Audit questions $653m Army purchase

An audit of the Army purchase of 105 light armoured vehicles has questioned buying so many when plans for their use have changed.

Auditor-General Kevin Brady's report, released yesterday, also says the pivotal August 2000 Cabinet paper on the purchase failed to address crucial issues, meaning the LAV3 project faces "funding and personnel shortfalls".

But Defence Minister Mark Burton has dismissed the report's main findings and the Chief of Defence Force, Air Marshal Bruce Ferguson, has defended buying 105 LAVs, saying the Army needs them all.

The Government signed a $652.8 million contract in January 2001 for the Canadian-built wheeled vehicles to replace the ageing M113 tracked personnel carriers.

The audit was originally intended as a follow-up to an audit released in August 2001 to assess the Army's analysis of the LAV's maintenance requirements, but the report notes that it soon became apparent the scope needed to be widened.

The report questions the change in use of the LAVs, saying it should have had Cabinet approval as it is "significantly different" from the plan which formed the rationale for buying 105 vehicles.

The original rationale was for the Army to be able to deploy a motorised battalion of 51 vehicles, which could be fully replaced by an identical battalion when required. But the Army adopted a more flexible approach to meeting the Government's expectations, with a different distribution of LAVs in bases nationwide.

The report says the Audit Office was unable to establish whether 105 LAVs were needed under current plans.

"However, in our view it could be possible for the Army to deliver its obligations ... with fewer than 105 LAVs."

The report also slams the August 2000 Cabinet paper, saying it should have included an indication of how and when the Army would be able to deploy and sustain a 51-vehicle battalion.

That would have needed "at a minimum" an assessment of the ability to train crews, a training timetable, future personnel levels and a human resources strategy.

The report says the findings also provide a "vital lesson" for other Government departments that proposed capital purchases should identify and assess all the "financial and capability implications".

The report also notes a $9.8 million blowout in the estimated yearly running costs of the LAVs, to $48.8 million.

Mr Burton dismissed the report's main criticisms, saying the consistent advice of "senior military advisers" was that the Army would need all 105 LAVs to deliver the capabilities required.

And the changed use of the LAVs was "clearly an operational matter for the Army".

Air Marshal Ferguson said he had objected in writing to the report's questions about the number of LAVs purchased.

"If you find their logic for that ... can you please let me know because it's not there."

He accepted criticism of the August 2000 Cabinet paper, but said the Defence Force now had "unrecognisably different" processes in place.

The report makes nine recommendations, including assessing the full effects of the shortage of crews for the LAVs.

New Zealand First defence spokesman Ron Mark said the Government had ignored Secretary of Defence Graham Fortune's recommendation to buy only half the number of LAVs.

LIGHT ARMOURED VEHICLES

* What are they? The Government signed a contract in 2001 to buy 105 LAVs for $652.8 million to deploy a motorised battalion group.

* What's wrong with them? The Auditor-General says the Army is still two years away from having enough trained personnel to run the LAV fleet.

* What does the Government intend to do? Not a lot. Defence Minister Mark Burton says the Army needs the vehicles.