When the delivery model changes

In March 2026 the Australian National Audit Office (ANAO) assessed Land 400 Phase 3, the $7.3 billion project for 129 Redback infantry fighting vehicles contracted to Hanwha Defence Australia (HDA) with final delivery scheduled for December 2028. The audit found the programme "partly effective" and reported that the project had recently been placed on the Capability Acquisition and Sustainment Group (CASG) Watch List. More precisely, ANAO found Defence is managing contract progress through remediation actions, which "overstates the extent to which the project is on schedule" and "obscures underlying schedule slippage." That reporting problem comes at the end of a longer procurement story, one that begins well before the contract was signed.

The original intent, reflected in planning documents and successive Defence policy statements, was to pursue a platform with high technical readiness. The 2009 White Paper had set military-off-the-shelf solutions as the policy benchmark. The 2023 Defence Strategic Review recommended acquiring off-the-shelf platforms where possible and limiting design changes. What the procurement produced was "a more developmental acquisition approach that increased exposure to integration and schedule risk." ANAO found that submissions to government "omitted reference to the earlier acquisition strategy for a military-off-the-shelf (MOTS) solution and did not discuss the existence or potential cost advantages of MOTS options, nor that all tenders received were developmental." [para 17] Defence's response is that MOTS was not the agreed acquisition strategy at the time. ANAO notes the policy position, but its finding is broader. ANAO found that government was not clearly advised of what that departure meant for cost, schedule and technical risk. Two very high technical risks remain unresolved (related to the vehicle's mobility and lethality capabilities), driven by Defence-mandated integration requirements and components not yet proven in a vehicle of this size. In July 2023 the government announced acceleration, pulling delivery forward by two years. Independent reviewers assessed it as "a significant, if not impossible, challenge" to deliver 129 fully capable vehicles by December 2028. [para 19] ANAO found Defence had instructed HDA to proceed with contract milestones "despite issues with the quality and accuracy of contract deliverables and HDA's advice to Defence of challenges and risks." [para 21]

The ANAO findings do not directly connect the procurement model change to the reporting problem. But the two findings can be read as a connected sequence. An acquisition approach departed from its documented intent, the departure was not clearly communicated to government, and progress was subsequently reported in a way ANAO found overstated schedule position and obscured slippage. The transparency problem in the reporting is, on this reading, a governance problem in the procurement.

This is not the first time ANAO has identified a similar finding in Land 400. The 2021 audit of Phase 2 identified an analogous disclosure failure. Government was not clearly told what distinguished MOTS from the option selected, or what that meant for schedule and cost. The Phase 3 findings support a similar conclusion.

The audit records several findings about the tender baseline. The request for tender had claimed to be pursuing "mature, proven technology" without defining the term, specifying minimum maturity thresholds or including evaluation criteria for system readiness or design maturity. [para 11] When tenders arrived and all were assessed as developmental to varying extents, Defence did not adjust its overall risk posture, nor assess non-developmental tenders more favourably, and its published evaluation criteria were not weighted or prioritised. [para 12] HDA's Stage 3 cost was understated by $852.6 million. [para 13]

ANAO also found that 19 of 83 HDA invoices had been paid late, with $483,929.39 in penalty interest accrued and $335,889.48 of that still outstanding at October 2025. [para 22] As at the March 2026 audit, the programme still carried two unresolved very-high technical risks, an audit finding of "partly effective," and a place on the CASG Watch List.

The status reporting problem ANAO identified (overstated schedule position, obscured slippage) is the downstream consequence of a procurement governance problem that preceded it. When the delivery model changes during procurement, the advice to government, the evaluation criteria and the risk posture all need to reset. In Land 400, none of them did.