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13 June 2008

A Weekly Report From The Keyboard Of Murray Mccully MP For East Coast Bays

Project Protector: The Great Naval Disaster

On the 5th of August 2004 Labour Ministers gathered at a special ceremony to celebrate the signing of a $500 million contract for Project Protector. The contract was to deliver one multi-role vessel (MRV) in December 2006 and two off-shore patrol vessels, one in May 2006 and the other in November 2006. Four in-shore patrol vessels were to be delivered, one in February, then June and September 2007 and January 2008. To date none of those vessels has been delivered in any shape to undertake the tasks for which they were purchased.

As regular readers of the distilled wisdom from the worldwide headquarters of will know, the humble Member for East Coast Bays has been a strong and consistent critic of Project Protector. And now, as the results of the chapter of blunders become apparent, some serious questions need to be asked about the capacity of the Ministry of Defence to manage substantial defence projects.

The MRV Canterbury

This week, 18 months after it was due for delivery, the MRV HMNZS Canterbury cancelled a planned voyage into the Pacific as the Navy and the ship’s contractor attempt to sort out serious problems. The vessel has already been the subject of a Board of Inquiry after the loss of a seaman in an incident with one of the inflatables. But other problems also confront the vessel, especially assertions that it can only operate effectively in relatively steady sea conditions.

The MRV component of the project has been doomed to failure since the start. Having sought tenders for a purpose-built multi-role navy vessel, the Ministry awarded a tender for, in effect, a converted ferry. Quite why officials and Ministers made the decision to go trail-blazing, when proven vessels were available from established military contractors is still the subject of mystification. Even more curious was a decision to disqualify the world’s largest ship builder, Hyundai, from the short list – apparently because Defence officials didn’t know how to read the company’s balance sheet. A scathing Ombudsman’s report made it clear that the process was seriously flawed and Defence officials were clearly out of their depth.

The Patrol Boats

All of the in-shore and off-shore patrol vessels should have been delivered by now. But that has not happened. In recent weeks the Navy has had to admit that both the in-shore patrol craft Rotoiti and the off-shore patrol vessel Otago had failed their Lloyds certification. Basic fire and safety requirements, insulation and ventilation issues were the reported cause. Quite how our Defence Ministry managed to superintend the expenditure of hundreds of millions of dollars and still flunk the Lloyds safety requirements just beggars the imagination.

The Auditor-General

The Auditor-General is now on the case. As he was with the LOV contract. And the LAV contract. And the Foreign Affairs Select Committee, soon to conduct its review of the Defence estimates, will no doubt have some searching questions to ask. By now there is little doubt that the problems at Defence are both serious and systemic. And there is evidence of more to come.

The blow out in the budget for new helicopters (from an original estimate of $400m - $560m to now $910m) is not encouraging. And despite the announcement of a $155 million sale of the Skyhawks on the eve of the 2005 election, there has been a succession of delays, but no actual progress ever since.

The Defence Ministry has a new chief executive – former MFAT deputy secretary John McKinnon. Whether he is able to drive through the substantial changes that are clearly required is a key question. A good starting point would be some good straight answers as to precisely what has gone wrong with Project Protector, and who in the Ministry of Defence is going to take responsibility.


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