Radar contract extension delivers improvements (Australia)

May 12, 2011 SHEPARD GROUP Source: BAE Systems Australia

BAE Systems has signed a new contract to continue supporting Australia's strategic Over the Horizon Radar (OTHR) system that will deliver major savings in support of Defence's Strategic Reform Program (SRP).

The Company has supported OTHR development, sustainment and operations since the mid- 1980s.

Throughout the contract, BAE Systems has pursued initiatives to deliver savings and efficiencies.

BAE Systems Managing Director Jim McDowell said when the SRP was announced in 2009, the company committed to deliver further cost savings.

"Working closely with the OTHR Systems Programs Office and in line with the SRP, the new agreement will deliver in excess of 16% savings over the five year contract.

"This has been achieved without adversely impacting on the Royal Australian Air Force (RAAF)'s OTHR operational capability," Mr McDowell said.

The five-year contract extension, with options to extend for a further nine years is valued at AUD $116 million.

Under the contract, 120 BAE Systems employees (based in Adelaide and the Northern Territory) will provide maintenance, logistics, engineering development, installation, verification and validation, operator training and support to the operation and enhancement of Radar Three and other key elements of the Jindalee Operational Radar Network.

"Working closely alongside the OTHR Systems Programs Office we have been able to achieve an agreement that includes both the necessary cost savings and incentivisation framework, and one that incorporates a culture of continuous improvement," Mr McDowell said.

Key features of the new contract include:

· Significant subcontract, materials and labour cost savings

· Incorporation of a new Efficiency Program that will help to identify further efficiencies using a LEAN approach

· Simpler contract model incorporating pain/gain share has reduced back office overhead and provides a genuine incentive to the Contractor, and

· Increased operational availability and improved operational flexibility delivered within existing contract labour profile.