While the timing of yesterday's announcement on the $5.2 billion Land 400 Phase 2 program tender to equip Army with 211 Rheinmetall Boxer Combat Reconnaissance Vehicles was somewhat expected, the press releases or lack thereof that followed certainly raised a few eyebrows.
In recent weeks we saw an increasing number of ads paid for by the State Governments of Queensland and Victoria arguing for what they each saw as their rightful share of the spoils. The BAE Systems/Patria bid was the darling of the Victorians, with BAE Systems promising to build a defence hub at Fishermans Bend in Melbourne where it would build the AMV35s if selected. And Rheinmetall was the champion of Queensland Minister for State Development, Manufacturing, Infrastructure and Planning, Cameron Dick, with its commitment to build a Military Vehicle Centre of Excellence (MILVEHCOE) in Brisbane if it secured the contract.
Following the announcement, major dummy spits were issued in the form of no less than 10 similar and strongly worded press releases from the office of the Victorian Labor Premier Daniel Andrews, with the Prime Minister Malcolm Turnbull and Victorian National and Liberal Party MPs and Senators singled out for special attention for their perceived “betrayal of Victoria”.
“Not content with short changing Victorians when it comes to infrastructure funding, ... Malcolm Turnbull has dudded Victorians again, denying our state close to $1 billion in economic activity and over 2,000 jobs.”
“[Insert traitorous MP/Senator name here] and Malcolm Turnbull just can’t help themselves – whenever they get the chance to dud Victorians they dud Victorians.”
Following the PM’s initial words at Enoggera Barracks in Brisbane, both Ministers Marise Payne and Christopher Pyne had been quick to reassure the audience that the decision had been about capability for Army, following “three years of rigorous testing”. It was also a good result for Australia, they said, with workshare distributed to every state including Victoria.
The ABC, perhaps in a sign of its growing rift with the Government, stole the PM’s thunder and broke the story at 1.10am, revealing a collection of snazzy infographics. One of them showed quite clearly that no less than 12 Victorian SMEs were going to pick up work under the deal, with the resulting jobs estimated to number 170 and the share of Australian Industry Content (AIC) spend amounting to $635 million.
Ironically, BAE Systems will continue to build its hub at Fishermans Bend, as it sees potential for its globally competitive aerospace business that develops leading edge autonomous systems, electronic warfare, hypersonics and weapons technology, including Nulka. BAE also plans to base much of its naval sustainment business at the hub, which will host more than 200 engineers and specialist employees for support of RAN ships across Australia. And as foreshadowed in April's From the Source interview with new BAE Systems CEO Gabby Costigan, the Williamstown shipyard is far from dead.
Despite its success, Rheinmetall remained stumm all day, a press release finally issued at 7.30pm last night – the advice being the announcement was stock market sensitive in Germany so we all had to wait for Düsseldorf.
There's been plenty of analysis on the strengths and weaknesses of the two contenders, the heavier Boxer likely won because of the increased protection it offered for the crew and passengers. It is, however, more expensive, and it is interesting to note the initial scope for 225 vehicles has been reduced to 211.
ADM Comment: The primes, it seems, get it when it comes to bidding for major programs, as opposed to some State Governments. Hedging your bets is the best way forward, there will always be wins and losses but it's really about playing to strengths and diversifying the business. When it comes to big ticket Defence programs, State Governments also need to play to their strengths, while thinking collaboratively about how they can each contribute to the national enterprise for the benefit of the warfighter and the taxpayer.
It must also be noted at this point that Chief of Army LTGEN Angus Campbell, at one of his recent Senate Estimates hearing appearances, essentially noted that Army would not be accepting a second best option from Government when it came to Land 400, its signature program for the next generation of capability.