DEFENCE ESTATE REGENERATION

Transcription

1 DEFENCE ESTATE REGENERATION

2 FOREWORD The Defence White Paper 2016 confirms the Government s policy decisions to invest in the Defence Estate (the Estate). The Estate is a core enabler and strategic asset for the Defence Force. The Estate provides the property, infrastructure and facilities to generate and maintain military skills and capabilities. It enables the Defence Force to respond to the contingencies expected of it by Government, and provides support to other government agencies and the community. Comprising 81,000 hectares and over 5,000 buildings, this sizeable footprint and asset base demands significant investment. Investment has fallen considerably short of what is needed to maintain an Estate of such scale and condition. Change is required in the management of the Estate. Without intervention, there is a risk that the Estate will become increasingly unfit for purpose, impeding the delivery of military operational outputs. An indicative capital funding track of $1.7 billion has been allocated over a 17 year period from 2013/14 to 2029/30. This is the scale of investment required to address the effects of an accumulated maintenance backlog, as well as future upgrades and replacement across the Estate. Investment will centre on solutions that are expected to deliver value for money, and at the same time will seek to support military capability and outputs in the most cost effective way. Government direction in the Defence White Paper 2016 is clear the Defence Force will maintain a substantial presence in its current major locations and training areas for the foreseeable future. However, internal reorganisation and rationalisation will need to occur to support operational requirements. The Estate will not be constrained by the current configuration assets will be removed where unnecessary duplication exists. The Estate asset portfolio will be optimised and consolidated, delivering fewer, high-quality and fit-for-purpose assets. Although there will be no base closures, it is expected there will be movement of personnel between camps and bases. Going forward, the Estate will also provide enhanced opportunities for all-of-government collaboration, with asset configuration reflecting multiple agency use where feasible. Alternate delivery models (e.g. Public Private Partnerships) will be considered where it makes sense to do so. Asset delivery will be grouped in such a way that sufficient scale exists to attract competitive providers capable of delivering sustained benefits to the Defence Force (e.g. grouping by asset class). To underpin investment in the Estate, the Defence Force will increasingly focus on improving its internal asset management practices.

3 CONTENTS THE DEFENCE ESTATE REGENERATION PROGRAMME PLAN 1 PURPOSE OF THE PLAN 1 WHAT IS ESTATE REGENERATION? 1 1. THE DEFENCE ESTATE 3 OVERVIEW OF THE ESTATE 6 THE ESTATE SUPPORTS MILITARY CAPABILITY 7 ESTATE ENVIRONMENTS 7 2. STRATEGIC CONTEXT 9 THE NEW ZEALAND DEFENCE FORCE 11 GOVERNMENT POLICY DIRECTION 12 DEFENCE FORCE STRATEGIES, POLICIES AND PLANS 13 KEY CHALLENGES THE REGENERATION RESPONSE 17 THE OPPORTUNITY 19 INVESTMENT OBJECTIVES: 20 THE BENEFITS 21 APPROACH TO ESTATE REGENERATION 22 BALANCED INVESTMENT ASSET MANAGEMENT APPROACH 25 GOVERNMENT ASSET MANAGEMENT 27 ESTATE ASSET MANAGEMENT APPROACH DELIVERY OF ESTATE REGENERATION 29 DEFENCE SPECIFIC CONSIDERATIONS 31 DELIVERY STRATEGY 31 THE FOCUS OF DELIVERY 32 INDICATIVE FIVE YEAR PROGRAMME 33 Headquarters New Zealand Defence Force 2 12 Aitken Street Private Bag Wellington 6011 Phone: (04) Facsimile: (04) New Zealand Defence Force Website: Crown Copyright

4 THE DEFENCE ESTATE REGENERATION PROGRAMME PLAN The Defence Force s Mission, simply stated, is to secure New Zealand against external threat, and to be able to take action to meet likely contingencies in our strategic area of interest. PURPOSE OF THE PLAN The Defence Estate Regeneration Programme Plan (the Plan) provides the framework for regeneration, management and use of the Defence Estate (the Estate) out to This document is a public summary of the Plan. The Plan follows better business case principles and meets Cabinet Office requirements (CO (15) 5) for long term infrastructure investment and asset management. The Plan seeks: to deliver on the recommended option of an integrated approach to Estate regeneration to convey the intended investment in the next phase of Estate regeneration out to 2020 to outline the blueprint for the future management of the Estate. The Plan does not seek investment approval for all the projects within the programme. This is because certain projects will require project or programme business cases reflecting the investment scale and risks. The Plan will be updated yearly and be reviewed every three years, responding to changes in requirements for the Defence Force. WHAT IS ESTATE REGENERATION? Regenerating the Estate will not involve replacing a 1930s building with another single purpose building. Rather than recapitalising or replacing assets on a like for like basis, regeneration will seek to deliver modern, high-quality assets that are fit-for-purpose, multifunctional and able to support future capability. The objective through regeneration is optimising value for money across the Estate, aiming to do more within the allocated operating and capital expenditure budget and enabling organisational change. In delivering a regenerated Estate, the Defence Force will aim to deliver the best value for money in the provision of infrastructure required to deliver current and future capabilities. This may include the sale, purchase, renovation, upgrade or replacement of assets. Consideration will also be given to alternative ownership and delivery models including non-asset solutions. There will also be a focus on improving asset management systems, processes and practices across the Defence Force. The funding for new capabilities that have an infrastructure component is out of the scope of the Defence Estate Regeneration Programme Plan, ensuring that long-term Estate investment is not reprioritised to address short-term operational and platformrelated spending. 1 DEFENCE ESTATE REGENERATION

5 Tamaki Leadership Centre, Whangaparoa DEFENCE ESTATE REGENERATION

6 1. THE DEFENCE ESTATE 3 DEFENCE ESTATE REGENERATION

7 The New Zealand Defence Estate totals some 81,000 hectares of land. RNZAF Base Ohakea DEFENCE ESTATE REGENERATION

8 81,000 HECTARES OF LAND (INCLUDING OPERATIONAL AND TRAINING) NINE CAMPS AND BASES OF BUILDINGS AND INFRASTRUCTURE BILLION TWO MAJOR TRAINING AREAS 5000 BUILDINGS A NUMBER OF SMALLER REGIONAL SUPPORT FACILITIES VALUE OF THE ESTATE $4.3 BILLION $150 LAND $1.5 VALUE BILLION $2.8 MILLION REPLACEMENT VALUE ANNUAL OPERATIONAL BUDGET 5 DEFENCE ESTATE REGENERATION

9 OVERVIEW OF THE ESTATE Operational site Training site Support site HQ DEFENCE ESTATE REGENERATION

10 THE ESTATE SUPPORTS MILITARY CAPABILITY The current Estate is largely configured to support the delivery of military capability in three services: Maritime: operates from the main base at Devonport. Land: operates from six main camps three primarily operational (Burnham, Linton and Papakura); and three primarily support and training facilities (Trentham, Waiouru and Tekapo). Air: operates from three bases two operational (Whenuapai and Ohakea), and one training and maintenance facility (Woodbourne). The overall headquarters component for each of the Services is based in Wellington. NZ Army troops disembark from HMNZS CANTERBURY 7 DEFENCE ESTATE REGENERATION

11 ESTATE ENVIRONMENTS The Estate includes a large range of assets serving a variety of purposes broadly broken down into the following environments: WORKING Facilities and infrastructure directly supporting military capability and outputs (e.g. offices, airfields, workshops, armouries, storage facilities). LIVING Both living accommodation and non-working accommodation. These include accommodation (barracks and housing) and related support infrastructure (e.g. messes and canteens), community buildings (e.g. community halls, chapels), and health centre facilities. TRAINING All buildings and infrastructure associated with training activities. This includes large tracts of land required for ranges and field training exercises. SHARED Both above and below ground network utility services and infrastructure such as roads, pavements, open space amenity areas, water supply, waste water and storm water, gas, electricity and communication infrastructure. These classifications are used for asset management purposes with assets categorised into the environment to which they primarily relate. Devonport Naval Base DEFENCE ESTATE REGENERATION

12 2. STRATEGIC CONTEXT 9 DEFENCE ESTATE REGENERATION

13 The Estate is a core enabler and strategic asset for the Defence Force and the government of New Zealand. The Estate provides the property, infrastructure and facilities critical to the delivery and development of military skills and capability. Delivering a responsive, modern, effective and efficient Estate underpins the Defence Force s ability to support Government s Defence objectives principally defending New Zealand and its interests. The Estate is a significant Crown asset maintained by the Defence Force. It provides support not only for Defence purposes, but also to other government agencies and communities. In addition, it provides a valuable resource for maintaining connections with New Zealand s security partners by providing operational and training locations. NZ Army soldiers fire a Javelin MRAAW missile in the Waiouru Training Area. DEFENCE ESTATE REGENERATION

14 The Estate has suffered from under-investment with capital and operating budgets falling considerably short of what is needed to maintain an estate of such a size and scale, with many assets coming to the end of their useful life. As a result, the Estate is generally in average condition and facing a significant risk of deterioration. The Defence Force requires a modernised and regenerated Estate to support and maintain the military capabilities required by Government. A step change is needed in order to tackle the numerous challenges facing the Defence Force the level of investment the Estate receives and the way the Estate is managed. The purpose of the Defence Estate Regeneration Programme Plan is to provide both: a. a plan with a sequence of projects to provide a safe, modern and affordable Defence Estate that achieves the investment objectives; and b. a business change process for managing the Estate. These dual expectations are inseparable if a step change in the management of the Defence Estate is to be achieved. The Defence Estate Regeneration Programme Plan articulates a future state for the Estate itself and a pathway to a future stage of business operation. THE NEW ZEALAND DEFENCE FORCE At its core, the Defence Force s role is to defend the nation s sovereign territory and those areas for which New Zealand is responsible, delivering security including against terrorism and related asymmetric threats. The Defence Force also contributes to collective security initiatives overseas and efforts to strengthen a rules-based international order that serves the nation s wider interests. The Defence Force is primarily responsible for delivering Defence outputs through military operations and building and maintaining military capability. Capability includes the personnel, equipment, platforms and/or other materiel that affects the capacity to undertake military operations. The Government needs a Defence Force that is wellequipped, well-trained and well-motivated and that is capable of undertaking a range of tasks independently or in combination with other security partners in order to contribute to the realisation of New Zealand s foreign policy and security objectives. It is the Defence Force's goal to maintain armed forces that can react to crisis at short notice. The Defence Force has a responsibility to achieve success on military operations, remain affordable, and prepare for future security challenges, while also providing welfare for military members, their families and preserving the wellbeing of civilian staff. PERSONNEL SUMMARY REGULAR FORCES RESERVE FORCES CIVILIAN TOTAL MARITIME 2, ,676 LAND 4,622 1, ,649 AIR 2, ,886 DEFENCE 2,066 2,066 TOTAL 9,181 2,299 2,797 14,277 (current at May 2016) 11 DEFENCE ESTATE REGENERATION

15 GOVERNMENT POLICY DIRECTION The Defence White Paper 2016 provides the topmost direction to the Defence Force, setting out the Government s policy objectives and strategic priorities. Specific to the Defence Estate, the White Paper recognises that infrastructure needs to be considered alongside military capabilities and personnel as one of the central pillars supporting Defence Force outputs. OUTPUTS Prepared Protect Project Inform Support Veterans INPUTS People Military capabilities (people and equipment) Estate (Infrastructure) Funding Defence Estate as one of the central pillars supporting the delivery of Defence Force outputs The Defence White Paper 2016 seeks regeneration of the Estate by 2030 through: A safer, modern and affordable Estate Opportunities to rationalise and consolidate the Estate Increased investment Improved strategic asset management and an increase in senior level scrutiny of infrastructure investment. PRINCIPLES FOR ESTATE REGENERATION The Government has set the following guiding principles for regeneration of the Estate: 1. The Defence Force will maintain a substantial presence in its current major locations, including training areas; 2. Operational units and support functions will be located or re-located to be in the best place for the Defence Force as a whole; 3. Investment will primarily be in core operational locations where the Defence Force accommodates its deployable forces: a. Devonport for Navy; b. Whenuapai for Air Force and Navy; c. Papakura for Special Forces; d. Linton and Burnham for Army; e. Ohakea for Air Force; f. Linton/Ohakea for joint capabilities; DEFENCE ESTATE REGENERATION

16 4. Opportunities to rationalise the Estate to improve its efficiency and effectiveness will be pursued at all locations for example by co-locating military training schools alongside operational units; 5. Opportunities for all-of-government and/or private sector asset development, supply (including ownership) and management will be pursued where this is most efficient; 6. Obsolete and inefficient infrastructure will be replaced and asset utilisation efficiencies and quality improvements will be generated over time; 7. Infrastructure will be disposed of once there is no longer a current or foreseeable need; 8. Management of the Estate will take full advantage of mandated all-of-government capital expenditure processes; and 9. The funding allocated to the Estate Recapitalisation Programme, as set out in the Defence Capital Plan, will not be reallocated within Vote Defence Force without Cabinet agreement. DEFENCE FORCE STRATEGIES, POLICIES AND PLANS FUTURE 35 The Defence Force strategy, Future 35, sets out a vision for the modernisation of the Defence Force, building on the Government s Defence policy goals. The current Future 35 is being updated following the release of the Defence White Paper Future 35 outlines how the Defence Force will meet the defence and security needs of New Zealand out to Regeneration of the Estate will contribute to the realisation of the Future 35 objectives in terms of how the support and enabling functions for maritime, land and air forces are managed. Changes made across the Defence Force in pursuit of these objectives will shape Estate requirements and inform prioritisation of Estate initiatives. The path to 2035 is defined by the following strategic milestones: Joint Task Force Capability by 2015 Enhanced Combat Capability by 2020 Integrated Defence Force by 2035 Orienting Navy, Army and Air Force units capabilities into an integrated Joint Task Force; capitalising on the unique capabilities of each force element and providing flexibility to tailor the size and makeup of an expeditionary military force to accomplish specific tasks in peace, crisis and war. Enhancing combat and combat support capabilities on maritime, land, air and joint warfare operations. The Defence Force will remain an expeditionary force able to protect and operate on its own or as part of a coalition. Able to operate in complexity with previously discrete capabilities part of an integrated system that is readily adaptable to unforeseen challenges. CAPABILITY PLAN The Capability Plan supports the Defence White Paper. It details the next steps towards delivering an integrated Defence Force and sets out how government decisions relating to Defence capability development will be guided and the priorities over the following 10 years. The Capability Plan identifies a focus for the Estate on making substantial investment in safe, modernised and fit for purpose real estate and reducing the operating costs associated with maintaining the Estate beyond its useful life. 13 DEFENCE ESTATE REGENERATION

17 A range of views and considerations on what the focus of regeneration should cover was discussed by stakeholders. The following key themes have been distilled from these discussions and challenge the current paradigms of delivery required from the Estate: Personnel Efficient Consolidate Economic Growth NZDF outputs Community and Family connection Value for money Health and safety Sustainable Adaptable All of Government Ready Flexible Supports and enables capability Rationalised Security Culture and protocols Risk minimised Responsive Amenity Effective Compliant Defence Estate 2030 DEFENCE ESTATE REGENERATION

18 KEY CHALLENGES The key challenges facing the Defence Force, as they relate to the Estate, are described below. Operating within an uncertain global context The global security environment is constantly evolving and with it, the demands on the Defence Force to respond. This presents a challenge in the way the Estate is able to effectively and appropriately accommodate current and future military capabilities. Deteriorating infrastructure risks impacting output delivery Large portions of the Estate assets and infrastructure have passed the end of their useful life, are in declining condition, with some unable to efficiently and effectively support the delivery of military capabilities. Parts of the Estate are currently considered not fit for purpose. There exists a legacy culture of making do and finding work-around solutions. These previous approaches will not provide critical enabling infrastructure needed to support delivery and deployment of military capabilities. Service-centric base and asset configuration does not support efficient utilisation Each camp and base location predominantly supports one of the three Services. This has resulted in a legacy of asset duplication within and between locations, has hindered function relocation and has failed to realise the best value from the Estate. The legacy of buildings and locations has led to poor utilisation of land across the Estate. The drive to deliver value for money The Defence Force has a responsibility to demonstrate active stewardship of Crown resources and to identify and implement effective approaches for managing the Estate. This includes delivering value from investments in a coordinated and efficient manner. Asset management approaches driving poor decision making practices This has been a consequence of historic underinvestment in the Estate with funding prioritised on an as required basis, leading to a focus on reactive maintenance and critical issues only. Responding to capability requirements There are often significant constraints on the ability of the Estate to adapt and respond to new or changing service requirements. Meeting the expectations of personnel The Defence Force s most important asset is its people without them it would be impossible to deliver the military capabilities expected of it. The current condition of the Estate and continuation of deferred maintenance and reliance on reactive maintenance has the potential to impact, and in some instances is already impacting, perceptions of the Estate with personnel becoming increasingly dissatisfied with their living and/or working environments. The need to meet regulatory compliance standards and conditions Portions of the Estate are increasingly at risk of not meeting minimum regulatory requirements. This could impact the Defence Force s ability to provide a safe and secure environment for personnel, as well as impeding its ability to meet operational outputs. HMNZS ENDEAVOUR in dry dock at Devonport Naval Base 15 DEFENCE ESTATE REGENERATION

19 Parachuting from an RNZAF Hercules Firing the Glock 17 Gen 4 pistol on a New Zealand Defence Force range DEFENCE ESTATE REGENERATION

20 3. THE REGENERATION RESPONSE 17 DEFENCE ESTATE REGENERATION

21 RNZE combat engineer tractor in Waiouru Training Area DEFENCE ESTATE REGENERATION

22 THE OPPORTUNITY To address the problems with the current Estate, the Government has signalled an indicative capital funding envelope of $1.7 billion over a 17 year period from 2013/14 to 2029/30 to address the effects of accumulated maintenance backlog, as well as upgrades and replacement across the Estate. In addition, an indicative operating funding envelope of $2.5 billion has been provided over the same period. Indicative $1.7B Capital Expenditure Indicative $2.5B Operating Expenditure Indicative Estate Regeneration investment profile 2013/ / Millions ($NZD) / / / / / / / / / / / / / / / / /30 Initial investment Major investment Investment stabilisation OPEX (excluding personnel and depreciation) The indicative funding track, specifically for Estate purposes, represents a significant opportunity to regenerate the Estate. Regeneration takes a strategic approach embracing modernisation, co-location, efficiencies and cost effectiveness. 19 DEFENCE ESTATE REGENERATION

23 INVESTMENT OBJECTIVES: The Defence Estate Regeneration Programme Plan aims to deliver on the following investment objectives: Improve the Defence Force s ability to sustainably accommodate future military capabilities in an uncertain global environment Providing an Estate that is flexible to change and is responsive to likely contingencies in an uncertain environment. Supporting the Defence Force s ability to remain relevant by being able to accommodate military capabilities and being sustainable in the long term. Improve the Defence Force s ability to meet demands to use and deploy military capabilities Better matching assets to modern military operational and training needs to improve the quality of military capability. Improving the condition and average age of assets to better support military capability and reducing the operational costs of maintaining the Estate. Improve service performance, operational efficiency and ease of use through optimised configuration Better maximising the use of the Estate. Right-sizing the Estate through rationalisation and consolidation within and between locations to reduce the cost of maintenance, achieve economies of scale through concentrating like activities in fewer locations. Improve working, training and living environments for personnel and their families to promote the wellbeing, recruitment and retention of personnel Providing the right infrastructure in the right locations that are safe, modern and of a high standard to support Defence personnel and the delivery of outputs. Meet legislative and government regulatory standards Addressing health and safety, security and regulatory compliance. Ensuring the Estate is legislatively and regulatory compliant. Optimise asset investment decision making Increasing the efficiency and effectiveness of asset management. Rationalising assets and reducing costs within the Estate portfolio. Improving the focus of asset management with reductions in reactive and deferred maintenance. Drive an increase in value over the life of investments Maximising the benefits and value for money from investment. DEFENCE ESTATE REGENERATION

24 THE BENEFITS Successful investment against the objectives for Estate regeneration is anticipated to generate the following benefits: The Defence Force is effective and flexible in delivering outputs The Estate will align with and support the Defence Force s strategic direction. The Estate will be better able to support Defence Force outputs and respond to changes in requirements with minimum impediments through increased certainty of planning. The Estate will form the foundation for integrated ways of working, and will be ready to support the introduction of new capabilities while still maintaining the ability to meet current operational priorities. The Defence Force operates in an efficient and sustainable manner The Estate will be configured in a way that encourages efficient and sustainable operating practices, providing the effective delivery of infrastructure to support capability. Improved strategic asset management practices will allow the Estate to remain fit for purpose across its useful lifespan and enhance financial sustainability. The plan will improve the timeliness of project delivery and increase the number of assets meeting target levels of service. Enhanced well-being, recruitment and retention of personnel Defence Force personnel will have access to improved living, working and training environments. Facilities will be safer, healthier and have greater amenity for personnel, their families and other Estate users. The Defence Force provides greater support to wider New Zealand economic and social outcomes The Estate enables greater support to wider New Zealand economic and social outcomes through collaboration with other government agencies, surrounding communities and wider New Zealand trade and national interests. Investment in the Estate will support regional and national growth, and enable platforms to promote or preserve trade (e.g. monitoring of trade routes, protecting New Zealand s Exclusive Economic Zone (EEZ)). Improved compliance to relevant Defence Force and legislation standards The Estate will be a safe, secure work environment for Defence Force personnel by meeting regulatory requirements, such as health and safety, seismic and Resource Management Act 1991 compliance, resulting in a reduction in the risk of lost time due to injuries, and minimal environmental breaches. Two RNZAF NH90s at RNZAF Base Ohakea 21 DEFENCE ESTATE REGENERATION

25 APPROACH TO ESTATE REGENERATION An integrated response to investment will result in an Estate that appropriately balances value, capability, people, location and operational effectiveness. This will be delivered through the Defence Estate Regeneration Programme Plan providing the framework for regeneration, management and use of the Defence Estate to Locations of Defence Force activity at present are set. The approach to regeneration of the Estate sees the Defence Force maintain a presence in all major camps and bases for the foreseeable future. The environment is changing rapidly and multipurpose and multifunctional facilities will become the new norm. DIMENSION The approach will enable the Defence Force to work in an integrated and flexible manner, with optimised configuration of the Estate, and a focus on current and future capability requirements. The Estate will be consolidated and rationalised, with assets and units being relocated (both within bases and across bases) where there are strong military and economic reasons to do so. There will be greater consideration of wider economic outcomes through support of all-of-government outcomes and contribution to surrounding communities. CONSIDERATIONS SCOPE The level of change and consolidation expected across the Estate SERVICE SOLUTION How services will be delivered (asset ownership) Optimised configuration and consolidation from a base specific and nationwide basis Alternative ownership model based on asset classes, considering strategic and financial implications The Estate will not be constrained by the current configuration assets will be removed or consolidated where duplication of assets exist and where there is a reasonable case to do so. Although there will be no base closures, there may be movement of personnel and functions between locations. There is a focus on optimising the Estate portfolio, delivering fewer, higher quality assets. This leads to improvements in the sustainable management of the Estate to better support Defence outputs. Assets that are able to be effectively supported by industry will be supplied/owned by outside providers. Where there are specific reasons for Defence Force ownership, assets will remain in Defence control. SERVICE DELIVERY Who will deliver the services Outsourced design, construction and maintenance tailored to local conditions The delivery of the programme will utilise third party support reflecting local requirements and capability. Partnerships with local providers will be formed to build and run assets. Design, construction and maintenance of projects will be outsourced where possible. IMPLEMENTATION Combination of Public Private Partnership / alternative delivery models (including non-asset solutions), large scale programmes and distinct projects Alternative delivery options will be assessed and implemented on an asset-class basis, providing the scale required to attract providers able to deliver sustained benefits to the Defence Force. There is an increased focus on improving internal Defence Force asset management practices. FUNDING Funding envelope consistent with the Defence White Paper 2016 policy setting Deliver capital investment and meet ongoing operational costs within the capital and operating budgets in accordance with the Defence White Paper 2016 policy setting. Other sources and/or models will be considered for example, asset disposals and third party arrangements. DEFENCE ESTATE REGENERATION

26 BALANCED INVESTMENT The following provides an indicative view of the proposed investment distribution of $1.7B capital expenditure expected through the delivery of the approach to Estate regeneration out to CAPEX $1.7B WAIOURU (Base) >1% ($13m) Minimal Investment on Base assets WAIOURU (Training) 4.5% ($72m) Investment focused on assets linked to training and readiness AUCKLAND 40% ($650m) The Defence Force supports all-of-government outcomes Movement of functions and assets to where they best support the Defence Force MANAWATU 25% ($397m) Movement of functions and assets to where they best support the Defence Force TEKAPO WOODBOURNE 3% ($51m) 1% ($20m) Investment focused on security and critical infrastructure BURNHAM TRENTHAM 4% ($61m) Movement of functions and assets to where they best support the Defence Force 16% ($252m) Movement of functions and assets to where they best support the Defence Force KEY Share of investment level (CAPEX) 0% 5% 5% 20% > 20% INVESTMENT MIX Investment Type % Compliance >1% Relocation ~3% New ~20% Upgrade ~9% Replacement ~67% Note: The investment mix is a representation of the distributed spend. It excludes approximately $190m for 23 DEFENCE ESTATE REGENERATION capital expenditure prior to 2015/2016 and consultancy support. ALL 5.5% ($91m) Covers security, fire, seismic, site remediation etc. across all bases

27 Infantry Sections from 2/1 RNZIR compete on the obstacle course at Burnham Military Camp DEFENCE ESTATE REGENERATION

28 4. ASSET MANAGEMENT APPROACH 25 DEFENCE ESTATE REGENERATION

29 HMNZS TE KAHA and HMNZS MANAWANUI at Devonport Naval Base DEFENCE ESTATE REGENERATION

30 GOVERNMENT ASSET MANAGEMENT The Government expects active stewardship of investment in both physical and intangible assets, and for strong alignment between individual investments and Government s long-term priorities. In June 2015, Cabinet adopted Circular (15) 5 Investment Management and Asset Performance in State Services, which sets the expectations for the management of investments in both physical and intangible assets by organisations and agencies, including the Defence Force. The expectations for asset management include: use of relevant indicators of past and projected asset performance in internal management and decision-making; demonstration of a level of asset management practice and performance appropriate to the scale and criticality of the assets; an investor confidence rating taking into account the level of asset management maturity; and planning for the eventual withdrawal or sale of assets and use of approved asset disposal processes. ESTATE ASSET MANAGEMENT APPROACH The Defence Estate Regeneration Programme Plan seeks to: Strengthen asset management practices; Improve understanding of demand; and Improve decision making around infrastructure provision that considers non-asset solutions. This approach acknowledges the importance of capital planning across the portfolio, avoiding fragmented planning at a base level. The Defence Force will enhance the support it provides to capabilities and reduce operational costs by taking a strategic approach to managing the Estate. Internal programme delivery capability will be enhanced to provide depth of expertise across the delivery life cycle. Where appropriate, the Defence Force will leverage private sector expertise to inform strategic decisions and manage delivery risk. The Defence Force will invest in asset management capabilities to maximise on-going returns, monitor and manage capital maintenance, and support additional capital investment decisions in relation to the Estate or supporting assets. Two NZ Army LAVs firing in Waiouru Training Area 27 DEFENCE ESTATE REGENERATION

31 Flying over the central plateau at the northern end of the Waiouru Training Area The Bill Morley Seamanship Centre DEFENCE ESTATE REGENERATION

32 5. DELIVERY OF ESTATE REGENERATION 29 DEFENCE ESTATE REGENERATION

33 The scale and complexity of Estate regeneration will see it delivered through a large number of projects. At the same time, the programme will be costeffective and will take into account other overarching Defence Force priorities and objectives. Unloading stores from an RNZAF Hercules DEFENCE ESTATE REGENERATION

34 DEFENCE SPECIFIC CONSIDERATIONS The nature of the environment within which the Defence Force operates means there are specific considerations that have the potential to impact or influence how the Defence Estate Regeneration Programme Plan is delivered, specifically: Base security: Security is an ongoing state or condition within which the Defence Force operates and is a matter that must underpin programme delivery. Base security and the designation of specific areas will influence the appropriate level of private sector ownership and service delivery available. Access and service delivery: The Defence Force must be prepared to respond and doing so may require access at short notice to specific assets and services. Specialised assets: Some assets are highly specialised and are recognised as a core capability for the Defence Force, limiting the ability for alternative delivery sources or third party use. Assets that sustain significant degradation as a result of training and output delivery: Estate assets used for live fire training and heavy weapons training have additional maintenance and remediation requirements. DELIVERY STRATEGY There is no one approach to the delivery of the programme. The Defence Force will consider: Use of non-asset solutions e.g. off-site service delivery by a third party with an already-established asset base; Off-site leased property that provides appropriate functionality and meets Defence Force requirements for security and access; Purchase of single off-site assets (e.g. as an office block) where these are identified as meeting the requirements for long term investment; Aggregation to form a national or regional subprogramme depending on location, value and commercial viability; Aggregation to form a Public Private Partnership depending on location, value and commercial viability (e.g. for accommodation and hospitality); or Single construction projects completed using appropriate design and construction methodology. Each project or work stream will be supported by an appropriate business case for either individual or bundled capital works. Emphasis will be placed on bundling multiple projects to minimise the number of individual business cases required to be submitted and considered. The bundling of multiple projects into long term packages of work is designed to realise potential synergies and other cost efficiencies, such as through a combination of Public Private Partnerships (PPP) and alternative delivery models (including non-asset solutions, large scale programmes and distinct projects). International Air Movements Terminal at RNZAF Base Ohakea 31 DEFENCE ESTATE REGENERATION

35 THE FOCUS OF DELIVERY IN THREE YEARS (2017/ /20) The first three years of implementation is focussed on Ramping up. This will lay the foundations for future work and will see: A focus on health, safety and compliance An upgrade of utility services Duplicated functions consolidated to reduce the Estate footprint where appropriate (for instance, Headquarter elements) Completing sequencing projects if sites are required for next stages of regeneration Addressing key operational and readiness projects, and complete outstanding compliance and safety requirements Planning for major investment. YEARS FOUR AND FIVE (2020/ /22) Years four and five is the start of the period of major investment that extends to 2025 and will see significant projects to deliver: A single standard applied consistently to personnel accommodation Health support facilities Large workshop replacements Security upgrade projects Range upgrades Major relocation of units. TO 2030 Major investment will continue until 2025/26. Beyond this, the focus will be on investment stabilisation reflecting business as usual renewal/regeneration of existing Estate infrastructure. DEFENCE ESTATE REGENERATION

36 INDICATIVE FIVE YEAR PROGRAMME The following details the proposed indicative programme for delivery over the next five years. Financial Year 2016/17 + Year 1-5 PROJECTS Devonport Projects Temporary Multi-Purpose Office Accommodation Small Boat Storage / Wash Down Area Ship Loading Area Multi-Storey Carpark and Office Building Base Headquarters Building Small Boats Maintenance Workshop Gate House South Yard Stanley Bay Dockyard Workshops Papakura Projects Training Centre Stage 2 Regiment Transport Office Visitor Accommodation Compound Sub-Programme Compound Extension 1 Compound Extension 2 Barracks (24 Bed) Living Sub-Programme Dental Services Centre Medical Centre Multipurpose Gymnasium and Physiotherapy Vehicle Shelters Logistics Facility Camp Administration Building Briefing Room Extension Realignment of Intermediary Perimeter Fence Infrastructure Service Corridors Rerouting Whenuapai Projects Barracks Phase 1 Flightline Fencing Paint Shop Hardstanding Replacement Phase 2 Air Medicine Facility Medical and Dental Centre Temporary Multi-Purpose Office Accommodation Roading Intersection Upgrade Main Gate Development On-Site Housing Relocation Stage 3 Multi-use Office Building Parachute Training Support Unit Headquarters Sub-Programme Flying Unit Facilities 1 Flying Unit Facilities 2 Support Unit Facilities 1 Arch Hangar Sub-Programme Arch Hangar Mid-life Upgrade Phase 1 Arch Hangar Mid-life Upgrade Phase 2 Defence Housing Stage 1 Logistics Despatch Warehouse Base Operations and Fire Rescue Building Safety and Surface Workshop Hardstanding Phase 3 WOLC <$25M <$20M <$5M <$50M <$10M <$15M <$10M <$5M <$5M <$10M <$10M <$10M <$15M <$10M <$5M <$15M <$20M <$10M <$15M <$10M <$10M <$5M <$15M <$50M <$15M <$10M <$10M <$15M (2016/17) 2017/ DEFENCE ESTATE REGENERATION

37 Scope Procurement Construction 2018/ / / / Cont. DEFENCE ESTATE REGENERATION

38 Financial Year 2016/17 + Year 1-5 PROJECTS Waiouru Projects Training Area Communications Safety Network Mounting Base Headquarters Drinking Water Network Heating Back-up Power Generation Training Area Fire Prevention Conference Facility Communications Facility Reconfigured Entrance and Security Perimeter Mounting Base Compound Ohakea Projects Hangar Fire Suppression Deluge Tank Hazardous Waste Storage Facility Refuelling Section Facility Temporary Multi-Purpose Office Accommodation Covered Tanker Park Airfield Sub-Programme Taxiway Replacement Air Terminal Freight Loading Area Aircraft Safe Arming Area Additional Taxiway Apron Entry/Exit Point Warehouse General Equipment Workshop Flight Rations Store Base Chapel Relocation Base Multi-purpose Administration Building Physiotherapy and Medical Facilities Linton Projects Multi-purpose Unit Facilities (Ammo) Hangar and Offices Ammunitions Storage Facility Drinking Water Network Logistics Warehouse Camp Workshop Camp Centre Multi-purpose Building Vehicle Shelters Woodbourne Projects Airfield Security Fence Air Force Training Area Replacement Fire Rescue Facility Burnham Projects Energy Centre Replacement West Melton Training Area Safety Communications Ammunition Storage Facility Unit Ablutions and Storage Garages Drinking Water Network Health and Rehabilitation Centre Temporary Multi-Purpose Office Accommodation Electrical Network Upgrade Perimeter Track and Security Fence Upgrade Goods Distribution Centre Camp Workshop Facilities Accommodation Sub-Programme Training Barracks Stage 1 Training Barracks Stage 2 Training Barracks Stage 3 Living Barracks Phase 2 Training & Doctrine Command Unit Facilities Tutorial/Assessment/Lecture Room Building New Camp Entrance and Spine Road Camp Armoury Extension Tekapo Projects Training Area Communications Safety Network Training Area Public Safety Civil Works Sub-Programme Heavy Vehicle Tracks Upgrade Fork Stream Crossing Main Camp Security Fence Main Camp Gate WOLC <$10M <$5M <$10M <$10M <$5M <$5M <$10M <$15M <$20M <$10M <$5M <$20M <$15M <$10M <$5M <$5M <$15M <$20M <$25M <$15M <$10M <$15M <$15M <$5M <$10M <$2M <$15M <$15M <$30M <$30M <$10M <$30M <$20M <$15M <$5M (2016/17) 2017/

39 2018/ / / / Cont.

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