13 Dec 2017

Frigates' costs blowout by $265m

9:46 pm on 13 December 2017

The cost of upgrading two of the navy's frigates has now blown out by a total of $265 million - 70 percent of the original cost.

The HMNZS Te Mana

The HMNZS Te Mana Photo: Supplied / New Zealand Defence Force

It's not the first time this project has run into trouble.

The previous National government admitted last year the upgrade would cost $100 million more than budgeted.

Then earlier this year the Treasury warned careful management was needed after the cost went up again.

Defence Minister Ron Mark said the government had now discovered the blow out had increased by a further $148 million.

"This government has discovered a range of cost pressures and procurement overspends across several portfolios. This Defence project is the largest such example to date," he said.

"There has been a series of inaccurate estimates and project management errors by the Ministry of Defence, compounded by a failure to act by previous ministers."

The project would now cost a total of $639 million and would ensure the two navy frigates received upgraded missile defence, radar detection and torpedo decoys.

Mr Mark said the government decided against finding a new company to complete the upgrade and a revised contract had been signed with Lockheed Martin Canada.

He had made it clear there would be no more delays or cost increases, he said.

"The systems on board [the frigates] are already considered to be outdated and of questionable effectiveness and safety. This project was signed off to happen in 2008, it is now 2017.

"What is the National Party suggesting? We wait another nine years and dither and go on the hope that we may find another tenderer?"

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