Post by exkiwiforces on Dec 8, 2014 20:18:26 GMT 12
Found this on the Janes Defence Website a last week. Someone needs to give Des Ashton a gong and where the hell was he when that other mob was running the country. To me he is doing a bloody good job well Sir.
Key Points
• New Zealand seeks to boost local involvement in an accelerating military modernisation programme
• Procurement and industry reforms driven by requirement to achieve value for money
As the New Zealand Defence Force (NZDF) continues its recent emphasis on military modernisation, the government has demonstrated a commitment to increase the involvement of local industry in a bid to achieve cost efficiencies.
Deputy Secretary of Defence (Acquisition) for the New Zealand Ministry of Defence (MoD) Des Ashton told IHS Jane's in late October that recently introduced procurement reforms are intended to maximise opportunities for competitive local companies partnered with foreign prime contractors.
The reforms have been introduced as New Zealand pushes forward with a number of major acquisition programmes supported by a significant increase in projected defence procurement spending. The scope of this military modernisation was outlined in a four-year strategic intention document published by the MoD in July 2014.
Modernisation
During the first year of this period, the MoD outlined a commitment to advance 15 "new capability projects" including multi-purpose littoral vessels, underwater ISR capability for existing Lockheed Martin P-3K2 Orion maritime patrol aircraft, and a "refresh" of the NZDF's light armoured vehicle fleet.
Other major programmes to have advanced in the past year include orders of Kaman SH-2G(I) Super Seasprite helicopters; Beechcraft T-6C turboprop trainer aircraft; and a contract awarded to Lockheed Martin to upgrade the combat systems on board the Royal New Zealand Navy's two ANZAC-class frigates.
The MoD is underpinning this raft of purchases with a commitment to grow capital expenditure.
In a defence industry review document published in October 2014, the MoD said defence capital expenditure is expected to grow significantly over the ensuing four years. For the period 2015 to 2018 the MoD said procurement spending is forecast to average about NZD500 million (USD396 million) annually, which is "around double the capital expenditure average for the period 2009 to 2013".
Value for money
While foreign manufacturers are expected to provide the majority of the NZDF's major requirements during this modernisation programme, Ashton said the MoD expects local companies to be given an opportunity to become involved in providing cost-effective support for the acquired platforms.
This aim is underpinned by procurement regulations introduced in 2013 - called the Government Rules of Sourcing - that effectively shifted priority away from signing contracts with suppliers that offer the most cost-effective upfront costs to those that provide the best value for money over the life of a procurement contract.
"This is not an offset or counter-purchase policy but we are making sure that there are fuller opportunities for local suppliers and that prime contractors have a good look at what is available here," said Ashton.
"We are now required to do all our defence acquisition business cases and all our purchases over the whole of life of a defence platform. If a local company is able to contribute to value in this regard then we would expect to see this reflected in bids. We expect foreign manufacturers to show us how they would get the best value for money by using that local capability."
Local involvement
A report published by the New Zealand MoD in October that recommended strategies for enhanced local involvement in defence programmes highlighted opportunities in defence capital expenditure commitments. It added that in 2012-13 some 76% of operating expenditure allocated towards the maintenance and repair of military hardware was won by local companies. However, in the same period just 30% of defence capital expenditure commitments involved New Zealand industry.
"It is in this capital acquisition area that the significant opportunity for optimising New Zealand industry involvement lies, especially in the supply chain and whole-of-life support for military hardware," added the report.
Among the report's recommendations were a commitment to supply local industry with greater clarity and detail about whole-of-life costings for procured military equipment; to encourage early involvement in programmes by introducing "industry engagement plans" in tenders with a whole-of-life value of NZD15 million or more; and to develop 10-year "horizon plans" that will enable industry to identify opportunities.
The introduction of these and other recommendations over the next two years are intended to optimise the involvement of local industry in defence programmes, thereby boosting job creation, tax revenues, and export activity as well as NZDF capability. Ashton stressed that while there is "no specific target for local industry involvement, the objective is to get the best possible value for ourselves".
Opportunities
In achieving greater local involvement in supply chains and whole-of-life support programmes, Ashton said there are numerous opportunities for New Zealand's defence companies, even as the MoD continues its policy of procuring off-the-shelf platforms (as opposed to those modified specifically for NZDF use) as part of further efforts to reduce procurement delays and enhance control cost.
"Buying off the shelf doesn't mean that [the acquired military equipment] doesn't have local requirements and opportunities," he said.
"There are a variety of activities where it pays to have cost-effective local support. Software is a good case in point. Without the involvement of local industry in providing software support, prime contractors would be in a spot of bother. Plainly there might be some areas that we don't have the facilities to support a programme but in most there is always a local company that has the wherewithal to do this."
Free tradeBack to top
Ashton explained that while New Zealand's industry participation policy cannot be regarded as a mandated economic compensation programme, foreign primes are usually keen to involve local industry in order to comply with the MoD's focus on achieving value for money.
"New Zealand has a commitment to free trade, and defence offset is generally not regarded as part of free trade. Another aspect is that sometimes there is a cost to [offset] and so that is why the emphasis of our policy is to extract best value, not give us a load of work and then ask to pay more for it," said Ashton.
"There might be purchases that we make where it is not best value to use local industry. This might involve a supply chain that is extremely responsive and can provide us with a cost-effective advice and support without local industry, but we are asking primes to have a good look at local capability.
"I've been heartened in recent contracts about how primes have got out to see local companies - in the through-life support for the T-6C, for example, [Beechcraft] have formed partnerships with local companies that can provide support and there will be other work that can flow from this."
Copyright © IHS Global Limited, 2014
Key Points
• New Zealand seeks to boost local involvement in an accelerating military modernisation programme
• Procurement and industry reforms driven by requirement to achieve value for money
As the New Zealand Defence Force (NZDF) continues its recent emphasis on military modernisation, the government has demonstrated a commitment to increase the involvement of local industry in a bid to achieve cost efficiencies.
Deputy Secretary of Defence (Acquisition) for the New Zealand Ministry of Defence (MoD) Des Ashton told IHS Jane's in late October that recently introduced procurement reforms are intended to maximise opportunities for competitive local companies partnered with foreign prime contractors.
The reforms have been introduced as New Zealand pushes forward with a number of major acquisition programmes supported by a significant increase in projected defence procurement spending. The scope of this military modernisation was outlined in a four-year strategic intention document published by the MoD in July 2014.
Modernisation
During the first year of this period, the MoD outlined a commitment to advance 15 "new capability projects" including multi-purpose littoral vessels, underwater ISR capability for existing Lockheed Martin P-3K2 Orion maritime patrol aircraft, and a "refresh" of the NZDF's light armoured vehicle fleet.
Other major programmes to have advanced in the past year include orders of Kaman SH-2G(I) Super Seasprite helicopters; Beechcraft T-6C turboprop trainer aircraft; and a contract awarded to Lockheed Martin to upgrade the combat systems on board the Royal New Zealand Navy's two ANZAC-class frigates.
The MoD is underpinning this raft of purchases with a commitment to grow capital expenditure.
In a defence industry review document published in October 2014, the MoD said defence capital expenditure is expected to grow significantly over the ensuing four years. For the period 2015 to 2018 the MoD said procurement spending is forecast to average about NZD500 million (USD396 million) annually, which is "around double the capital expenditure average for the period 2009 to 2013".
Value for money
While foreign manufacturers are expected to provide the majority of the NZDF's major requirements during this modernisation programme, Ashton said the MoD expects local companies to be given an opportunity to become involved in providing cost-effective support for the acquired platforms.
This aim is underpinned by procurement regulations introduced in 2013 - called the Government Rules of Sourcing - that effectively shifted priority away from signing contracts with suppliers that offer the most cost-effective upfront costs to those that provide the best value for money over the life of a procurement contract.
"This is not an offset or counter-purchase policy but we are making sure that there are fuller opportunities for local suppliers and that prime contractors have a good look at what is available here," said Ashton.
"We are now required to do all our defence acquisition business cases and all our purchases over the whole of life of a defence platform. If a local company is able to contribute to value in this regard then we would expect to see this reflected in bids. We expect foreign manufacturers to show us how they would get the best value for money by using that local capability."
Local involvement
A report published by the New Zealand MoD in October that recommended strategies for enhanced local involvement in defence programmes highlighted opportunities in defence capital expenditure commitments. It added that in 2012-13 some 76% of operating expenditure allocated towards the maintenance and repair of military hardware was won by local companies. However, in the same period just 30% of defence capital expenditure commitments involved New Zealand industry.
"It is in this capital acquisition area that the significant opportunity for optimising New Zealand industry involvement lies, especially in the supply chain and whole-of-life support for military hardware," added the report.
Among the report's recommendations were a commitment to supply local industry with greater clarity and detail about whole-of-life costings for procured military equipment; to encourage early involvement in programmes by introducing "industry engagement plans" in tenders with a whole-of-life value of NZD15 million or more; and to develop 10-year "horizon plans" that will enable industry to identify opportunities.
The introduction of these and other recommendations over the next two years are intended to optimise the involvement of local industry in defence programmes, thereby boosting job creation, tax revenues, and export activity as well as NZDF capability. Ashton stressed that while there is "no specific target for local industry involvement, the objective is to get the best possible value for ourselves".
Opportunities
In achieving greater local involvement in supply chains and whole-of-life support programmes, Ashton said there are numerous opportunities for New Zealand's defence companies, even as the MoD continues its policy of procuring off-the-shelf platforms (as opposed to those modified specifically for NZDF use) as part of further efforts to reduce procurement delays and enhance control cost.
"Buying off the shelf doesn't mean that [the acquired military equipment] doesn't have local requirements and opportunities," he said.
"There are a variety of activities where it pays to have cost-effective local support. Software is a good case in point. Without the involvement of local industry in providing software support, prime contractors would be in a spot of bother. Plainly there might be some areas that we don't have the facilities to support a programme but in most there is always a local company that has the wherewithal to do this."
Free tradeBack to top
Ashton explained that while New Zealand's industry participation policy cannot be regarded as a mandated economic compensation programme, foreign primes are usually keen to involve local industry in order to comply with the MoD's focus on achieving value for money.
"New Zealand has a commitment to free trade, and defence offset is generally not regarded as part of free trade. Another aspect is that sometimes there is a cost to [offset] and so that is why the emphasis of our policy is to extract best value, not give us a load of work and then ask to pay more for it," said Ashton.
"There might be purchases that we make where it is not best value to use local industry. This might involve a supply chain that is extremely responsive and can provide us with a cost-effective advice and support without local industry, but we are asking primes to have a good look at local capability.
"I've been heartened in recent contracts about how primes have got out to see local companies - in the through-life support for the T-6C, for example, [Beechcraft] have formed partnerships with local companies that can provide support and there will be other work that can flow from this."
Copyright © IHS Global Limited, 2014