Reports and Publications

• Annual Report 2005
  • Contents
  • Part 1 Overview
  • Part 2: Statement of responsibility and audit report
  • Part 3: Departmental financial statements
  • Part 4: Non-departmental schedules
  • Part 5: Other information

Within this section

Output Class - Management of equipment procurement (continued)

4. Acquisition of medium range anti armour weapon for the Army

5. Acquisition of direct fire support weapon (area) for the Army

6. Acquisition of very low level air defence radar for the Army

7. Upgrade and refurbishment of C-130H aircraft for the Air Force

Annual Report for the year ended 30 June 2005

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Part 3: Departmental financial statements (continued)

Output Class - Management of equipment procurement

4. Acquisition of medium range anti armour weapon for the Army This weapon will provide land forces with a medium range capability against armoured vehicles and other targets.
Target	Delivered
A contract through the United States Foreign Military Sales programme for the missiles and launch units was entered into in December 2003, with deliveries expected to be complete by June 2006.	The project remains on target for delivery in August 2006.

Financial summary of project costs charged to non-departmental appropriations as at 30 June 2005 (GST inclusive)
	$
Project approval	23,856,000
Foreign exchange variances to date and forecast to complete	(1,750,424)
GST	2,982,000
Total approved cost	25,087,576
GST exclusive
Expenditure to 30 June 2004	2,136,233
Expenditure 2004/05	9,084,210
Future commitments and forecasts	10,707,742
	21,928,185
GST
GST to 30 June 2004	-
Expenditure 2004/05	125
Future commitments and forecasts	2,965,845
	2,965,970
Total forecast cost to complete	24,894,155

• Foreign exchange variances at 30 June 2005 are favourable by $1.750 million due to the purchase rates of the USD currency being better than the USD exchange rates used in the Cabinet paper for financial approval.
  
  USD approval rate = 0.5841
  USD forecast average rate = 0.6436
• Commitments and forecasts are valued using an average exchange rate of forward contracts still to be settled, plus the actual exchange rates for currencies in the bank. The exchange rate used to calculate commitments and forecasts at 30 June 2005 was USD = 0.6600.

5. Acquisition of direct fire support weapon (area) for the Army This weapon will provide land forces with the ability to engage targets at a range of up to two kilometres.
Target	Delivered
The intention is to enter into a contract for the acquisition of this equipment by 30 August 2004.	Due diligence and evaluation of options to meet New Zealand requirements were completed in September 2004. A satisfactory combined weapon and sighting system is not available at this time and further consideration is necessary. A revised project strategy will be provided to Government in due course.
Further project milestones, including delivery, will be known once a contract is awarded.	No contract has been awarded.

Financial summary of pre-acquisition costs charged to departmental output class - Management of equipment procurement in 2004/05 (GST exclusive)
	$
Budget for pre-acquisition costs	75,000
Expenditure to 30 June 2005	46,631

6. Acquisition of very low level air defence radar for the Army This project will purchase an alerting and cueing system to bring the Army Mistral air defence system up to an improved operational standard.
Target	Delivered
It is planned to enter into a contract for the acquisition of this equipment by 30 June 2004.	A contract for the alerting and queing system was awarded on 28 May 2004. A contract for the identification of friend or foe system was awarded on 5 October 2004.
Further project milestones, including delivery, will be known once a contract is awarded.	Delivery of all equipment is expected by September 2006.

Financial summary of project costs charged to non-departmental appropriations as at 30 June 2005 (GST inclusive)
	$
Project approval	13,728,376
Foreign exchange variances to date and forecast to complete	335,333
GST	1,716,047
Total approved cost	15,779,756
GST exclusive
Expenditure to 30 June 2004	1,630,655
Expenditure 2004/05	2,137,582
Future commitments and forecasts	10,295,472
	14,063,709
GST
GST to 30 June 2004	6,918
Expenditure 2004/05	1,811
Future commitments and forecasts	1,707,318
	1,716,047
Total forecast cost to complete	15,779,756

• Foreign exchange variances at 30 June 2005 are unfavourable by $0.335 million due to the purchase rates for the EUR currency being less than the EUR exchange rate used in the Cabinet paper for financial approval.
  
  EUR approval rate = 0.5187
  EUR forecast average rate = 0.5057
• Commitments and forecasts are valued at an average of the exchange rate of forward contracts still to be settled, plus the actual exchange rates for currencies in the bank. The exchange rate used to calculate commitments and forecasts at 30 June 2005 was EUR = 0.5056.

7. Upgrade and refurbishment of C-130H aircraft for the Air Force This project will extend the life of the Royal New Zealand Air Force C-130H Hercules aircraft by upgrading the aircraft systems and undertaking some structural refurbishment work.
Target	Delivered
The intention is to complete the evaluation of the Best and Final Offers from the four tenderers, and following consultation, make recommendations to the Government in late 2004.	An evaluation of a Best and Final Offer was completed in July 2004. A preferred tenderer was announced on 6 August 2004 and Government approval to commence contract negotiations was obtained on 11 October 2004. A contract with Spar Aerospace Limited, Edmonton, Canada, was signed on 14 December 2004. A contract was signed with the preferred tenderer on 14 December 2004. The first preliminary design review (PDR) for the Fatigue Improvement Modification (FIM) element of the project was successfully completed in June 2005. The preliminary design review (PDR) for Mechanical Systems and Structural was held in June 2005.

Financial summary of pre-acquisition costs charged to departmental output class - Management of equipment procurement in 2004/05 (GST exclusive)
	$
Budget for pre-acquisition costs	130,000
Expenditure to 30 June 2005	124,526
Financial summary of project costs charged to non-departmental appropriations as at 30 June 2005 (GST inclusive)
	$
Project approval	233,739,000
Foreign exchange variances to date and forecast to complete	(1,887,722)
GST	29,217,000
Total approved cost	261,068,278
GST exclusive
Expenditure to 30 June 2004	-
Expenditure 2004/05	43,962,237
Future commitments and forecasts	187,888,645
	231,850,882
GST
GST to 30 June 2004	-
Expenditure 2004/05	6,100
Future commitments and forecasts	29,210,899
	29,216,999
Total forecast cost to complete	261,067,881

• Foreign exchange variances at 30 June 2005 are favourable by $1.888 million due to the purchase rate for the CAD currency being better than the CAD exchange rate used in the Cabinet paper for financial approval. The USD rate is slightly unfavourable.
  
  CAD approval rate = 0.7857
  CAD forecast average rate = 0.8435
  
  USD approval rate = 0.6748
  USD forecast average rate = 0.6680
• Commitments and forecasts are valued using an average exchange rate of forward contracts still to be settled, plus the actual exchange rates for currencies in the bank. The exchange rate used to calculate commitments and forecasts at 30 June 2005 were CAD = 0.8413 and USD = 0.6600.

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