09 April 2010

ASC is just a service provider

The government-owned submarine builder and maintainer ASC Pty Ltd is in the firing line again over the maintenance of the Collins class submarines; see for example Shake-up at navy shipbuilder by John Kerin in The Australian Financial Review, Wednesday 7 April 2010. Kerin says that ASC:

 ...has been under fire from the Rudd government and the DMO over the cost and adequacy of its maintenance of the Collins class submarine fleet.

Only three of the six Collins class submarines are capable of putting to sea, although this is an improvement on two at the end of the year.

ASC and DMO are renegotiating the terms of a 15-year, $3 billion contract to maintain the subs after accusations by DMO that ASC’s maintenance work was too costly.

It needs to be remembered by all concerned that ASC is a commercial organisation, albeit a government-owned one, which is no more than a service provider to the Defence Materiel Organisation of the Department of Defence.  Defence can have as many submarines available to put to sea as it is prepared to pay to maintain and crew. 

The facts of the matter are:

(1)  The Navy has not trained enough crew to be able to man more than three submarines, and will not be able to in the short run – see Managing the submarine workforce.

(2)  DMO has never budgeted for the maintenance of six submarines, so it is a bit rich to blame ASC for the state of the submarine fleet.  Indeed last year DMO cut the budget for submarine maintenance, and was unpleasantly surprised to discover that ASC had to lay off desperately needed skilled workers. No doubt ASC could make improvements, all industrial organisations can, but any gap between its current performance and the best that might be achievable would nowhere near account for the current state of Australia’s submarine capability.

(3)   The Defence Budget Audit made clear that maintenance program instability (in other words changing Defence requirements) were causing problems for ASC (see Future submarine and other matters).

Ultimately these factors come back to the size of the Defence budget, and the failure of Defence to manage the submarine fleet as a military capability.

Proximity is power when it comes to the bureaucratic blame game. DMO and Navy have constant access to the Defence Ministers, ASC cops the blame.

No comments: