April 28, 2004
Seasprite - The Billion Dollar Blunder
Australia's prominent role in the war on terror has led to calls for increased spending on defence. But tonight's story - on how Australia forked out over $1 billion for helicopters which are literally museum pieces - raises serious questions about how the defence budget is being managed. Thom Cookes has more.
REPORTER: Thom Cookes This scout troop is on an outing to a naval museum just outside of Washington DC. A retired marine sergeant is giving them a guided tour of one of the museum's prize exhibits. MARINE SERGEANT: Now we'll tell you a little bit about the Seasprite here. This particular bird is a sub-hunter. This thing had a great history in its flight time, and it was retired here to the museum. [REPORTER:] The Seasprite naval helicopter, first flown in the 1950s, is now a museum piece in the United States. It was phased out of service from the early '90s and by 2001 the US had put its few remaining Seasprites into storage. But remarkably, the Royal Australian Navy has spent over $1 billion on these museum pieces. It bought 11 of the ageing helicopters and has spent the last seven years trying to convert them into state-of-the-art war machines. Most are older than the Seasprite on display in the US and some even flew in the Vietnam War. The Australian Defence Department has a long history of embarrassing blunders on major projects, but the story of the Seasprite helicopter is possibly the most shocking to emerge so far.
* * * *
Aldo Borgu is a former adviser to three coalition defence ministers and is now an analyst at the Australian Strategic Policy Institute. He explains how the Seasprite project came about. ALDO BORGU: Certainly the major requirement was because we actually had a smaller ship, the offshore patrol combatant, or offshore patrol vessel, which we were basically putting together jointly with Malaysia, it couldn't carry a Seahawk helicopter, which can be carried on the Anzac frigate, so if we were proceeding just with the Anzacs, we probably would have gone for the existing Seahawk helicopter, but because we also had this smaller ship, which was banking on the fact that the Malaysians would buy it so we'd have a joint development program, we needed a smaller size helicopter which would have been either the Seasprite or the Westland Lynx. [REPORTER:] Being small was the one thing the Seasprite had going for it. This is the offshore patrol vessel designed for the joint Malaysian-Australian project. The size of this rear helicopter deck meant that Australia's existing Seahawk helicopters would be too large to land on the ship. Under questioning in Senate Estimates hearings, defence officials admitted that this was the sole reason the Seasprite was bought.
* * * *
REPORTER: Why do you think the Defence Department went ahead with the Seasprite even though the offshore patrol vessel was cancelled? SENATOR CHRIS EVANS: Look, it's a complete mystery to me. There's been no proper explanation of that. The helicopter was designed for a ship that was cancelled, but we went ahead and ordered the helicopter, even though the capability was no longer going to be purchased. The Defence Department was unable to provide anyone for an interview with Dateline, but it's previously claimed that once it had signed the Seasprite contract, there was no going back.
* * * *
ALDO BORGU: Once we decided we don't need the offshore patrol vessel anymore, we should have decided we don't need the Seasprite anymore and just gone with a far more simpler solution in terms of getting additional Seahawk helicopters. There is this point about once a project gets approved, certainly by Cabinet, let alone moving into the acquisition phase, I don't think Defence naturally doesn't want to walk away from it, bird in the hand worth two in the bush type scenario, but the problem is that's irrespective of how many problems it actually comes up against. I've never met a project that Defence didn't like. [REPORTER:]Undeterred by no longer having the ship it was designed for Defence went ahead with the Seasprite and was given two options by the manufacturer, Kaman Aerospace. Kaman could either restart its production line and build totally new helicopters or it could hunt around for old Seasprites that had been retired and rebuild them. Defence chose this cheaper second option. But as Opposition Defence Spokesman Chris Evans discovered, these old airframes were not entirely up to scratch. SENATOR CHRIS EVANS: The contractor, in order to meet your specifications, has decided that some of these frames, up to 70%, has to be replaced - is that fair?
* * * *
SENATOR CHRIS EVANS: Okay. What sorts of hours would these airframes already have flown? Did any of them serve in the Vietnam War, by the way? Did any of them fly in the Vietnam War? AIR VICE MARSHALL CONROY: From their build dates, it would appear so. In fact, according to Defence, some of the Seasprite air frames date back to 1963 and have already been rebuilt at least twice. AIR VICE MARSHALL CONROY: The air frames themselves were stored at a US storage facility and the Commonwealth sent a team of experts, engineering experts, to pick those air frames that were in the best condition.
[REPORTER:] AMARC, or the Aircraft Maintenance and Regeneration Centre, is a massive parking lot where the US keeps aircraft it no longer has any use for. There are almost 4,500 planes and helicopters stored out here in the Arizona desert. It's hard to find a more graphic display of military might and the amount of money that the US is prepared to spend on defence. These B1-B nuclear bombers were virtually redundant from the first day they were flown. They cost around US$300 million a piece and there are 18 of them in mothballs here. LARRY KOTZ: I don't think I want to know how much those things are worth out there. As a taxpayer, I just don't want to know. Larry Kotz has an office on the edge of AMARC and makes a living buying up old military aircraft for either parts or scrap. He's currently working over these C-141 transport jets.
* * * *
[REPORTER:] Dateline has established from US Defence Department records that when these choppers were put into storage, they were each valued at around $600,000 American. By the time the Australian project is finished, we'll have effectively spent around $100 million getting each one of our 11 Seasprites into the air. It may be a $1 billion project for Australia, but US records show that since the early '90s the United States has been trying to give away its old Seasprites as part of military aid packages. Despite the fact that the Americans were offering free helicopters, in at least three cases they were knocked back - Greece in 1993, Turkey in 1994 and Thailand in 1997. REPORTER: Did you know that the United States has been trying to give away the Seasprite to a number of countries? SENATOR CHRIS EVANS: No, I didn't know that. I suppose it shouldn't surprise me. But this is just the final nail, I suppose, in the coffin of the story. [REPORTER:] But Defence sources claim that the most serious blunder with the Seasprite are the sophisticated electronics and weapons that Australia has tried to cram into a 1950s design. Australia's Seasprites are being fitted with advanced systems that allow the helicopter to be flown by a crew of two instead of three and to find and destroy targets without the help of a mothership.
* * * *
ALDO BORGU: Every time you try to put advanced avionics and systems into an old platform, you run into problems. Every time you try to integrate new weapons onto an old platform, you are going to run into problems. Before you actually try to commit billions of dollars or hundreds of millions of dollars to these projects, have a good sense about how realistic it is, what you're trying to actually achieve. [REPORTER:] Dateline has spoken to several US Defence sources who were stunned by the complexity of the systems Australia planned for the Seasprite. As far as Larry Kotz is concerned, it would have been better to keep it simple. LARRY KOTZ: That wasn't done in Australia's case. They bought the whole, you know, kitchen with the sink and the automatic dishwasher and the refrigerator/freezer and they put it all in and they've had some growing pains. Now, my understanding is they're on track with getting that done and by the time they're done, they're going to have a very cool system. It's going to be able to track eight targets at the same time and do all kinds of nifty things. Whether that was a good way to go in the very beginning or to have done it slowly, it's kind of too late to worry about it now since it's already a done issue. If I was going to do it, I would have made a more simpler package closer to what the New Zealanders did. [REPORTER:] The NZ Navy bought four old Seasprites for training and parts and then a further five brand-new choppers. These new Seasprites were bought virtually off the shelf and use a missile system already tested by the US and have been in operation for the last three years. For its nine Seasprites, the NZ Navy spent around $290 million compared to the $1.1 billion Australia will spend on 11.
* * * *
NAVY OFFICER: The super Seasprite project has attracted its fair share of negative publicity and, yes, it is 3.5 years late, whilst remaining within budget. The delay has come about by the usual challenges faced by projects introducing leading-edge technology. The Defence Material Organisation has learned several important lessons from the progress of this program, which we've heeded. [REPORTER:] One of those lessons was how to write a contract. When Defence agreed to buy the Seasprite, it also paid for a 10-year maintenance contract. But it forgot to link the two and as the project lagged further and further behind, Defence faced a $30 million maintenance bill for helicopters that are yet to arrive. REPORTER: Did you find that shocking, though, that you can be paying for a maintenance contract and not actually have the helicopter present and that there's no linkage in time between the two? ALDO BORGU: It's ridiculous. I don't think anybody can basically argue against that.
http://www.sbs.com.au/dateline/#