The Australian National Audit Office (ANAO) has said Australia may pay too much for the combined civil and military air traffic management system OneSKY, despite a tender process that found the system “was capable of producing a value for money outcome”.
The ANAO, at the request of the Senate rural affairs and transport legislation committee and the Minister for Infrastructure and Regional Development, conducted an audit into Airservice's oversight and implementation of OneSKY, which aims to combine both the civil and military air traffic management systems into one program.
One SKY is due to replace the existing air traffic management platforms operated by Airservices Australia for civil air traffic management and the separate system operated by the Department of Defence (DoD) for military air traffic. Both systems are due to reach the end of their economic lives in the latter part of the current decade.
While the audit found that the design of the tender process was capable of producing good value for money, the ANAO scrutinised the way in which the tenders were evaluated.
"It is not clearly evident that the successful tender offered the best value for money. This is because adjustments made to tendered prices when evaluating tenders against the cost criterion were not conducted in a robust and transparent manner," the ANAO said.
"Those adjustments meant that the tenderer that submitted the highest acquisition and support prices was assessed to offer the lowest cost solution. It is also not clearly evident that the successful tender is affordable in the context of the funding available to Airservices and Defence."
The audit is the second ANAO audit of OneSKY.
In 2016, it published a first audit that found Airservices did not follow its own policies and procedures in contracting an external organisation, the International Centre for Complex Project Management (ICCPM), to provide services related to the OneSKY project.
"Airservices notes the report. Airservices welcomes the ANAO’s conclusion that the tender process design was appropriate and that the evaluation governance both provided an approach capable of identifying the best value for money tender and guarded against the perceived conflict of interest issues that had been identified in the ANAO’s previous audit report as requiring further investigation," Airservices said in a statement.
"Airservices notes that the report does not make any recommendations for improvement.
"Airservices has provided further clarity on some of the matters raised as an attachment to this report. Airservices remains firmly of the view that the tender process, having been appropriately designed, has identified the best value for money tender at an acceptable level of risk, having regard to all of the evaluation criteria."
The DoD said in a statement, "Defence extends its appreciation to the Australian National Audit Office for their audit on the conduct of the OneSKY tender. Defence acknowledges the findings contained in the audit report, and notes that the ANAO have not made any recommendations for Defence.
"The objective of this audit was to assess whether the OneSKY tender was conducted so as to provide value with public resources, and achieve the required timeframes for the effective replacement of the existing air traffic management platforms. Defence notes that the OneSKY tender process remains ongoing, and a final decision to enter into the key acquisition and sustainment contracts with the remaining tenderer has not yet occurred.
"Defence notes that the Proposed Audit Report included commercial-in-confidence information which, if included in the Final Report, could compromise the ongoing tender negotiation process and limit options to achieve a value for money outcome."