THE auditor general has claimed the federal government spent $222 million on new Bushmaster vehicles in 2016 solely to keep the Thales Bendigo facility operating, and the deal was not value for money for taxpayers.
In a heavily redacted report into the purchase of $1 billion worth of military vehicles, auditor Grant Hehir was critical of the Hawkei program which he claimed was 23 per cent more expensive than the US-equivalent and subject to “reliability” issues.
The government formed a financial partnership with the US in 2008 to develop the joint tactical light vehicle, before starting parallel investment in Australian-based options.
Defence received approval to develop Thales’ Hawkei in 2011, which Mr Hehir described as the “least developed option”, and the government withdrew from its partnership with the US.
Mr Hehir said this decision meant the Hawkei would not be subject to the required level of scrutiny during its development.
“The decision not to seek ministerial approval to continue in the JLTV program reduced Defence’s ability to benchmark its procurement of the Hawkei and apply competitive pressure, and… reduced Defence’s ability to evaluate whether procurement of the Hawkei clearly represented value for money,” he said.
A 2017 review of the Hawkei was also postponed.
Mr Hehir was also critical of a decision to extend the production of the Bushmaster when production was due to cease in Bendigo in late 2016.
The government spent $222 million to purchase more of the vehicles in order to keep the Bendigo facility operating pending the approval of the Hawkei project.
The report found the benefits to Bendigo were minimal, with it accounting for “substantially less than 1 per cent” of the local workforce, materials sourced from outside of Bendigo and profits sent to French shareholders.
“Limited justification had been provided as to why Bendigo required government assistance, given that its industrial base was reasonably diversified and its unemployment rate was only marginally higher than the national average,” Mr Hehir said.
Thales Australia defended its Bushmaster program in a written response, with chief executive officer Chris Jenkins saying the extra order allowed for improvements to be made to the vehicles deployed overseas.
“The examination of Bushmaster vehicles damaged or destroyed by roadside bombs allowed the vehicle to be upgraded over the course of the Afghanistan conflict, using the lessons learned to improve the protection levels of the vehicle,” he wrote.
“There is no doubt that the deep engineering capability developed through an Australian design, manufacture and vehicle upgrade program saved lives.
“This critical sovereign capability has been maintained and enhanced in the Hawkei program and will continue through the life of the platform.”
The Hawkei program secured 200 jobs in Bendigo.
Member for Bendigo Lisa Chesters said the auditor general would not have made these findings if the government had a stated commitment to local procurement.
She said other countries were looking at importing the Hawkei given the high quality of its production.