The govt tender that still isn't finished, eight years later

Airservices Australia and the Department of Defence still haven’t signed a contract for their near billion-dollar joint air traffic management system, more than eight years after the pair decided to replace their ageing solutions.

The long-running procurement process has now seen four separate tender evaluation teams test nine bids over five phases, against a staggering 2609 specification requirements.

Lead agency Airservices down-selected its incumbent traffic management supplier Thales for the deal more than two years ago, but the number of system tweaks required means they still haven’t settled on a deal, and are unlikely to until at least the second half of this year.

A report into the procurement by the Australian National Audit Office paints a radically different picture to what officials expected back when they released a request for information to industry in May 2010.

The new joint civil and military air traffic management system was then expected to reach final operational capability in 2017-18.

But the latest advice from the procurement team is that “contract signature for the entire acquisition and support scope is unlikely to occur before mid-2017”.

Airservices has already spent $75 million with Thales on “advance” work orders.

The estimated total cost of the new system has changed a number of times over the past eight years. The latest figures put it between $900 million and $1 billion for the critical infrastructure, which will coordinate all of the aircraft over Australia.

The ANAO said the tender process has been sound in terms of probity and established a “healthy level” of competitive tension, but is still dramatically late.

Some of the procurement delays have been blamed on under-resourcing, the discovery of new risks, staff turnover - Defence says nearly all staff involved in the tender evaluations have now left the department - and an underestimation of how long the tasks involved would take to get done. The ‘immaturity’ of the partnership between Defence and Airservices Australia was also criticised by the auditor.

The audit also revealed that the agencies never managed to align their business cases, approvals processes, or lines of governance, increasing the complexity of an already staggeringly intricate program. And the cost of harmonising the two agencies’ requirements was estimated to add 35 percent to Defence’s system bill.

Now the ANAO has questioned whether the government can even afford the new system.

Thales came through the arduous tender evaluation process as the least-risk option, which complied best with the two agencies' detailed list of demands.

But as the second-highest cost option of all the bids, at an asking price well above that of competitors Lockheed Martin and Raytheon, the ANAO has questioned whether the government is getting bang for its buck.

“It is not clearly evident that the successful tender offered the best value for money,” the report states.

“This is because adjustments made to tendered prices when evaluating tenders against the cost criterion were not conducted in a robust and transparent manner.”