$ 51 BILLION DEFENCE CAPABILITY PLAN FOR 2006-2016

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The Australian government has today released its the public version of the Defence Capability Plan (DCP) 2006-16. It outlines more than $51 billion of major capital equipment proposals which are planned to be evaluated by Government over the next decade. This DCP provides many opportunities for US based businesses seeking entry into the Australian defence procurement program. The proposals it contains are essential to deliver the capability required by the Australian Defence Force (ADF) to maintain Australia’s security.

The recent 2006/2007 Federal Budget announced investment of an additional $2.4 billion over financial years 2011-12 to 2015-16. This continues the additional 3 per cent funding over 10 years announced by the Government in the 2000 Defence White Paper. The additional funding by Government enables the DCP 2006-16 to address the rise in the price of military platforms and technology. Providing a public version of the Defence Capability Plan to Australian industry is a key part of ensuring that the ADF will continue to have the major equipment and systems it needs to do its job.

The DCP 2006-16 is a major document produced periodically from an ongoing review of defence capability requirements. Australia’s National Security – A Defence Update 2005 fed into this review process and largely influenced the DCP 2006–16. This DCP brings Australia’s equipment acquisition and capability development strategy over the next decade into line with its increasingly complex security situation. The DCP will deliver the capabilities required by the ADF to maintain Australia’s security and strengthen its ability to promote national interests. The DCP is based on advising capability effects and outcomes rather than platform replacement. This change from being solution focused to outcome focused is associated with improved capability development processes under the successful Kinnaird reforms. This DCP retains a degree of planning flexibility to manage the risk of unforeseeable and uncontrollable events occurring through changes in the strategic environment, technological development and the ability of defence industry to meet global demand.

Some of the major features of this public version of the DCP are:

* Modifying helicopter plans to reduce the number of aircraft types and to create a common joint training and management system. More than $3.7 billion of project funding has been set aside to achieve this aim.

* The addition of more than $500 million of new naval surface capability projects to enhance the ANZAC class air search radar system and to develop undersea warfare detection capabilities, and sea mine counter-measures in 2017 to 2019.

* A 40 per cent boost in funding for Army networking projects as part of the Hardened and Networked Army initiative. The networking enhancements will support Network Centric Warfare capability and are to be introduced across the majority of Army units. Better understanding of the requirements of the Land 17 phase 1 project means that Army’s 105mm and 155mm artillery replacement will be safely deferred for three years whilst Army’s Ground Based Air Defence capability will be enhanced from around 2018 to 2020 in a new project valued at more than $750 million .

* Continuing the projects to support Australia’s air combat capability - including a $350 to $450 million mid-life upgrade of the Hawk lead-in fighter in 2017 to 2019 and future upgrades for the Wedgetail Airborne Early Warning and Control aircraft. Prudent planning sees additional provision made for the F/A-18 Hornet structural refurbishment to ensure sufficient aircraft maintain operational capability in the transition to the New Air Combat Capability.

* Building on the Government’s recent decision to acquire a heavy airlift capability, the DCP retains around $1 billion to refurbish or replace the C-130H Hercules and Caribou aircraft fleets. More detailed analysis of the lifespan of the Orion AP-3C means that the decision to refurbish or replace the ADF’s maritime patrol aircraft can be deferred for 2 years. This DCP also sees increased funding of more than $250 million for the Multi-Mission UAV project – AIR 7000 Phase 1B.

* Greater funding for the ADF’s military satellite communications capability with more than $1 billion to be invested in next generation satellite and ground station infrastructure to ensure continuity of service and flexibility through digital content.

* Continued improvements to Defence’s core enterprise systems including a new improved logistics management system project valued at more than $350 million and operational in 2012 to 2014.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David

david.taylor@agarcarlyon.com

International Merchandise Imports to Australia - May 2006

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The following table, released today by the Australian Bureau of Statistics (ABS) shows the various international merchandise imports brought into Australia during May 2006. All values are in $A.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David

david.taylor@agarcarlyon.com

Australia To Purchase MRH 90 Helicopters

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The Australian Government has approved a $ 2 billion acquisition of thirty-four MRH 90 helicopters to replace Navy’s Sea King and Army’s Black Hawk helicopters. The selection of the MRH 90 complements the Government’s decision in 2004 to acquire an initial twelve MRH 90 helicopters as Army’s additional troop lift helicopter. Delivery of the first twelve is scheduled from December 2007 through to December 2009.

The new twin-engine troop lift helicopters will provide opportunities for joint fleet management. These benefits include greater operational flexibility and efficiency through common operational, training and logistic systems and a capability to rotate personnel, aircraft, spare parts and role-specific equipment between troop lift, special operations and maritime support commitments.

The 34 additional MRH 90s will be assembled in Brisbane. As these MRH 90 aircraft will be assembled in Australia this acquisition of at least 34 aircraft will provide significant opportunities for Australian industry and the Australian Defence Force (ADF) will gain an operating capability within a relatively short time-frame.

The emphasis of the Australian industry package, worth $1.2 billion, is on the development and sustainment of critical aircraft mission system capability. The long term viability of the Australian MRH 90 assembly line will be maximized, ensuring greater development of the skill base required to support the MRH 90 into the future through a strategy aimed at promoting Australian industry as part of the Eurocopter global supply chain.

For information on this article, or on any other aspect of the Australian economy or business opportunities available, please email me.

David

david.taylor@agarcarlyon.com