Classified budget totalled $93 million in last financial year says report, which also reveals delayed projects

The Australian Department of Defence has for the first time released financial data about its classified "black" projects, acknowledging expenditure of A$168 million ($93 million)in the 2001-02 Australian financial year.

According to the department's latest annual report, 301 contracts were awarded in 2001-02 and given exemption from public disclosure on national security grounds.

A total of 235 classified contracts worth A$138.4 million were awarded, an undisclosed number of which were for the Royal Australian Air Force. The Royal Australian Navy awarded 28 classified contracts worth A$4.6 million, while 37 contracts valued at A$19.5million were placed by Australia's military intelligence agencies.

Australia has previously used the reporting exemption to hide contracts for the conversion of one and probably two Lockheed Martin P-3C maritime patrol aircraft into electronic intelligence platforms. The arrangement has also been used to conceal missile purchases.

The report also says spending on new hardware for the Australian forces reached A$2.48 billion. The cost of RAAF operations was A$5.87 billion, or A$165 million higher than forecast in the May 2001 budget.

The report reveals that Australia is pursuing damages from Lockheed Martin for late delivery of TPS-117air-defence radars - the project is three years behind schedule. The main subcontractor, Tenix Defence Systems, has "significantly" under performed in delivering communications systems and other elements, says the report.

The report reveals a A$61million funding increase for the ongoing acquisition of Raytheon Evolved Sea Sparrow Missiles with spending now capped at A$341million with A$305million spent to date. Expenditure in 2001-02 was lower than forecast at A$69 million - A$11 million less than budgeted. This is due to restructured payment arrangements for vertical launch system upgrade kits for Royal Australian Navy frigates, while the project remains behind schedule due to delays in missile qualification and certification. The RAN will not now receive operational test and evaluation missiles until early next year, or at least three months later than forecast in May.

The RAAF's A$3.46 billion airborne early warning and control project, however, is ahead of schedule with A$458million spent during the financial year, almost double that in 2000-01.

The New Zealand government is to consider in the next month three major Royal New Zealand Air Force projects. Defence minister Mark Burton says reports are due on the status of the plans to upgrade or replace the RNZAF's Lockheed Martin C-130H transports, upgrade of Lockheed MartinP-3K mission systems and replace Boeing 727 transports.

Source: Flight International