25 Juli 2011

Army Tender Ambushed

25 Juli 2011

Bushmaster Ute (photo : Avalon AirshowNews)

THE Gillard government has been accused of interfering in a Defence tender process to buy the next generation of army trucks, pushing a generous portion of the multibillion-dollar contract to the Victorian-built Bushmaster.

Defence and industry insiders have told The Saturday Age the government has tried to circumvent recommendations from the Defence Materiel Organisation, which favoured a cheaper armoured truck made by German company Rheinmetall MAN. It beat both Mercedes-Benz and the modified Bushmaster Ute, which is made in Bendigo by French company Thales, in the Defence tender.

The Bushmaster Ute not only came last in trials, but costs up to three times as much as its rivals. It is more expensive to service and rolled twice in initial testing due to a high centre of gravity.

Despite this, a source in the DMO told The Saturday Age a message came back from the government after the German company topped the tender process: ''Any option that doesn't include Thales is no option.''

Another insider said: ''The government wanted to keep Bendigo open and it would close if we didn't give them some work.'' They said the government was trying to influence the final departmental decision, worth as much as $1.7 billion.

While the DMO recommended Rheinmetall MAN, the government has yet to make a decision on the tender. The department denied being asked to include Thales as a successful tenderer. It said the final decision would rest on ''the needs of our soldiers and best value for money''.

The delayed project for 2700 medium and heavyweight trucks, some of which could be used in Afghanistan, includes 1500 vehicles with substantial armoured protection.

Thales has bid to supply 900 of its new Bushmaster Utes - worth more than $500 million - to replace the army's ageing fleet of Unimog trucks.

ADF's Unimog trucks (photo : Australian Army)

Privately, a number of parties have raised concerns about political interference in the tender.
In March, Mercedes-Benz Australian president Hans Tempel wrote to Defence Minister Stephen Smith to express concerns about ''the overall process of selecting a final tenderer … and whether undisclosed factors will play a role''.

The letter, which has been obtained by The Saturday Age, was written after Labor's Bendigo MP Steve Gibbons stated publicly that the government could reverse the DMO's final decision. The MP told the ABC that while the DMO might ''overlook Bushmaster, we may be able to overturn that … because ultimately it will be a government decision''.

Mr Gibbons has been a vocal campaigner for Bushmaster, which has cut 100 jobs in his constituency in the past year. In his reply to Mr Tempel, Mr Smith warned Mercedes-Benz ''a letter has recently been sent to all tenderers … reminding them of their obligations regarding public announcements and communications''.

The department has reminded all three tenderers of their obligation not to speak to journalists.
The Saturday Age believes there are further concerns the government intervened in a separate contract awarded to Thales in May, when 101 Bushmaster troop carriers were purchased for $130 million, despite the army needing less than half as many to replace damaged vehicles. That contract will keep the Bendigo production line open for at least another year.

Sources say the army originally requested 31 vehicles, but Defence increased its request to 61. The final purchase of 101 vehicles is seen by insiders as excessive, and they claim there are dozens of Bushmasters sitting unused in storage.

The department says ''there are no unused [deployable] Bushmasters in storage''.

However, aerial pictures taken last month show 89 Bushmasters sitting on Defence land in Brisbane (and there were 61 pictured there last year).

A DMO source said: ''This is protectionism. We are trading off the safety of soldiers and we are trading off capability for an Australian-made option.''

This week, Mr Smith said he would make no decision on the contract until after he received a recommendation from the department. Speaking at Thales's Bendigo plant he said: ''We will await Defence advice and then we'll make a judgment.''

The department makes a recommendation based on the technical merits of each manufacturer, but before a formal submission is made it must consider what is known as ''Whole of Commonwealth requirements'' for army vehicles.

Defence and contractor sources say this is ''industry policy being run out of Defence''.

''What annoys me is the man on the ground will miss out [because] the government is directly intervening,'' said a source involved with testing the trucks.

A test driver said: ''My vested interest is as a soldier on the ground who, in the end, will have to use the vehicle.''

''That vehicle [Bushmaster Ute] doesn't meet the tender specifications. You can't load it above the cab height … and there are the centre of gravity issues. Really, it's not a vehicle we can use, and the army doesn't want it.''

The new Bushmaster utility had initial testing problems, suffering from potentially fatal rollovers and unacceptable vibration in the driver's cabin. Some sources say these issues are still outstanding, while others insist they were fixed.

One source said that while all three vehicles had minor weaknesses, they met the contract requirements and all were better than the current fleet in Afghanistan.

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(The Age)

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