Defence House fit out
The estimated cost of the fit-out of Defence House, including security and earthquake strengthening work attributable to the NZDF, is less than $110 million.
As noted in the Treasury document, the prime driver of the cost of the fit-out was Defence’s security requirements. These requirements were in turn driven by the Government’s Protective Security Requirements and the NZDF’s responsibilities under the Defence Act.
Defence House, the former Bowen State Building, is owned by Precinct Properties and the NZDF has been working with the owners on the special requirements of the building. The original MBIE estimate from 2015 was for a 7-level building, and Defence House is actually a 13–level building. In addition to the larger size of the building, the special requirements have included security requirements, and equipment to increase the building’s resilience so it can continue to operate should a natural disaster occur that causes damage to Wellington’s infrastructure. An example of this is electrical generators so the headquarters can continue operating in the event of power being knocked out in the city.
Defence staff moved into Defence House during October and November from the temporary headquarters in Freyberg Building in Aitken Street that has been occupied since the headquarters was displaced from the former Defence House following the 2016 Kaikoura earthquake.
The building also houses the Ministry of Defence, some staff from the Department of Prime Minister and Cabinet, Inspector General of Intelligence and Security, Protective Security Requirements Team and National Cyber Security Centre.
With regard to the MBIE figures cited in the Treasury document, these were rough-order estimated figures done a number of years ago for a standard fit-out office building, not a building that contained the required security and other requirements of Defence. As outlined above, the $30 million MBIE figure was for a 7-level building, and Defence House is much larger, at 13 levels. Comparisons between the MBIE figures and the actual fit out costs are not valid.
With regard to your specific questions, see below.
The upgrade finished in September - what was the final cost?
Just less than $110 million. Exact figures will not be available until 2020, once final invoices are received and reconciled.
Why did the NZDF conclude that it would cost $110m in total, when MBIE thought the upgrade would cost $30 initially?
As outlined in the Treasury document, the $30 million MBIE figure was an estimate for a 7-level standard fit-out building. Defence House is actually a 13-level building, built to specific security and other requirements, as outlined above, and much larger in size. Comparisons between the MBIE figures and the actual fit-out costs are not valid.
What were the main sources of the cost increase?
See response above.
Why was NZDF's bid for $35m in Budget 2018 rejected?
That is a matter that needs to be put to Treasury. When NZDF’s bid was declined it was instructed to fund from its capital balance sheet reserves.
Which department was initially meant to be in the Bowen State Building before NZDF and the other cluster moved in?
This question should be directed to MBIE.
Why did the Government pay for the re-fitting; why not Precinct Properties who owns the building?
The general approach taken to commercial property in New Zealand is that the landlord provides the base shell and general infrastructure ready for tenant-specific fitout, which the tenant then pays for. An alternative model, which is less frequently seen in New Zealand, is for a landlord to provide the entire fitout and to pass the costs of the entire fitout on to the tenant through higher rental costs.
How big was the contingent from the GCSB, NZSIS and DPMC that moved into the new Defence Force House?
These questions need to be directed to those agencies.