Home' InDaily : February 12th 2010 Contents www.independentweekly.com.au
February 12 - 18, 2010 news
On February 15, politicians of
all shapes and sizes will again
assemble at Osborne to officiate
in another ribbon-cutting exercise at
Techport, the State s naval industry
Criticism of the project will be
Techport is politically untouchable
because it represents multi-billion-
dollar defence contracts, jobs and an
industry hub that is desperately needed
to replace some of our old and dying
But before the champagne corks pop
there is widespread concern about the
total cost of this project and whether
it has become an empire of its own
Techport began life as the Port
Adelaide Maritime Corporation, armed
with the task of developing a common
user facility (an 8ha site accessible to
a range of companies, contractors and
sub-contractors) with 9.2 tonne ship lift
at Osborne to enhance the prospects of
winning the bid for a $6 billion federal
defence project to build air warfare
At the time, in May 2005, the project
was estimated to cost $120 million.
By 2006 it had doubled to $243 million,
then swiftly to $260 million and then in
July 2007 to $374 million.
The total cost (and difference in scope
from the original plan) is difficult to
determine with recent announcements
concentrating on the costs of additional
projects within the precinct.
According to the government s Major
Projects Directory the original project
of a common user facility, ship lift,
runway and dry berth will come in at
$260 million when it opens this month.
Additional costs of a Maritime
Skills Centre, commercial and supplier
precinct and associated developments
will take the cost to well above $400 mil-
How important this expenditure was
to the decision by Federal Cabinet to
award the project to ASC at Osborne
will not be known until the release of
cabinet papers in around 25 years time.
What we do know though is that the
existing ship lift at ASC was already
capable of handling submarines and a
full 9000 tonne air warfare destroyer.
On the day that the deal was
announced -- in May 2005 -- the State s
financial commitment to a common
user facility and ship lift was a third of
what it has become today.
The man at the helm of Techport,
CEO Andrew Fletcher contradicted
Treasurer Kevin Foley with his ver-
sion of how increased costs emerged.
In October 2006 Mr Foley told an
Estimates Hearing in parliament
that the project had jumped from $120
million to $243 million for several
■ $51 million for scope change (like
adding an extra bedroom or two to a
■ $25 million in refined estimates
(where the builder changes the
quote after you settled on the
■ $40 million in cost escalations.
In June 2007 Mr Foley told
parliament that scope changes by the
Commonwealth Government had
added $115 million to the project,
because "the commonwealth, to
meet its requirements, wanted us
to put further infrastructure in
place, which we agreed to."
But that version of events was
contradicted by Andrew Fletcher
a year ago when he appeared
before parliament s Public Works
Committee in August 2008.
"On the way through, the
commonwealth came to us at the
11th hour and said it would like
to extend the ship-construction
dry-stand area by half so that it
could put one-and-a-half ships on
it, which enhanced its production
schedule," Mr Fletcher told
"We gave them two options
for that; one was that the state
would be prepared to build that
for them, but they would have
to pay rent over ten years to
recover those monies; the other
was that they could pay for the
construction of the initial stuff.
They chose the second and paid
us a cheque for $17 million. That
brought the contract up from $243
million to $260 million."
What Mr Fletcher s answer
shows is that the scope change
from the commonwealth
amounted to just $17 million,
which they paid in full.
It s a different scenario to that
painted by the Treasurer a year
But Mr Fletcher wasn t quite
He wanted to make it clear the
huge cost blowout wasn t his or
Techport s fault.
At the Public Works Committee
hearing he asked to go "off
the record" and proceedings
continued in camera.
The Independent Weekly has
seen a transcript of the in-camera
proceedings where Mr Fletcher
bemoans the requirement for
such projects to be handled
through the Department of
Transport Energy and
"My understanding is that
DTEI were the holder of the skills
base for this sort of work in the
government and there had been
projects in other areas, health
and whatever, which had got a bit
out of control," he said.
"The result was the usual thing
you often find in government
-- there was a blanket ruling: if
you are going to build a building
you will involve DTEI, or if you
are going to do any project it will
He explained further that DTEI
took a 2-3 per cent fee for their
involvement and he understood
why governments took such
actions -- that is, they had to
preserve their risk.
Fletcher then explained
how there was a better way for
governments to perform in major
projects such as Techport (see
His point made, the committee
went back on the record to discuss
drainage and recommended
Much has been promised
about the impact of the Techport
facilities and their capacity to
attract new tenants, create jobs
and wealth etc.
Andrew Fletcher is on the
record in June 2007 saying he was
getting very close to signing up
some nice earners.
"We have a list of 14 very seri-
ous tenants and potential owners
that are queued that we have been
engaged with. Six of them are, I
think, just about sure.
"There is a list of others who,
now that they are starting to
understand the opportunities that
will flow from the program, have a
huge amount of interest."
When Techport officially opens
on February 15, the tenants will
be the same as those lured a
couple of years ago.
Raytheon, from its Payneham
location, the government-funded
Maritime Skills Centre, ASC and
the AWD systems centre.
Some space in the Suppliers
Centre has been sold, but it s not
known whether tenant businesses
have moved in.
In a subtle reminder of how
we sit in the AWD project, the
Government s own major projects
directory states that two thirds
of the work will take place
"The AWDs will be built
using a modular construction
method involving fabricated and
pre-outfitted hull blocks, which
are then joined together to form
a completed ship," the directory
"70 per cent or 66 blocks will
be constructed at interstate
shipyards, and transported to
Techport Australia for consolida-
tion. The remaining 27 blocks
will be built at ASC s facility at
Just this week the Australian
welcomed the opening of a
$60 million floating dock in
Western Australia -- "a critical
part of ASC s Western Australian
submarine maintenance opera-
tions", according to ASC s CEO
"The floating dock will
ensure that ASC can continue
to provide to the frontline of
Australia s naval defence force by
supporting the maintenance of
the Collins Class submarines at
the Australian Marine Centre (in
Henderson, Western Australia).
"Along with land-transfer
capability and ASC s mainte-
nance hall, the opening of the
dock means ASC is now able to
carry out maintenance on as
many as three submarines at any
"We re extremely pleased to
be a key user of this world-class
dock and congratulate the West
Australian Government for their
commitment to infrastructure
upgrades at the AMC," Mr
Back in Adelaide this coming
week, the illusion will be main-
tained that we are the centre of
the defence industry universe.
When the ribbon is cut and the
back slapping begins, who will
ask the question -- have we spent
$400 million wisely?
Techport -- masterstroke
or massive blowout?
Techport CEO Andrew Fletcher
believes there is a better way for
government's to deliver major
Part of his "in camera"
evidence outlined his theory.
"It is very hard, whether you
are in the private sector or
government, to deliver things
within expectation, time and
budget unless you have a
suitable skilled and assembled
team who are focussed on the
Then Mr Fletcher delivered
a double-whammy for public
servants and their masters.
"One of the things I have
noticed in government, and
maybe it is a fault of the
Westminster system, but it is
not all that often that you get a
sole point of responsibility and
that is a fundamental weakness.
"As soon as you get two or
three ministers, department
heads, players in it that are
responsible, risks get hand-
balled. It just doesn't work," he
told the committee.
"It doesn't matter whether you
are in government or anywhere.
You have got to have people who
"That is the other area; we
are not good at holding people
accountable in government."
Too few held
WA's ship lift at the Australian Maritime Complex at Henderson.
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