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Page 24 Senate Wednesday, 1 March 2017 Senator KIM CARR: So they are no longer— Mr Grzeskowiak: In the estate space. Mr Richardson: However, there may be some within capability. Mr Gillis: Yes, Serco has had a number of contracts with my group but most of those are finishing by the middle of 2017. They are related to sustainment of Armidale class patrol boats and a number of smaller contracts. That work will finalise by the middle of this year. Senator KIM CARR: I see. My reading of it was that they had $320 million worth of contract work. Is that the sort of number— Mr Gillis: They did have a large number of contracts, but most of those will be finalising. Air Chief Marshal Binskin: There is a little bit more to the story in another part of Defence. The Vice Chief can add to the numbers. Senator KIM CARR: I appreciate that. It is very good of you. Thank you. Vice Adm. Griggs: Serco manage the retail end of our clothing stores to Defence members. I think that contract is in the order of about $30 million. That was in the list of contracts that were provided to Iraq. Senator KIM CARR: Has there been any connection that fed your concerns with Serco in regard to the use of consultants through that process? Mr Richardson: Nothing has been brought to my attention. Senator KIM CARR: I might turn to the Aurecon tenders. There are 140 contracts with Aurecon Australasia. Is that correct? Mr Gillis: I am not aware of that. We will have to take that on notice. Even within my group we sign in excess of 16,000 contracts a year. To ask for a specific company and the breakdown, a lot of these companies do work across groups and across the whole of Defence. As you have seen with Serco they are working in the VCDF area, they are working in the estate area and they are working in my area. We are happy to take that on notice and get you a whole-of-Defence response. Senator KIM CARR: The Serco one was the 121 separate contracts from January 2016. It is an extraordinary number. As you say, they are now coming to an end. Was that part of the downsizing arrangements? Vice Adm. Griggs: There were issues in regards to Serco's performance with some of the contracts we had, especially in support of the Armidale class patrol boats. So we have agreed to separate that contract and to terminate that. We will be doing that and that finishes at the middle of this year. Senator KIM CARR: What were the issues? Vice Adm. Griggs: They related to their performance. The availability and their inability to meet the KPIs for the availability of the Armidale class patrol boats. Senator KIM CARR: We will come back to that. There might be more questions later in the day. Mr Richardson: Senator, Mr Johnson is here if you want to go back to the naval architect. Senator KIM CARR: Yes, please. Mr Johnson: Defence has approximately six qualified naval architects working within the submarine group, though six architects are shared between the Future Submarine program and the Collins sustainment work. The need for naval architects and other submarine technical specialties including structural engineers and mechanical engineers is increasing as the design work for the Future Submarine program begins. A recruitment action is already underway to engage more naval architects and structural engineers. We do have a seventh person, who is an intern, but I do not think they would qualify in the context of your question. We have an intern, a recent graduate, who is working at ASC. Senator KIM CARR: So there are six naval architects. Are they all contractors or are they employed through the APS? Mr Johnson: I think technically they are contractors. They are working on behalf of the government. I can give you a more precise answer if I can take that on notice. Senator KIM CARR: Thank you. In regard to the cost of these, it has been put to me that the reported cost is about $25 million per annum. Would that be an accurate reflection of the cost? Mr Johnson: The cost for what? Senator KIM CARR: These particular contractors through the technical office. FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE
Wednesday, 1 March 2017 Senate Page 25 Senator Payne: Rather than guessing at that, I think I will take it on notice. Mr Richardson: And I can certainly say it would not be $25 million for six naval architects—no way. Senator KIM CARR: I was surprised when I saw the figure, but you are saying that it cannot be right. So what is the cost and what do the costs relate to? Is it the cost for travel? What is the nature of the costs? Senator Payne: We will provide you with a detailed response on notice. Senator KIM CARR: Thank you. You will also tell me if the APS could actually employ them? Mr Johnson: Yes. Mr Richardson: As a general rule, we have headspace within Defence APS. We have allowed headspace for growth in the submarine and shipbuilding area. If there is a need for the submarine area to employ naval architects as public servants, then we can do that. We have no preference for contractors over public servants when it comes to naval architects. Senator KIM CARR: I would have thought it was a capability that the defence department could actually use. If I can return to the Aurecon contracts. I am told that there are 140 of them worth $33 million. Many of these contracts actually refer to project management. Is that the case? Mr Gillis: I will have to take that on notice. Senator KIM CARR: If you could. I would be interested in how many of the staff involved in that are Aurecon staff, departmental staff or ADF staff. What is the breakdown in terms of those arrangements? Can you provide this advice now? Mr Grzeskowiak: As Mr Gillis said earlier, Aurecon, a big engineering capable company, is used across Defence. Certainly in my world of estate and infrastructure, we use them in their capacity as an engineering management company for some of our infrastructure projects. If we are looking for a response from the department it will be a cross-departmental response. Senator KIM CARR: Are they operating out of defence department facilities? Mr Grzeskowiak: I do not actually know. That could happen from time to time. But most of the time they would be, I think, operating from their own offices or indeed on sites. Senator KIM CARR: Can you take that on notice? Mr Grzeskowiak: Yes. Senator KIM CARR: Is this work that could be done by APS personnel? Mr Grzeskowiak: In my world we very much rely on the construction industry for their skills and expertise not just for physically building sites but also for the design and project management of that work. For a long time now we have operated a highly leveraged model, highly outsourced, into the industry that we work with and we rely on their skills. Senator KIM CARR: There have been questions raised in regard to the capabilities of the department in regard to media monitoring. Secretary, there is an annual contract for media monitoring service worth $1.1 million. I can give you a contract number, if you like. I will ask you questions in regard to capabilities here. It is not that there is a question about the fact that there is media monitoring. In question on notice No. 509, the department says the cost of media monitoring from 1 January 2016 to 31 October 2016 was $775,000. First of all, is there a new contract arrangement being put in place in that regard? Mr Richardson: No, there has been no new contract. Senator KIM CARR: On 6 September 2016 the department notified a new annual contract monitoring service worth $1.1 million. Mr Richardson: That was a contract extension. Senator KIM CARR: I see. That probably accounts for that. Why has there been an increase in the cost, then, if it is a contract extension? Ms McCrane: We extended the contract and the scope and services provided under that contract. We engaged more media monitoring, particularly in electronic format media, such as social media. Senator KIM CARR: I see. So there is an increased range, is there, of activities required? Ms McCrane: Yes. Senator KIM CARR: Who receives these services? Mr Richardson: Government, opposition, people across the ADF and the APS in Defence. FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE
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