Serco Group has won a 2-year contract worth around $50 million to provide logistics and base support services to the Australian military in the Middle East.

The contract, with a 1-year extension option, includes base maintenance and ground refueling, together with healthcare, accommodation and other support functions.

"The services will be implemented in a staged approach, with all services fully operational by the end of September 2011," a Serco Group statement said.

"We have supported the Australian Defense Force for more than 15 years providing garrison support services to the army, maritime engineering and technical services to the navy and logistics, engineering advice and aircraft maintenance support to the air force. We also have 60 years of experience providing services in the Middle East with services including air traffic control, metro operations and support for higher education establishments."

Serco Chief Executive Officer Chris Hyman said the contract will draw upon "our well-established capabilities in the Middle East and our 15-year experience of working closely with the Australian military."

The Serco win comes after Jason Clare, Australia's minister for defense materiel, announced a ship disposal strategy during a wide-ranging speech to the Defense and Industry Conference at the Adelaide Convention Center last week.

Clare said he had just released a request-for-proposal for the disposal of up to 24 navy ships over the coming decade.

"The RFP will provide the flexibility for companies to bid for all ships, a class of ships or a single ship," he said.

"I have also approved a plan to dispose of up to 12,000 army vehicles over the next decade. This includes Land Rovers, Unimogs and Mack trucks. Disposing of this equipment in bulk should provide real opportunities for business and increase the amount of revenue defense can raise and reinvest in new equipment."

Clare said the money raised from the sale of the vehicles could be invested in training simulators that would reduce wear on army vehicles.

But he also reassured the Australian War Memorial foundation and other historical preservation organizations that historically significant pieces of military equipment will still be made available to them.

Clare's speech focused on improving procurement processes to cut down on delays and resulting extra costs incurred throughout defense supply chains.

Northrop Grumman is the latest first-tier defense manufacturer to join the Defense Material Organization's Global Supply Program, following Lockheed Martin in January, Clare said. The GSP is a government initiative that provides prime contractors with the resources to identify and certify small Australian companies as part of their global supply chain.

"To date, the government has invested just over $11 million into the program and more than $356 million in contracts have been awarded to Australian industry," Clare said.

About 90 percent of the value from these contracts has gone to Australian small to medium size enterprises. This includes more than $200 million in projects from Boeing and more than $100 million from Raytheon. I am hopeful with the awarding of the new naval combat helicopter contract we will see more work for Australian companies from the Global Supply Chain Program."

To improve supply chain relations, Clare said an agreement has been reached with BAE Systems and the DMO to trial an integrated project team concept.

Also, H.I. Fraser, a manufacturer of pneumatic and hydraulic fluid systems, will work with the DMO to develop a rotatable pool of spares to reduce lead times and to keep business in Australia.

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