26 February 2020

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Nicole Brangwin
Foreign Affairs, Defence and Security Section

 Acknowledgements

The author would like to thank Sophie Power, Graham Rayner, Leo Terpstra, David Watt and Derek Woolner for their valuable assistance in the preparation of this Research Paper.

Chronology

• The 2009 Defence White Paper (DWP) and the Defence Capability Plan 2009 were the first public government policy documents to feature the Future Submarine Program (FSP), known as Project SEA 1000.^[1]
• The 2009 (Rudd), 2013 (Gillard) and 2016 (Turnbull) defence white papers confirmed each government’s position to acquire 12 Future Submarines for the Royal Australian Navy (RAN).^[2]
• At the release of the 2013 DWP the Gillard Government announced its decision to use the United States Navy’s ‘AN/BYG-1 combat system as the reference system for future design work’ on Australia’s Future Submarines.^[3]
• In February 2015 the Abbott Government announced that a Competitive Evaluation Process (CEP) would be undertaken as part of the Future Submarine acquisition strategy. The CEP involved France (DCNS), Germany (ThyssenKrupp Marine Systems—TKMS) and the Government of Japan as potential international design partners.^[4]
• The 2016 DWP verified the Future Submarine Program (FSP) would be a rolling acquisition program.^[5]
• On 26 April 2016 Prime Minister Malcolm Turnbull announced DCNS (now Naval Group) from France as the preferred international design partner for Australia’s FSP. The successful design is the Shortfin Barracuda Block 1A conventional submarine, which is based on the French Barracuda nuclear powered submarine.^[6]
• As of December 2019 the FSP was in the Preliminary Design Definition phase.^[7]
• The Design and Mobilisation Contract was signed between the Commonwealth and Naval Group on 30 September 2016, which included the construction of Adelaide’s Osborne North submarine facility.^[8]
• On 30 September 2016 the Government also announced Lockheed Martin as the successful tenderer, following a limited tender process, to integrate the combat system with the Future Submarines. The initial mobilisation contract was signed in November 2016, which commenced the ‘preparatory and initial design work’ and the Combat System Design, Build and Integration contract was signed on 25 January 2018.^[9]
• Negotiations on the Strategic Partnering Agreement (SPA) commenced in November 2017 between the Commonwealth and Naval Group.^[10] Following lengthy negotiations, the SPA was signed on 11 February 2019.^[11]
• The first program contract (under the SPA) was signed in early March 2019 between the Commonwealth and Naval Group for the submarine design. The contract is worth $605 million and covers work through to 2021.^[12]
• The acquisition cost of the 12 Future Submarines is estimated at over $50 billion in constant dollars and around $80 billion in out-turned dollars. The sustainment costs for the life of the program out to 2080 are roughly estimated at more than $50 billion in constant dollars and $145 billion in out-turned dollars.^[13]
• Construction of the first Future Submarine is expected to commence in 2022–23 and is scheduled to enter service around 2032–33.^[14]
  

 

Contents

Chronology
Abbreviations
Introduction
Capability requirements

Table 1: Future Submarine capability requirements

Competitive evaluation process

CEP oversight: Expert Advisory Panel
Oversight of the oversight panel
Performance audit of the design phase

Future oversight
Agreements and contracts

Commonwealth and Naval Group
Figure 1: Design and Mobilisation Contract stream of activities

Source: ANAO, Future Submarine Program—Transition to design

Table 2: FSP major design milestones
ASC and Naval Group
Commonwealth and Lockheed Martin Australia
Commonwealth, Naval Group and Lockheed Martin Australia
Australia and France—government-to-government
Contractual architecture
Figure 2: Future Submarine Program contractual architecture

Facilities and infrastructure

Figure 3: Osborne Naval Shipyard

Risk management
Cost
Schedule

Table 3: schedule—key milestones
Table 4: phase and purpose of the FSP

Collins class submarine maintenance

CCSM—Life of type extension
Collins sustainment—project of concern
Collins upgrades
Cost of extending the life of the CCSMs

Local industry involvement
Construction process

Capability specifications
Table 5: the build process

Combat system
Nuclear option

The US option
Further consideration

Conclusion
Key resources

Abbreviations

AN/BYG-1	Combat control system
ANAO	Australian National Audit Office
ANI	Australian Naval Infrastructure Pty Ltd
ASC	ASC Pty Ltd (formerly Australian Submarine Corporation Pty Ltd)
ASC Shipbuilding	ASC Shipbuilding Pty Ltd (subsidiary of BAE Systems)
CCSM CSPIF	Collins class submarines Combat System Physical Integration Facility
CEP CN10	Competitive Evaluation Process Collins class submarine sustainment
DCNS	Direction des Constructions Navales Services—now Naval Group
DWP	Defence White Paper
Defence	Australian Department of Defence
FCD	Full cycle docking
FSP	Future Submarine Program
ID	Intermediate docking
IIP LOTE	Integrated Investment Program Life of type extension
Mark 48 HWT	Mark 48 Heavyweight Torpedo
MPR	ANAO Major Projects Report
MCD	Mid-cycle docking
Naval Group	French shipbuilder (formerly known as DCNS)
Naval Group Australia PLBTF	A subsidiary of Naval Group Platform Land Based Test Facility
RAN	Royal Australian Navy
SEA 1000 SEA 1450	Defence’s project designator for Australia’s Future Submarine Program Collins class submarine life of type extension
SLEP	Service Life Evaluation Program
SPA	Strategic Partnering Agreement
SA	South Australia
UUC	Usage and upkeep cycle
WA	Western Australia

Introduction

The Future Submarine Program (FSP) will span decades and decisions that are made today will affect generations to come. If the program is to ultimately succeed in providing the Royal Australian Navy (RAN) with a reliable, operationally effective and safe capability, it will require continued political support for managing the significant costs and risks associated with such a long-term enterprise. This in turn requires the Parliament to be informed. As such, the aim of this paper is to document some of the key decision points and incorporate relevant information about the FSP that is useful to the Parliament.

The focus of this paper is to provide a chronology of events and a compilation of topics that may be raised in Parliament, including capability requirements, acquisition processes, key agreements and contracts, the practical application of decisions around facilities and infrastructure, costs, schedules and future decision points. It does not address the merits of the competing platforms or the number of submarines required.

This paper also provides an update to the Parliamentary Library’s 2012 publication Australia’s Future Submarines, given so much has changed since then. At that time, there was a sense of urgency surrounding the decision making process for the FSP.^[15] Commentators and industry experts warned of an impending capability gap affecting the RAN’s submarine fleet if a decision was not made soon.^[16] These fears were somewhat allayed in December 2012 when the outcome of a study by Defence assessed that the ‘theoretical life’ of the existing Collins class submarines (CCSM) could be extended. According to the then Minister for Defence, Stephen Smith, the study concluded:

... there is no single technical issue that would fundamentally prevent the Collins class submarines from achieving their theoretical platform life, their planned withdrawal dates, or a service life extension of one operating cycle for the fleet, which is currently around seven years, excluding full cycle docking periods. As well, under the Coles Review into Submarine Sustainment, improved management of the Collins class is expected to extend the operating cycle.^[17]

This assessment was accepted by the Gillard Government, effectively giving decision-makers some wriggle room.^[18]

On 26 April 2016 Prime Minister Malcolm Turnbull announced DCNS (Direction des Constructions Navales Services—now Naval Group)^[19] from France as the preferred international design partner for Australia’s FSP.^[20] The successful design is Naval Group’s Shortfin Barracuda Block 1A conventional submarine, which is based on the French Barracuda nuclear powered submarine design.^[21]

On 30 September 2016 a contract worth in the order of $450–500 million was signed between the Australian Government and Naval Group for the ‘design and mobilisation’ of Australia’s 12 Future Submarines.^[22] This includes the construction of Adelaide’s Osborne North submarine facility for this purpose.^[23] The Turnbull Government also announced Lockheed Martin as the successful tenderer, following a limited tender process, for the combat system integrator contract, worth around $1.4 billion over the life of the project.^[24]

The 2016 DWP explained the decision to replace the RAN’s existing fleet of six CCSMs with 12 future submarines, noting that approximately ‘half of the world’s submarines will be operating in the Indo-Pacific region’ by 2035.^[25] The decision to acquire 12 Future Submarines was developed as part of the white paper preparations under the Force Structure Review (FSR).^[26] An FSR process is typically conducted by the Department of Defence in the development of a new White Paper but is not a public document. However, the key elements of an FSR are integral to a new White Paper.^[27] These elements include an assessment of ‘Defence’s future capability needs’ and the force structure needed ‘to achieve Australia’s defence objectives’.^[28]

The Government’s long awaited Naval Shipbuilding Plan was released on 16 May 2017 (it was originally intended for release in 2016) and was expected to contain further details about the FSP.^[29] However, the Plan mostly confirmed details already released in the 2016 DWP; notably that the program will be a ‘rolling acquisition’ rather than a ‘continuous build’ program (which is discussed further under the ‘construction process’ section) and the first submarine is likely to begin construction in 2022–23 and ‘enter service in the early 2030s’.^[30] The Government promised to ‘review the Plan and provide regular updates on its implementation, including through national security statements and naval shipbuilding updates to the Parliament’.^[31]

In December 2018 the Morrison Government announced that negotiations between the Commonwealth and Naval Group on the Strategic Partnership Agreement (SPA) had concluded, although the agreement was not yet signed. This announcement coincided with the news that the Future Submarines would be called the Attack class, with the first boat named HMAS Attack.^[32] As an aside, the name seems to be a break with the RAN’s convention for naming RAN vessels with ‘a uniquely Australian connection’, such as bestowing names of World War II naval personalities on the CCSMs.^[33] While this is not the first time Attack has been used to name RAN vessels, with the Attack class patrol boats commissioned into service from 1967,  each of the vessels was named after a town or river in Australia.^[34]

The SPA between the Commonwealth and Naval Group was eventually signed on 11 February 2019 (contractual arrangements are discussed further below).^[35]

Capability requirements

Over the last decade, the capability requirements under each government have changed very little, despite rapid technological advancements and regional capability developments.

Table 1 highlights the key capability requirements identified in the last three DWPs, showing the number of required submarines has remained consistent and capability requirements relatively similar. Notably, the Australian Labor Party’s 2009 (Rudd) and 2013 (Gillard) DWPs explicitly ruled out nuclear propulsion and stated the submarines would be ‘assembled in South Australia’. The 2016 DWP made no specific assertion on either issue.

Table 1: Future Submarine capability requirements

2009 Defence White Paper[36]	2013 Defence White Paper[37]	2016 Defence White Paper[38]
12 conventional submarines (specifically rules out nuclear propulsion) Assembled in South Australia Close cooperation with the US on developing undersea warfare capabilities Greater range and endurance than the CCSM A build program ‘designed to provide the Government with the option to continue building additional submarines in the 2030s and beyond ...’ Main capabilities include anti-ship and anti-submarine warfare, mine laying and mine detection, strategic strike, collection of intelligence, support to Special Forces, supporting ongoing operations Equipped with real-time communications Ability to carry different mission payloads such as Uninhabited Underwater Vehicles (UUVs)	12 conventional submarines (specifically rules out nuclear propulsion) Assembled in South Australia Continue to closely cooperate with the US on developing undersea warfare capabilities Further work to continue on a new Submarine Propulsion Energy Support and Integration Facility in Australia Consideration of two (not four as previously announced) design options: an ‘evolved Collins’ and a new design[39] Noted the potential to extend the operational service life of the Collins class submarine by one full operating cycle The Future submarine industry skills plan was released at the same time as the white paper and focused a rolling build program[40]	12 ‘regionally superior’ conventional submarines Maximise Australian industry involvement High level of ‘interoperability with the United States’ Similar range and endurance to the CCSMs Rolling acquisition program that will allow a technology review, sometime in the late 2020s to consider developments and other specifications that might be needed Key capabilities include intelligence, surveillance and reconnaissance (ISR), anti-ship and anti-submarine warfare and support for Special Forces operations Upgraded version of the AN/BYG-1 combat system and Mark 48 MOD 7 heavyweight torpedo Equipped with ‘advanced communications systems to link with other Navy ships and aircraft’

Sources: Defending Australia in the Asia Pacific century: Force 2030, Defence White Paper 2013 and 2016 Defence White Paper.

Competitive evaluation process

The Abbott Government’s decision to undertake a competitive evaluation process (CEP) was not announced with much fanfare or initial detail, which led to some confusion.

On 8 February 2015 during a media interview, Prime Minister Tony Abbott stated that an open tender on the future submarine contract was not an option as the government ‘always intended to have ... a competitive evaluation process’.^[41] The next day, during a press conference, Prime Minister Abbott reiterated the Government’s position that a CEP would be ‘the best possible deal for Australia’.^[42] He mentioned that it was ‘maybe even likely, that there will be an international partner ... We are talking, not just to the Japanese, although we certainly are talking to them, we’re talking to the French, we’re talking to the Germans—that’s what you would expect’.^[43]

On 20 February 2015 the details of the CEP became clearer. Defence Minister Kevin Andrews announced the acquisition strategy for the FSP, identifying France, Germany and Japan as potential international design partners.^[44] Sweden, the designer of the RAN’s Collins class submarines, was excluded from the CEP due, according to Defence, to ‘the absence of an ongoing design and build capacity’.^[45] The CEP was expected to take around ten months.^[46]

The proposals from Naval Group (France), ThyssenKrupp Marine Systems (TKMS) (Germany), and the Government of Japan, were to include:

a) Pre-concept designs based on meeting Australian capability criteria;

b) Options for design and build overseas, in Australia, and/or a hybrid approach;

c) Rough order of magnitude (ROM) costs and schedule for each option; and

d) Positions on key commercial issues, for example intellectual property rights and the ability to use and disclose technical data.

In addition to this – and on the advice of Defence – the Government has endorsed a set of key strategic requirements for our future submarines:

a) Range and endurance similar to the Collins class submarine;

b) Sensor performance and stealth characteristics that are superior to the Collins class submarine; and

c) The combat system and heavyweight torpedo jointly developed between the United States and Australia as the preferred combat system and main armament.^[47]

These capability requirements were later mirrored in the 2016 DWP (noted in Table 1).

The Opposition criticised the Government’s handling of the process, arguing the ‘competitive evaluation process term that has emerged in the last several days is just simply unknown to the defence industry’.^[48]

However, former head of the Defence Materiel Organisation, Warren King, noted to a Senate Committee, Defence ‘rarely open-tender for Defence products. There are a range of reasons for that, not the least of which is strategic relationships and interoperability’.^[49] King also noted that a number of organisations that Defence buys from ‘do not respond to tenders. Series of governments, over many years, have made decisions to buy without that tender process’. An example of this includes the acquisition of the C-17 Globemaster aircraft from the US under a Foreign Military Sales scheme.^[50] King went on to explain:

On occasions where it is necessary to get information and data for the government of the day we have used a process of competitive evaluation. By that we mean using the available tools to get responses to items such as cost, capability, schedule and risk when a tender process would not generate those answers. The government of America, for example, would not respond to an open tender. A company could, but not the government.^[51]

King noted the acquisition of the MH-60R helicopters as an example of the use of a CEP by Defence.^[52] In 2011, the Gillard Government conducted a ‘competitive acquisition process’ to decide on the RAN’s new combat helicopters.^[53] The 15-month long competitive acquisition process involved Sikorsky/Lockheed Martin’s MH-60R and NATO Helicopter Industries NH90 NFH, which resulted in the MH-60R being purchased from the US under a Foreign Military Sales arrangement.^[54]

Nonetheless, the Senate inquiry into Australia’s naval shipbuilding industry highlighted, in its third report, that initial reference to the CEP ‘generated much confusion about what such a process would entail’ and therefore many interested parties sought a working definition.^[55] The Committee expressed concern that the CEP would fall ‘short of a truly rigorous procurement process for the largest and most complex defence program in Australia’s history’.^[56] However, one month prior to the release of the Committee’s third report, the Government established a panel to oversee the process.

CEP oversight: Expert Advisory Panel

On 5 June 2015 the Government established an Expert Advisory Panel to ‘assure the Government that the competitive evaluation process remains sound, is conducted in accordance with probity and accountability principles, and that participants have been treated fairly and equitably’.^[57] The Panel was expected to ‘report back at the conclusion of the process’ while also providing interim reports to the Minister for Defence.^[58] The Government did not indicate whether any of these reports would be made public.

Proposals from all three submarine designers were received by the 30 November 2015 deadline and were still being assessed by Defence when the 2016 DWP was released in February 2016.^[59]

The Panel reported to government on 13 April 2016 and 13 days later, Naval Group were announced as the successful international partner.^[60] According to the Australian National Audit Office (ANAO) report on the Future Submarine CEP (ANAO CEP report), the Panel’s ‘unanimous’ advice to government concluded:

(a) the Competitive Evaluation Process itself was a sound and appropriate process for the selection of an international partner for the SEA 1000 Future Submarine Program.

(b) The Competitive Evaluation Process was conducted in a very sound and defensible manner, from both a probity and accountability perspective.

(c) Each of the participants has been treated fairly and equitably. This assessment is supported by a review of key metrics relating to numbers of meetings held and person hours involved in interactive sessions with participants, as well as person hours involved in the evaluation of Final Proposals as part of the Competitive Evaluation Process. This assessment was also confirmed by the participants.

(d) Each of the participants has been treated fairly and equitably in accordance with any applicable Commonwealth legislative and policy requirements (as advised by Defence).

(e) The assessment contained in the Evaluation Report is defensible based on the material received and reviewed by the Panel and traceable from the detailed assessments and materials provided by the Evaluation Working Groups.^[61]

Further details about the Panel’s advice to government do not appear to be publicly available.

Oversight of the oversight panel

The ANAO CEP report was released in April 2017 and concluded that ‘Defence effectively designed and implemented a competitive evaluation process to select an international partner for the Future Submarine program’. However, there were a couple of points of interest: the potential for contractual issues to arise and the risks involved in selecting one design partner instead of two.^[62] The latter point was again raised in the ANAO’s subsequent report on the FSP’s transition to design (T2D report) where it was noted this ‘increased the risk of this acquisition’.^[63]

The ANAO CEP report noted the advice given to government by both the Minister for Defence and Defence recommending Naval Group as the preferred international partner was detailed and comprehensive. This advice also ‘clearly identified the risks and caveats in proceeding with’ Naval Group, however, Defence ‘was confident it could mitigate and resolve these issues through further negotiation’ with Naval Group.^[64] It is possible that some of these risks and caveats concerned intellectual property, cost and commercial issues,^[65] which were discussed during the lengthy SPA negotiations that were completed in December 2018 (discussed further below under the ‘agreements and contracts’ section).^[66] 

Defence recommended the selection of one international partner rather than two to undertake the design phase of the program. This was based on Defence’s lack of ‘technical resources’ to manage two partners through this phase. The ANAO CEP report remarked:

The approach taken by Defence for the Future Submarine program removes competition in the design phase, and removes incentives for the international partner [Naval Group] to produce a more economical and efficient build. This places the onus on Defence to ensure that its approach to the Future Submarine’s design and build phases, where final costs and schedules will be determined, returns value-for-money to the Commonwealth in the absence of a competitive process.^[67]

Value for money can be difficult to achieve when there is only one company involved.

Interestingly, the ANAO CEP report stated that CEP participants addressed the competitive evaluation criteria based on eight submarines, not 12. Defence advised ANAO that the reduction in number reflected ‘the Commonwealth’s fiscal position at the time the competitive evaluation process was announced’.^[68] During the Abbott and Turnbull Governments there was much speculation about the number of boats to be acquired under the FSP.^[69] The release of the 2016 DWP put an end to the speculation, confirming 12 boats.^[70]

The total cost of the CEP was $30.1 million.^[71]

Performance audit of the design phase

The most recent ANAO report on the FSP—Future Submarine Program – transition to design (T2D)—was released on 14 January 2020.^[72] The ANAO’s audit criteria assessed Defence’s administration of the program in transitioning to the design phase, including whether planned design milestones were being met; the effectiveness of expenditure to date; and whether the strategic partnership is meeting the Government’s requirements.^[73]

The report highlighted the oversight mechanisms for Defence during negotiations on the SPA between the Commonwealth and Naval Group. These included regular briefings to Defence’s Negotiation Reference Committee and submissions to the independent Naval Shipbuilding Advisory Board (established in 2016)^[74] both of which reported to Government on the progress of negotiations.^[75]

The ANAO T2D report stated the Board made a recommendation to Government in September 2018 that alternatives should be examined if successful negotiations were not achieved. Additionally, the ‘Board also commented that Defence should assess whether program risks outweighed the benefits of proceeding even if negotiations succeeded on the Strategic Partnering Agreement’.^[76] In response, Defence assessed the viability of further extending the life of the CCSM and whether this would allow enough time ‘to develop a new acquisition strategy for the Future Submarine if necessary’.^[77] Defence advised the ANAO that consideration of these issues ‘was represented in the advice to Government seeking approval to enter the Strategic Partnering Agreement’.^[78]

The report concluded that the formal arrangements are in place for Defence to effectively manage the FSP through the SPA, but raised concerns about the extension of ‘two key mandated design milestones’ and the design phase experiencing a nine-month delay.^[79]

Defence assured the ANAO that these issues have not delayed construction activities and the delivery timeframe of the Attack class submarines.^[80] Further details about the ANAO’s findings from this report are interspersed throughout the paper in the relevant sections such as cost and schedule.

Future oversight

In April 2017, the ANAO flagged that the CEP audit was one of a series of audits that will be conducted ‘to provide assurance on the program’s progress’.^[81] To date, the FSP has been examined in three ANAO reports:

1. Future Submarine—Competitive Evaluation Process (27 April 2017)
2. Naval Construction Programs—Mobilisation (14 May 2018)
3. Future Submarine Program—Transition to Design (14 January 2020).

Future ANAO reporting on the FSP will be included in the annual Major Projects Report (MPR), which is reviewed by the Joint Committee of Public Accounts and Audit.^[82] The criteria for inclusion in the MPR was amended in September 2019 to allow ‘projects admitted one year after Second Pass Approval or projects at the pre-Second Pass Approval stage that have spent >$500 million’.^[83] As such, SEA 1000 Phase 1B—Future Submarines Design Acquisition is expected to feature in the 2019–20 MPR.^[84]

The ANAO’s reports on the FSP to date provide some level of confidence that oversight mechanisms are in place and a certain degree of transparency is permitted. This is evident through the level of detail provided by Defence to ANAO, based on the ANAO’s ability to access appropriate information for audit purposes. As such, it should be expected that prospective ANAO reports featuring the FSP will provide similar assurances of accountability and transparency.

Yet, a precedent was recently set. The ANAO’s Army’s Protected Mobility Vehicle—Light performance audit report had key findings omitted, which was instigated by the Attorney-General under section 37(1) of the Auditor-General Act 1997.^[85] Consequently, the Auditor-General warned that the:

... issuing of the certificate has resulted in the parliament not being fully informed about the operation of government, because parliament does not gain access to the unredacted report. There is a lack of accountability mechanisms surrounding the decision taken by the executive to issue a certificate. For example, there is limited transparency to parliament regarding the executive’s substantive reasons for issuing a certificate.

...A precedent has been set, which if repeated may affect parliament scrutiny of the executive by limiting the Auditor-General’s independent reporting to parliament on the procurement and sustainment activities of government entities, particularly, but not solely, in the defence context.^[86]

The Joint Committee of Public Accounts and Audit report of its inquiry into the omission published its report in April 2019 expressed its concern that ‘the application of section 37 as occurred in this instance established a precedent that prevents future robust scrutiny of defence acquisition or sustainment’.^[87] The Committee made four recommendations, including:

• an inquiry by the Committee into each instance where section 37 of the Auditor-General Act is used
• legislative amendments regarding timeframes for section 37 applications be considered either when section 37 is used next or the Auditor-General Act is reviewed, whichever occurs first
• issues raised by the Auditor-General be considered ‘as part of the next periodic review of the Auditor-General Act’ and
• referral to the Senate and House of Representatives privileges committees ‘of whether the draft reports and working papers of the Auditor-General are subject to parliamentary privilege’.^[88]

The 46th Parliament may wish to consider these issues carefully in order to ensure the Parliament will be adequately informed about large scale defence acquisitions in the future, such as the FSP.

At present the Parliament is examining two matters related to the FSP: the Joint Committee on Public Accounts and Audit is considering the ANAO’s T2D report and the Senate Standing Committees on Economics is inquiring into Australia’s sovereign naval shipbuilding capability. The latter is scheduled to report by 25 June 2020.^[89]

Agreements and contracts

Commonwealth and Naval Group

Initial contract—Design and Mobilisation Contract

Following the 26 April 2016 announcement of Naval Group as the sole preferred international partner with the Shortfin Barracuda Block 1A design, preliminary discussions commenced but did not conclude before the August 2016 election.^[90] Subsequently, on 30 September 2016, the Turnbull Government signed its first contract—the Design and Mobilisation Contract—with Naval Group to commence the commercial relationship and design phase of the FSP.^[91] This included designing Adelaide’s Osborne North submarine construction facility (facilities and infrastructure are discussed in the next section of this paper).^[92]

When the signing of the Design and Mobilisation Contract announcement was made, no specific details about the contract were publicly disclosed. Following a motion in Parliament to table the contract, the Government opposed it due to the contract containing:

... commercially sensitive information that could be contrary to the public interest to disclose. This includes commercial strategies, fee price structures, and details of intellectual property which would be of significant commercial value. Given the strategic nature of the Future Submarine Program, there is also cause to consider the damage to Australia’s international relations that could arise in connection with the release of the Design and Mobilisation Contract.^[93]

In October 2016 the Head of the FSP, Rear Admiral Greg Sammut, revealed broad details about the Design and Mobilisation Contract at a Senate Estimates hearing. The contract involves design activities, which are expected to be lengthy to ensure it is sufficiently mature prior to building the submarines. This includes detailed program planning, test and integration facilities and the development of the required infrastructure.

There is also to be ongoing definition and planning for the transfer of technology that is going to be necessary from France into Australia to support construction and also to support the sovereign sustainment capability that we will be establishing with this submarine.

Alongside all of those activities, we will also be preparing for subsequent contracts and commercial negotiations. It is not just one contract, as you would imagine, to design and build 12 submarines; we need to put in place the full range of commercial arrangements that will support the program over its life. Finally, we do need to establish the ICT infrastructure that will support the design that will take place between France and Australia.^[94]

In response to a Freedom of Information request, the Department of Defence released a mostly redacted copy of the Design and Mobilisation Contract, which provided no useful details about the contract parameters.^[95]

Eventually, clarification about key aspects of the Design and Mobilisation Contract was revealed in the ANAO Transition to Design report on the FSP. The Design and Mobilisation Contract’s ‘purpose was to support the progression of design work and other work until the Strategic Partnering Agreement’ was finalised which would then be superseded by the subsequent Submarine Design Contract.^[96] The contract comprises seven streams of activities, as illustrated by the ANAO in Figure 1.^[97]

Figure 1: Design and Mobilisation Contract stream of activities

Source: ANAO, Future Submarine Program—Transition to design

According to the ANAO, streams two to seven are ongoing with additional deliverables to be added to future contracts.^[98]  While the SPA and Submarine Design Contract (discussed below) have superseded the Design and Mobilisation Contract, the latter ‘will remain open until specific items are delivered’.^[99]

The ANAO noted that one of the key milestones in the Design and Mobilisation Contract identified 17 October 2017 as the objective date to finalise the SPA. However, this was not achieved until 16 months later.^[100]

Overarching agreement—Strategic Partnering Agreement

Throughout the FSP numerous contracts will be signed. As such, an overarching legal framework is required. This is known as the SPA. While the SPA was initially expected to be finalised by 17 October 2017, negotiations between the Commonwealth and Naval Group did not formally commence until November 2017.^[101] Defence advised the ANAO that negotiations were delayed due to preliminary discussions not achieving the necessary ‘understanding of Naval Group’s commercial approach’.^[102] The preliminary discussions between the Commonwealth and Naval Group highlighted different approaches to commercial and engineering practices that slowed progress on negotiations.^[103] For further reference, the ANAO T2D report provides a detailed description of the negotiation process and oversight responsibilities.^[104] The report also provides analysis of the SPA provisions, which is not replicated here.^[105]

In February 2018 Defence officials were publicly confident the SPA would be finalised by the middle of that year, however this was not achieved until the end of 2018 and officially signed until 11 February 2019.^[106]

Despite the SPA’s importance, it is not a public document, mainly due to confidentiality and commercial-in-confidence reasons.^[107] Defence disclosed the following broad details about the SPA in response to a question on notice:

In broad terms, the SPA is the umbrella agreement between the Commonwealth, Naval Group and its Australian subsidiary, Naval Group Australia under which successive Program Contracts will be executed to deliver the Future Submarine Program (FSP). The SPA sets out:

- the objectives of the FSP,

- the overarching contractual framework that will apply across all phases of the FSP (design, construction and delivery),

- the respective commitments of the parties with respect to delivery of the FSP,

- the governance and working arrangements between all parties (including Lockheed Martin Australia as the Combat System Integrator),

- the pricing models to apply to the various phases of the FSP, and

- the process for entering into the Program Contracts for Naval Group and/or Naval Group Australia to carry out work and to provide the required supplies to deliver the FSP.

The SPA includes operative terms and conditions to be incorporated into the relevant Program Contracts for delivery of the FSP, along with a common glossary of defined terms and an array of schedules and annexes dealing with terms and conditions and other arrangements relevant to the roles of Naval Group and Naval Group Australia on the FSP.^[108]

Broadly, the SPA provides the principal framework that sets out ‘the enduring terms and conditions and the operative terms and conditions’, which are applicable to all contracts signed as part of the FSP (known as Program Contracts).^[109]

The ANAO T2D report highlighted the difficulties encountered during the preliminary discussions and subsequent negotiations between the Commonwealth and Naval Group. The ANAO assessed that the SPA:

...establishes a contractual basis to meet the Commonwealth’s objectives for the Future Submarine Program. To guide its negotiation of the Agreement, Defence established clear negotiating objectives and fit-for-purpose governance and oversight arrangements. Defence also escalated key issues for ministerial consideration during the negotiation process, and provided frank advice to government on areas requiring active management by the parties to mitigate program risk and achieve program objectives.^[110]

Shortly after the SPA was signed, the first Program Contract was finalised.

First Program Contract—Submarine Design Contract

The first Program Contract, the Submarine Design Contract, was signed on 1 March 2019 between the Commonwealth and Naval Group. The contract is worth $605 million and covers work through to 2021.^[111] The Submarine Design Contract progressively incorporated the outstanding items from the initial contract—the Design and Mobilisation Contract—and effectively updated the major design milestones as illustrated by the ANAO in Table 2.^[112]

Table 2: FSP major design milestones

Source: ANAO, Future Submarine Program—Transition to design

The Submarine Design Contract contains mandated design and review points known as Mandated System Reviews, which comprise ‘entry and exit criteria’ that Naval Group must meet at each scheduled review point. Defence explained ‘that these reviews provide “hold points” for assessing the Program’s progress and risks’.^[113] At present, the ‘overall design schedule has been extended by nine months against Defence’s pre-design contract estimates’. Defence advised the ANAO:

The difference between the estimated pre-contract schedule and the current contract schedule is to ensure design maturity meets the Commonwealth’s expectations at the mandated design reviews, such as Systems Requirements Review and Systems Functional Review.

The variance is intended to ensure the Commonwealth’s requirements for a high level of design maturity before progressing to subsequent phases of design is achieved, thereby reducing costly uncertainties during the build phase and the need for larger construction contingencies.

These were major lessons learned out of the Collins and Air Warfare Destroyer programs.^[114]                       

The ANAO assessed that it was too early to tell if the expected outcomes from extending the design schedule are likely to be achieved.^[115]

ASC and Naval Group

Framework Agreement

ASC (formerly known as the Australian Submarine Corporation) is the Commonwealth-owned company that built and now maintains the RAN’s existing fleet of CCSMs.^[116] Naval Group Australia is the design and build partner for the FSP.^[117]

ASC and Naval Group Australia signed a Framework Agreement in February 2019.^[118] The Framework Agreement covers ‘issues like training, safety, maintenance, the work—the use together of the different capabilities in the submarine yard’.^[119] The Head of ASC, Stuart Whiley, explained that the agreement works both ways between the two organisations. ASC will train Naval Group apprentices and graduates, help them develop an Australian supply chain and operate ‘a production yard safely under an Australian legislative environment ...’.^[120] Naval Group will help ASC ‘on some aspects of what the Attack submarine does’ for the Collins Life of Type Extension (LOTE) program (LOTE is discussed further below).^[121] During the April 2019 Senate Estimates hearings, Whiley offered to table a copy of the Framework Agreement but it was ultimately deemed ‘commercially sensitive’ so a copy was not tabled.^[122]

Commonwealth and Lockheed Martin Australia

Attack class submarine—combat system integration

On 30 September 2016 following a limited tender process between Raytheon Australia and Lockheed Martin Australia for the combat system integrator contract, the Turnbull Government announced Lockheed Martin as the successful tenderer. The contract is worth around $1.4 billion over the life of the project.^[123] Lockheed Martin will integrate the AN/BYG-1 combat system, which was endorsed by the Government in 2015, in the Attack class submarines (the combat system is discussed further below).^[124]

The initial mobilisation contract was signed in November 2016, which commenced the ‘preparatory and initial design work’.^[125] The Combat System Design, Build and Integration contract was signed on 25 January 2018.^[126]

Commonwealth, Naval Group and Lockheed Martin Australia

Tripartite Cooperative Arrangement

The Commonwealth, Naval Group and Lockheed Martin Australia entered into Tripartite Cooperative Arrangement on 3 May 2017. The Arrangement is non-binding and ‘does not create a partnership or joint venture’ however, it sets out the operating principles between the signatories which ‘will be developed and refined as the various phases of the FSP evolve and mature’.^[127]

Australia and France—government-to-government

In December 2016 the governments of Australia and France signed two treaty-level agreements to facilitate work on the FSP:

• on 7 December 2016, the governments of Australia and France signed the Agreement between the Government of Australia and the Government of the French Republic regarding the Exchange and Reciprocal Protection of Classified Information, which ‘will directly support the delivery of the Future Submarine Program’.^[128]
• on 20 December 2016, the intergovernmental agreement between Australia and France (Framework Agreement between the Government of Australia and the Government of the French Republic concerning Cooperation on the Future Submarine Program) was signed to allow the transfer of skills, knowledge and technology ‘to the Australian Government and Australian industry to achieve a sovereign operational and sustainment submarine capability in Australia’.^[129]

The Joint Standing Committee on Treaties (JSCOT) examined both bilateral agreements and the report was tabled in Parliament in April 2017.^[130] The report recommended binding treaty action while also ensuring intellectual property and Australian industry involvement were appropriately managed. JSCOT recommended the Government report back to the Committee on progress in 2018, during the winter sittings, to which the Government agreed.^[131] To date, there has been no public response. The Parliamentary Library understands that the Government reported back to the Committee but the information has not been made public.^[132]

Contractual architecture

The contractual arrangements and partnership frameworks for the FSP are extensive, as described above. Figure 2 (prepared by ANAO) attempts to provide a relatively straightforward illustration of the contractual architecture for the FSP.^[133]

Figure 2: Future Submarine Program contractual architecture

Source: ANAO, Future Submarine Program—Transition to design

Facilities and infrastructure

The 2017 Naval Shipbuilding Plan set out broad details for the operation of two naval shipyards in Australia: one at Osborne Naval Shipyard in SA and the other at Henderson Maritime Precinct in WA.^[134] Osborne Naval Shipyard has a number of facilities, including shipyards at Osborne North and Osborne South. The construction of the Attack class submarines will take place at Osborne North. At present, ASC conducts deep maintenance activities on the CCSM at Osborne North and planning continues on the Platform Land Based Test Facility (PLBTF) and the Combat System Physical Integration Facility (CSPIF) at ‘greenfield’ (vacant land) sites at Osborne North.^[135] At the October 2019 Senate Supplementary Estimates hearings, it was reported that the design phase of the CSPIF had reached 90 per cent with ‘preliminary construction works’ commencing before the end of 2019. The design phase of the PLBTF was at 60 per cent with construction expected to start ‘in the first half of 2020’.^[136] Figure 3 below shows the existing set-up and proposed expansion area at Osborne Naval Shipyard.^[137]

Figure 3: Osborne Naval Shipyard

Source: Naval shipbuilding plan

Headquarters

Australia and France have established a presence in each other’s country with the official opening of Naval Group’s Australian headquarters in Adelaide on 20 December 2016 and the Australian Future Submarine Office in France in July 2017.^[138]

Sovereign capability

In May 2016 the Turnbull Government announced that ‘the physical assets of the [ASC] shipyard would be maintained under Commonwealth ownership’.^[139] Later that year, the Government announced the structural separation of ASC into three separate government-owned companies to support the key capabilities of shipbuilding (which would become ASC Shipbuilding), submarine sustainment (known as ASC Pty Ltd) and infrastructure (which would become Australian Naval Infrastructure).^[140]

In March 2017 Australian Naval Infrastructure Pty Ltd (ANI) was formally established as a Government Business Enterprise, acting as a Public Non-Financial Corporation to maintain sovereign ownership of ‘shipbuilding and submarine sustainment land and critical infrastructure located at Osborne’ North and South. ANI’s role is to support rolling and continuous naval shipbuilding activities by managing land and assets, developing program infrastructure, providing ‘precinct services’, as well as managing common user facilities.^[141]

In 2017 the Commonwealth negotiated a deal to purchase the common user facility and surrounding land at Osborne Naval Shipyard from the SA Government for $230 million. The deal also included a promise from the SA Government to assist the Commonwealth to progress development at Osborne. This includes ‘assisting with relevant approvals, providing utilities and services, road, rail and emergency services access, and stamp duty relief’.^[142]

In 2018, following the structural separation of ASC, ASC Shipbuilding became a subsidiary of BAE Systems as part of the Future Frigate (Hunter class frigate) build at Osborne South. ASC Pty Ltd continued to deliver CCSM sustainment and the Air Warfare Destroyer program and would later be awarded a subcontract to build two Offshore Patrol Vessels.^[143]

ANI noted in its most recent annual report that Osborne North is currently used by ASC for full-cycle docking (FCD) and maintenance of the CCSMs. The report states:

Existing access arrangements remain in place for ASC Pty Ltd’s occupation of the Osborne North yard for CCSM sustainment activities.

In early 2019, ANI signed a Term Sheet and Coordination Agreement with Naval Group in relation to access to the Future Submarine yard’.^[144]

During the February 2019 Senate Estimates hearings, the Head of ASC, Stuart Whiley, advised the committee that ASC had been tasked with considering four options for future Collins FCD and maintenance activities: three involve moving operations to WA in 2022, 2024 or 2026 and the fourth option is to remain in SA. This tasking was expected to be completed by mid-June 2019.^[145] There was speculation that the Government’s decision about the location of ASC’s Collins FCD activities would be made public before the end of 2019.^[146] At the time of writing no announcement had been made.

At the February 2019 Senate Estimates hearings, the Head of ANI, David Knox, told the committee that work on the Future Submarine construction yard, mainly the testing and combat system facilities, currently focused on a greenfield area at Osborne North; not the land currently occupied by ASC. Knox also explained that ANI owns ‘all the major assets for north and south’ Osborne and under the SPA, Naval Group will lease facilities at Osborne North and supply the necessary equipment.^[147] Knox stated that a framework guiding the arrangements between ANI and Naval Group for leasing the facilities at Osborne North had been negotiated and a contract containing the detail of these arrangements was close to signing.^[148] At the April 2019 Budget Estimates hearing, Knox advised the Committee that ANI had signed two agreements with Naval Group: one details the terms involved in building the construction yard and the other contains the terms of access once the yard is complete.^[149]

Risk management

Another key issue negotiated between the Commonwealth and Naval Group includes the management of risk. As the SPA is not a public document, details about the allocation of risk among contracting parties is limited. The Federal Budget 2019–20 did contain a statement of risks, referred to as a ‘Guarantee in favour of Naval Group’.^[150] Sammut explained during the April 2019 Budget Estimates hearings:

That means there is a guarantee in terms of the obligations that ANI have under access arrangements with Naval Group. The access arrangements are built around the fact that the shipyard is owned by ANI on behalf of the Commonwealth. It is not owned by Naval Group or its subsidiary. As it does own the shipyard and it will have an access agreement with Naval Group to use that shipyard to be able to operate it and deliver our submarines, there are obligations on ANI to ensure that it operates in accordance with that access agreement in a way that does not impede Naval Group's ability to deliver on the strategic partnering agreement in program contracts to the Commonwealth.^[151]

Consequently, if ANI is unable to deliver on its access agreement with Naval Group, any costs incurred by Naval Group as a consequence will be paid by the Commonwealth.^[152] Sammut assured the Committee that ‘contingent liabilities that arise in the course of the contract’ have been managed under section 60 of the Public Governance, Performance and Accountability Act 2013 and Naval Group also provided the Commonwealth with performance guarantees, the detail of which is not public. ^[153] ANI maintains a Material Business Risks register that captures and documents ‘risks and controls as well as their ratings’ and is periodically monitored and reviewed by the ANI Board’s Audit and Risk Committee.^[154]

In its May 2018 report on naval construction, the ANAO stated that Defence first advised Government in July 2015 that concurrent Australian naval ship builds would carry ‘extreme risk’.^[155] The same advice was provided to Government prior to the release of the Naval Shipbuilding Plan, with two immediate risks identified: design and cost.^[156] The design risk for the FSP is that its ‘highly developmental and does not conform to the Government’s guiding principles on design maturity’.^[157] The cost risks involve problems ‘in containing costs and managing the demand for labour resources’ given the challenge of running concurrent naval build programs, the ‘very high’ cost premium for building locally and the potential for increased labour costs due to high demand for skilled workers.^[158]

In one of its submissions to the Joint Committee on Public Accounts and Audit review of ANAO’s naval construction report, Defence acknowledged:

... that active management is necessary and [Defence] is adopting an enterprise approach to risk mitigation for the naval shipbuilding endeavour by developing a national risk profile. Further, since those risks were identified by Defence, a number of mitigations have been put in place to reduce the level of risk to a manageable level.^[159]

Additionally, the ANAO’s T2D report warned about the high degree of risk attached to the FSP. The report concluded that ‘the decision not to acquire a military-off-the-shelf submarine platform, and instead engage a ‘strategic partner’ to design and deliver the submarines with significant Australian industry input, has increased the risk of this acquisition’.^[160] Defence acknowledges that the overall risk for the FSP is ‘high’ and assures the Government and the ANAO that relevant risk mitigation strategies have been adopted. A key component of this strategy is effectively managing the partnership with Naval Group.^[161] During SPA negotiations, ‘differences in the commercial, engineering and manufacturing approaches of Defence and Naval Group’ were identified, which require ongoing management. Since the SPA was signed, both parties have needed to work towards ‘establishing a shared understanding of how to operationalise negotiated outcomes so as to realise program objectives and reduce program risk’.^[162] Some of the risks for the Commonwealth involve developing and maintaining a skilled and sustainable workforce for Defence and Australian industry.^[163] One of the biggest program risks is the potential for a capability gap (which is discussed under the section on Collins class Submarine maintenance).^[164]

The ANAO assessed that while the Commonwealth’s relationship with Naval Group is in the early stages of the program, ‘the partnership is essential for effective risk management and program success’. This is especially important to effectively manage current issues such as the nine-month delay in the design phase and the extension of two major design milestones (the Concept Studies Review and the Systems Requirements Review).^[165]

Defence maintains a risk management tool that includes a ‘program risk register and risk schedules for each business unit within the Program’. In February 2019, the Naval Shipbuilding Advisory Board reviewed the FSP’s risk register and considered it ‘the most mature of all the [naval construction] programs’.^[166] Defence has taken the following steps to mitigate risks:

• mandating design and review points in the Submarine Design Contract;

• partnership and governance arrangements;

• transferring the Future Submarine’s detailed design processes to Australia;

• the fabrication of complex hull parts of Future Submarine No.1 in France;

• productivity and cost control measures for the build phase; and

• oversight and review by the Naval Shipbuilding Advisory Board and Submarine Advisory Committee.^[167]

The ANAO’s T2D report describes each of these steps in details, which will not be replicated here.^[168]

Cost

In the years leading up to the April 2016 announcement of Naval Group as Australia’s international partner on the FSP, rumours abounded about the anticipated cost of the enterprise: from $18 billion (2011), $20 billion (2014), $36 billion (2009) to $40 billion (2011).^[169]

The 2016 Integrated Investment Program (IIP), which accompanied the 2016 DWP, provided an ‘approximate investment value’ on an out-turned dollar basis^[170] of more than $50 billion for the design and construction of the FSP and $5–6 billion for weapons and systems. ^[171]

Prime Minister Turnbull confirmed on 26 April 2016 that the overall investment in the FSP would be around $50 billion.^[172] What is included in this $50 billion price tag and how it is calculated has been, and continues to be, a point of discussion in Parliament. In particular, ASPI’s Marcus Hellyer noted a comment made by Sammut, during the May 2018 Budget Estimates hearings that the $50 billion Future Submarine cost is ‘on a constant price basis’ for the acquisition costs alone. On top of that, the sustainment costs are likely to be ‘in the order of up to $50 billion on a constant price basis’, out to around 2080.^[173] Hellyer noted that ‘constant cost estimates don’t take inflation into account’.^[174] So what is the estimated cost of the Attack class submarine acquisition? Hellyer explains:

To convert a constant number to an outturned number, we need both a spend spread (how many dollars per year and over how many years) and an outturning rate. As an exercise, we set out an indicative $50 billion constant spend spread based on a ramp-up in spending to achieve commissioning of the first submarine in 2032–33, followed by subsequent submarines on a two-year drumbeat. When outturned at 2.5%, the total becomes $79 billion. Of course, if you apply higher indices to account for the fact that the cost of military equipment increases at a faster rate than general inflation, you quickly get much bigger numbers [emphasis added].

...

If Sammut did actually mean that the $50 billion acquisition and $50 billion sustainment are constant dollar estimates—and there’s no reason to think that he didn’t—then we’re actually talking a total of around $200 billion in outturned dollars.^[175]

Clarification on Hellyer’s $79 billion figure was sought during the October 2018 Supplementary Estimates hearings. Sammut did not disagree with ‘the rough out-turn costs’ suggested by Hellyer (noting that various assumptions were made in arriving at the number) but would not ‘say they’re precisely that figure ...’^[176] Sammut explained that the IIP’s out-turned dollar figure of $50 billion was determined prior to the conclusion of the CEP:

Whilst we were confident that it was greater than $50 billion outturned, we didn't have what I would call figures that we wanted to be public on at that stage. All I can say is that that was the figure that was entered into the public Defence Integrated Investment Program. The point I would make is that the costs of the program have not changed since completion of the CEP and the allocation within the Defence IIP, which is not publicly releasable, has not changed for the program once the costs of the program were established after the CEP.^[177]

The estimated $50 billion (in constant dollars) acquisition cost of the FSP includes the design and construction of 12 submarines; design and integration of the combat system for 12 submarines; required science and technology investment; logistic support; and ‘the design and construction of the submarine yard and other land-based facilities (for example, wharves, training centre, crew facilities)’.^[178] The sustainment estimate of $50 billion (in constant dollars) spanning ‘55 years for the in-service costs of the Future Submarine Program, is based on a range of data including actual Collins sustainment costs, the assumed ‘usage upkeep cycle’ of the Future Submarine and future workforce projections’.^[179]

At the November 2019 Supplementary Estimates hearing, Sammut stated that the estimated acquisition cost for the FSP is ‘in the order of $80 billion’ in out-turned dollars and the estimate for sustainment might ‘roughly’ work out to be around $145 billion in out-turned dollars to 2080 for the fleet of Attack class submarines.^[180]

The crucial point Hellyer made about the costs associated with the FSP is how this will affect Defence’s budget in decades to come:

[T]otal numbers are largely irrelevant because after the $200 billion, Defence will just keep spending billions on continuous submarine building off into the distance. The real question is how much of Defence’s annual cash flow is now tied up in the future submarines (and shipbuilding and the future fleet in general). The Cost of Defence [2018] estimated that the continuous naval shipbuilding enterprise would require an annual cash flow (in 2020–21 dollars) of $3.5–4 billion, or around 30% of Defence’s capital investment budget.

And the future submarines alone would require around $2 billion per year in acquisition funding and another $2 billion in operating costs (between sustainment and crewing) for a total of around $4 billion per year. Or put another way, around 10% of Defence’s total budget will be locked into one capability [emphasis added].^[181]

ASPI reiterated this point in November 2019.^[182]

Recent budget figures show that $2.24 billion in approved project expenditure has been allocated for Phase 1B of the FSP. Phase 1B is the design and construction phase.^[183] Defence’s most recent annual report shows the total current Government approved budget figure as $5,963 million which is expected to cover the FSP to the beginning of the construction phase in 2022–23.^[184]

Overall expenditure on the FSP, as of 30 September 2019, is $834,891,390, with 47 per cent ($396,068,415) spent on design work.^[185] As such, the ANAO assessed:

Defence cannot demonstrate that its expenditure of $396 million on design of the Future Submarine has been fully effective in achieving the program’s two major design milestones to date. Defence expenditure on design work is a material component of the program, representing some 47 per cent of all program expenditure as at September 2019.^[186]

Schedule

To date there have been no major changes to the original schedule for the FSP, as set out in the 2016 DWP. To recap, the 2016 DWP and accompanying IIP stated the acquisition process would commence in 2016—first pass approval was achieved when Naval Group was selected as the international design partner in April 2016—the first submarine is expected to enter service in the early 2030s and construction of the 12 Attack class submarines will continue into the late 2040s and 2050s.^[187]

The 2017 Naval Shipbuilding Plan confirmed construction on the Attack class submarines would begin in 2022–23 with the first boat entering service in the early 2030s.^[188]

In May 2018 Defence submitted to Parliament a schedule of key milestones in response to a question on notice (see Table 3 below).^[189] The ANAO’s T2D report provided an update on the design and build schedule (as at 19 December 2019) that shows the Preliminary Design Review is now expected to conclude by January 2021, which is reflected in Table 3.^[190]

Naval Group proposed an extension of the completion date for the Critical Design Review out to September 2023—‘some 15 months later than planned by Defence in its pre-design contract planning’.^[191] A nine month extension was eventually agreed, effectively delaying the Definition Design phase by nine months. Defence explained: 

This delay is intended to ensure the Commonwealth’s requirements for a high level of design maturity before progressing to subsequent phases of design, thereby reducing uncertainties during the build phase [and] the need for larger construction contingencies. Accordingly, Defence has not altered the planned delivery date for the first Attack class submarine.^[192]

Table 3: schedule—key milestones

Activity	Schedule
Preliminary Design Review	Conclude March 2020 January 2021
Critical Design Review [the critical design work is expected to move from France to South Australia in 2022][193]	Conclude June 2022 not contracted to date
Operation of the Propulsion System Land Based Test Site	Commence 2022/23
Operation of the Combat System Physical Integration Facility	Commence 2022/23
Construction of the first Future Submarine	Commence 2022/23
Construction of the second Future Submarine	Commence 2025/26
Sea trials for the first Future Submarine	Commence 2031/32
Acceptance of first Future Submarine	2032/33

Source: Senate Foreign Affairs, Defence and Trade Legislation Committee, Answers to Questions on Notice, Defence Portfolio, Additional Budget Estimates, 2017–18, question 41; and Future Submarine Program—transition to design.

During the November 2019 Senate Estimates hearing for Defence, Sammut clarified that in 2022–23 the ‘whole qualification section’ activity is scheduled to commence:

In the 2022-23 timeframe for that activity, before we commence construction of the vessel itself in 2024, those construction activities will commence with whole qualification section. The idea being that we will qualify the personnel, the tools and the processes for the build of the pressure hull of the submarine before we commence building the actual submarine itself.^[194]

Table 2 on page 19 of this paper illustrates the amended timeframe for the design phase under the Submarine Design Contract. Table 4 (below) shows the structure and extent of the design phase of the FSP. As of December 2019 the FSP was in the Preliminary Design Definition phase.^[195]

Table 4: phase and purpose of the FSP

Source: ANAO, Future Submarine Program—Transition to design

The perpetual question surrounding the FSP is will there be a capability gap between the decommissioning of the CCSM’s and commissioning of the Attack class submarines? Defence has assessed that if there is more than three years delay in the FSP, this ‘will create a gap in Navy’s submarine capability’.^[196] How will this be tracked?

It might be reasonable to expect that any changes to the cost and schedule of the FSP would be reflected in publicly available documents, such as the IIP. The 2016 IIP promised that the public online version would be ‘periodically updated to reflect changes in the’ IIP to ensure industry has the most up to date information.^[197] To date, the IIP has not been updated online, but it might be refreshed sometime this year to provide a 2020–30 version. In the meantime, the Services update industry via annual environmental working groups, Defence annual reports, Defence Portfolio Budget Statements and project information on the Capability Acquisition and Sustainment Group website.^[198]

Additionally, as noted earlier on page seven of this paper, the government also promised to provide regular updates to the Parliament on naval shipbuilding progress in the Naval Shipbuilding Plan.^[199] Publication updates such as these would be helpful in increasing the degree of transparency and accountability surrounding the FSP.

Collins class submarine maintenance

Commonwealth-owned ASC is contracted to provide in-service support for the CCSMs.^[200] The CCSMs are maintained under a scheduled Usage Upkeep Cycle (UUC). One UUC lasts for 12 years and involves one Full Cycle Docking (FCD) which takes two years to complete, one Mid-Cycle Docking (MCD) which takes one year to complete and two Intermediate Dockings (ID) of around six months each in duration. Additionally there are four Intermediate Maintenance Periods (IMP) of 16 weeks each.^[201]

FCDs are conducted at ASC’s facility in Osborne North, SA and the MCDs, IDs and IMPs are conducted at ASC’s facilities in Henderson, WA, known as ASC West.^[202] A FCD is the most complex submarine maintenance activity. It involves the complete refurbishment of the submarine as well as selected critical equipment.

The three diesel engines and the main propulsion motor are extracted through hull cuts, and the major systems such as air services, hydraulics, power distribution, and fluid systems are decommissioned requiring dockyard auxiliary systems to be brought on line to maintain critical services, and the re-commissioning of ship based systems near the end of the FCD.^[203]

Given the complexity of this activity, ASC notes that FCDs must be conducted using ‘a workforce with many years of FCD experience and the ability to balance problem resolution against schedule demands’. MCDs, IDs and IMPs, which are conducted at ASC West, are not as complex.^[204] While the report that these statements are drawn from was heavily redacted, it might be suggesting the existing ASC West workforce is not sufficiently experienced to manage the transition and workload of FCD.

Questions continue to be raised about whether ASC will relocate its FCD activities to WA. At the time of writing, the federal government had not made a public announcement.^[205]

As previously mentioned, one of the biggest program risks is the potential for a capability gap between the decommissioning of the CCSM and commissioning of the Attack class submarines. A key risk mitigation strategy is the CCSM life-of-type-extension (LOTE) program under SEA 1450.^[206]

CCSM—Life of type extension

The last of the CCSMs was originally expected to leave service in the early 2030s. The first Collins class submarine was commissioned into service in 1996 and the sixth in 2003.^[207] The original ‘theoretical platform life’ of the Collins was expected to be 28 years. In 2012, the Department of Defence assessed the indicative service life of the CCSM and determined it could be extended by ‘one operating cycle for the fleet’.^[208] This assessment was accepted by the Gillard Government in 2012.^[209]

Life-of-type-extension (LOTE) work on submarines is not uncommon. The former head of the FSP, Rear Admiral Rowan Moffitt (Rtd), explained in 2012 that at that time the Dutch were extending the life of submarines; the US Navy extended the Los Angeles class submarines from 30 years to 42 years and similarly the Ohio class submarines; and the United Kingdom was ‘extending their Vanguard class from an original design life of 25 years to 30 years’.^[210]

In 2012 John Coles’ report of the review into the sustainment of the CCSM mentioned the Service Life Evaluation Program (SLEP) study being undertaken by Defence at that time and explained the potential pitfalls:

A SLEP by definition takes the service life beyond that envisaged at the design stage and is frequently employed by the majority of navies to gain the maximum life from costly assets. The downside is that the cost of maintaining aging assets to the original design intent can be disproportionally expensive in both materials and time. Reliability can create serious issues with the inevitable material degradation from age and the hostile environmental conditions of the submarine space. Several characteristics of a SLEP on all or some of the Collins class submarines are considered to be worthy of comment since such an activity is extended sustainment.^[211]

Coles produced a progress report in March 2014 that did not specifically discuss LOTE work but was positive about the remediation work being undertaken to improve the CCSM sustainment process.^[212]

The 2016 follow-up Coles report noted that planning for the LOTE work had commenced in mid-2016.^[213] The report also highlighted some ‘key assumptions’ about the transition from the CCSM to the Attack class submarines, noting there would be:

• ‘a continuous submarine capability’
• LOTE work for three CCSMs that could be increased or decreased as the new submarines are introduced
• LOTE work coordinated in time with the FCD schedule (ten-year operation cycle and two-year FCD, known as 10+2 UUC) to allow ‘continuity of submarine capability’
• the ‘relocation of the Collins FCDs to Western Australia’ in an effort ‘to avoid resource demand conflicts in South Australia’ once construction of the Future Submarine commences, with the final LOTE FCDs taking place in Western Australia from 2026 to 2032 and
• continued capability upgrades on the CCSMs.^[214]

At the April 2019 Budget Estimates hearing for Defence, it was noted that the IIP provides for LOTE work for at least five boats, but the final number will be decided, along with the cost, through ongoing definition studies.^[215] This was still the case at the October 2019 Supplementary Estimates hearing for finance with the final CCSM finishing its LOTE either in 2036 for five boats or 2038 for six boats.^[216]

Each boat’s final decade in service will involve continued combat system development (assisted by the United States) together with ‘the inclusion of technical refreshes and capability enhancements ...’ Defence asserted there will not be a capability gap.^[217]

At the April 2019 Budget Estimates hearing for Finance, ASC chief Stuart Whiley noted that the LOTE work was in the concept phase and in 2020 it will move to the ‘detailed design and planning phase’.^[218] At the October 2019 Supplementary Estimates hearing, Whiley noted LOTE planning was being prepared and a ‘costed feasibility proposal’ would go to Defence in March 2020.^[219] The Chief of Navy’s recent incoming government brief indicated that first pass approval for SEA 1450 Phase 1 (CCSM LOTE) would occur in June-July 2020.^[220]

The ANAO’s T2D report noted that Defence advice from September 2019 stated LOTE work on the first CCSM would commence in 2026 when the boat enters FCD.^[221]

While planning is still in progress on the LOTE work, it is understood the majority of LOTE work will be conducted during the FCD and the remaining work during other docking opportunities such as MCDs, IDs and IMPs.^[222] The workforce requirements to conduct this activity are also still in the planning stage.^[223]

To better manage risk with the transition from the CCSM to the Attack class submarines, consideration is being given to the installation of ‘sub-systems and components in the upgraded Collins class that will be common to the Attack class’. This concept was endorsed by the Naval Shipbuilding Advisory Board in November 2018.^[224]

Collins sustainment—project of concern

The sustainment project for the CCSMs (known as CN 10) spent almost nine years on Defence’s Projects of Concern list: the longest any Defence project remained on the list and the only sustainment project to be included on the list.^[225] CN 10 was placed on the Projects of Concern list in November 2008 after failing ‘to meet acceptable benchmarks for operational capability’.^[226] Originally the Commonwealth signed a Through-life Support Agreement with ASC in 2003. This was renegotiated to an In-Service Support Contract in 2010 as part of the remediation plan (which also included the creation of the Australian Submarine Program Office and agreement on an Integrated Master Schedule).^[227] Following three reviews by John Coles in 2012, 2014 and 2016, CN 10 significantly improved to achieve ‘international benchmark levels of availability’, which was maintained to the point where CN 10 was removed from the Projects of Concern list in September 2017.^[228]

Collins upgrades

The Collins class submarine program includes other upgrade projects. The 2016 DWP and accompanying IIP provide very broad cost bands for the CCSM program, which include:

• sonar replacement with a cost band of $750 million–$1 billion and timeframe a few years beyond 2025
• satellite communication with a cost band of $750 million–$1 billion
• sensor and communications enhancements with a cost band of $400–$500 million.^[229]

The Naval Shipbuilding Plan suggests that further ‘enhancements to the current submarine capability, as well as continuation of the sustainment effort, will continue into the late 2030s’.^[230] The Plan highlights the capability enhancements noted in the IIP, which aims to avoid a ‘capability gap’ by prioritising:

... obsolescence management and fleet sustainment investment valued at $2.6 billion (out-turned) for approved and unapproved projects and $6.7 billion (out-turned) for the continuation of the sustainment effort over the remaining life of the Collins class submarines.^[231]

The ANAO monitors the ongoing sustainment and upgrade projects for the CCSM in the annual Major Projects Report (MPR), which is reviewed by the Joint Committee of Public Accounts and Audit. The most recent MPR includes two projects: SEA 1439 Phase 3 Collins class submarine reliability and sustainability with an approved budget of $445.3 million and SEA 1439 Phase 5B2 Collins class communications and electronic warfare improvement program with an approved budget of $607.8 million.^[232] The MPR shows SEA 1439 Phase 3 is experiencing a 112 months schedule slippage due to changes to submarine docking schedules and the schedule for SEA 1439 Phase 5B2 has slipped by 36 months.^[233]

Cost of extending the life of the CCSMs

An Insight Economics report from 2017 assessed the overall cost for extending the life of the CCSMs to be around $15 billion.^[234] This assertion was rejected by the head of the FSP, Greg Sammut who stated the overall cost for the LOTE work is yet to be determined.^[235] This was still the case when Sammut addressed the April 2019 Senate Budget Estimates hearing on the matter.^[236] The estimated annual cost of Collins sustainment is around $566 million.^[237]

Local industry involvement

The federal government has promised to ‘maximise local industry involvement’ in the FSP and claims around 2,800 jobs will be generated each year as a result.^[238] The Government has also promised the 12 submarines will be ‘Australian built’ securing ‘Australian jobs’ and using ‘Australian steel’.^[239]

The Naval Shipbuilding Plan reiterates the Government’s promise to ‘maximise local industry involvement’ through the transfer of ‘technology, intellectual property, business processes and workplace cultures’ to Australian industry so a sovereign enterprise can be maintained.^[240]

As part of the 2018 Defence industrial capability plan, the Government outlined the sovereign industrial capability priorities, which includes maintenance and technology upgrades of the CCSMs and work on the FSP.^[241] The Plan asserts:

Australian industry will have significant opportunities to compete for work on the construction and sustainment of these submarines. The Future Submarine is the largest defence procurement program in Australia’s history. The industrial inputs required to achieve this program will be many and will involve platform design and construction, systems design and integration, specialised engineering and naval architecture as well as many more.^[242]

The SPA signed between the Commonwealth and Naval Group in February 2019 did not stipulate a specific percentage for Australian industry involvement. As explained by Sammut in April 2019:

There is a requirement on Naval Group to approach Australian industry. Procurements will be written from Australia by its subsidiary, Naval Group Australia. There are obligations towards meeting our objectives to maximise Australian industry involvement, in terms of setting up the sovereign sustainment and operating capabilities and also the capacity to build the submarine in Australia. I do not wish to go into some of the more commercially sensitive arrangements that we have in place to ensure that we maximise Australian industry involvement. What Naval Group are required to do is ensure that they are articulating their plan for each work scope, as we move forward, that moves us towards the maximisation of Australian industry involvement so that it's clear in those plans, which have to follow and have to abide by the terms and conditions set out in the strategic partnering agreement, specifically what they're going to do during each contracted work scope as we move forward. They're generally reflected in more granular form in what we call local industry activities—the activities that will be conducted in local industry as we move forward at each stage of the program towards maximising its involvement.^[243]

In 2016 former Naval Group CEO Sean Costello told the media that over 90 per cent of the ‘build activities’ for the Attack class submarines would take place in Australia.^[244] Following this statement, speculation about the percentage of Australian content for the FSP was repeatedly raised in Parliament, most of which has been detailed in the final report from the Senate Committee’s Inquiry into the Future of Australia’s Naval Shipbuilding Industry, which will not be replicated here.^[245]

In 2018 the then Minister for Defence, Christopher Pyne, stated in response to a media question about Australian industry contribution to the FSP:

Well, this will be a local build. A local build is defined as being around 60 per cent-plus. That's what we've achieved on the Collins class. We have achieved the same on air warfare destroyer. North of 60 per cent on both of those projects. So we expect this to be a local build as we've announced. That's what Naval Group will deliver, Naval Group Australia. In fact, I'm sure it'll be further north of 60 per cent.^[246]

In February 2018, while no longer the CEO of Naval Group, Costello reportedly clarified his comments to the media:

It’s as true today as when I said it, and to be clear, what I said was that the planning of the Future Submarine project is that 90 per cent of the build activities will be performed in Australia.^[247]

Nevertheless, clarification about the amount of Australian content was raised during the April 2019 Budget Estimates hearings with Sammut confirming ‘that 90 per cent of the build of the Future Submarine will be conducted in Australia’. With regard to Australian content, no further statement can be made until the design process is complete.^[248] These points were again reiterated by Sammut at the 29 November 2019 Senate Estimates hearing where he clarified:

In the first instance, the figure of 90 per cent was made in reference to the amount of construction of the future submarine that would take place in Australia. To the minister's point, we haven't started construction yet. We are currently in the design phase of the program. That was work that we always knew we would need an international partner to lead for us, because we don't have the skill sets in this country to do concept and preliminary design of the submarine. That work is predominantly undertaken in France; although I would say at this stage in an update on the figure we have given you in the past about the level of spend in Australia, we're now at 39 per cent. And that's the level of spend that we're achieving at this particular point in the design phase of the program. There have been four items of major equipment selected for the submarine. It's been necessary to select those four major items of equipment, or indeed the designs of those systems, so that we could actually proceed through concept design and get to this point where we're about to conduct systems requirements review. I would point out they are systems not produced in Australia. However, there will be opportunities at the tier 2 level of supply chain in Australia to participate in the delivery of those equipments (sic).^[249]

On 24 February 2020 a public hearing was held by the Senate Standing Committees on Economics as part of its inquiry into Australia’s sovereign naval shipbuilding capacity.^[250] The public hearing involved representatives from Naval Group Australia and the Department of Defence and focused on Australian content, given comments made by Naval Group Australia’s chief executive John Davis that were reported in the media on 13 February 2020. The media article said Davis ‘was unable to say whether the boats’ Australian industry content would reach 50 per cent’.^[251] In the article, Davis was quoted saying ‘We didn’t know the Australian market before we joined the program ... Now we have a much deeper insight, and we recognise there is a lot more work to be done than we anticipated’.^[252]

On the same day the Department of Defence issued a joint statement with Naval Group stating that at present ‘137 Australian companies and organisations have subcontracts’ and further opportunities for Australian industry will become available as the program progresses.^[253]

The Minister for Defence, Linda Reynolds, also responded on 15 February 2020 with a short media release stating that under the SPA, both parties reaffirmed their full commitment, ‘in particular with respect to schedule and Australian Industry Capability’, and agreed to a quarterly ministerial level meeting to review progress (the next meeting is scheduled for April in France).^[254] On 24 February 2020, Minister Reynolds met with her French counterpart while in Munich, Germany for an international security conference. During this meeting the French Government made an undertaking committing Naval Group ‘to a level of Australian industry capability of at least 60 per cent of the contract value spent in Australia’.^[255] Naval Group Australia confirmed this commitment on Twitter stating ‘we will deliver on this’.^[256]

At the time of writing, the transcript of the public hearing had not been published but the media reported that Naval Group was still committed to the 60 per cent target and pledged to formalise this with the Commonwealth in the next two years.^[257]

Construction process

In 2012 then Minister for Defence Materiel Jason Clare spoke about how and why the Future Submarines should be built in Australia. These comments remain relevant today. Clare asserted this is no ‘ordinary defence project’. The program will span decades ‘and by the time the last [submarine] is built the first will need to be replaced’. The flow-on effects are important as a new industry is created in Australia; skills and technology will be developed in other Australian industries, universities and technical colleges. Clare stated there is also a strategic importance to designing, building and sustaining the submarines in Australia but expertise will be needed from international partners. Overall:

Building submarines requires intense collaboration between the designers, builders and ultimate users and maintainers. It is very difficult to do this if the project is based overseas.

US and UK experience shows that the best way to build submarines is to slowly evolve their design – to build in batches of three or four. This means obsolete equipment can be replaced and capability upgrades made progressively when equipment has been designed, produced, tested and is ready to install.

If we want a design and construction system that can evolve the design of our future submarines to meet our specific needs, it makes sense for that work to happen here.^[258]

These are some of the reasons a ‘rolling build program’ was referenced throughout the 2013 Future submarine industry skills plan.^[259] The 2016 DWP and 2017 Naval Shipbuilding Plan, however, refer to a ‘rolling acquisition program’, explaining that this will provide:

... long-term planning certainty for industry, allowing those Australian companies involved in the submarine program to invest in the capabilities needed to support their involvement in the construction and sustainment activities’.^[260]

ASPI pointed out that this statement does not provide a ‘concrete commitment’ to replace the Attack class submarines, only ‘the ability to do so’ and does not clarify what is meant by a ‘rolling acquisition program’.^[261] ASPI inferred that ‘the term “rolling acquisition” leaves open the options of both continuous and non-continuous build programs, while allowing the’ 2016 DWP to make assurances about industry certainty.^[262]

Capability specifications

Specifications for the Attack class submarines are limited, but according to Naval Group the Shortfin Barracuda Block 1A’s specifications are 97 metres in length with a displacement of 4,500 tonnes (surfaced) using pump jet propulsion and conventional power.^[263]

While additional official platform specifications are not widely known—which is not surprising given the program is still in the design phase—at least one media report suggests the range of the Attack class submarine is likely to be around 18,000 nautical miles, with a top speed of more than 20 knots and a complement of 60 crewmembers.^[264]

Sammut noted that development of Australia’s diesel-electric Attack class submarine will utilise Naval Group’s experience ‘designing both the [nuclear] Barracuda and conventional submarines’. He clarified that Naval Group is not converting the nuclear-powered Barracuda submarine into a diesel-electric submarine. This cannot be done. The design of the Shortfin Barracuda will be based on ‘many of the learnings and references that come out of the Barracuda design’ as well as the conventional submarines Naval Group has designed.^[265]

Noteworthy in the 2016 DWP is the opportunity in the late 2020s to review the program and make changes in line with technological advancements. Specifically, an assessment will be made as to ‘whether the configuration of the submarines remains suitable or whether consideration of other specifications should commence’.^[266] Naval Group suggests the Shortfin Barracuda Block 1A will evolve into the Block 1B during the rolling acquisition program and following the aforementioned review, may develop into Block 2A, incorporating new technology.^[267]

Table 5: the build process

Phase 1	Phase 2	Phase 3
Production of hull sections	Production of completed hull sections	Final integration and systems activation
‘In this phase, steel plates will be rolled into curved sections and welded into the internal frames. Suppliers from Australia and France will ship materials and components to Adelaide’.	‘In this phase, the tanks, pipes and equipment are mounted into the hull sections. Hull sections are outfitted vertically (standing on end) before being returned to horizontal outfitting for remaining equipment. Using modular production technologies, internal equipment is built, tested and then loaded into the submarine sections. Supply chains from around Australia will build internal equipment and ship to Adelaide’.	‘After the outfitting of sections is complete, they are joined together to complete each submarine. Subsystems are tested and activated and the submarine begins to come to life. The submarine is launched and following extensive trials, will be accepted into service by the Royal Australian Navy’.

Source: Naval Group website, ‘The build’, n.d.

During the November 2019 Senate Estimates hearing for Defence, Greg Sammut explained, in the context of managing risk, that prior to the construction phase of the Attack class submarines the design must be sufficiently mature:

Having a high level of design maturity before you commence build is one of the key principles for holding schedule during the construction phase, where delays are much more lengthy because it takes more time to do rework, and they are more expensive because you have a higher number of people engaged in construction activities than you do during design.^[268]

Other risk mitigation strategies involve ‘sufficient test and evaluation of equipment before they’re put into the submarine’. This includes testing the propulsion system and the combat system at land-based facilities. Also ensuring the construction shipyard is equipped with modern shipbuilding equipment and techniques.^[269]

Combat system

Prior to the CEP taking place, the preferred combat system for the Attack class submarine had already been selected. At the release of the 2013 DWP, the Gillard Government announced its decision to use the US Navy ‘AN/BYG-1 combat system as the reference system for future design work’ on the Future Submarine.^[270] The Minister for Defence, Stephen Smith, explained that the US combat, weapons and communications system is:

... a modern version of what we have in the Collins. That is significant for compatibility purposes with our alliance partner, for interoperability purposes, but also it is a deeply significant decision so far as the design and build of the submarine itself is concerned.^[271]

This preference was also supported by the Abbott Government.^[272]

Cooperation with the US Navy on submarine combat systems dates back to 2001 when the Minister for Defence removed the combat system from the main contract for the CCSMs. In 2002 the Howard Government selected an off-the-shelf system from the US Navy. Since then, Australia has participated in a Joint Development Program with the US Navy for combat and weapons control systems.^[273]

In November 2015, the Turnbull Government ‘endorsed’ the AN/BYG-1 Tactical Weapon and Control Sub-system and the Mark 48 Heavyweight Torpedo ‘as the combat system and main armament for the Future Submarines’.^[274]

The AN/BYG-1 Tactical Weapon and Control Sub-system and the Mark 48 Heavyweight Torpedo are systems jointly developed by the US and Australia and are based on systems currently in use in the CCSMs and the US Navy’s Los Angeles, Seawolf and Virginia class submarines.^[275] US company General Dynamics Mission Systems, the Tactical Control System developer for existing US and Australian submarines, explains:

The AN/BYG-1 acronym is derived from the Joint Electronics Type Designation System (JETDS): AN refers to Army/Navy, B indicates underwater systems, Y refers to data processing, and G indicates Fire Control or Searchlight Directing.

Each of the AN/BYG-1 systems incorporates a variety of advanced processor build (APB) software algorithms developed by industry, government, and academic sources.^[276]

In September 2016, the Turnbull Government announced Lockheed Martin Australia as the successful tender, following a limited tender process, for the combat system integrator contract, worth around $1.4 billion over the life of the project.^[277] In October 2016, the Minister for Defence Industry, Christopher Pyne, stated the Attack class submarines will be equipped with ‘upgraded versions of the tactical and weapon control system’ that are currently used in the CCSMs. This will allow ‘continuity with the tactical and weapon control system and the Mark 48 torpedo as key elements of’ the Collins class submarine’s existing combat system.^[278]

This approach aims to ensure continued interoperability with the US military.^[279] The ANAO confirmed that the ‘Government’s decision to acquire these systems for the Future Submarine was based on maintaining the Australian submarine fleet’s strategic interoperability with the United States’.^[280] The ANAO identified the integration of the combat system as a ‘key risk’, as it will ‘involve the sharing of interface data’ between Naval Group, Lockheed Martin Australia and the Australian Government, which will require careful management by Defence.^[281]

The initial mobilisation contract with Lockheed Martin was signed in November 2016, which commenced the ‘preparatory and initial design work’.^[282] The Combat System Design, Build and Integration contract was signed on 25 January 2018.^[283]

Nuclear option

Discussion around whether Australia should, or could, consider a nuclear powered submarine capability has been persistent in the future submarine context over the last decade.^[284] These discussions have often called for a more serious consideration of the issue and this has only recently gained traction as part of a broader debate about Australia’s future energy sources. The main reason this issue has persisted is because nuclear powered submarines would meet Australia’s strategic requirements for the FSP.^[285] But without a nuclear industrial base the discussion struggles to progress.

The 2009 and 2013 DWPs categorically rejected the consideration of nuclear powered submarines, which aligns with the Australian Labor Party’s stated position opposing the use of nuclear power for military or civil purposes.^[286] The Turnbull Government’s 2016 DWP did not rule it out.^[287] However, Prime Minister Turnbull stated during a May 2016 press conference that ‘the issue of nuclear propulsion did not form any part of our consideration’.^[288] The current Minister for Defence, Linda Reynolds, reaffirmed this point during a Senate Estimates hearing in November 2019 stating: ‘I can confirm that a nuclear powered submarine is not being considered as an option for the Attack class submarine’.^[289]

The US option

In 2011 former senior Defence official Ross Babbage suggested Australia should consider leasing US nuclear powered Virginia class or UK Astute class submarines.^[290] One year later Babbage still held this view arguing:

... the best submarines for Australia for the coming 40 years would be 10-12 leased or bought Virginia or Astute class boats. The Virginia class boats, in particular, are well sorted and reliable, they have low risk, they have known costs, they never need to be refueled and they could be acquired with associated training programs and system upgrade pathways.

...

Were the Australian government to be open to a Virginia or Astute option following next year’s [2013] election, it would be sensible to have discussions with both the U.S. and U.K. governments. However, all other things being equal, if the U.S. government were open to the idea, it would seem more sensible for Australia to opt for the Virginia class. Australian boats of this class would be operating in very close cooperation with U.S. boats in Pacific and Indian Ocean waters. There are likely to be substantial advantages flowing to both countries from joint basing, logistic support, training and many other aspects.^[291]

It was also suggested that it would be generally more affordable as Australia might lease eight Virginia class submarines at a cost of around $23–27 billion.^[292]

A February 2012 media interview quoted US Ambassador to Australia Jeffrey Bleich stating that decisions ‘about the design of the Australian submarine are up to Australia’s leaders, including whether they pursue diesel power or nuclear power ... Whatever they decide the US is willing to help’.^[293] A subsequent media article suggested an Abbott Government would consider the nuclear option.^[294]

The counter-arguments at that time centered on the extensive public campaign that would be needed to garner support for a nuclear option and the potential reluctance of the US government (and Congress) to permit US ‘companies to sell nuclear technology to a non-nuclear nation’.^[295] Additionally, Paul Dibb (another former senior Defence official) ‘warned that relying on even as close an ally as the US to that extent would remove much of Australia’s sovereignty over such a powerful weapon’.^[296]

Defence Editor Brendan Nicholson also pointed out, as most commentators had, that Australia does not have a nuclear industry, nor is the public likely to support such a venture. Nicholson emphasised the difficulties in pursuing a leased US Virginia class submarine capability, but suggested proper discussion on the nuclear issue is needed:

Australia could buy or lease from the US Virginia-class attack submarines, which have a reactor intended to last for the boat’s life without needing its nuclear fuel topped up.

That sounds simple enough on the face of it, but for Australia to obtain these subs in time to replace the Collins-class fleet would bring major problems, even if the first hurdle of persuading Washington to provide them were overcome.

US nuclear submarine crews all include very highly trained technicians, including nuclear physicists. There are very few nuclear physicists in the Royal Australian Navy.

To find specialised crews would require whole new university courses and the recruitment of large numbers of young men and women with an eye on a naval career under the waves. This is likely to require a complex national enterprise lasting for a decade.

An alternative would be to “borrow” large numbers of specialist crew from an ally: that would bring serious sovereignty issues, especially in time of war. A long-term possibility might be lurking in the selection process for the navy’s new submarines, which are intended to be conventionally powered.

France wants to sell Australia a very big, conventional version of its nuclear-powered Barracuda submarine. Of up to 12 new navy subs, the first five or six will surely be conventional, but a switch to a nuclear version might be made in the future. The issue of whether the navy should have nuclear submarines has only ever been debated in superficial fashion before Australia’s public. A sensible analysis of the issues would be very timely.^[297]

Ultimately, the potential for a leasing option might not have been viable given concerns with the US submarine industrial base.^[298] Submarine production in the US between 1997 and 2016 reportedly dropped 80 per cent due to the US Navy ordering fewer submarines. Consequently the supply chain and workforce supporting the submarine industrial base declined. Now the submarine industrial base is reportedly struggling to rebuild the supplier base and skilled workforce, which is causing delays in the delivery of programs like the Virginia class submarines.^[299]

Further consideration

The second report (2014) of the Senate Committee inquiry into Australia’s naval shipbuilding industry noted that ‘both sides of politics have decided that they would not pursue a nuclear option’ for the FSP.^[300] A Defence official advised the Committee that any decision to acquire nuclear powered submarines would attract an:

... enormous overhead. First of all, you have to change people's attitude towards nuclear power and then, beyond that, the industry behind it to sustain that capability and the cost of operating it. It is an interesting comparison that Japan, which has a nuclear industry and has a substantial nuclear base, chooses to operate conventional submarines.^[301]

Professor Goran Roos (Adjunct Professor at a number of academic institutions) told the Senate Committee that a nuclear submarine capability would be ‘fantastic’ but Australia would need to have the right technology in-country to maintain it:

We do not have a nuclear capable industry within country; hence we cannot do it now. If you rephrased the question and said, 'How long would it take us to go to a level where we could procure a nuclear propulsion submarine?' I would say probably by submarine 6 to 7 in the new build program. That is roughly when you are looking at because that is the time line it is going to take us. You need six to seven conventional submarines, where you start to build up the capability to then have a nuclear system in this area, and you could then go. So you are looking at 10 to 20 years.^[302]

In June 2017 former Prime Minister Tony Abbott suggested Australia should consider acquiring nine nuclear powered submarines from allies France, the UK or the US. Abbott lamented his biggest regret while Prime Minister was not ‘robustly challenging the nuclear no-go mindset...’. While Abbott was not asserting ‘that we must go nuclear’, he argued that Australia ‘should at least consider the option before the opportunity is lost for another several decades’. He suggested Australia should start the conversation by talking to the US about providing the RAN with nuclear powered submarines, which could be initially based at the US military base at Guam while Australia developed its domestic nuclear capabilities.^[303]

Sammut stated in October 2017 that there is ‘no plan to switch to nuclear power. Before we can contemplate a nuclear-powered fleet, there’d need to be a much broader policy debate about nuclear power itself’.^[304]

The current debates over Australia’s future energy sources have created an opportunity for a broader discussion about nuclear issues. This resulted in the establishment of a Parliamentary Committee inquiry into the prerequisites for nuclear energy in Australia. The terms of reference for this inquiry were relatively broad as the committee considered a range of issues including ‘security implications’ and ‘any other relevant matter’.^[305] The Committee also considered previous inquiries such as the South Australian Nuclear Fuel Cycle Royal Commission from 2016 and the Switkowski nuclear energy review from 2006.^[306] The Committee’s final report was released in December 2019 making three recommendations for the Australian Government to consider nuclear energy technology in the future.^[307] Although the inquiry prompted a broader discussion about potential submarine capabilities in the future, the issue appears to have been sidelined for now.

Conclusion

The project to acquire Australia’s future submarines has already been running for a decade. With decades more to go the longevity and complexity of the FSP will necessitate a sufficiently informed parliament. One of Parliament’s core functions is to scrutinise the expenditure of public funds (especially when the project involves such large amounts). This is particularly important given the history of difficulties encountered in complex defence procurement projects.^[308]

Undoubtedly there will be problems over the life of the project that will require careful navigation of complex relationships and trade-offs between various priorities, including platform specifications, long-term industry capabilities and wider trade and industry policies. Added to this are the evolving strategic environment and changing technologies. How well these problems are managed will be central to overall confidence in the program. Although there is an understandable need for confidentiality based on commercial and national security grounds, Parliament has only had access to limited detailed information. The ANAO has noted, in the context of Defence’s Projects of Concern list, there has been a reduction in transparency over the last five years and warned that not only has transparency been reduced, but ‘the level of formality has declined with explicit criteria replaced by unpublished principles, and processes have become less rigorous with a greater emphasis on maintaining relationships with industry’.^[309]

The Parliament may wish to explore appropriate avenues to systematise the provision of this information, such as regular unclassified updates on the progress of FSP milestones; management structure and key meetings (attendees, date and place); standards and policies; contracts; progress on facilities and infrastructure upgrades; workforce (including civilian and military with a breakdown of the skilled workforce involved in the Attack class submarine build, CCSM sustainment, LOTE) and technological advances. This would promote a seamless approach to transparency and accountability and encourage broader confidence in the program.

Key resources

Below is a resource list of some (not all) key publications that have relevance to the FSP and CCSMs.

Bilateral treaties—Joint Standing Committee on Treaties

• Framework Agreement between the Government of Australia and the French Republic concerning cooperation on the Future Submarine Program
• Agreement between the Government of Australia and the Government of the French Republic regarding the exchange and reciprocal protection of classified information
• Committee Report 169 (13 April 2017)
• Government response (20 November 2017)

Senate Standing Committees on Economics: Future of Australia’s Naval Shipbuilding Industry

44th Parliament

• Report 1 (27 August 2014)
• Report 2 (17 November 2014)
• Report 3 (1 July 2015)
• Interim report (28 August 2015)

45th Parliament

• Final report (28 June 2018)

RAND Corporation

• John Birkler et al., Australia's Naval Shipbuilding Enterprise: Preparing for the 21st Century, RAND Corporation, Santa Monica, CA: RAND Corporation (2015)

Coles reviews

• J Coles, Collins class sustainment review: phase 1 report (November 2011)
• J Coles, Study into the business of sustaining Australia’s strategic Collins class submarine capability (November 2012)
• J Coles, Study into the business of sustaining Australia’s strategic Collins class submarine capability: Progress review (March 2014)
• J Coles, Study into the business of sustaining Australia’s strategic Collins class submarine capability: Beyond benchmark (May 2016)

Defence

• 2016 Defence White Paper
• 2016 Integrated Investment Program
• 2016 Defence Industry Policy Statement
• Australian Industry Capability Program
• 2017 Naval Shipbuilding Plan
• 2018 Defence Export Strategy
• 2018 Defence Industrial Capability Plan
• 2019 Defence Industry Skilling and STEM Strategy
• J Cocking, C Davis and C Norwood, Australia’s requirement for submarines, DST Group (2016)
• Defence Procurement Policy Manual (December 2017 version)
• Building submarines in Australia – aspects of economic impact (May 2015)
• Future submarine industry skills plan: a plan for the naval shipbuilding industry (2013)

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[1].          Australian Government, Defending Australia in the Asia Pacific century: Force 2030, Department of Defence (DoD), 2 May 2009, pp. 70–71; Australian Government, Defence capability plan 2009, DoD, 2009, pp. 171–172.

[2].          Australian Government, Defending Australia in the Asia Pacific century: Force 2030, op. cit., pp. 70–71; Australian Government, Defence White Paper 2013, DoD, 3 May 2013, pp. 82–83; Australian Government, 2016 Defence White Paper, DoD, 25 February 2016, pp. 90–92; Australian Government, 2016 Integrated Investment Program, DoD, February 2016, pp. 81–84.

[3].          J Gillard (Prime Minister), S Smith (Minister for Defence) and M Kelly (Minister for Defence Materiel), ‘2013 Defence White Paper: the Future Submarine program’, media release, 3 May 2013.

[4].          K Andrews (Minister for Defence), ‘Strategic direction of the Future Submarine Program’, media release, 20 February 2015.

[5].          Australian Government, 2016 Defence White Paper, op. cit., pp. 91 and 115.

[6].          M Turnbull (Prime Minister) and M Payne (Minister for Defence), ‘Future Submarine program’, media release, n.d.; Naval Group, ‘The Shortfin Barracuda Block 1A’, Naval Group website.

[7].          ANAO, Future Submarine Program—transition to design, op. cit., p. 52.

[8].          C Pyne (Minister for Defence Industry), ‘DCNS submarine contract and combat system integrator announcements’, transcript, press conference, Adelaide, 30 September 2016.

[9].          Pyne, ‘DCNS submarine contract and combat system integrator announcements’, op. cit; Lockheed Martin Australia, ‘Lockheed Martin Australia welcomes Future Submarine Combat System contract announcement’, media release, 25 January 2018.

[10].        Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 28 February 2018, p. 40.

[11].        Ibid., p. 40; and S Morrison (Prime Minister) et al., ‘Government delivers on future submarine program’, media release, 11 February 2019.

[12].        C Pyne (Minister for Defence), ‘Attack class design contract signed’, media release, 5 March 2019; and Naval Group Australia, ‘Naval Group signs the submarine design contract for Australia’s Attack class submarines’, media release, 5 March 2019.

[13].        Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 29 November 2019, pp. 11 and 26.

[14].        Senate Foreign Affairs, Defence and Trade Legislation Committee, Answers to Questions on Notice, Defence Portfolio, Additional Budget Estimates, 2017–18, question 41.

[15].        N Brangwin, Australia’s future submarines, Background note, Parliamentary Library, Canberra, 24 May 2012.

[16].        Ibid.

[17].        The CCSM’s operating cycle is explained in more detail further below under the heading ‘Collins class submarine maintenance’. S Smith (Minister for Defence) and J Clare (Minister for Defence Materiel), ‘Collins class service life evaluation program’, press release, 12 December 2012.

[18].        S Smith (Minister for Defence) and J Clare (Minister for Defence Materiel), ‘Collins class service life evaluation program’, media release, 12 December 2012.

[19].        DCNS changed its name to Naval Group in June 2017 but to avoid confusion, this paper will refer to DCNS as Naval Group from this point on. See Naval Group, ‘DCNS changes its name to Naval Group’, media release, 28 June 2017.

[20].        ‘Naval Group is a French-law Public Limited Company; as at 31 December, 2017 62.25% of its capital was held by the French State, 35% by Thales, 1.73% by current and former members of staff and 1.02% by the company itself’. The Chairman of Naval Group is Hervé Guillou, see Naval Group website. Naval Group Australia was formed in 2015 as a subsidiary of Naval Group and is headed by Jean-Michel Billig. Turnbull and Payne, ‘Future submarine program’, media release, n.d.

[21].        Naval Group, ‘The Shortfin Barracuda Block 1A’, Naval Group website.

[22].        C Pyne (Minister for Defence Industry), ‘DCNS submarine contract and combat system integrator announcements’, transcript, press conference, Adelaide, 30 September 2016.

[23].        Ibid.

[24].        Ibid.

[25].        Australian Government, 2016 Defence White Paper, op. cit., p. 90.

[26].        Department of Defence, Defence capability plan 2009, op. cit., p. 171. Australian Government, Defending Australia in the Asia Pacific century: Force 2030, op. cit., pp. 70–71.

[27].        B Moyse, ‘Winning battles and losing wars: the next force structure review’, The Strategist, ASPI blog, 19 September 2018.

[28].        Australian Government, 2016 Defence White Paper, op. cit., p. 14.

[29].        Following the release of the 2016 DWP, the Government agreed to an additional Senate Estimates hearing to discuss the white paper. Hansard shows the Government explaining why the Naval Shipbuilding Plan was not released with the White Paper as originally intended but was expected at that time to be released later in 2016. Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 17 March 2016, pp. 3–4; M Turnbull (Prime Minister), M Payne (Minister for Defence) and C Pyne (Minister for Defence Industry), ‘Securing Australia’s naval shipbuilding and sustainment industry’, media release, 16 May 2017.

[30].        Australian Government, Naval shipbuilding plan, DoD, May 2017, p. 26; and Australian Government, 2016 Integrated Investment Program, DoD, February 2016, p. 82.

[31].        Ibid., p. 112.

[32].        C Pyne (Minister for Defence), ‘Attack class Future Submarines’, media release, 13 December 2018.

[33].        The first Australian submarines maintained their original alpha numeric designator AE1 and AE2. The names of the Oberon class varied somewhat from explorers and military people, town names, an indigenous name and a constellation. The CCSMs were named after World War II naval personalities: J Perryman, ‘Naming of RAN Ships’, Sea Power Centre – Australia, RAN website.

[34].        Sea Power Centre – Australia, ‘Welcome to the Armidale class’, Semaphore, 4, February 2006.

[35].        S Morrison (Prime Minister), C Pyne (Minister for Defence) and S Ciobo (Minister for Defence Industry),’ Government delivers on future submarine program’, media release, 11 February 2019.

[36].        Australian Government, Defending Australia in the Asia Pacific century: Force 2030, Department of Defence, 2 May 2009, pp. 70–71.

[37].        Australian Government, Defence White Paper 2013, Department of Defence, 3 May 2013, pp. 82–83.

[38].        Australian Government, 2016 Defence White Paper, op. cit., pp. 90–92; Australian Government, 2016 Integrated Investment Program, op. cit., pp. 81–84.

[39].        Prior to the 2012 Federal Budget, the Gillard Government stated they were considering four design options for the Future Submarines: 1. Existing military-of-the-shelf (MOTS) ‘modified only to meet Australia’s regulatory requirements’ 2. Modified MOTS incorporating ‘Australia’s specific requirements’ including combat systems and weapons 3. Enhanced Collins Class or MOTS design 4. New developmental design: J Gillard (Prime Minister), S Smith (Minister for Defence) and J Clare (Minister for Defence Materiel), Next stage of future submarine project announced, media release, 3 May 2012.

[40].        Government policy describes a rolling build as a program ‘where ships are built at a steady cadence supported by an engineering program that deals with equipment obsolescence and minor system changes, and also a research and development program that develops new technology for major equipment and capability upgrades’. A rolling build is established to operate for an ‘indefinite period’: Australian Government, Future submarine industry skills plan, DoD, 2013, p. 127.

[41].        T Abbott (Prime Minister), ‘Media interview with Chris Uhlmann: Party room meeting’, transcript, ABC News, 8 February 2015.

[42].        T Abbott (Prime Minister), ‘Press conference: future submarines project’, transcript, Parliament House, Canberra, 9 February 2015; K Andrews (Minister for Defence), ‘Statement on Australia’s future submarine’, media release, 9 February 2015.

[43].        Ibid.

[44].        K Andrews (Minister for Defence), ‘Strategic direction of the Future Submarine Program’, media release, 20 February 2015.

[45].        This decision was controversial at the time as many commentators believed Sweden should have been included in the CEP. Original statement cited in Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 25 February 2015, pp. 65–102. For commentary on the exclusion of Sweden from the CEP see P Smart, ‘Sweden makes it official: we’re unimpressed at being left out of SEA 1000’, Australian Defence Magazine, May 2015, p. 8; A Probyn, ‘Swedish bid for sub deal torpedoed’, West Australian, 21 February 2015, p. 14; J Tringham, ‘Interview: Dean Rosenfield, Managing Director, SAAB Australia’, Jane’s Defence Weekly, 52(9), 4 March 2015, p. 34; T Thomas, ‘Running deep. The industrial implications of the Competitive Evaluation Process to find Australia’s preferred Future Submarine Program partner’, Australian Defence Business Review, 34(4), July/August 2015, p. 22.

[46].        K Andrews (Minister for Defence) et al., ‘Press conference: Melbourne’, transcript, 20 February 2015.

[47].        Andrews, ‘Strategic direction of the Future Submarine Program’, op. cit.

[48].        M Butler (Shadow Minister for Environment, Climate Change and Water; Labor MP for Port Adelaide), ‘ABC 891 Adelaide Breakfast: Government’s weasel words on future submarines’, transcript, 11 February 2015; P Wong (Leader of the Opposition in the Senate) et al., ‘Doorstop interview: Abbott Government’s broken promise on Australia’s Future Submarines’, transcript, Parliament House, Canberra, 10 February 2015.

[49].        Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 25 February 2015, op. cit., p. 37.

[50].        Ibid., p. 37.

[51].        Ibid., p. 37.

[52].        Ibid., p. 38.

[53].        S Smith (Minister for Defence) and J Clare (Minister for Defence Materiel), ‘New naval combat helicopters’, media release, 16 June 2011.

[54].        D Watt, ‘New naval aviation combat helicopters’, Parliamentary Library, blog, 25 June 2011.

[55].        Senate Economics References Committee, ‘Future of Australia’s naval shipbuilding industry: Part 3: long-term planning’, The Committee, July 2015, p. 28.

[56].        Ibid., p. 39.

[57].        The Panel members included: Professor Donald Winter (Chair—who would subsequently be appointed Chair of the Naval Shipbuilding Advisory Board, see: C Pyne (Minister for Defence Industry), ‘Chair of the Naval Shipbuilding Advisory Board Appointed’, media release, 22 October 2016), the Hon. Justice Julie Anne Dodds-Streeton, Mr Ron Finlay and Mr Jim McDowell. K Andrews (Minister for Defence), ‘Expert Advisory Panel appointed to oversee Future Submarine Competitive Evaluation Process’, media release, 5 June 2015.

[58].        K Andrews (Minister for Defence), ‘Press conference: Expert Advisory Panel on the Future Submarine Competitive Evaluation Process’, transcript, 5 June 2015.

[59].        M Payne (Minister for Defence), ‘Future Submarine program enters next phase’, media release, 30 November 2015.

[60].        Turnbull and  Payne, ‘Future Submarine program’, op. cit.

[61].        Australian National Audit Office (ANAO), Future Submarine—Competitive Evaluation Process: Department of Defence, Performance Audit report, 48, 2016–17, p. 8.

[62].        Ibid.

[63].        ANAO, Future Submarine Program—transition to design, Performance Audit report, 22, 2019–20, p. 20.

[64].        ANAO, Future Submarine—Competitive Evaluation Process, op. cit.

[65].        Ibid., p. 40.

[66].        C Pyne (Minister for Defence), ‘Attack class Future Submarines’, op. cit.; ANAO, Future Submarine Program—transition to design, op. cit., pp. 25–26.

[67].        ANAO, Future Submarine—Competitive Evaluation Process, op. cit., p. 38.

[68].        Ibid., p. 24.

[69].        P Briggs, ‘Submarines: build them here, and build 12’, Lowy Interpreter, Lowy Institute blog, 19 October 2015.

[70].        Australian Government, 2016 Defence White Paper, op. cit., p. 90; Australian Government, 2016 Integrated Investment Program, op. cit., p. 82.

[71].        Ibid., p. 36.

[72].        ANAO, Future Submarine Program—transition to design, op. cit.

[73].        Ibid., p. 8.

[74].        C Pyne (Minister for Defence Industry), ‘Chair of the Naval Shipbuilding Advisory Board’, media release, 22 October 2016.

[75].        ANAO, Future Submarine Program—transition to design, op. cit., pp. 25–26.

[76].        Ibid., p. 26.

[77].        Ibid., p. 26.

[78].        Ibid., p. 26.

[79].        Ibid., pp. 8–9.

[80].        Ibid., p. 10; G Moriaty (Defence Secretary) et al., ‘ANAO Report – Future Submarine Program—Transition to design’, media release, 15 January 2020.

[81].        ANAO, Future Submarine—Competitive Evaluation Process, op. cit., p. 17.

[82].        ANAO, Future Submarine Program—transition to design, op. cit., p. 20.

[83].        Ibid., p. 20.

[84].        Ibid., p. 20.

[85].        Section 37 deals with ‘Sensitive information not to be included in public reports’ and subsection (1) states ‘The Auditor-General must not include particular information in a public report if: (a) the Auditor-General is of the opinion that disclosure of the information would be contrary to the public interest for any of the reasons set out in subsection (2); or (b) the Attorney-General has issued a certificate to the Auditor-General stating that, in the opinion of the Attorney-General, disclosure of the information would be contrary to the public interest for any of the reasons set out in subsection (2)’. The reasons listed in subsection (2) include ‘(a) it would prejudice the security, defence or international relations of the Commonwealth (b) it would involve the disclosure of deliberations or decisions of the Cabinet or of a Committee of the Cabinet (c) it would prejudice relations between the Commonwealth and a State (d) it would divulge any information or matter that was communicated in confidence by the Commonwealth to a State, or by a State to the Commonwealth (e) it would unfairly prejudice the commercial interests of any body or person (f) any other reason that could form the basis for the claim by the Crown in right of the Commonwealth in a judicial proceeding that the information should not be disclosed’. Auditor-General Act 1997, section 37(1).

[86].        Joint Committee of Public Accounts and Audit, ‘Army’s protected mobility vehicle—light—Auditor-General’s report No. 6 (2018–19)’, Official committee Hansard, Canberra, 19 October 2018, pp. 1–2.

[87].        Joint Committee of Public Accounts and Audit, Report 478: issuing of a certificate under section 37 of the Auditor-General’s Act 1997, April 2016, p. 6.

[88].        Ibid., pp. 9–10.

[89].        Joint Committee of Public Accounts and Audit, Inquiry into the 2018–19 Defence Major Projects Report and the Future Submarine Project – Transition to Design (Auditor-General’s Reports 19 and 22 (2019–20)), Canberra, 2020; Senate Standing Committees on Economics, Australia’s sovereign naval shipbuilding capability, The Senate, 19 September 2019.

[90].        M Turnbull (Prime Minister) et al., ‘Australia’s future fleet of submarines’, transcript, doorstop interview, Osborne SA, 26 April 2016.

[91].        M Payne (Minister for Defence), ‘First contract signed with DCNS to commence design phase’, media release 30 September 2016.

[92].        C Pyne (Minister for Defence Industry), ‘DCNS submarine contract and combat system integrator announcements’, transcript, press conference, Adelaide, 30 September 2016.

[93].        Senate, ‘Defence procurement: order for the production of documents’, [Questioner: N Xenophon], Responder: J McGrath, Debates, 9 November 2016.

[94].        Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 19 October 2016, p. 71.

[95].        Department of Defence, ‘Future Submarine Program: design and mobilisation contract: contract no: CASG/FSP/Contract356/2016: details schedule’, Freedom of Information disclosure log, 23 December 2016.

[96].        ANAO, Future Submarine Program—transition to design, op. cit., p. 36.

[97].        Ibid., p. 44.

[98].        Ibid., p. 44.

[99].        Ibid., p. 16.

[100].      Ibid., pp. 16 and 27.

[101].      Ibid., p. 27; Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 28 February 2018, p. 40.

[102].      ANAO, Future Submarine Program—transition to design, op. cit., p. 27.

[103].      Ibid., pp. 9, 33, 40 and 46.

[104].      Ibid., pp. 22–28.

[105].      Ibid., pp. 29–31, Table 2.1.

[106].      Ibid., p. 24; and Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 28 February 2018, op. cit., p. 40.S Morrison (Prime Minister) et al., ‘Government delivers on future submarine program’, media release, 11 February 2019.

[107].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Answers to Questions on Notice, Defence Portfolio, Additional Budget Estimates 2018–19, Portfolio Question no. 126.

[108].      Ibid.

[109].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 10 April 2019, p. 31.

[110].      ANAO, Future Submarine Program—transition to design, op. cit., p. 22.

[111].      C Pyne (Minister for Defence), ‘Attack class design contract signed’, media release, 5 March 2019; and Naval Group Australia, ‘Naval Group signs the submarine design contract for Australia’s Attack class submarines’, media release, 5 March 2019.

[112].      ANAO, Future Submarine Program—transition to design, op. cit., p. 34.

[113].      Ibid., p. 45.

[114].      Ibid., pp. 45–46.

[115].      Ibid., p. 46.

[116].      ASC, ‘Submarines’, ASC website.

[117].      Naval Group Australia website.

[118].      C Pyne (Minister for Defence), ‘Naval Group Australia and ASC sign framework agreement for Attack Class’, media release, 25 February 2019.

[119].      C Pyne (Minister for Defence), ‘Remarks at Naval Group and ASC Framework Agreement announcement’, speech, 25 February 2019.

[120].      Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 4 April 2019, p. 73.

[121].      Ibid., p. 73.

[122].      Senate Finance and Public Administration Legislation Committee, Answers to Questions on Notice, Finance Portfolio, Budget Estimates 2019–20, Question no. 2.

[123].      Pyne, ‘DCNS submarine contract and combat system integrator announcements’, op. cit.

[124].      M Payne (Minister for Defence), ‘Address to the Submarine Institute of Australia, Adelaide’, speech, Adelaide, 17 November 2015.

[125].      Lockheed Martin Australia, ‘Lockheed Martin Australia welcomes Future Submarine Combat System contract announcement’, op. cit. Australian Industry Capability (AIC) Public Plans are available from the Defence Strategic Policy and Intelligence Group section of the Department of Defence website. The AIC plan for the initial services contract with Lockheed Martin is published on this site and notes ‘a detailed design solution [is] expected to be delivered to the Commonwealth by June 2022’. See Lockheed Martin, ‘Australian Submarine Combat System: Combat system integrator (ASCS-CSI) program: initial services contract: Public AIC Plan – Lockheed Martin Australia’, 1 October 2017.

[126].      Lockheed Martin Australia, Lockheed Martin Australia welcomes Future Submarine Combat System contract announcement, ibid.

[127].      ANAO, Future Submarine Program—transition to design, op. cit., p. 16.

[128].      G Brandis (Attorney-General), ‘Australia and France sign classified information sharing treaty’, media release, 9 December 2016.

[129].      M Payne (Minister for Defence) and JY le Drian (Minister for Defence, France), ‘Australia and France sign submarine inter-governmental agreement’, media release, 20 December 2016.

[130].      Joint Standing Committee on Treaties, Future Submarine Program – France, classified information exchange – France, Report 169, April 2017, pp. xvii–xviii.

[131].      Ibid., pp. xxii, 37–38 and Australian Government response to the Joint Standing Committee on Treaties Report 169: Future Submarine Program – France, classified information exchange – France, November 2017, pp. 2–3. The lessons of Collins show why these agreements are important. Chapter 26 of Derek Woolner and Peter Yule’s book The Collins class submarine story: steel, spies and spin looks at the complexities of the contractual arrangements surrounding the build and maintenance of the Collins. In the year 2000, following the acquisition of Kockums by German company HDW in September 1999, the Commonwealth took full control of ASC by buying Kockums’ 49 per cent share in the company. At this point of the Collins project, the Commonwealth effectively became the prime contractor, however, Kockums retained the design authority. Not long after, the working relationship between ASC and Kockums deteriorated, which resulted in a drawn out and disruptive IP dispute. See D Woolner, The Collins class submarine story: steel, spies and spin, Cambridge University Press, Melbourne, 2008, p. 310.

[132].      Communication with Committee Secretariat, 16 May 2019 (cited with permission).

[133].      ANAO, Future Submarine Program—transition to design, op. cit., p. 17.

[134].      Australian Government, Naval shipbuilding plan, op. cit., p. 47.

[135].      Originating in the UK, international engineering company Laing O’Rourke was awarded the main contract to construct the Osborne North submarine yard. See C Pyne (Minister for Defence), ‘Submarine and shipbuilding sector; Attack class submarine’, transcript, 13 December 2018; and Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 4 April 2019, op. cit., p. 78.

[136].      Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 22 October 2019, pp. 5–6.

[137].      Australian Government, Naval shipbuilding plan, op. cit., p. 51.

[138].      M Turnbull (Prime Minister) and C Pyne (Minister for Defence Industry), ‘Prime Minister unveils Australia’s DCNS HQ in Adelaide’, media release, 20 December 2016; M Turnbull (Prime Minister), ‘Remarks at the opening of the Australian Future Submarines Office, Cherbourg, France’, transcript, 9 July 2017.

[139].      Australian Government, Naval shipbuilding plan, op. cit., p. 41; and M Cormann (Minister for Finance), ASC structural separation, fact sheet, n.d.

[140].      Australian Government, Naval shipbuilding plan, op. cit., p. 41.

[141].      ANAO, Naval construction programs—mobilisation, Audit report, 39, 2017–18, ANAO, Barton, ACT, 14 May 2018, p. 27.

[142].      M Cormann (Minister for Finance) and C Pyne (Minister for Defence Industry), ‘Agreement reached on common user facility’, media release, 15 May 2017.

[143].      Australian Government, ASC annual report 2018, 21 September 2018, p. 5; ASC, ‘Shipbuilders commence construction of first Offshore Patrol Vessel’, media release, 15 November 2018.

[144].      Australian Naval Infrastructure (ANI), Annual report 2018–19, 12 September 2019, p. 9.

[145].      Senate Estimates, Finance and Public Administration Legislation Committee, Official committee Hansard, 19 February 2019, p. 13.

[146].      M Hellyer, ‘The government must create a single Australian submarine enterprise’, The Strategist, Australian Strategic Policy Institute (ASPI) blog, 5 September 2019.

[147].      Senate Estimates, Finance and Public Administration Legislation Committee, Official committee Hansard, 19 February 2019, op. cit., pp. 10 and 13.

[148].      Ibid., p. 20.

[149].      Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 9 April 2019, p. 34.

[150].      Australian Government, ‘Statement 8: statement of risks’, Budget strategy and outlook: budget paper no. 1: 2019–20, p. 8-3.

[151].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 5 April 2019, p. 40.

[152].      Ibid.

[153].      Ibid., p. 41. Section 60 of the Public Governance, Performance and Accountability Act 2013 covers ‘Indemnities, guarantees or warranties by the Commonwealth’. Section 60(1) states ‘The Finance Minister may, on behalf of the Commonwealth, grant an indemnity, guarantee or warranty’. Section 60(2) states ‘The grant of the indemnity, guarantee or warranty must be in accordance with any requirements prescribed by the rules’. See Public Governance, Performance and Accountability Act 2013 (Cth), section 60.

[154].      ANI, ANI statement of corporate intent 2019/20: covering reporting period 2019/20 to 2022/23, p. 30; ANI, Annual report 2017–18, op. cit., pp. 13–14.

[155].      ANAO, Naval construction programs—mobilisation, op. cit., p. 44.

[156].      Ibid., p. 44.

[157].      Ibid., p. 47.

[158].      Ibid., p. 48.

[159].      Joint Committee of Public Accounts and Audit, Department of Defence, Submissions to the Inquiry into Defence First Principles Review, Naval Construction and Mental Health in the ADF. Inquiries based on Auditor-General’s Reports 31, 34 and 39 (2017–18), (Submission no. 2), February 2019.

[160].      ANAO, Future Submarine Program—transition to design, op. cit., pp. 6 and 8.

[161].      Ibid., pp. 9–10.

[162].      Ibid., pp. 25 and 32.

[163].      Ibid., p. 27.

[164].      Ibid., p. 44.

[165].      Ibid., p. 33 and 40.

[166].      Ibid., p. 45.

[167].      Ibid., p. 45.

[168].      Ibid., pp. 45–48.

[169].      B Pacey, Sub judice: Australia’s future submarine, Kokoda Papers, 17, January 2012, p. 77; Australian Strategic Policy Institute (ASPI), ‘The submarine choice: perspectives on Australia’s most complex defence project’, Strategy, September 2014, pp. 8 and 31; A Davies, ‘What price the future submarine?’, ASPI, Policy analysis, 99, 2 March 2012; N Brangwin, Australia’s future submarines, Research paper series, 2011–12, Parliamentary Library, 24 May 2012, p. 8.

[170].      The ANAO explains out-turning: ‘When considering and approving budgets, the Government takes into account the estimated impact of inflation over the life of a project which is known as ‘out-turning’. At the time of project approval, project managers estimate the impact of indices tendered (or estimated) for the life of the project. These estimates are built into the project budget as part of the out-turning process, which are revised as part of each budget review and update process’. ANAO, Major Projects Report 2017–18: Department of Defence, Audit report, 20, 2018–19, ANAO, Barton, ACT, 2018, p. 71.

[171].      Australian Government, 2016 Integrated Investment Program, op. cit., p. 9.

[172].      Ibid.

[173].      Sammut did caveat his comments that detailed acquisition and sustainment costs ‘will be determined during the design process through choices made’. See Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 29 May 2018, p. 49; M Hellyer, ‘Senate estimates, submarine escalates’, The Strategist, ASPI blog, 6 June 2018. Of note, the IIP states the ‘approximate investment value’ is in out-turned dollars. See Australian Government, 2016 Integrated Investment Program, ibid., p. 9.

[174].      Hellyer, op. cit.

[175].      Ibid.   

[176].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, op. cit., pp. 91–92.

[177].      Ibid., p. 92.

[178].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Answers to Questions on Notice, Defence Portfolio, Supplementary Budget Estimates, 2017–18, question 25.

[179].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Answers to Questions on Notice, Defence Portfolio, Budget Estimates, 2018–19, question 60.

[180].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 29 November 2019, op. cit., pp. 11 and 26.

[181].      Hellyer, ‘Senate estimates, submarine escalates’, op. cit.

[182].      A Davies and M Hellyer, ‘The very hungry future submarine’, The Strategist, ASPI blog, 5 November 2019.

[183].      Australian Government, Portfolio budget statements 2019–20: budget related paper no. 1.4A: Defence Portfolio, p. 118.

[184].      Australian Government, Defence annual report 2018–19, November 2019, web table D.3.

[185].      ANAO, Future Submarine Program—transition to design, op. cit., p. 41.

[186].      Ibid., p. 40.

[187].      Australian Government, 2016 Defence White Paper, op. cit., p. 91; Turnbull and Payne, ‘Future submarine program’, op. cit.

[188].      Australian Government, Naval Shipbuilding Plan, op. cit., pp. 16 and 26.

[189].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Answers to Questions on Notice, Defence Portfolio, Additional Budget Estimates, 2017–18, question 41.

[190].      ANAO, Future Submarine Program—transition to design, op. cit., p. 34.

[191].      Ibid., pp. 34–35.

[192].      Ibid., p. 36.

[193].      M Turnbull (Prime Minister), M Payne (Minister for Defence) and C Pyne (Minister for Defence Industry), ‘Submarine design to move to Australia’, media release, 3 May 2018.

[194].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 29 November 2019, op. cit., p. 6.

[195].      ANAO, Future Submarine Program—transition to design, op. cit., p. 52.

[196].      Ibid., p. 43.

[197].      Australian Government, 2016 Integrated Investment Program, op. cit., p. 11.

[198].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 29 November 2019, op. cit., p. 37.

[199].      Australian Government, Naval Shipbuilding Plan, op. cit., p. 41.

[200].      ASC, ‘Submarines: maintenance’, ASC website, n.d.

[201].      ASC, FCD transition study: first draft: hypothesis methodology, 30 April 2018, p. 7 [released via Freedom of Information disclosure].

[202].      Ibid., p. 7.

[203].      ASC, FCD transition study: first draft: hypothesis methodology, op. cit., p. 8.

[204].      Ibid., p. 8.

[205].      K Ziesing, ‘WA pushes to move Collins full cycle docking’, Australian Defence Magazine, 15 August 2019; A Tillett, ‘Hundreds of submarine jobs set to go west under maintenance plan for Collins class’, Australian Financial Review, 19 February 2019.

[206].      ANAO, Future Submarine Program—transition to design, op. cit., p. 44.

[207].      Royal Australian Navy (RAN), ‘Guided Missile Submarine, Diesel-electric (SSG)’, RAN website.

[208].      S Smith (Minister for Defence) and J Clare (Minister for Defence Materiel), ‘Collins class service life evaluation program’, op. cit.

[209].      Ibid.

[210].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 28 May 2012, p. 129.

[211].      J Coles et al., Study into the business of sustaining Australia’s strategic Collins class submarine capability, [DoD], [Canberra], November 2012, p. 108.

[212].      Coles et al., Study into the business of sustaining Australia’s strategic Collins class submarine capability: progress review, March 2014.

[213].      J Coles et al., Study into the business of sustaining Australia’s strategic Collins class submarine capability: beyond benchmark, Ministerial and Executive Coordination and Communication Division, DoD, May 2016, p. 33.

[214].      Ibid., p. 85.

[215].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 5 April 2019, p. 46.

[216].      Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 22 October 2019, p. 13.

[217].      Smart, ‘Submarine technology conference focuses on smoothing transition’, op. cit., p. 30.

[218].      Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 9 April 2019, pp. 16 and 20.

[219].      Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 22 October 2019, op. cit., p. 9.

[220].      ‘Chief of Navy Australia – incoming government brief’, October 2019, access via The Australian Naval Institute website.

[221].      ANAO, Future Submarine Program—transition to design, op. cit., p. 44.

[222].      Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 9 April 2019, op. cit., p. 22.

[223].      Ibid., pp. 21–22.

[224].      ANAO, Future Submarine Program—transition to design, op. cit., p. 44.

[225].      The public version of Defence’s Projects of Concern list commenced in 2008 ‘as a framework to manage the remediation of underperforming materiel acquisition projects’. Ministers decide which projects enter and exit the list. ANAO, Defence’s management of its Projects of Concern, Performance audit, 31, 2018–19, pp. 1 and 16.

[226].      Ibid., p. 84.

[227].      Ibid., pp. 84–85.

[228].      Ibid., pp. 85–87.

[229].      Australian Government, 2016 Integrated investment program, op. cit., p. 77.

[230].      Australian Government, Naval Shipbuilding Plan, op. cit., p. 25.

[231].      Ibid., p. 26.

[232].      ANAO, Major Projects Report 2018–19: Department of Defence, Audit report, 19, 2019–20, ANAO, Barton, ACT, 2019, p. 5;

[233].      Ibid., p. 15.

[234].      Insight Economics, Australia’s future submarine: getting this key capability right, public policy report, September 2017, p. 11.

[235].      R Nutbrown, ‘No submarine capability gap for Australia, SEA 1000 chief insists’, Australian Defence Business Review, 3 October 2017.

[236].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 5 April 2019, p. 46.

[237].      M Hellyer, The cost of Defence: ASPI Defence budget brief 2019–20, ASPI, June 2019, p. 13.

[238].      S Morrison (Prime Minister), C Pyne (Minister for Defence) and S Ciobo (Minister for Defence Industry), Government delivers on Future Submarine program, media release, 11 February 2019.

[239].      M Turnbull (Prime Minister) et al., ‘Australia’s future submarines’, transcript, doorstop interview, Osborne SA, 26 April 2016.

[240].      Australian Government, Naval Shipbuilding Plan, op. cit., pp. 19 and 27.

[241].      Australian Government, 2018 Defence industrial capability plan, DoD, Canberra, 23 April 2018, pp. 36–37.

[242].      Ibid., p. 144.

[243].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 5 April 2019, p. 30.

[244].      Editorial, ‘Playing the percentages: Sean Costello on the 90% Future Subs comment’, Defence Connect, 8 February 2018.

[245].      Senate Economic References Committee, Future of Australia’s naval shipbuilding industry: final report, The Committee, 28 June 2018, pp. 110–113.

[246].      C Pyne (Minister for Defence), ‘Submarine and shipbuilding industry’, transcript, doorstop interview, South Australia, 13 December 2018.

[247].      Editorial, ‘Playing the percentages: Sean Costello on the 90% Future Subs comment’, op. cit.

[248].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 5 April 2019, pp. 30–31.

[249].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 29 November 2019, op. cit., p. 23.

[250].      Senate Standing Committees on Economics, Australia’s sovereign naval shipbuilding capacity, op. cit.

[251].      B Packham, ‘French tell subs firms to shape up’, The Australian, 13 February 2020.

[252].      Ibid.

[253].      Department of Defence and Naval Group, ‘Joint statement with Naval Group – Australian industry involvement in the Attack Class Submarine Program’, media release, 13 February 2020.

[254].      L Reynolds (Minister for Defence), ‘Australia’s Future Submarine Program’, media release, 15 February 2020.

[255].      L Reynolds (Minister for Defence), ‘Opportunities for Australian industry maximised in Future Submarine Program’, media release, 24 February 2020.

[256].      Naval Group Australia (@navalgroup­­_AU), ‘Delivering for Australia’, tweet, 24 February 2020.

[257].      K Ferguson and Isobel Roe, ‘French Naval Group says Australian contractors will get more than half of future submarine fleet work’, ABC News, 25 February 2020.

[258].      J Clare (Minister for Defence Materiel), ‘Speech to the Submarine Institute of Australia, 6th biennial conference’, speech, Canberra, 14 November 2012.

[259].      Australian Government, Future Submarine industry skills plan: a plan for the naval shipbuilding industry, DoD, Canberra, March 2013.

[260].      Australian Government, Naval Shipbuilding Plan, op. cit., p. 25.

[261].      A Davies and M Thomson, ‘When is a rolling submarine production not continuous?’, The Strategist, ASPI blog, 6 April 2016.

[262].      Ibid.

[263].      Naval Group, ‘The Shortfin Barracuda Block 1A’, Naval Group website.

[264].      C Williams, ‘Sinking billions on an outdated weapon’, The Canberra Times, Public Sector Informant, 5 March 2019, p. 1.

[265].      Senate Foreign Affairs, Defence and Trade Legislation Committee, Official committee Hansard, 25 October 2017, p. 34.

[266].      Australian Government, 2016 Defence White Paper, op. cit., p. 91.

[267].      Naval Group, ‘Future submarines: the future: technology development of the Shortfin Barracuda’, Naval Group website.

[268].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 29 November 2019, op. cit., p. 8.

[269].      Ibid., p. 8.

[270].      J Gillard (Prime Minister), S Smith (Minister for Defence) and M Kelly (Minister for Defence Materiel), ‘2013 Defence White Paper: the Future Submarine program’, media release, 3 May 2013.

[271].      S Smith (Minister for Defence), ‘Launch of the 2013 Defence White Paper’, transcript, 3 May 2013.

[272].      K Andrews (Minister for Defence), ‘Strategic direction of the Future Submarine program’, media release, 20 February 2015.

[273].      ANAO, Major Projects Report 2017–18: Department of Defence, op. cit., p. 314.

[274].      M Payne (Minister for Defence), ‘Speech to the Submarine Institute of Australia’, transcript, 17 November 2015.

[275].      ANAO, Major Projects Report 2017–18: Department of Defence, op. cit., pp. 313–314; General Dynamics Mission Systems (GDMS), ‘Tactical Control Systems (TCS)’, GDMS website.

[276].      General Dynamics Mission Systems (GDMS), ‘AN/BYG-1 Submarine Tactical Control System (TCS)’, GDMS website, n.d.

[277].      C Pyne (Minister for Defence Industry), ‘DCNS submarine contract and combat system integrator announcements’, transcript, press conference, Adelaide, 30 September 2016.

[278].      C Pyne (Minister for Defence Industry), ‘Speech to the Nation Defense Industrial Association Conference’, speech, Washington, 7 October 2016.

[279].      Ibid.

[280].      The Auditor-General, Future submarine—Competitive Evaluation Process, op. cit,. p. 25.

[281].      Ibid., p. 25.

[282].      Lockheed Martin Australia, ‘Lockheed Martin Australia welcomes Future Submarine Combat System contract announcement’, media release, 25 January 2018. Australian Industry Capability (AIC) Public Plans are available from the Defence Strategic Policy and Intelligence Group section of the Department of Defence website. The AIC plan for the initial services contract with Lockheed Martin is published on this site and notes ‘a detailed design solution [is] expected to be delivered to the Commonwealth by June 2022’. See Lockheed Martin, ‘Australian Submarine Combat System: Combat system integrator (ASCS-CSI) program: initial services contract: Public AIC Plan – Lockheed Martin Australia’, 1 October 2017.

[283].      Lockheed Martin Australia, Lockheed Martin Australia welcomes Future Submarine Combat System contract announcement, ibid.

[284].      S Cowan, Future submarine project should raise periscope for another look, The Centre for Independent Studies, 2012; P Briggs, ‘Should nuclear-powered submarines be part of Australia’s future?’, The Strategist, ASPI blog, 16 October 2018; P Briggs, ‘Can Australia afford nuclear propelled submarines? Can we afford not to?’, ASPI, Special Report, 16 October 2018; C Skinner, ‘Development of Australia’s Future Submarines’, Australian Society for Defence Engineering, NSW, 1 February 2016.

[285].      J Cocking, C Davis and C Norwood, Australia’s requirement for submarines, Defence Science and Technology (DST) Group, 2016, p. 6.

[286].      Australian Government, Defending Australia in the Asia Pacific century: Force 2030, DoD, 2 May 2009, pp. 70–71; Australian Government, 2013 Defence White Paper, DoD, 3 May 2013, pp. 82–83; and Australian Labor Party (ALP), Labor: national platform: a fair go for Australia, ALP, policy document, 2018, p. 71.

[287].      Australian Government, 2016 Defence White Paper, op. cit., pp. 90–92; Australian Government, 2016 Integrated Investment Program, op. cit., pp. 81–84.

[288].      M Turnbull (Prime Minister), ‘Joint press conference with Prime Minister of France’, Canberra, 2 May 2016.

[289].      Senate Foreign Affairs, Defence and Trade Legislation Committee: Estimates, Official committee Hansard, 29 November 2019, p. 11.

[290].      R Babbage, ‘Why Australia needs nuclear subs’, The Diplomat, 8 November 2011.

[291].      Interview, ‘Ross Babbage’, The Diplomat, 14 May 2012. Also see R Babbage, ‘We’ll be sunk if we don’t choose the best submarine’, The Australian, 17 January 2012, p. 10.

[292].      Editorial, ‘Opinion: facts about nuclear powered submarines’, Company of Master Mariners of Australia, n.d.

[293].      J Kerin, ‘US proposes nuclear subs option’, The Australian Financial Review, 22 February 2012, p. 1.

[294].      J Kerin, ‘Libs would look at nuclear subs option’, The Australian Financial Review, 23 February 2012, p. 16.

[295].      B Nicholson, ‘Nuclear or not, we’ll need prefab subs’, The Australian, 9 February 2011, p. 13.

[296].      B Nicholson, ‘Defence urged to lease US subs’, The Australian, 24 October 2012, p. 7.

[297].      B Nicholson, ‘Time for a sensible analysis on hottest of hot potatoes’, The Australian, 2 July 2015, p. 6.

[298].      R O’Rourke, Navy Columbia class (Ohio replacement) Ballistic Missile Submarine (SSBN[X]) program: background and issues for Congress, Congressional Research Service, Washington, 18 August 2016; D Axe, ‘Shrinking silent service: the US Navy faces a massive submarine shortage’, National Interest, 3 April 2019.

[299].      DB Larter, ‘As CNO Richardson departs, US submarine builders face pressure’, Defense News, 22 August 2019.

[300].      Senate Economics References Committee, Future of Australia’s naval shipbuilding industry, report, part 2, 17 November 2014, p. 70.

[301].      Ibid., p. 70.

[302].      Senate Economics References Committee, ‘Future of Australia’s naval shipbuilding industry’, Official committee Hansard, 8 October 2014, p. 19.

[303].      T Abbott, ‘Submarines: why settle for second-best?’, transcript, The Centre for Independent Studies (CIS), 29 June 2017.

[304].      B Nicholson, ‘The Strategist Six: Greg Sammut’, The Strategist, ASPI blog, 31 October 2017.     

[305].      Standing Committee on the Environment and Energy, Inquiry into the prerequisites for nuclear energy in Australia, House of Representatives, Canberra, 2019.

[306].      Ibid.

[307].      Standing Committee on the Environment and Energy, Not without your approval: a way forward for nuclear technology in Australia, House of Representatives, Canberra, 13 December 2019.

[308].      For instance, the Super Seasprite helicopter project ran for 12 years before it was cancelled by the Government in the March 2008 at a cost more than $1.4 billion (47 per cent over budget). ANAO, The Super Seasprite, performance audit, 41, 2008–09, p. 14.

[309].      ANAO, Defence’s management of its projects of concern, op. cit., p. 8.

 

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