02 July 2009

AWD Alliance: unanswered questions

It is a relief to see that the Air Warfare Destroyer Alliance has terminated contract negotiations with NQEA and signed instead a $300 million contract with BAE Systems to participate in the construction of hull sections for the Air Warfare Destroyers. It is good for the Air Warfare Destroyer project itself, good for the viability of the very important Williamstown Naval Dockyard, and good for the strength of the industrial structure which is required to support the capabilities of the Australian Defence Force.

This leaves unanswered the questions of how the curious beast that is the Air Warfare Destroyer Alliance got itself into the situation of selecting as preferred tenderer for $300 million worth of work a company which could not obtain a bank guarantee for $20 million, and why DMO, the client, participates in the selection of subcontractors rather than leaving that to the prime, ASC Pty Ltd.

Apart from the oddity of the initial selection of NQEA, there seems to have been no consideration of wider defence industrial capability issues such as the ongoing need for the capabilities built up over many years at Williamstown, or at the very least to arrive at a carefully argued case for why sustainment of those capabilities might not matter. We hear a lot from government about the importance of Australia’s defence industry to the ADF, but there is little sign of a coherent policy on this matter.

For more on the Air Warfare Destroyer Alliance see AWD: Who is building those ships? and Alliance contracting in Defence.

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