Submarines For Australia

A report released today shows that Australia’s future submarine (FSM) project is extravagantly expensive, highly risky and, in an era of heightened tensions in the Asia Pacific, compromises the future defence of Australia.

The report shows that the proposed acquisition will be Australia’s biggest ever defence acquisition project, will cost far more than necessary and, because of its extended delivery schedule, will probably leave a very serious capability gap of several years when Australia may have no operational submarines at all.

Mr Gary Johnston, a Sydney businessman and owner of the website Submarines for Australia, today published the independent report on the FSM that he commissioned from Insight Economics – Australia’s Future Submarine: Getting this Key Capability Right.

“I have been very concerned about Australia’s defence acquisition process for a long time,” Mr Johnston said. “The Super Seasprite helicopters failed completely at a cost of $1.4 billion, enough to pay for two teaching hospitals.”

“When I saw last year that the government proposed to spend $50 billion on twelve new French submarines with only a design concept and no proper evaluation or competitive tender process, I thought ‘enough is enough’. I decided to commission a thorough investigation of the acquisition process for the FSM and see if there wasn’t a better way forward, with a lower cost and fewer risks.”

“This report by Insight Economics, to be launched by Professor Hugh White at the National Press Club in Canberra today, is the result of that process.”

“The Insight Economics team has consulted very widely in Australia and overseas with strategic experts, admirals, former submarine commanding officers, engineers, shipbuilders and former Defence officials.”

Mr Johnston said that it was clear that governments from both sides of politics were to blame for the situation we currently are in. To quote from the report:

‘In 2009, the Rudd/Gillard governments talked a good game in terms of acquiring 12 advanced submarines and then did virtually nothing over the following four years to begin the acquisition process. The Abbott and Turnbull governments approved a grossly inflated acquisition budget for the submarines, established a flawed process that resulted in the costliest and most risky acquisition approach possible over an unacceptable timeframe and then, for political reasons, stated that the submarines must all be built in Adelaide, regardless of cost.’

“The report shows that by selecting a design partner rather than a platform, Defence was able to avoid being subject to all the checks and balances that had been established so carefully over the years to reduce the risk of procurement disasters. There was no competitive process between two or three contractors for a project definition and fixed price contract, no off-the shelf option to be considered and, as far as we can tell, limited scrutiny by Ministers and other departments of State.”

“And the decision to build all the submarines in Adelaide regardless of cost was made by one Minister on the hop. Defence and the government-owned naval shipbuilder have not performed well recently. Three air warfare destroyers have cost us three times as much as they should have done and will be delivered three years late. On the other hand, local industry has provided value for money in past naval projects that were managed competitively with the private sector mainly building the ships with fixed price contracts.”

“The cost of the 12 submarines beggars belief,”said Mr Johnston. “The report estimates a whole of life cost, including acquisition, sustainment and a life extension for the Collins class, of $180 billion. The current forecast acquisition cost of each new submarine is $3 billion, over four times that of the latest Japanese submarine, a relatively large platform like Collins, which cost under $700 million.”

“The report sets out in vivid detail the high risks surrounding the acquisition. Based on painful experience, it is almost certain that, as a new design, the cost and delivery will blow out substantially. There are major technical risks in building such a big, developmental submarine and significant risks in operating it ‘up threat’ in North Asia.”

“The government says the FSM will be ‘regionally superior’. It will not. For a start, the waters to our north will be teeming with nuclear submarines in the 2030s. It is also highly disturbing that the FSM reportedly will not deploy air-independent propulsion or Lithium-Ion batteries, two breakthrough technologies that can allow conventional submarines to remain totally submerged for up to three weeks.”

Mr Johnston said that the greatest risk was of a capability gap. “The report shows that there is a strong possibility that the first FSM won’t be operational until 2040. With the Collins class reaching the end of their lives in 2026 to 2033, this is a terrible situation. The government is looking to extend the six Collins boats for ten years – at a reported cost of $15 billion, enough to buy 18 new submarines with a thirty-year life. Experience shows that upgrades to 1980s designed platforms just don’t work.”

“So in a time of a heightened strategic threat, we may lack any credible submarine capability for a decade or more. And it takes a long time to restore that capability, not just by building platforms but in retaining personnel and being able to train new people.”

“The report proposes a way forward to address the capability gap in the future and, by introducing some competition, provides an insurance policy against the excessive cost and risks around the Shortfin Barracuda in the longer term.”

“The way forward would not require the government to change existing policy decisions.”

“First, rather than extend Collins, take urgent steps to acquire six off-the-shelf submarines, modified to extend their range and built in Adelaide if cost-effective. And also, because of the long transits to the Navy’s areas of operations, acquire a submarine tender – a mother ship – that could be forward based on Australian territory and provide a better amenity for the crews. Together this should cost under $10 billion.”

“Second, bring forward the review of future submarine technologies flagged in the 2016 Defence White Paper. The review would consider whether we should either acquire more, much cheaper, modified off the shelf submarines; or build the Shortfin Barracuda; or set in motion the lengthy and costly process to acquire nuclear submarines. The criteria would be capability requirements and value for money.”

Mr Johnston said that in his view two of the prime responsibilities of government were to provide for the effective defence of Australia and to spend taxpayers’ money in a considered and responsible manner. “Government has failed badly on both counts in the submarine acquisition. It urgently needs to lift its game.”

View Report

www.insighteconomics.com.au

7 thoughts on “Submarines For Australia”

  1. Hey Gary, just a couple of quick points, a fixed price contract sounds like a great idea. Except when you have a development project. Then it becomes a terrible idea and risks capability failure in total.

    The Kaman SeaSprite contract was a fixed price and it almost drove Kaman broke, when they couldn’t develop and deliver what they promised.

    This left the Commonwealth in a position where it had to write the program off completely or invest more to try and finish it, which it did. Despite this Kaman still couldn’t deliver what was promised and the project was scrapped and a more or less off the shelf Seahawk helicopter purchased instead, which is what should have happened in the first place.

    As for the plan for the submarines, I can’t see how re-contracting Germany and France to compete for a submarine will be any cheaper than the current plan. There are two major problems with them.

    1. We need a submarine capability that no-one else in the world requires, which adds a cost impost.

    2. We have a political requirement to build locally, which adds a massive cost impost, a risk impost, a schedule impost (all of which have been seen with the Air Warfare Destroyer project). However these imposts will not be avoided. There is no circumstance that will allow these submarines to be built overseas, when the politicians want them built here for job creation purposes.

    We could have purchased Arleigh Burke Destroyers for the Navy which offer significantly greater capability than the AWD’s at the same cost and had them delivered significantly sooner, however that was unpalatable to the Government. That is the reality the submarine project faces. Any major submarine work, including build, upgrade or through life support, has to be done locally and anything else won’t be acceptable.

    SeaSprite was an awful failure that didn’t ever need to happen. However simply imagining you can fix that buy insisting on a fixed price contract in future

  2. Good on you Gary!

    Unfortunately the same spineless stupidity and dishonesty from Canberra which has – incredibly – delivered an Australian energy crisis has so far thwarted making the obvious choice for a remotely credible Australian defence capability – SSNs. I firmly believe the energy issues and appalling approach to defence warrant criminal prosecution.
    I worked as a lawyer for a defence contractor for a number of years and also have a degree in electronics engineering. I was horrified by what I witnessed – basically sending Australian kids who joined our Navy out into the ocean in unseaworthy third world tubs. In the end I resigned out of disgust with the whole charade – from the pretend admirals on company boards to the morons in defence procurement who couldn’t run a bath.

    The culture is rotten to the core – only the obsequious and dishonest display the traits to rise up through the system. That’s why Australia has a military which would be thrashed like a monkey in a potato sack in 5 minutes. It’s a real scandal – a stinking pile of criminal negligence and recklessness which will imperil Australia in the decades ahead. I do wonder if a combination of investigative journalists and retired Supreme Court Justices and QCs could get stuck into this shambles, hold these rotten crooks to account, and spearhead a desperately needed national debate and radical overhaul of a dying and woefully underequipped ADF.

    Payne and Pyne, and dozens more of the vapid and pathetic clowns who’ve allowed this to happen over decades – into the dock with the lot of them!

    1. I regret this diatribe has been penned by a professional with legal and electronics engineering education as it an insult to both professions, who I hope will disown this emotive and unsubstantiated input to what must be a sober and thoughtful debate sparked by the Insight Economics report.
      I too am reading the report and expect to comment further after doing so. However I will make one advance comment – there is absolutely no way that Australia will be subjected to a gap in submarine capability!
      We did this before in the 1930’s and then relied on the submarine capability of the US Navy operating out of Australia, assisted by Dutch and British submarines, to make the most important contribution to the defeat of the Japanese at sea

  3. It’s not clear to me what your point is:

    1) The defence of our country deserves some emotion.
    2) It’s a comments section – not sure what substantiation you expect?
    3) The only relevance I can see with mentioning the 30’s is that nearly a century ago the RN and USN operated conventional boats – not anymore, for sound reasons. Your suggestion that we rely on other countries is most unpersuasive.

    Anyway, the more people who take an interest the better – so good luck with reading the report mate. I stand by what I’ve written – and been saying for years. I don’t think defence planning and procurement has been acceptable for many years and consider the only way it will change is to hold people to account. It’s not OK to send young service men and women out to defend our wealthy nation in second rate or non-existent platforms.

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  5. GARY, – I, KEVIN Thorpe, -AM, a Now, V Long Term Suffering victim OF, ‘Gov-T’ CORRUTPION perpetrated UPON me & My Family, in the 1,990’s &, still Fighting MONGRELS In, – NSW – “STATE, POLITICS”, YES & CORRUPT FED I.R Court, -Syd. Was in front of “THE,- MAN”, Marcus EINFELD & 2 STOOGES Mars hall &,-Moore 1,999. -NOT Worth Feeding. At 74, I will BE V, V HAPPY 2b, PUBLIC SPEAKER for U, &/OR, make VIDEOS, As i have Done, WITH T. ABBOTT & – Many { Independent Pollies }.

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