Taxpayers have been billed over $480,000 in overdue payment fees after the Department of Defence failed to pay invoices for the army's new Redback infantry fighting vehicles on time. The fees stem from a $4.6 billion contract with South Korea's Hanwha, signed in 2023, which has since grown to $7 billion.
An audit by the Australian National Audit Office, released on Monday, found that Defence did not update its internal payment rules to comply with a government-wide crackdown on slow-paying departments. This resulted in $483,929 in penalty interest being owed between June 2024 and June 2025, with over $335,000 of those fees still unpaid as of last October.
Defence argued that the 30-day payment terms in the original contract were permissible because negotiations began before the new policy took effect in July 2022. However, the Auditor-General noted that the department had an opportunity to update the terms during final negotiations in 2023.
The audit also found that Defence was only partly effective in managing the procurement, with officials waiving contractual requirements and using remediation to mask underlying schedule delays. Production of the vehicles began in Victoria early this year, but final delivery is not expected until the end of 2028, a timeline reviewers called highly challenging.
Defence Minister Richard Marles was kept in the dark about key aspects of the procurement, including a shift in strategy from buying an off-the-shelf model to a developmental vehicle. Formal progress reports to Marles were described as limited, while briefs for Defence leadership focused on project milestones.
In response, Defence acknowledged the audit's findings and agreed to provide explicit advice to the government and strengthen compliance with payment rules. The department is undergoing a major shakeup, with plans to roll its acquisition, guided weapons and sustainment groups into an independent agency by July 2027.
