Wednesday, February 25, 2015

Opinion: Australia submarine procurement process a disaster in the making

Governments have dithered for too long over choosing a new submarine, but making a hasty decision now would be beyond foolish.
By Hugh White/The Age
Governments have dithered for too long over choosing a new submarine, but making a hasty decision now would be beyond foolish.
The process to select our new submarines announced on Friday by the Defence Minister is completely inadequate. If it sticks to it, the government will choose our new submarines without having nearly enough information to make the decision properly. And it will be setting up our biggest defence procurement disaster ever.
That is because the three contenders – Japan, Germany and France – have been given only 10 months to design the boat, decide how and where to build it, and come up with a price. These are all immensely complex tasks, and 10 months is simply not long enough to take them beyond the back-of-the-envelope stage, and provide answers on which the government can rely.
The harsh reality is that however the project is managed, there is probably now not enough time to design and build new submarines before the Collins Class are due to start being retired. 
That means that when the government makes the choice,  it will not know whether the design  it has chosen is viable,  it will not know how it can best be built, and  it will have no idea how much it will cost. Moreover, there will be no robust basis to decide whether an Australian build is viable. Any company directors who made a decision of this scale like that would face prosecution for failing to exercise due diligence.
So, why do it this way? One answer, of course, is that the "competitive evaluation" announced on Friday is just a fig leaf draped over Tony Abbott's captain's pick.  He still wants the Japanese option, and there are real reasons to suspect the process has already been stacked in Japan's favour.
The government has stipulated – for no overriding strategic reason – that the new submarine must be fitted with a US combat system, and it is widely rumoured Washington will not allow its system to be fitted to a French or German boat. If true, that makes Japan the automatic winner. And it makes a build in Australia much less likely.
The government tells a different story.  It says things must be done in a rush because time is running out. The first of the Collins boats is due to leave service in 2025, so the replacements must get to sea by then. This is only half right. It is true that governments from both sides have left this decision far too late, but making a rushed decision with too little information is a very bad way to save time. Indeed, it is a sure way to waste even more.  More haste, less speed, as the old saying goes.
And, even if all goes swimmingly, a hasty, ill-informed decision based on the government's quick and dirty process would not save any time, anyway. A lot of detailed design work has to be done before any steel can be cut, so the only question is whether that work is done before or after the choice is made and the contract signed.
A far better approach would be to give all three contenders (and, preferably, the Swedes as well) a couple of years to develop their designs in parallel, so that by the time the choice is made the government would know much more about what it is buying, whether it will work, and how much it will cost. This approach – called a project definition study, or PDS – is proven by long experience to be not just the best, but also the quickest way to proceed in major defence acquisitions when nothing already available meets your needs.
Still, the harsh reality is that however the project is managed, there is probably now not enough time to design and build new submarines before the Collins Class are due to start being retired. Rather than endanger the whole project by ill-considered haste, it would be much better to accept this reality and look at ways to manage it.
This is why the government is not completely right to say it must get the new submarines to sea by 2025. There are at least two other ways to manage the problem and avoid a gap between the Collins and its successor.  One is to extend the life of the Collins boats so they can stay in service until their replacements are ready. That would be a major project in itself, but it is a possibility well worth considering.
The other option would be to acquire a fleet of interim submarines to cover the gap. This is what the Howard government did a decade ago when it bought the Super Hornets when delays in the Joint Strike Fighter program threatened to delay delivery until after our old F-18 fighters had to be withdrawn. This cost $5 billion, but has proved a great success.
We could do the same with our submarines, by buying three or four new boats "off the shelf", which could be brought into service quickly and allow us to maintain our submarine capability while we took the time needed to get the eventual replacements right, and to maximise the chances that they can be built in Australia cost-effectively.
If we are looking for an interim submarine, the obvious choice would be the German Type 214.  These are relatively small submarines, but they are very good and thoroughly proven, have already been built in large numbers, and could be supplied from the German yards in Kiel quickly and with little risk.
And the Type 214 is, for a submarine, relatively cheap.  Four of them would cost about $4 billion, which is less than we paid for the squadrons of interim Super Hornet aircraft, and a relatively small part of the total submarine replacement project, which could easily reach $40 billion. And they would make a very handy addition to our longer-term capability.    
Many people believe the 214s are too small for our needs. This concern is generally overstated, but, even if it is true, they would still be a lot better than no workable submarines at all. And no submarines at all is increasingly the most likely result of the government's approach to submarine procurement.

Hugh White is an Age columnist and professor of strategic studies at the Strategic and Defence Studies Centre, ANU. 

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