Frigate budget blows out

Last updated 21:09 17/06/2014

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An upgrade of the navy’s two frigates has resulted in a budget blow-out of almost $30 million and the HMNZS Te Kaha being out of the water for almost a year longer than expected.

Parliament’s foreign affairs committee yesterday heard that an upgrade to the platform systems on Te Kaha and Te Mana had suffered major setbacks as the ‘‘stretched’’ contractor struggled with the workload.

Defence Secretary Helene Quilter said the work on Te Kaha had cost $6m more than budgeted and taken 11 months longer than expected, while the work on Te Mana required additional funding of $22m.

The Ministry of Defence had commissioned a review of the project, which began in 2008, once the issues became apparent, she said.

It found the ministry erred in making itself the prime contractor, did not manage the delivery of the contract appropriately and ‘‘significantly underestimated’’ the complexity of the project.

‘‘The project is a really complex one. It’s really removing, I suppose, the guts out of the frigates, the cooling systems, the ventilators, the air conditioning units, the cables, the control and monitoring systems and replacing them with new equipment, so you take down walls on the ship and you find problems and that’s been a key contributor to some of the problems that we have found,’’ she said.

The committee also heard that the contractor, Babcock, had become ‘‘stretched’’ by work being done on the Endeavour, Canterbury and Te Kaha vessels, as well as routine maintenance, but the project was now ‘‘back on track’’, with additional resources poured in by ministry and Babcock.

Labour’s defence spokesman Phil Goff said the blow-out was concerning.

‘‘You’ve got to have some real concerns that the Ministry of Defence did not get this right at significant cost to the taxpayer and significant degrading to the capacity of the Defence Force if our frigate is unavailable for 12 months longer than they anticipated.’’ 

The upgrade, originally budgeted to cost $58m, is designed to boost the capabilities of the ships and increase their lifespan.

Te Kaha is due back on the water in August.

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