The push for a submarine tender
13 Feb 2015|

"Blame for the mess this project is in can be spread around like confetti"

The government doesn’t seem to understand the words it has been saying on submarines. It has committed to a ‘competitive evaluation process’ for the future submarine project—a term not used in defence circles—and some seem unable to explain the difference between that and a tender. Those seeking to build submarines in Adelaide sure know the difference though, because for them a big benefit of a formal tender process is that it’ll probably sink the Japanese Soryu option before it starts.

For some, the future submarine project is as much about money and jobs for South Australia as it is about defence requirements. Make-work programs for industry are exactly the wrong way to think about defence procurement: it should be about the best capabilities at the best price—but South Australians in particular don’t see it that way.

The pressure to spend the defence budget propping up manufacturing in South Australia was a driving factor in committing to 12 submarines in the first place. It’s hard to see why Australia needs to double the size of its submarine fleet, given the defence budget has been cut back in pretty much every other area and we can barely crew the six submarines we have now.

Blame for the mess this project is in can be spread around like confetti. We’re six years into this project still without a basic idea on how it will proceed; both Labor and Coalition governments have delayed decisions and Defence has hardly covered itself in glory. The delay will cost billions of dollars to prop up the ageing Collins class subs for another decade. And there’s a real risk of a capability gap in the future.

While the Japanese Soryu option has emerged only in the last few years, the rest of the contenders have been under consideration since 2009. For that entire time there has been a clear push for doing all the work on the future sub in Australia, though we clearly lack the capability to design a submarine and arguably the workforce to build one too.

That the Australian-made option has been estimated by some to cost $40 billion or more has been treated as a second-order consideration. That the Australian-built Collins Class was dogged by defects and poor performance for years has been brushed under the carpet. That the ASC-led Air Warfare Destroyer project has faced significant problems has similarly been ignored.

No, supposedly the real threat to the future submarine project is a secret deal with Japan. That’s worth keeping in mind when considering why there’s a strong push for a tender. It’s doubtful the Japanese option is in a formal enough state to be capable of being tendered. A tender requires definite options meeting specified requirements—with costings, timeframes and viable workforce arrangements. Given that an Australian Soryu would have to be negotiated and managed as a joint venture between the Australian and Japanese governments, it’s highly unlikely to have any of those things developed.

Added to that are complications caused by Japanese constraints on defence exports, Japanese concerns over sharing confidential information, and the need to alter the Soryu to fit Australia’s US-designed weapons systems.

Nor can the specific probity requirements in a tender situation be ignored. Information flow between those bidding and those reviewing the tender is limited, and communications between individual bidders and the Australian government would be expected to be shared amongst all bidders—something that both inhibits the Soryu option and would rightly concern the Japanese government.

It‘s disingenuous to pretend that the Australian option hasn’t been given every chance. Aside from the fact that an Australian build was the only firm requirement when the future sub project was first mooted, defence has spent six-plus years working with ASC on the future sub. The progress of the Air Warfare Destroyer project, together with cost and performance issues on the current Collins subs, have raised valid concerns about ASC’s ability to deliver the future sub project.

The government chose the right words, even if they are imprecise. The ideal process allows the government to evaluate whether the Japanese option is viable or whether we should go with a local option, something a tender will not do. A competitive evaluation process may not be as structured as a tender but it’s more likely to produce the best outcome for our defence force, not just for those in the industry demanding more handouts.

Simon Cowan is a research fellow at The Centre for Independent Studies and author of The Future Submarine Project Should Raise Periscope for Another Look, which was released on 24 October 2012. Image courtesy of Flickr user Art Siegel.