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Smith under attack from losing bidder

Date

David Ellery

Defence Minister Stephen Smith has rejected claims by a losing bidder that proper processes weren't followed in awarding a major contract.

He is adamant a proper competition was conducted to choose Australia's next battlefield airlifter and he had told the truth when he said so on Thursday.

Mr Smith was accused of being untruthful by one of the losing bidders for the plane contract - which will cost taxpayers $1.4 billion - yesterday.

''Airbus Military is obliged to place on the public record our disappointment at the Minister's choice of words,'' a spokesman said. ''There was no tender process and certainly no competition.''

Mr Smith's office denies this, saying information had been sought from a range of suppliers during 2011.

''Alenia [the winning bidder], Airbus Military, Raytheon and the US FMS office were asked to participate in the process,'' a spokesman said.

''This competitive, comprehensive and comparative analysis was conducted by Defence, the Defence Materiel Organisation and Airforce. An equal and same opportunity was given to both Airbus Military and Alenia.''

Airbus Military doesn't see it that way, claiming due diligence was lacking and that Defence is now spending three times as much money for planes that can't be delivered before 2015.

''Defence seems to have rejected its own tried, tested and proven process of evaluating competing platforms,'' the spokesman said. ''Selection of the C-27J for $1.4 billion appears to have been based largely on the RAAF's own desktop assessments. This effort falls short of a full evaluation process.''

Airbus said it could have had planes ready for delivery in six months - not three years - and costing a third of what is going to be paid for the C-27J.

''Despite Airbus Military expending considerable resources responding to inquiries and requests for rudimentary information we are concerned the outcome may have been predetermined from the start,'' the spokesman said.

An industry insider said there had been plenty of time to conduct a rigorous and formal competition between the two planes - the Rudd government retired the Caribous, which the new aircraft will replace, in 2009 and the ADF has been having to make do in the meantime.

''The Minister says 10 C-27Js will cost $1.4 billion - isn't that close to or even more than what you would pay for a JSF,'' he said. ''My understanding is nine of the 10 Australian aircraft are ones the US [which has mothballed its C-27J fleet] is no longer taking. I believe the US price was around $30 million or $31 million a unit [roughly the same as the C295]. Why are they costing us so much?''

Mr Smith's office said the C295 price being quoted by Airbus was ''aircraft only''.

The C-27J contract includes 10 planes, modifications to bring them in line with ADF operational requirements, spare parts, training and other establishment costs, testing, certification to Australian standards and facilities to house them.

''Airbus would be aware of these essential program costs being included in Defence projects through its own experience with the KC-30A multi-role tanker [and] transport aircraft project,'' the spokesman said.

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