Part 8: Safeguarding Project Protector's operating funds
8.1
In this Part, we discuss whether NZDF ensured that the Navy had enough funds to operate the new Protector Fleet when it arrived.
NZDF set aside funds to operate the new Protector Fleet. Delivery of the fleet was delayed and NZDF allocated unused funds for other purposes. NZDF told us that it will give high priority to recruiting and preparing crews to operate the new vessels.
8.2
Project Protector is a project to buy seven new patrol vessels and introduce them into service. NZDF was to set aside enough operating funds to recruit and prepare crews to operate the vessels when they arrived. Operating funds pay for personnel, maintenance, fuel, and depreciation.
8.3
The Protector Fleet was meant to arrive at intervals during the foundations phase. Therefore, NZDF set aside funds in increasing annual amounts to operate the fleet – from about $5 million in the first year to about $61 million in the third year (see Figure 1).
8.4
Some of the funds were used to recruit and prepare personnel to operate the first vessels that were due to arrive. However, production issues meant that the delivery of the fleet was delayed. As a result, some personnel left the Navy. This meant that the Navy needed only about 38% of the funding that it had originally planned to use for operating costs during the foundations phase (see Figure 1).
Figure 1
Project Protector's planned and actual operating expenditure during the foundations phase
| Financial year | Planned expenditure $m |
Operating expenditure as at 30 June $m |
Expenditure as % of budgeted amount |
|---|---|---|---|
| 2005/06 | 5.1 | 5.9 | 115.69% |
| 2006/07 | 31.0 | 5.4 | 17.42% |
| 2007/08 | 60.5 | 25.8 | 42.64% |
| Total | 96.6 | 37.1 | 38.41% |
Source: NZDF.
8.5
The acquisition difficulties mean that NZDF will need to repeat the recruiting and training cycle to operate the Protector Fleet. NZDF told us that it will give priority to recruiting and preparing crews for the vessels.