2 June 2015
The winner of the Federal Government's "competitive evaluation process" on who will build Australia's next submarine fleet may lose out to strategic considerations, Independent senator Nick Xenophon says.The South Australian senator has grilled defence officials about the process during a late Senate estimates hearing in Canberra on Monday, pointing to a 2001 competitive evaluation process where a German company won the right to build a submarine combat system.
Despite winning the right, a United States company was awarded the contract on "strategic grounds".
Senator Xenophon today said it did not seem to matter if a tender could build the best value, "most capable submarine on Australian soil".
"Ultimately you could lose out on the vagaries of 'key strategic considerations'," he said.
He feared the competitive process to build Australia's next submarine fleet was just a facade and Japan was already the preferred bidder over France and Germany.
Senator Xenophon added that the Navy could no longer confirm it would still need 12 submarines, despite the 2009 and 2013 Defence White Paper saying a fleet of 12 was required for future strategic requirements, and despite "an increase in regional tensions since those papers were released".
Strategic decisions to be 'taken into account'Defence Department submarines general manager David Gould told the hearing that strategic considerations would be taken into account.
"I don't know if there'll be a clear winner," he said.
"I suspect it's much more likely that there'll be a series of considerations of differently valid risks."
He said the task would be to reconcile recommendations "with broader strategic considerations".
Defence Department secretary Dennis Richardson said Senator Xenophon's questioning was hypothetical.
"You could develop all sorts of hypothetical scenarios in relation to the future submarine and the competitive evaluation process that would give you different answers," he said.
"I think it's far too premature for us to be engaging on speculation about hypothetical scenarios that may or may not come to life."
Federal Attorney-General George Brandis said the outcome of the 2001 competitive process was not very instructive.
"All of these decisions tend to turn on their own particular facts," he said.
Federal Industry Minister Ian Macfarlane last week said South Australian shipyards might not make the first of the nation's next submarines, but he remained optimistic about Australian prospects down the track.