Australian defence cancels major contract

The Australia Defence has disposed of six military craft and the contract for them cancelled, with reforms designed to improve the military procurement efficiency to be unveiled in months.

Defence Minister Stephen Smith said that the department does need to be more rigorous in its procurement process. The cancelled project is set to cost some $40 million to the Commonwealth. 

Built originally for the army, the six 25.4m craft, ordered more than a decade ago and completed in 2005 but never accepted, were too big for their intended use, Mr Smith said. In 2007, Defence suspended trials when the crafts developed cracks during testing.

"The great tragedy of this project is that when the watercraft were produced, they were not in a position to be utilised by Australian defence forces," Mr Smith said.

Mr Smith and the Minister for Defence Materiel, Jason Clare, expressed renewed concern at Defence's inability to manage procurement contracts.

"A key priority for Defence -- a key priority for Jason (Clare) and I this year -- will be to put in place better accountability mechanisms, better fiscal discipline internally within Defence," Mr Smith said.

"In the past there has been too much of an attitude or a culture that, irrespective of the cost, irrespective of the outcome, a Defence project was somehow immune from rigour" he said.

Mr Clare said he would be meeting this month with chief executives involved with 11 projects of concern to ensure progress was made for the contracts to be removed from the blacklist.

Other major troubled programs include the Collins-class submarine sustainment project, continuing problems with RAAF's Wedgetail Airborne Early Warning and Control aircraft and its Multi-Role Tanker Transport (MRTT).

Of the 18 projects listed since 2008, seven have been removed due to remediation and two others cancelled.

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