Research report

Conduct of the OneSKY tender

10 Apr 2017
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Description

Audit objective and criteria

The objective of the audit was to assess whether the OneSKY tender was conducted so as to provide value with public resources and achieve required timeframes for the effective replacement of the existing air traffic management platforms. To form a conclusion against the audit objective, the following high level criteria were adopted:

  • Was the OneSKY tender process based on a sound business case and appropriate governance arrangements?
  • Did the tender process result in the transparent selection of a successful tender that provided the best whole-of-life value for money solution at an acceptable level of cost, technical and schedule risk, consistent with the RFT?
  • Did negotiations with the successful tenderer result in constructive contractual arrangements that ensured continuity of safe air traffic services, the managed insertion of an optimum system of systems outcome within required timeframes, and demonstrable value?

The Conditions of Tender had envisaged contracts would be signed in April 2015. As of January 2017, whilst a contract for the entire acquisition and support scope has not yet been executed, a number of contracts have been entered into through an Advanced Work Supply Arrangement for the acquisition contract scope, the first of which commenced in July 2015. Defence has advised its Ministers that contract signature for the entire acquisition and support scope is unlikely to occur before mid-2017. As such, this performance audit has not examined criterion 3.

Conclusion

The design of the OneSKY tender process was capable of producing a value for money outcome. The successful tenderer was assessed as significantly stronger in terms of technical capability as well as involving much lower schedule risk. The successful tenderer had also submitted significantly higher acquisition and support prices than the other tenderers. Adjustments made by the Tender Evaluation Committee (TEC) to tendered prices suggested that the successful tenderer offered the lowest cost solution. The TEC’s approach did not highlight to decision-makers the trade-off that needed to be made between the technical merits and cost of the competing tenders. There have also been significant delays with the conduct of the OneSKY tender process.

A two-stage tender process was employed involving a Request for Information (RFI) followed by a Request for Tender (RFT). This approach was appropriate for the scale, scope and risk of the joint procurement. It promoted a healthy level of competition for the procurement, with 23 responses to the RFI and nine tender responses received from six tenderers (two respondents offered a total of three alternate tenders). The RFT was released to the market in June 2013, 18 months later than the expected December 2011 release. This delay was further compounded by tender evaluation activities taking more than twice as long as planned. Contracts are unlikely to be signed prior to mid-2017, at least 40 months after tender evaluation commenced.

The evaluation governance arrangements were appropriate. They provided an approach that was capable of identifying the best value for money tender. They also guarded against the conflicts of interest issues identified in ANAO Report No.1 2016–17 impacting on the tender evaluation process and outcome.

Tender evaluation proceeded through the planned phases, with competitive pressure maintained until late in the process. The records of the evaluation process evidence that the successful tender was assessed to be better than the other remaining candidates from a technical and schedule risk perspective. It is not clearly evident that the successful tender offered the best value for money. This is because adjustments made to tendered prices when evaluating tenders against the cost criterion were not conducted in a robust and transparent manner. Those adjustments meant that the tenderer that submitted the highest acquisition and support prices was assessed to offer the lowest cost solution. It is also not clearly evident that the successful tender is affordable in the context of the funding available to Airservices and Defence.

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