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The Australian National Audit Office (ANAO) has released its report into the sustainment arrangements the Royal Australian Navy has put in place for the fleet of Anzac Class frigates.
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An audit of the sustainment program was ordered due to the "cost and the importance of this capability until the Hunter Class frigates enter into service", with the RAN using 15 per cent of its overall sustainment budget for the year on the Anzac Class, at a cost of $374 million.
ANAO's findings expressed concerns that "Defence cannot demonstrate the efficiency or outcomes of its sustainment arrangements, as the necessary performance information has not been captured," as well as revealing that Defence has been aware since 2012 that "sustainment arrangements have not kept pace with higher than expected operational usage".
"The Anzac Class Product Delivery Schedule in Navy’s Materiel Sustainment Agreement established with the Capability Acquisition and Sustainment Group is not fit-for-purpose," the report said.
"Navy has not updated the document to reflect the current governance arrangements and sustainment needs. The current sustainment plan and available budget do not accurately reflect the operational use of the frigates, which is higher than planned."
ANAO released the following recommendations for the sustainment program, which Defence agreed to undertake, some pending qualification.
- Defence update the Anzac Class Product Delivery Schedule of the Navy Materiel Sustainment Agreement to align sustainment plans for the Anzac Class frigates with their operational use and material condition;
- In the context of developing its transition plan for the Anzac Class life-of-type extension, Defence review the capital and sustainment funding required to maintain the Anzac Class frigate capability until 2043, and advise the government of the funding required to meet the government’s capability requirements for the class or the capability trade-offs to be made;
- Defence review the key performance measures for the Anzac Class frigates’ sustainment to ensure they are reliable and complete;
- To align with the strategic planning approach outlined in the Defence Integrated Investment Program, Defence develop guidance in the Capability Life Cycle Manual on when a proposal to establish or amend a sustainment program should be provided to the Defence Investment Committee and the Minister for Finance for consideration; and
- Defence refine its performance reporting and management arrangements for the Anzac Class frigates by aligning key performance indicators in the Warship Asset Management Agreement and those in the Anzac Class Product Delivery Schedule of the Navy Materiel Sustainment Agreement.
ANAO also released a summary of the Department of Defence's response, which is provided below:
"Defence welcomes the ANAO Audit Report into the Anzac Class Frigates - Sustainment and agrees with the recommendations. Recommendations three and four have been agreed with qualifications.
"Defence would like to highlight the reliable performance and operational effectiveness of the Anzac Class Frigates, and their ability to consistently achieve whole of government requirements during the previous two decades. Throughout the life of the Anzac Class Frigates, Defence has effectively managed upgrades and subsequent sustainment of these warships in order to achieve the strategic requirements that have evolved since the introduction of the capability.
"Defence is confident the assurance provided through this Seaworthiness regime affirms the warships are operational, seaworthy and capable of performing all assigned tasks. Furthermore, Defence is continually assessing options to optimise sustainment funding for the Anzac Class Frigates to ensure operational availability and effectiveness continues to be met.
"The Warship Asset Management Agreement (WAMA) has seen the implementation of greater cost oversight and improved performance-based measures that encourage collaborative behaviours and a solutions focus within the industry partners. In line with the First Principles Review, the WAMA seeks to support long term relationships with industry that will underpin the sovereign capabilities essential to deliver continuous shipbuilding and sustainment.
"Defence is actively planning and making preparations for the transition from the Anzac Class Frigates to the Hunter Class Frigates to ensure effective operational coverage in a complex and ever changing strategic environment."
