Billion dollar Defence tender for Boxer combat vehicles only 'partly effective', Auditor-General report finds

The Auditor-General's report into a 2018 Department of Defence tender, released Thursday, highlighted some flaws in the process eventually awarded to contractor Rheinmetall in a $4.28 billion deal.

While it found Defence was effective in detailing its requirements and evaluating the tender process, the report said a number of aspects lacked other details and skipped steps, resulting in being "partially effective".

It added there were "gaps" in relevant documentation relating to the tender process as well as shortcomings in the project's management of conflict of interest.

"Defence's management in these respects has not been fully effective for a project that is developmental in nature and is to replace a capability that is expected to reach its life of type in 2020," the report read.

"Further, key executive reporting mechanisms for the project do not accurately reflect the project status."

The $4.28 billion contract forms part of a larger capability upgrade, referred to as Land 400, that will undertake four discrete projects, including the Australian Army's new fleet of more than 200 Boxer combat reconnaissance vehicles.

It's estimated to cost somewhere between $14 and $20 billion once fully delivered.

Twenty-five of the Boxer vehicles are expected to be delivered by December 2020 to provide an early deployable capability with a further 186 vehicles due between February 2022 and January 2027.

Defence responded it agreed with the report's findings, noting two companies had declined to bid for the tender as a result of its shortcomings.

"Defence acknowledges the findings in relation to the tender process, and that schedule constraints, coupled with the costs of participating in the 12-month risk mitigation activity, resulted in at least two companies declining to bid," a response to the report by Defence read.

"These are important lessons that have already been applied to other major acquisition programs, including Land 400 Phase 3."

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The Auditor-General recommended tender processes be properly reviewed in future to ensure they were properly followed.

Defence maintained the process still managed to deliver a "lethal, relevant and effective land combat vehicle capability" for Australia's future.

"Over the 30 years that the CRV is expected to be in service, this approach will direct more than $10 billion toward local defence industry, employ significant numbers of Australian workers and support potential export opportunities," Defence's response read.