Geoffrey Barker, Financial Review
15 September 2015
And then there were three. The federal government has reduced the choice of Australia's next-generation submarines to a three-way contest in an ad hoc defence department "competitive evaluation process" (CEP).
The names of the contenders are now well-known, although little is known about them or about the CEP which will report to cabinet next year. The contenders are the Japanese Soryu, the French "short-fin" Barracuda, and the German Type-216 submarines.
Depending on their roles and missions, and depending on how they are equipped to fight, any of the contenders could be a significant force-multiplier for the Australian Defence Force. All are powerful weapons systems of similar size and great lethality.
Whatever the CEP reports to cabinet the submarine choice will be significantly influenced by political and strategic considerations other than stealth, range and firepower.
It is now thought that six to eight new submarines will be acquired to replace the current Collins-class submarines in what will be Australia's biggest defence acquisition. Cost estimates have ranged from $20 billion to $36 billion.
South Australia's economic vulnerability and the uncertainty of employment in Adelaide will dispose cabinet to want submarines at least partly constructed at the ASC/Techport site where the Collins-class submarines were built and are now maintained. So might government and industry hope for technology transfers to improve future Australian submarine technology and construction know-how.
With federal elections due by January 2017 the Coalition government finds itself under increasing pressure to save marginal South Australian parliamentary seats by choosing a builder willing to bring submarine construction and jobs back to the state.
Not surprisingly the French builder DCNS and the German builder TKMS have both pledged hand-on-heart to build in Australia and to transfer high-end submarine technologies to Australia if selected. Japan's Kawasaki and Mitsubishi corporations have been less enthusiastic about Australian builds and technology transfers, but are now focusing more intently on those issues.
The Japanese have enjoyed political advantages in the early stages of the contest and Australian ministers have praised the Soryu submarine.
Moreover the United States indicated that it would see an Australian Soryu purchase as supporting its so-called "pivot" to the Asia-Pacific region and contributing to stronger regional ties and to inter-operability between regional navies confronting increasingly aggressive Chinese naval activities.
Questions over the CEP
These considerations have encouraged a widespread belief that the CEP process is a device to ensure that the Soryu (or an Australianised version of it) ultimately emerges victorious from the CEP.
This belief has been reinforced by ministerial failures to explain credibly how the process is supposed to work. The CEP was seen as a panicky political reaction to Coalition leadership and other tensions. It bears little apparent relationship to the procurement reforms that followed the 2003 Kinnaird and 2008 Mortimer reports.
Nevertheless the French and German contenders are working hard to lobby government and industry and to tout their formidable construction capabilities and the boats they are offering. Somewhat belatedly, Japanese submarine builders are now spending more time trying to understand the interactions between Australian submarine construction and domestic political imperatives.
The short-fin Barracuda proposed by France's DCNS is a conventional boat based on the nuclear-powered French Barracuda attack submarine. It displaces 4000 tonnes and is more than 90 metres long. Little more technical information has been released, but DCNS has committed to Australian build and to significant technology transfer.
The type-216 proposed by Germany's TKMS is of similar displacement and length to the short-fin Barracuda. It boasts exceptional endurance and range and a small crew of 33 officers and men. TKMS, the world leader in conventional submarine construction, has indicated interest in possibly purchasing the government–owned ASC if it wins the contest. It has also been the contender most open about its plans
The presumed front-runner, Japan's Soryu submarine, displaces 4200 tonnes, is 84 metres long and carries a sizeable complement of 65 officers and men. Japan has seven Soryu submarines and is planning to build another three.
The three contenders have been asked to submit plans to the CEP for an all-Australian submarine build, an all-overseas build, and a for part-overseas and part-Australian build. But many questions remain unanswered.
Among them: What weight will the government assign to a Rand Corporation report that questioned Australia's capacity to build submarines? What premium is the government prepared to pay for Australian construction, which would be costlier than foreign construction? How would submarine construction at Adelaide be managed alongside current and planned air warfare destroyer, future frigate and patrol boat construction programs?
Above all, perhaps, how will the government balance the political and strategic considerations and the daunting financial and technical issues of building submarines on time and on budget.
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