Assistance to Defence

AGS assisted the Defence Materiel Organisation (DMO) to conduct a tender process to establish an innovative, performance-based contract for support and maintenance of the RAAF fleet of C-130J Hercules aircraft.

DMO initiated the C-130J Through Life Support Project to establish a performance-based support contract for the C-130J Hercules fleet. The project goal was to secure:

• improved delivery of sustainment services
• a performance-based support arrangement through to the C-130J planned withdrawal date of 2030
• a long-term relationship with industry to deliver improved value for money
• full price disclosure, with profit related to risk and performance
• a meaningful transfer of risk from DMO to the contractor.

In August 2007, DMO released Requests for Tender seeking Through Life Support services for the RAAF fleet of C-130J Hercules aircraft. Following tender evaluation and contract negotiations, in March 2009 DMO awarded a contract to Australian Aerospace and sub-contractor Lockheed Martin.

The contract, which is valued at $292 million, will provide innovative solutions to C-130J maintenance and is designed to reduce the cost of ownership into the future. Australian Aerospace and Lockheed Martin will deliver services including aircraft maintenance, engineering and supply chain management. The five-year performance-based contract links annual contract extensions to contractor performance and cost reduction, thereby promoting efficiency and delivering real cost savings. Subject to contractor performance, support of C-130J aircraft will continue under this contracting strategy until the fleet’s planned withdrawal date. 

Australian Aerospace’s contract arrangements will provide Defence with an improved delivery of services, performance-based long-term support arrangements, a focus on the relationship with the Commonwealth, price disclosure and a meaningful transfer of risk.

AGS’s team acted as probity adviser to DMO in relation to this competitive tender process. This included assisting in developing the Request for Tender documentation, advising on tender evaluation methodology and evaluation issues as they arose, and delivering briefings to tender evaluation personnel.