Defence Department considered walking away from $50 billion French submarine deal

ABC News
Updated about 8 hours ago
The SEA 1000 was identified in the 2009 Defence White Paper.
Photo: The Australian Government is purchasing 12 new submarines to replace its existing fleet. (Supplied: Australian Submarine Corporation)
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Defence secretly considered walking away from the $50 billion French submarine deal during protracted and at times bitter contract negotiations, and started drawing up contingency plans for the new fleet.
Key points:

    Advisory group told Defence to consider alternatives
    Extending the life of the Collins-class submarines was one suggestion
    Future governments have the option to walk away from the current deal if it is delayed

The revelations are contained in a new report by the auditor-general that also confirms the program is running nine months late and that Defence is unable to show whether the $396 million spent so far has been "fully effective".   

According to the report, the Federal Government's handpicked advisory group told Defence in 2018 to "consider alternatives to the current plan", when negotiations over a key contract appeared to be breaking down.

The Commonwealth and Naval Group, chosen to build Australia's future submarines, were at loggerheads over the Strategic Partnering Agreement, which would provide a framework for the complex and costly project.

Behind the scenes, the Naval Shipbuilding Advisory Board told Defence to start drawing up alternatives should the negotiations fail.

According to the auditors, Defence began examining whether it could extend the life of the existing Collins-class submarines and "the time this would allow to develop a new acquisition strategy for the Future Submarine if necessary".
Scott Morrison signs a document with Christopher Pyne and Florence Parly sitting alongside him. Naval officers stand behind them
Photo: Christopher Pyne, Scott Morrison and French Armed Forces Minister Florence Parly signed the strategic partnering agreement in February. (Department of Defence)

Concerns were so great that the board asked Defence to consider "whether program risks outweighed the benefits of proceeding" and questioned whether it was still in the national interest to go ahead with the project.   

The Strategic Partnering Agreement was eventually signed, with much fanfare, in early 2019 and notably, it gives future governments the ability to walk away from the project if it's delayed or fails to deliver what it promised.

Already, two key milestones have been missed and work on the design phase is nine months behind schedule.

In the report, Defence expressed a "deepening concern over a number of matters", which in its view "were a risk to the Future Submarine Program".
'The alarm bells are ringing'   

Opposition defence spokesman Richard Marles said the report was "deeply concerning".

"On all three measures of this program — on time of delivery, on the cost of the project, and on the amount of Australian content — the numbers are all going the wrong way," he told the ABC.

Australia's submarine requirements explained
With the winning bidder for Australia's next fleet of submarines announced, attention turns to how it will meet Australia's high-endurance requirements.

Crossbench senator Rex Patrick, who is a former submariner, said Defence needed a "fallback" plan if the project continued to face delays.

"The alarm bells are ringing," Senator Patrick said.

"If the Minister is not hearing them they need to be turned up.

"Defence's view that they can recover the schedule is naive at best."

Despite the persistent problems, Defence maintains construction of the submarines is still on track to begin in Adelaide in 2023.

Minister for Defence Linda Reynolds said the program was complex.

"I welcome the important ANAO [Australian National Audit Office] findings that the Federal Government has established a fit-for-purpose strategic partnering agreement with Naval Group, and that there are appropriate risk management strategies in place to deliver the Future Submarine Program," Senator Reynolds said in a statement.

"The first Attack Class submarine is scheduled for delivery to the Royal Australian Navy in 2032. The ANAO report confirmed there has been no change to this delivery timeframe or budget.

"The program is highly complex and requires a long-term focus.

"Whilst the Future Submarine Program is still in the early design phase and there have been some delays, it is essential to get the design right."

Sir lastnail wrote on Jan 15^th, 2020 at 7:08pm:



We should have bought proven nuclear submarines from France
not diesel subs.

$50 Billion would have been bad enough for a Jerry-rigged diesel version of a meant to be Nuclear sub. 


BUT ... the cost is actually about $255 Billion and counting. 

Captain Nemo wrote on Jan 15^th, 2020 at 7:45pm:


Not quite.  That is based on its estimated total life costs, not on its cost of purchase.   

Brian Ross wrote on Jan 15^th, 2020 at 8:02pm:



Diesel subs derive from old WW2 technology.
They are a waste of time and could never survive a modern war.

Brian Ross wrote on Jan 15^th, 2020 at 8:02pm:


You are at a competitive and military disadvantage with deisel subs so why bother having them at all ?

Bobby. wrote on Jan 15^th, 2020 at 8:21pm:


Sure of that, Bobby?  Really?  And on what evidence do you base that opinion?

I saw this deal falling through when they gave it to the French.
France is burning down. In no way could I see them keeping up the facade. They're just hoping they can take us for a ride for as long as they can. They can't deliver on the set price.
So we pay $50 BILLION on a defaulted submarine deal, but spend sweet FA on Fire Fighting. This Government lacks any foresight for our future and can only react in aftermath situations.

We would have been better off having the Nips or Germans doing us a deal. But besides them building 'superior' Subs back in the day, the 'Politics' of the past ignored their superior deals. But even those to me would have come at a hefty price.
Why not pump $50 Billion into our own 'innovation' - you know, the word that Turnbull pumped out recently via his ad campaigns and other PM's have done in the past.
They ask for innovation - but they will not support it and thus innovators are forced to head overseas in search of support.
Britain supported Dyson. USA tried to exploit Dyson. Australia just didn't support Dyson in any way. The Australian Government doesn't support or protect Australians from any USA exploitations. People are still reliant on Britain, but recently - we are seeing Australians support and rely on themselves... not Politics altogether.

Brian Ross wrote on Jan 16^th, 2020 at 12:25pm:


If what you say is true nobody would have nuclear power subs and yet this is the preferred choice for most of the powerful nations. The Russians had them back in the 50's

Bobby. wrote on Jan 16^th, 2020 at 2:28pm:


I think your "special circumstances" might be more common than you appear to think, Bobby... 

Jasin wrote on Jan 16^th, 2020 at 2:47pm:


I think that it is obvious that no diesel powered submarine would surface or even SNORT during wartime if there is a possibility that enemy craft would be present, so the supposed "exceptional circumstances" would become normal and it would remain submerged for longer than the estimated 24 hours.

Jasin wrote on Jan 16^th, 2020 at 3:42pm:


When?  Where?  Please be specific with a case of a "ships have hunted Subs over long distances for weeks."

ASW is much harder than most novels/movies would have you believe.  Look at the ASW efforts of the Royal Navy duing the Falklands/Malvinas war in 1982.  The RN was supposedly the most experience at ASW in the world and it failed dismally to find and sink any Argentine submarines.   

Brian Ross wrote on Jan 16^th, 2020 at 4:03pm:



They can't even get crews for all the 6 Collins subs.
No one wants to go in their iron coffins.

Sir lastnail wrote on Jan 16^th, 2020 at 2:33pm:


Other countries?  They developed Uranium enrichment industries.  We abandoned ours' in the 1960s.   We lack the ability to refuel any nuclear submarines.  Uranium enrichment is not something you wave into being with a magic wand.   

Jasin wrote on Jan 16^th, 2020 at 7:33pm:


It has one and a Naval strategy.  Indeed, one of the reasons why they were able to purchase the CANBERRA class LPHs was because the Army supported the Naval decision to purchase them to be a core of the Naval Strategy.   What is missiing is large enough "lots" of a class for naval yards to keep those skilled in building them, building them.

Bobby. wrote on Jan 16^th, 2020 at 8:47pm:


A minor problem.

Quote:


WWII was a real war, Bobby. 

Brian,
Quote:

really - a sub sinking out of control -
is a minor is problem?


Brian,
Quote:

How many of our subs would survive a real war?

Brian ,
if it was a minor problem then why
did 3 sailors get PTSD ?

Brian Ross wrote on Jan 18^th, 2020 at 5:21pm:



dear Brian,
this is where you lose your credibility -
facts don't persuade you.
Those guys were in a state of terror for many long hours -
that's what caused their PTSD.
How would you cope with sinking uncontrollably in a submarine?

We don't have many details.
Did cracks open up -
did water start gushing in?

Bobby. wrote on Jan 18^th, 2020 at 5:26pm:


Provide some evidence that it occurred at all, Bobby.... 

Bobby. wrote on Jan 19^th, 2020 at 11:22am:


Are you lying?  Bobby?

*SIGH*  The Australia?  Sorry, they've had in for the COLLINS class since they were conceived.  That is what happens when you sack a large number of middle ranking naval officers who know a little but not a lot.

FARNCOMBE wasn't in danger of sinking.  QED.

I know of a major Naval stuff up that could have cost many lives of its cadets.

Luckily the volunteer Marine Rescue saved them in hard seas and weather.

The Marine Rescue was 'ordered' to keep their mouths shut and not go to the Media (or alert the parents).


...and where were the Police in regards to this obvious 'crime'?

Yeah right. 

"An investigation by The Weekend Australian reveals discrepancies between Defence's official account and first-hand accounts now circulating in Perth from the Farncomb's crew."

So they didn't actually interview the crew, they reported second hand conversations people claimed to have had with the crew.

Top reporting there...

Defence Minister warns French designers of Australia's submarine fleet after company questions local supplier capability 

Captain Nemo wrote on Feb 13^th, 2020 at 9:09pm:


And you know this because?

What alternatives are there, Captain?   No one else around the world produces conventional powered submarines, apart from the Japanese that could buy...

Brian Ross wrote on Feb 13^th, 2020 at 9:24pm:



That's the problem.

We should have purchased off the shelf nuclear powered subs.

Captain Nemo wrote on Feb 14^th, 2020 at 10:33am:



Of course we should have.
It's just like the Seasprite helicopter
where they kept changing the design
until $billions was wasted and
then they cancelled it all.

The Dept of Defence never learns.

Captain Nemo wrote on Feb 14^th, 2020 at 10:33am:


So, we need to distort our defence budget appreciably?  We don't manufacture nuclear reactors.   We don't enrich Uranium.   We would need to have both things occur overseas.   We would lose our submarines for approximately six months to a year every three years as they refueled.   We don't have nuclear technicians or engineers.   We would be dependent on who ever supplies the boats.   Not a good deal IMO, Captain. 

Prime Minister for Canyons wrote on Feb 14^th, 2020 at 1:11pm:


Fine, in theory.  However, neither Germany nor Sweden bid on the contract.   It was either Japan or France.   They chose France.   They believed that France offered a better deal.    Are you suggesting that the Government should go a more expensive deal?

Brian Ross wrote on Feb 14^th, 2020 at 2:27pm:



I put them all in the same basket.
The Navy wastes more than anyone else.

Bobby. wrote on Feb 14^th, 2020 at 2:40pm:


Forgive yourself.  It is dependant on how much use they see, Bobby.  Our submarines are traditionally run hard and far.  They would need refuelling more often.   

Brian Ross wrote on Feb 14^th, 2020 at 2:49pm:



Brian,
Just admit that your 3  years was nonsense.

Bobby. wrote on Feb 14^th, 2020 at 2:57pm:


Why do we need these WWII style German U-boats for anyway ? We should be putting in an order for 20 Erickson Sky cranes to save what is left of the country before it is completely obliterated by fires of our making

Bobby. wrote on Feb 14^th, 2020 at 3:16pm:



I meant to go back to a news item the other day but forgot

it was along the lines of Aussies being stuck with the French contract because the tender process was flawed

flawed to the extent the French deal was the only one govt. cared to even look at


hope taxpayers are keeping book of LNP corruption in order to have it handy for dissemination when the Fed elections get underway

PZ547 wrote on Mar 6^th, 2020 at 11:51am:


Not unusual.  When the COLLINS contract was let, only the Swedes were the only one who complied with the Contract.  The Germans ignored it.  They lost it as a consequence.   In this case the French were only ones to comply with the contract letting process.

Yes sir WhiteKnight,

Quote:


https://www.abc.net.au/news/2020-03-11/australia-urged-to-embrace-nuclear-submar...

Johnnie wrote on Mar 11^th, 2020 at 7:30pm:



But Brian has been proven wrong.
I recommended proven nuclear subs at the start of this thread.

Once again - I have been proven correct above
armchair experts like Brian.

I have stayed out of this thread until now, however it's now time for an expert opinion - mine.    In an ideal world Australia would have developed a nuclear industry in the 1960s as planned, and SSNs would have been part of the RAN since the 1990s, along with conventional submarines. However this was not to be and we have the situation as it is now, not as it might have been.

Australia has a unique problem with submarine operations. Our areas of interest are very long way away and no one is designing conventional submarines that have the range and endurance we need. The last 'off the shelf' design to meet those requirements was the British Oberon class.  The Collins class is a heavily modified Swedish design that needed a lot of work to meet our needs, which it does despite a lot of uninformed media criticism.

But now, no one is designing what we need? What to do?
Cue the French...this seemed the best of several mediocre choices. I personally was initially in favour of it. However the long lead time, cost blowouts, lack of French willingness to allow Australian construction and other participation has made this a rather bad bargain.

IMO the best choice now is an upgraded Collins class  that will see us through the next couple of decades. After that I hope we have developed a nuclear industry and are able to support a mix of SSN and SSK as we should have started doing 30 years ago. 

I'm with that Belgarian. Refine what we already have. Far cheaper and a case of sticking with what we know.

James Cameron had Australians in Pyrmont design and build his Submersible to take him to the bottom of the Marianna Trench with 'few' problems that were managed. Very well done, considering it was a first up.

I'm sure we have the expertise and I'm sure we could come up with the Educational initiative to create that expertise on a wider scale. It sure would be far cheaper than this stupid French fizzer.

USA are the rulers of the Air and Aviation - it's where it wins it Wars.
The World is looking to Australia (driest continent) to lead the way in Water Technology and in some aspects we do!
But I do feel that our Submarines is where we would win our Wars with our own niche expertise (Oceania next door are Surface Skimmers with a Surface Navy).
Call it a 'Shark' instinct. 
...and all things 'down under'.

I also think for our 'Defensive' measure - Mini Subs would be the go from many points of our Coastline. Great against all the Drug boats and shipments currently coming in by sea atm.  Authorities are obviously only catching a 1/4 of what is hitting the towns and streets by the look of it.

Open up Whyalla (Well they should have when Blue Steel was going great guns there) and start building again.
Start employing Australian Workers and Designers.

NASA once nearly opened up at Weipa because of our high standard of workmanship reputation and safety standards.
To say that Australian worker pay rates are too high?
Well look at the cost of living in Australia! 

Out with crappy Holden and in with Australian Subs!!!!

Brian Ross wrote on Mar 12^th, 2020 at 1:49pm:


Plus costs of refurbishment and upgrading.... nothing lasts forever...hull fatigue sets in and the costs become prohibitive... more costly than total replacement.

Haven't looked into the design and parameters/specifications of these French letters... but the proof can only be seen in the eating.... if they aren't up to scratch........ well.... we know what happened last time around...

Grappler Truth Teller Feller wrote on Apr 28^th, 2020 at 3:56am:



I don't mean upgrading the existing hulls, but building entirely new boats based on the Collins design and incorporating the technology improvements since the Collins class were built.

I think the design of the Submarine altogether is very ineffective. It's still up there with the birds.
Doesn't even have the right type of rear to break the eddies behind it and is dragged back, rather than propelled forward by the slip.

I really think Australia should start building its own Subs NOW!
Let the Americans look after the skies like Eagles.


New Zealand can build the Ships and South America should produce the Ground Forces.

There will be War.