ANAO Department of Defence’s Procurement of Hunter Class Frigates
Wednesday 10 May 2023
Why did we do this audit?
On 29 June 2018 the Australian Government announced the selection of BAE’s Global Combat Ship – Australia as the design for the Hunter class frigate program.
The government planned to build nine new frigates in three batches at Osborne, South Australia.
This is the latest in a series of audits on the Department of Defence’s (Defence) naval shipbuilding program. It provides independent assurance to Parliament on Defence’s procurement, decision-making and advising, contracting, and delivery to date.
Key facts
The acquisition was planned as a foundation project in the government’s continuous naval shipbuilding program.
The estimated acquisition cost of the Hunter class project (SEA 5000 Phase 1), as publicly reported in July 2020, was $45.6 bn (out-turned).
SEA 5000 Phase 1 is focused on design, construction and delivery of nine Hunter class frigates and associated support systems. The current approved stage of the project focuses on design and productionisation, at a head contract value of $1.9 bn in December 2018.
What did we find?
Defence’s management to date of its procurement of Hunter class frigates has been partly effective. Defence’s procurement process and related advisory processes lacked a value for money focus, and key records, including the rationale for the procurement approach, were not retained. Contract expenditure to date has not been effective in delivering on project milestones, and the project is experiencing an 18-month delay and additional costs due in large part to design immaturity.
What did we recommend?
There were two recommendations to Defence. These were to improve: compliance with record keeping requirements; and advice to government on whole-of-life costs and value for money.
Defence agreed to the recommendations.
Source: Australian National Audit Office (ANAO)