Light Operational Vehicle

Project purpose and history

The purpose of this project was to acquire a fleet of Light Operational Vehicles to replace the Army's Land Rovers, which were overdue for replacement. O ur analysis focused on the military vehicles purchased as part of the project.

In late 1999 to early 2000, the Ministry asked for tenders for non-military and military vehicles. The estimated cost of the project at that time was $59.9 million ($56.1 million for the military vehicles and $3.8 million for the non-military vehicles). No compliant bids were received, so the Ministry asked the Army to review its statement of requirements for the vehicles.* The Ministry considers that the project was cancelled, but we could not verify this through the Ministry's documentation.

After the Army completed its review of the statement of requirements, including an independent verification and validation by a consultant, the Ministry confirmed the availability of vehicles that would meet the Army's mobility requirements, and approached the market for a second time in mid-2002 with a revised specification. Tenders were sought for two alternatives: 308 vehicles capable of being fitted with armour and 36 sets of armour, or 83 permanently armoured vehicles and 225 non-armoured vehicles.*

After analysing the tenders, the Army reviewed the numbers and types of armoured and non-armoured vehicles required, bringing the total number of military vehicles to be acquired to 321. Tender requirements were amended to reflect these changes.**

While there was a clear winning bid for the non-armoured vehicles, further testing was required to gain enough assurance that the armoured vehicles from the same bidder met the "proven in service" criteria. The Minister of Defence decided to split the acquisition into two tranches because there was some urgency for the vehicles to be acquired.** The Army was facing significant problems in maintaining its fleet of Land Rovers and these problems were affecting its ability to train and conduct exercises.**

A contract was signed with Automotive Technik Ltd in March 2004 for the supply of 188 Pinzgauer non-armoured military vehicles. After testing and evaluation confirmed that the armoured Pinzgauer met the Army's armour protection requirements, a further contract was signed with Automotive Technik Ltd in June 2004 for the supply of 133 Pinzgauer military vehicles, including 60 armoured vehicles. Deliveries to the Army began in October 2004 and were completed in 2006, except for one armoured vehicle that has been held by the supplier for testing. This vehicle was to be delivered in June 2008.

Cost and time frame changes for the Light Operational Vehicle project

Costs and time frames at the Approval to Commence and Approval to Commit points, and figures forecast as at December 2007

Sources

1. We use the figure from the Cabinet approval of 26 July 1999. The Ministry uses the $60 million to $110 million range from the 2002 LTDP.
2. We use the figure from the Army's Force Development Proposal dated 11 June 1999. The Ministry uses the mid-2006 timing from the 2004 LTDP.
3. We use the figure from the Cabinet approval of 3 December 2003.
4. We use the figure from the Cabinet approval of 16 June 2004.

Changes to costs and time frames as the project has progressed

Explanatory notes

1. We have had to assume the difference between the Approval to Commence point (December 2000 - so we use the end of December 2000) and the Approval to Commit point (the third quarter of 2006 - so we use the end of September 2006).
2. We have had to assume the difference between the Approval to Commit point (the third quarter of 2006 - so we use the end of September 2006) and the Ministry's December 2007 forecast (the first quarter of 2006 - so we use the end of March 2006).

* Note by Minister of Defence to Chair of Cabinet External Relations and Defence Committee, 4 December 2000.

** Note by Minister of Defence to Chair of Cabinet External Relations and Defence Committee, November 2003.