Re: Auditor-General’s Report on Ministry of Defence Acquisitions

DaimlerChrysler NZ Ltd applaud the findings and recommendations of the Auditor-General’s Report into the Acquisition Process of Light Armoured Vehicles and Light Operational Vehicles for the NZ Army. Recognising the fact that the whole process has been equally frustrating for the Government, their remarks are based on having had experience with the previous exasperating and expensive Tender process, which never really appeared to be based on a ‘level playing field’, and which had been scrapped as a result. Due to previously biased Tenders, as highlighted by the Report, the Ministry of Defence, and therefore the NZ Tax-payer, were never really given the chance to purchase equipment that provided ‘value for money’, while also complimenting the general requirements of the NZ Forces.

The findings will also hopefully endorse the fact that New Zealand does not require unique vehicles to fulfill its needs, and can utilize ‘off the shelf’ vehicles such as those used by other NATO defence units around the world. Project Co-ordinator for DCNZ, Mike Norton, comments: “It certainly has always puzzled us as to why the New Zealand Army has specified vehicles that do not conform to normal international standards, and that our terrain and deployment requirements are so unique they do not suit the majority of Light Operational Vehicles available.”

DCNZ have been aware that the Ministry of Defence have attempted to provide a ‘best value’ approach to previous Tenders, but have been constrained by the processes that existed, especially if the technical criteria required had been developed specifically in line with one vehicle in mind. Hopefully, if future Force Development Proposals are established with due diligence and plausibility, then the technical specifications that ensue will lend themselves to a wide range of equipment that can represent sensible investment.

“Nobody wants to see another fiasco like the Light Armoured Vehicle project, for which Cabinet approved a budget of $212 million, only to see a proposal for the LAV III to emerge, with an estimated cost of $677 million. This $465 million difference certainly is a big portion of the taxpayer’s spend, and it will be surprising if it is allowed to proceed, especially as the Report suggests there was an alternative.” However, due to the nature of the process, it appears the alternatives were not given a chance, and industry was deprived the opportunity to demonstrate that it could provide a range of cost effective solutions to the requirement.

“We are now all awaiting the results of the NATO Mobility Study, which relates to the LOV Tender which is still progressing. Assuming the criteria used are not once again unique to the NZ Army, a wide range of vehicles should comply, and be considered in the Tender. ‘

It should be noted that DCNZ (a 49% NZ owned company) has a direct interest due to the availability of the Mercedes-Benz G wagon which is used by over 50 Armies around the world, and was quoted only this week, by a US Marine Corps’ spokesman, as being a vehicle which “can outdo pretty much any four-wheel-drive it comes up to”, and that “off-road, it’s pretty much unstoppable” (the Marines purchased 95 G wagons last year, which they use as a Fast Attack Vehicle”) – Marine Corps Times, August 20, 2001.

It should also be noted that in his Report, the Auditor-General refers to Canada, and the sizeable team that is available to process such Tenders. The Government there is currently considering the purchase of 802 Light Operational Vehicles, which are anticipated as being the Mercedes-Benz G wagon, as reported earlier this year (Ottawa Citizen, 25 May 2001).

Similarly, in the South East Asian area, the Singapore Army successfully operates over 200 G wagons, in terrain typical of where the NZ Army may be called to assist (eg. East Timor).

All that we ask is that we, along with other potential contenders, take part in a process that is fair, honest and transparent. We are confident that the Government, Ministry and Services will respond positively to the Auditor-General’s report and ensure that both the Army and the taxpayer get the best solution.

Mike Norton
C.F.O. and Project Co-ordinator

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