Indra Australia, which was awarded the $50 million project in 2014, was singled out by Deputy Secretary of the Capability Acquisition and Sustainment Group (CASG) Kim Gillis while under questioning about the project from Labor senator Alex Gallacher.
"This is just, I would say, poor contractor performance, and it's as simple as that," Gillis said.
"I think the company involved has over-promised and under-delivered."
The project was placed on the Defence's projects of concern list in August last year.
"AIR 5431 Phase 1 was awarded to Indra Australia in 2014 to deliver a mix of mobile and transportable air traffic control radars and supporting equipment to allow Defence to control and monitor air traffic while deployed on operations," Minister for Defence Marise Payne and Minister for Defence Industry Christopher Pyne said in a joint press release last year.
"The project has experienced schedule delays since approval, and initial delivery is expected almost two years later than originally planned."
The head of CASG also told estimates the project, which is running two years late, is likely to be a year late against final material release and is being taken "very seriously" by Defence because of its importance to the RAAF's capability.
"The project is currently two years late against the initial material release and, we expect, one year late against final material release," he explained. "We have only expended approximately 20 per cent of the contract and we put this onto a project of concern in August 2017. So again, with a very small number of projects of concern, this is one which we take very, very seriously because of its effect on Air Force capability."
Gillis also confirmed Defence and Indra will be meeting this month or next with both ministers Payne and Pyne expected to attend.