Orion spending decision flies in face of Clark’s previous policy

Labour’s move to reorient defence aircraft to protect the seas around New Zealand rather than carrying out Coalition duties in overseas conflicts has been dropped. NICKY HAGER looks at what caused the U-turn. NO ONE said it openly, but an unpublicised cabinet decision in late January signalled the end of Labour’s policy of reorienting the defence forces.

The US arms supplier L-3 was selected as favoured tenderer for a high-tech upgrade of New Zealand’s Orion aircraft, making it likely the $300 million contract will be approved by government later this year.

Defence had submitted similar proposals for a high-tech Orion upgrade twice to cabinet, in August 2000 and May 2002.

Each time Prime Minister Helen Clark rejected the proposal, aware that the decision was fundamental to future defence policy.

She instructed Defence to find less costly options that gave priority to protecting the seas around New Zealand rather than Coalition duties in overseas conflicts.

However, since then, Defence has secured cabinet backing for essentially the same proposal and the choice of L-3 appears to cement the Coalition-focused option.

The original Orion upgrade proposal in 2000 consisted of sophisticated radars, infrared sensors for detecting targets at night and through cloud, electronic eavesdropping equipment, anti-submarine sensors, a powerful central computer to process the surveillance data, and communications gear to feed the results to allied forces.

Defence’s preferred supplier was the US Raytheon Corporation, which had fitted the same equipment on US and Australian Orions.

After the government rejected this option, Clark oversaw a special review of the Orions, the Maritime Patrol Review, chaired by her defence advisor Pat Helm.

The Helm Review concluded that the urgent priority for the Orions was patrolling around New Zealand and recommended that capabilities for “major coalition war with advanced military nations” be dropped.

He estimated that a good upgrade for regional roles would cost about $10m-12m per aircraft.

But 15 months later Defence came back to cabinet with much the same proposal. Clark rejected it and again sent the officials away to implement Helm’s recommendations. But they didn’t.

The selection of L-3 this year is as if the Helm Review never occurred.

The L-3 proposal involves almost exactly the same components as the rejected 2000 proposal and has the same preferred tenderer (in between Raytheon changed its name to L-3 Communications Integrated Systems). L-3 is now preparing its “best and final offer” for a final government decision later this year.

The New Zealand dollar price is down from $390m in May 2002 to about $300m now – the result of savings on communications equipment, not changes to surveillance capabilities. That is still five times the cost of Helm’s option and an astronomical sum for electronics on six aircraft.

The main difference between the 2000 and 2004 proposals was deleting submarine detection from the project.

This wasn’t a concession to the Helm Review, which assessed an anti-submarine capability as “hard to justify”.

Confidential defence papers show that defence officials decided simply to defer the anti-submarine expenditure.

Minutes of a high level defence meeting record that officials considered the Orions’ anti-submarine role (which Clark has publicly opposed) as a “priority” and made plans to preserve the capability.

Work is under way on an Acoustics System Upgrade, involving new acoustic recorders and processing computers that detect submarine sounds.

Once the main Orion upgrade is secured, the plan is to buy these and magnetic anomaly detectors through minor capital project funding.

Until then, existing anti-submarine equipment is being retained.

Hiding the anti-submarine plans was part of a wider campaign by defence officials to manoeuvre their plans through cabinet.

Internal Orion documents refer to managing “political risks” – making sure cabinet ministers won’t oppose their plans.

One Orion upgrade document discusses managing political risk by ensuring officials avoid “media attention” and “political interest” in the project.

Defence’s political strategy has consisted of repackaging the war-fighting Orion plans to sound like the new role recommended in the Helm Review.

A November 2002 cabinet paper claimed that “meeting the civilian agency requirements around New Zealand [fisheries, customs, police etc] is the core of the upgrade” with only a “contingent military capacity” on top of this. This was untrue.

Defence submissions to government presented three upgrade options. Options one and two supposedly covered most or all civilian requirements (costing $40m and $45m per aircraft respectively). Option three was only an extra $5m per aircraft for adding all “government’s defence policy objectives”.

It was a classic bureaucratic trick, since the “civilian” options contained nearly all the high-tech military capabilities (such as target data management computers) Helm had said were only necessary for Coalition warfare.

Documents said that new navigation and communications equipment was required to comply with international air traffic regulations. Again this was misleading. An article in Air Force News printed shortly after began: “Upgrading the P-3 Orion’s communications and computer systems allows greater communication and information sharing with [Coalition] partners in a task force environment.”

At each stage Defence Minister Mark Burton signed off the papers, agreeing to tender conditions that entirely contradicted his prime minister’s review. The turn-around in policy was eased by bureaucratic subterfuge combined with a minister who wasn’t really interested.

Defence officials also worked to avoid the “political risk” of media attention by keeping the process as secret as possible. For instance, the Ministry of Defence has refused to release the Orion upgrade tender documents under the Official Information Act despite a seven-month investigation by the ombudsman.

Tender documents are important because they show what Defence actually intends, as opposed to what it tells ministers.

For instance, in 2000 officials told cabinet the Orion upgrade was primarily to help catch illegal fishing boats around New Zealand. This deception came unstuck – and the project failed to get government approval – when a select committee obtained the tender documents and found that the key specification was for the upgraded Orions to be “employed as part of a larger Coalition force integrated into an international, probably US-led, coalition maritime order of battle”.

This experience may explain why Defence has kept the tender documents secret this time.

But other documents make it clear what Defence is planning.

A confidential briefing for defence chiefs last year states that the Orion upgrade would allow New Zealand to keep up with the US allies’ shift to “Intelligence, Surveillance and Reconnaisance (ISR) operations” for their Orion squadrons. The briefing says that the upgrade will allow “development of an ISR based role for the upgraded P3K Orion” – a refocusing of Orion functions “in the direction of ISR with EW [electronic warfare] emphasis”.

This is not talking about civilian maritime patrols around New Zealand.

In recent years US and allied Orions have undergone a fundamental shift in roles – involving equipment upgrades just like the one planned here.

Orions, originally designed in the 1960s for hunting Soviet submarines, began a transition when they were used to detect and target Iraqi vessels during the 1991 Gulf War. More recently US Orions were used extensively in the Afghanistan War for intelligence gathering and surveillance.

In the bloody Anaconda battle in March 2002, in which New Zealand SAS troops fought, US Orions flew back and forth for days using high-tech radars, cameras and heat detectors to locate groups of Afghan fighters.

According to a report in Aviation Now, the aircraft can “feed live, streaming video to special operations teams on the ground or a carrier battle group staff at sea”. This is part of the new Orion “ISR” role of intelligence gathering and surveillance in a conflict zone.

A US military officer quoted in the Washington Times said Orions had “emerged as special operations troops’ favourite surveillance asset”.

New Zealand Orion upgrade documents include a new specification of “supporting . . . special forces in potentially hostile environments”.

Other Middle East-based Orions monitor shipping to back up Navy operations. New Zealand Orions, designated Operation Troy, took part in this “war on terror” shipping surveillance last year, based at an undisclosed location (in fact, an airfield in the United Arab Emirates) with other US-led forces.

The US and allied Orions in the Middle East are packed with precisely the high tech sensors and communications gear that have been approved for the New Zealand Orions.

The Operation Troy Orions had a temporary upgrade with this equipment. In this context, it’s not surprising that the government accepted an Orion upgrade that gave priority to compatibility with US Coalition operations.

Meanwhile, the Orions continue to spend very little time patrolling around New Zealand.

The Helm Review called for a ten-fold increase in aerial surveillance for fisheries and customs. The Orion schedules have ignored this.

Clark would not comment, referring questions to Burton. He said government acceptance of the MoD Orion upgrade tender specifications and the L-3 proposal did not imply a shift in Defence policy. “The core of the upgrade is meeting the requirements of civilian agencies such as Fisheries and Customs, around New Zealand,” he said.

But reading Burton’s recent speeches, his main policy statements are that Labour will spend more on the military than National did and send more troops overseas than National did. Words such as “regional”, “peacekeeping” and “independent” have dropped from the rhetoric.