Competitive tender does not mean a capability gap
The committee recommends that the competitive tender
process for the future submarines begins immediately.
As noted by several independent witnesses, there remains
sufficient time to conduct a competitive tender for the future submarines
while avoiding a capability gap. This is due to the work on the future
submarines undertaken by the previous government.
In his evidence, Dr John White set out a timetable that
included a competitive tender process, contracting, construction, testing and
introduction to service without a capability gap.
If followed, this timetable would allow the government
obtain the best submarine capability at the best price, while avoiding a
The firm proposal to purchase 12 conventionally-powered submarines dates
back to the 2009 White Paper. In this chapter the committee, considers whether
there is sufficient time to conduct a competitive process.
In his evidence, Dr White submitted that there was still sufficient time
'with adequate contingency' for a competitive PDS to be undertaken. He stated:
Based on analysis
confirmed by international reputable shipyards, a 12-year time frame is
adequate to implement the entire Future Submarine program for the first of
class and to deliver the lead submarine, fully tested and accepted, into
Australian service—this fits within the window that we have remaining, which I
understand is until 2028—provided that the recommended acquisition strategy is
followed, along with experienced industry team members to assist Defence and
DMO in timely implementation.
Having considered the sequence of events and the projects milestones,
Dr White formed the view that while there was still time for a competitive
process, 'we would have to get on with it—stop investigating things endlessly'.
Rear Admiral Briggs informed the committee that two years before the
first of the Collins goes off the line is now a known date for the future
submarines. According to Rear Admiral Briggs, there was enough time to
undertaken a competitive PDS.
He was of the view that 12 months would be adequate for the government to
announce a competitive open tender process.
He was of the view that the four potential bidders were basically doing
designs and indicated that there would be serious doubts if they were not able
a sensible answer in 12 months.
In Rear Admiral Briggs' view, there was enough time to complete the
acquisition phase including a PDS. He told the committee that 'if we make the
right call in the first quarter next year, there is just enough time to do
this' and avoid
a capability gap.
According to Commodore Greenfield, the end of Collins' operational life
sets the delivery date for the future submarines. He also said that there was enough
to design a submarine specifically for Australia and moreover for the boats to
be built in Australia, without there being a capability gap. In his view, there
was time to do this, even with a due diligence process, including a funded
project definition study:
...the first Collins
will complete its next 10-year operational period in mid 2026, and of course
the Navy will want to refine that. With Collins, there was a two-year funded
project definition study phase, then nine years of design and build before
delivery, from 1987—contract award—to 1996. That is nine years plus two for
PDS; that is 11 years. Between next year and 2026 is 11 years, and 2028 is 13 years
away. I believe there does not have to be a capability gap, provided we just
get on with it.
In addressing the matter of transition and timing and whether there was
time to avoid a gap, Commodore Greenfield was convinced that:
As long as work
begins immediately, with the assistance of a carefully chosen overseas
design/build partner, Australian industry can build a fleet of submarines to
world class quality standards, within a period from contract award for the
first of class to avoid a capability gap.
Likewise, Mr Hamilton-Smith argued that there was still time to go
a proper process, to make the right decisions and to have ships in service by
the time the Collins was withdrawn.
He estimated that a full competitive tender would take 12 to 18 months
and that the submarines would be in the water within 10 years. He understood
'the first of the Collins goes out of life around 2027, so, in his view, there
to get the process right rather than to rush into an expensive mistake.
Mr Stuart Whiley, ASC, drew on the Collins class process to demonstrate
that it was possible to have a competitive PDS and still not risk a capability
gap. Based on his experience and that of ASC, he stated:
...from contract to
delivering Collins was 10 years. The PDS was two years. There is a process to
get into the PDS. There is a process to get into contract. In theory you do
have enough time to do it before Collins pays off.
Mr King noted that the timeframe 'would be very quick for a full PDS
tender'. He went further to indicate that 'you still have to do the detailed
design', telling the committee that a tender 'is still just a promise; it is
not a delivered fact'.
Evidence overwhelmingly supported a competitive selection process for
the future submarine which was anchored in the firm belief that such a process
the only way whereby Australia could truly select the best option for its
A contest between potential bidders challenges them to produce the best
product at the most competitive price for Australian taxpayers.
It also provides the opportunity for Defence not only to compare and
validate the various claims but to question its own assumptions about what is
Most witnesses agreed that decisive action must be taken to get the
process moving but insisted that there was time for a competitive process where
all proposals could be tested and claims validated.
While the committee agrees that timeliness is of the essence, the risk
posed by not undertaking a competitive tender process would be ill-considered
and highly risky.
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