climax on July 23 with contract signatures in Brisbane. In a low key announcement, Defence Materiel Minister Mike Kelly stated that the contracts were related to Phase 3B of Project LAND 121 – ‘Project Overlander’ and were signed by Rheinmetall MAN Military Vehicles Australia and Haulmark Trailers (Australia) for the supply of the Australian Defence Force’s next generation of trucks and trailers.
APDR has frequently written about the inordinate amount of time taken to reach this point, and the enormous cost to Australian taxpayers and to industry of an out of control evaluation. However, now it is a time for celebration because – as Dr Kelly pointed out – the $1.6 billion contract will see the purchase of more than 2,500 vehicles and the creation of up to 150 Australian jobs. About 30 of these positions will be with prime contractor Rheinmetall MAN Military Vehicles Australia (RMMVA) with the company seeking additional engineers, project managers and project support staff. Haulmark Trailers and various subcontractors who have not yet been signed up will employ the remainder. RMMVA say they are committed to Australian involvement and that further opportunities will be detailed in their industry capability plan, which will be released at some point by the Defence Materiel Organisation.
The decision has been welcomed by Peter Hardisty, Managing Director of RMMVA. Asked to comment on the implications of the contract for future business, he explained to APDR:
“Australia is one of the most important powers in the Asia-Pacific region. Rheinmetall MAN Military Vehicles and its parent Rheinmetall has recognised Australia’s strategic importance by establishing several offices in Australia with responsibilities for New Zealand and Southeast Asia in recent years and plan further investments in the near future. There are a number of important Defence projects which Rheinmetall MAN Military Vehicles and its parent Rheinmetall are actively engaged with. LAND 400, JP 2110, LAND 155 and JP 157 as well as the simulation project JP 2035 are some of the opportunities that are of great interest to RMMVA and Rheinmetall.
“Rheinmetall is one of the world’s leading suppliers of defence technology including wheeled and tracked military vehicles, weapons, ammunition, simulation solutions, command and control technology, force protection systems, sensors and much more. Rheinmetall is globally recognised for these core competencies and has invested in capacity and system-oriented innovation for over 120 years.”
As to the vehicles themselves, Minister Kelly explained that the 2013 Defence White Paper (only the most recent description of ‘Overlander’) outlined the requirement to provide around 2700 protected and unprotected medium and heavy vehicles, together with trailers and specialist modules, under Project LAND 121 Phase 3B. These will include: medium and heavy recovery vehicles; medium and heavy tractors; heavy integrated load-handling vehicles (self-loading hook lift trucks); and medium-weight tray variants (with cranes and tippers).
In his release he said:
“The vehicles will have enhanced performance and protection representing a significant increase in safety, as well as providing consistency across the fleet, ensuring improved efficiency in operator training and simplifying logistic support to land forces.”
A little surprisingly – since this evaluation had its genesis more than a decade ago – the fleet configuration does not yet appear to have been finalized and the first ADF trucks will only be delivered in 2016. The final vehicles will reach our shores from their Vienna production line – which annually churns out about 200,000 commercial variants of these trucks - in 2020.
Compare this to the situation in New Zealand, where their Department of Defence announced on May 15 the acquisition of 200 Rheinmetall-MAN vehicles for NZ $135 million. Similar to Australia, they are buying three sizes of new trucks: 6 tonne, two-axle vehicles; 9 tonne, three-axle models; and a 15 tonne, four-axle variant. Additionally, according to a media release New Zealand will receive dump trucks; trucks fitted with specialised pallet and container handling equipment; and tractor/semi-trailer combinations to carry heavy vehicles and equipment that will also help enhance the NZ Defence Force’s capabilities.
Despite ordering vehicles of identical complexity to Australia’s, the NZDF will take delivery of all of their trucks by the end of 2014 – at least two years earlier than the ADF. Every New Zealand truck will be in service by the end of 2015, while the last of Australia’s will still be arriving in 2020.
The large difference in schedule is believed to be because of the extraordinary amount of testing to which the DMO will subject each Australian variant – there are dozens of them - prior to accepting delivery. The logic of mandating such an onerous process is opaque - just like so much of the LAND 121 Phase 3 evaluation methodology. The total cost to the Australian taxpayer has been vast – and will continue to grow. Due to this approach a further slip in a serially delayed acquisition cannot possibly be ruled out. The expenditure by Defence to date has been extraordinary - some estimates are as high as $200 million for negligible gain – with a lot of that bill passed on to industry.
So is this the end of it? Not really. Asked to describe what happens between now and the delivery of the first truck in 2016 a Departmental a spokeswoman said:
“Broadly, Defence will be conducting design and verification activities, including the integration of digital communications equipment and of the vehicle, trailer and module combinations. Training development and “Introduction into Service” training courses will also be conducted prior to vehicle rollout.”
Meanwhile in New Zealand, they will accept their trucks without the need for further verification of their performance. In essence, the NZDF decided to base their order on the Rheinmetall-MAN trucks that the British Army had decided to purchase way back in 2006 – using the logic that if they were good enough for the UK, then they were good enough for them. After all, they are even driven on the same side of the road. Why Australia did not follow a similar, sensible, low cost, low risk approach should be the subject of further scrutiny to try and stop this sort of waste occurring again.
Again, the Department puts a different perspective on the situation. Asked to comment on whether there was a connection between the Australian and New Zealand acquisitions or whether a combined order was a possibility, the spokeswoman responded:
“There is no connection between the New Zealand order and the recent contracts placed with Rheinmetall MAN Military Vehicles Australia Pty Ltd & Haulmark Trailers (Australia) Pty Ltd under LAND 121 Phase 3B.
“There is also no potential to combine orders or achieve further cost savings. Australia is acquiring two of the three variants that New Zealand is acquiring, however there are key differences in the respective technical requirements – including levels of vehicle environmental compliance, blast protection, interoperability with Australian Defence Force equipment and integrated digital communications.”
So there you have it – Australian Army trucks have to be different from British and New Zealand Army trucks.
(Sidebar piece. While the order is excellent news for the Rheinmetall-MAN joint venture – a world leader in the production of military vehicles – there might have been some unintended negative consequences for the Rheinmetall Defence half of the company. Just a few weeks after the award of the truck contract to RMMVA, Rheinmetall Defence received the puzzling news that it did not make the shortlist for the Domestic Munitions Manufacturing Agreement contract. This is despite being credible, enormously experienced and an undoubted world leader in the design and production of various types of military ammunition. The exclusion, which was announced six days after the LAND 121 contract signing, has left many scratching their heads – including the author. Some observers feel that having secured the truck order for such a substantial amount of money there might have been a feeling in Defence that the company would be content with their lot. This is not to say that this was the decisive factor – it almost certainly was not – but it might well have formed part of the decision-making matrix at higher levels).