Adelaide
is in line to secure a fourth $2 billion air warfare destroyer because the
Federal Government wants a major shipbuilding project in its defence program.
The project will be included in next year's Defence White Paper.
The Government wants to help bridge the national skills gap and a
fourth air warfare destroyer is the likely choice.
Leaving aside any question of whether we needed the first
three Air Warfare Destroyers, let alone a fourth, and leaving aside that this
represents a Government that is highly unlikely to be elected at the next
election thinking aloud about what it will do following the election after that,
this seems a curious way to shape the Royal Australian Navy.
Let us leave aside also the fact that if the Government had
conducted itself with any meaningful sense of purpose in relation to the future
submarine we would have been cutting metal by 2016 in order for the first of
the new submarines to go into service as the Collins Class submarines reach the
end of their planned service life from 2025.That didn’t happen; instead, the Government presided over a charade in
which the Defence Materiel Organisation ran around the world trying to drum up
a design competition when it has been clear from the start (including,
apparently, to the European submarine builders) that the only way for Australia
to procure a submarine that is fit for purpose is to have the Government’s very
own ASC Pty Ltd build a submarine that takes HMAS Collins as its starting
point, evolves the design both to build on what we have learned from designing,
building and operating the Collins Class and to take account of perceived
changes of requirement. We must be the only country in the world in which the
Government owns a submarine builder and yet agonises for years over who should
build its submarines.
I would be the first to agree that continuity of work for
Australian defence industry and the preservation of its very high skills is
important, and if any Government were to start to talk seriously about a “continuous
build” approach to both its surface ships and its submarines (there is talk of
this for the future submarine build) I for one would raise a cheer.
Meanwhile, I would have thought that an adequate maintenance
and refit budget to keep Australia’s six submarines and 48 commissioned surface
vessels in fighting trim would be more than adequate to maintain all the shipbuilding
and maintenance skills we would need to support the RAN – especially as the
Government’s antics in relation to the future submarine mean that it has
inadvertently committed us to cutting up and refitting some number of Collins
Class boats – a major shipbuilding task in itself, the end result of which will
be a 1980s submarine for the 2020s-30s.
Whatever the case for the Air Warfare Destroyer, I think the
certainty of being able to deploy two vessels in fighting trim, while a third
undergoes maintenance or refit, would be preferable to having four in various
states of disrepair. Given that the Navy could not muster a single seaworthy amphibious
ship to assist in disaster relief during last year’s cyclone season, there is
plenty of work to be done. What is required is the money and the political will
to do it.
An unhelpful and regrettably uninformed contribution to the debate about Australia’s future submarine capability, and indeed about the current Collins Class submarines, was made last week by a senior official who ought to know better, and upon whom we ought to be able to rely for public utterances underpinned by careful research and analysis.
In Australia’s mining boom: what’s the problem?, an address to The Melbourne Institute and The Australian Economic and Social Outlook Conference, 30 June 2011, Productivity Commission Chairman Gary Banks had this to say, in a section of his address which canvassed areas which might contribute to fiscal consolidation:
But no doubt there is more low-hanging fruit waiting to be picked. For example, the case for Australia spending $36 billion or so on another dozen homemade submarines, when imported alternatives could be purchased for a fraction of the cost (and risk) has never been adequately explained publicly — notwithstanding the generally acknowledged failure of the Collins Class precedent. The whole area of defence procurement seems ripe for a thorough independent review.
While I would agree with Mr Banks about the need to review defence procurement, his comments about the availability from an overseas supplier of an acceptable future submarine are remarkably ill-informed. He appears to believe that a submarine is a commodity, like sand or cement – as long as the article travels under the label “submarine” it will do the job.
In fact a submarine is one of the most complex pieces of military equipment in existence, the design of which involves wicked trade-offs between range, capability and stealth. Because of these trade-offs, submarines are carefully designed for the particular roles they are to perform, with equally careful regard to the geographical environment in which they are to serve.
To put it in a nutshell, European submarines are typically built for short patrols in deep cold water. Australia needs long range submarines, to operate in warm shallow water. All other navies which operate long-range submarines operate nuclear fleets, so if we want a long range fleet it is going to have to be purpose designed.
As long ago as 2008 a group of some of the nation’s leading experts on submarine design and operation advised the Government that there is no military off the shelf option which will provide the capabilities which Australia requires, and that this will of necessity be a developmental project. The nearest design which meets Australia’s capability requirements is the Collins Class submarine, and accordingly this represents the lowest risk starting point for the development of a new design for the mid-21st century.
In addition, there is good reason to believe that the United States will refuse to release certain critical technologies for incorporation into a European designed and/or built submarine, for fear of technology leakage.
This advice of these experts informed the Government’s thinking about the requirements for Australia’s future submarine capability and was reflected in the 2009 Defence White Paper. The case which was made and accepted had nothing to do with “skilled job creation or technological spillovers” as suggested by Mr Banks in his presentation – it was purely and simply a clear case of there being no off the shelf option that goes even close to meeting the need.
As for his claim about “the generally acknowledged failure of the Collins Class precedent”, I know of no-one in the submarine world who thinks that the Collins Class was a failure. The Defence Materiel Organisation has never provided enough budget to maintain them properly, but that is another story.
And just for the record, there was no significant cost over-run with the Collins project, notwithstanding the Howard Government’s beat-up to the contrary, which as far as I can discern was intended to demonstrate that the then Leader of the Opposition, Kym Beazley, had made a foolish decision when, as Defence Minister in the Hawke Government, he had opted to have the submarines built in Australia. Of the $1.7 billion allocated to “fix” the submarines following the 1998 McIntosh-Prescott Report, only $143 was for areas where the submarines failed to meet the requirements of a contract well in excess of $5 billion (in other words, to fix the submarines); $300 million was for changed operational requirements and $727 for technological obsolescence (i.e., technological developments which had taken place during the build).
These remarks by Mr Banks were a reprise of a comment he made in his keynote address to the Annual Forecasting Conference of Australian Business Economists in December 2010 (see here), at which he referred to “submarines costing multiples of equivalent imported models”. The key word there is “equivalent” – the best advice available to the Government that Mr Banks serves is that there is no equivalent imported model. Who told Mr Banks that there was?
Comments by senior commentators like Mr Banks matter. His recent remarks were enthusiastically quoted by Australian Financial Review Economics Editor Allan Mitchell in an opinion piece on Wednesday 6 July, and by columnist Brian Toohey in a piece posted on Inside Story on 7 July (see Luxury vessels here). And so the notion that building the submarines is an unnecessary indulgence receives further confirmation in the public mind.
There is a debate to be had about Australia’s future submarine, an important debate – so let’s hope that it can be a better informed debate than it seems to be at the moment.
Note: The information cited above about the budget allocations for completion of the Collins Class project was drawn from Peter Yule and Derek Woolner, The Collins Class Submarine Story: Steel, Spies and Spin, Cambridge University Press, 2008, p. 324.
In the weekend Australian Financial Review, 16-17 April 2011, columnist Brian Toohey writes under the headline Wealth fund an unproductive idea about the notion of the proceeds of the mining boom being invested in a sovereign wealth fund.
I agree with him, and by implication my former colleague Ted Evans, all the way on the sovereign wealth fund idea:
Westpac Chairman Ted Evans is one of the most persuasive critics of sovereign wealth funds. A former Treasury head, Evans told this columnist last week that he has not changed his view that the greatest contribution governments can make to the living standards of future generations is to ensure that today’s policies are directed towards maximising future production.
He argues one effective way to do this is to spend more on education, which he says “can yield a higher return than even good private investments”.
Later in the piece it is made clear that investment in research and development and transport infrastructure are included in this productivity enhancing approach – standard “new growth theory”, which dates from the 1960s but is still new to some of our policy makers including, I fear, the present government.
As noted above, I am with Toohey and Evans all the way on this, but unfortunately Toohey cannot resist having a swipe at the Department of Defence and the case for Australian designed submarines, in ways which do nothing to enhance his case against sovereign wealth funds and for productivity enhancing expenditure:
The ill-managed and profligate Defence Department should no longer be exempt from the overall cap on spending.
I am not going to enter into a protracted argument in this post as to whether Defence is or is not ill-managed or whether it is or is not profligate. Suffice it to say that, while I would regard some areas as ill-managed (it would be surprising if it were otherwise in such a large and complex organisation), I do not regard it as being nearly as ill-managed as it is alleged to be.
As for profligacy, I think that the Department and the Australian Defence Force are grossly under-resourced for the high technology capital stock that they are required to keep maintained in airworthy, seaworthy etc condition, and in which the members of the ADF are required to undertake inherently dangerous training.
Be that as it may, my main point here is that, even if Defence were guilty as charged by Toohey, any issues of mismanagement and profligacy should be addressed directly and rectified. Cutting expenditure is not an appropriate response: the size and shape of the ADF needs to be contoured around the Government of the day’s assessed needs for Australian defence, not whether or not Defence “deserves” the funds it receives.
On submarines, Toohey says:
Junking the proposed local production of 12 giant submarines to a unique Australian design would save $40 billion and let 12 proven, high performance German subs be imported for $5 billion.
Sure the German submarines are “proven”, but proven for what? German submarines are designed for short patrols in deep cold water. We want submarines that are suitable for very long patrols in warm shallow water – a totally different proposition. If we do not acquire submarines that are fit for purpose, an even better idea might be not to acquire submarines at all, but I am not going to sign up for that idea.
We need to get on with the Collins replacement with a greater sense of urgency than the Government is so far showing. We need to be cutting metal by 2016, and we have not yet settled a design or chosen a submarine builder. As I have commented before, we must be the only country in the world that would vacillate about whether to use its own submarine builder to build its submarines.
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.
On 15 December 2009 the Minister for Finance announced the retirement (completion of term) of two directors of ASC, and the appointment of four new directors.
The retiring directors are:
(1) Dr Bill Schofield AM, a lifetime defence scientist, having served in various positions in the Defence Science and Technology Organisation (DSTO) from 1965 to 1991. From 1995 to 2001 he was Director of the Aeronautical and Maritime Research Laboratory at Fisherman’s Bend. In my time as Secretary, Department of Defence, he played a key role in the resolution of outstanding technical issues with the Collins Class submarine. As a member of the Kinnaird Review of defence acquisition which reported in 2003, he was instrumental in the recognition by government of the role which DSTO can play in minimising and managing technical risk in major defence projects. At the time of his retirement from the ASC board he was chairman of its risk committee, a function in which domain knowledge would appear to be critical.
(2) Mr Michael Terlet AM, who spent twenty years in defence industry before retiring in 1992 and becoming a professional company director. He was Chief Executive Officer and Deputy Chairman of AWA Defence Industries, prior to which he was Managing Director of Fairey Australasia Pty Ltd at the time of its merger with AWA.
The new directors are Ms Sally Pitkin, Mr John (Jack) O’Connell AO, Mr Bruce Carter and Mr David Miles AM. So we have replaced two engineers with four professional company directors, two of whom are lawyers and two of whom have an accounting background. None, as far as I can see, have any domain knowledge concerning the building and sustainment of submarines. In his media release announcing their appointment (see here), Finance Minister Lindsay Tanner said:
... the appointees bring a range of skills and experience in legal and financial matters to the board, and will enhance the board’s high level of expertise and standards of governance.
The new appointees on the ASC board join its Chairman, Vice Admiral Chris Ritchie AO RANR (who has a background in surface ships), Director Mr Geoff Phillips (a company director with a background in finance and management), and newly appointed Chief Executive Officer and Managing Director, Mr Stephen Ludlam (formerly President – Submarines for Rolls Royce (UK)), bringing the total Board membership from five to seven.
This means that the only person on the board as reconstituted who has a deep background in submarines is the Chief Executive Officer.
Several questions arise. None of what follows is to be taken as questioning the suitability of any single member to serve on the ASC board – each person individually clearly has the background and qualifications to make a contribution to the governance of ASC. My questions relate to balance of skills, where the Government thinks it is heading, and what is really going on here.
In no particular order my questions are:
(1) Why was it considered necessary to increase the size of the ASC board at this time?
(2) Given that the board was being increased in size, why was it decided to narrow the range of skills available? Why not, for example, retain Dr Schofield and Mr Terlet, and simply appoint someone with a legal and someone with an accounting background?
(3) What does this change signify regarding the Government’s approach to ASC? Does it see this wholly owned entity as a fundamental element of Australia’s defence capability, or is it just another company which the government still hopes to sell one day? Is the Government more interested in the sale price it will one day receive than it is in the defence value of the last remaining Australian-owned prime defence contractor? The Government’s ongoing refusal to commit to ASC as the designer and builder of the future submarine, the only sensible game in town, suggests that the defence value of ASC is seen to be of small moment.
(4) The key risks faced by ASC are technical risks, not the normal range of commercial risks. Now that the only person on the Board with domain knowledge of submarines is the CEO, who will ask management the hard questions? Who will evaluate the answers it receives? How will the board know what risks it is taking on? Who will chair the risk committee?
Given that the Government shows no sign of moving with the alacrity required to bring the future submarine into service by 2025, this is a more important question than it might appear. My guess is that we will be lucky to introduce the new submarines into service before 2030, by which time we will be managing Collins class submarines as aging platforms, managing a whole new suite of emerging risks.
(5) Where did the idea of letting Dr Schofield and Mr Terlet go actually come from – who recommended this to the Minister for Finance and why?
(6) Is this reconstitution of the ASC Board just another step in the Defence Materiel Organisation’s ongoing warfare against ASC?
(7) If so, why is the Government so cheerfully tolerant of, let alone complicit in, bureaucratic warfare between two wholly taxpayer-owned entities? Is it in on the game, or simply asleep at this particular wheel? Read Combet captured? before you answer that.
(9) Why is such a key defence asset as ASC run as an asset of the Department of Finance rather than an asset of the Department of Defence?
(10) Why is there no-one in the mainstream media with the wit to ask these questions?
In Future submarine: no time to waste I suggested that the project to design and build a submarine to replace the Collins class from 2025 is starting to bump into some very stringent timelines.
Fifteen years might seem like a leisurely timetable for building a 4,500 tonne boat, but consider the following major contributors to the leadtime:
(1) Time to design and build
- The Collins class took 6 million man hours to design and 2 million man hours to build.
- The new United States Virginia class attack submarines took 18 million man hours to design and 10 million man hours to build.
- From cutting steel to delivery of the first of class was 6 years in both cases.
- There is a limit to the number of people than can be engaged productively at the one time on design or build, even if there were no limit to the number of people with the appropriate skills. We cannot halve the design or the build time by putting twice as many people to work.
(2) Research and development
Aside from the R&D task that will flow from the evolution of a whole range of technologies relevant to submarine and anti-submarine warfare, there is a huge R&D agenda directed to more prosaic matters which will drive the design and performance of the new submarines.
There will be a need to find a large production diesel and generator which can be utilised with minimum modification, suitable batteries, and a snort induction system from head valve to exhaust. These will all be new, because no-one else in the diesel electric submarine world has our requirement for power, and they are all critical to the submarine’s noise signature.
These basic technical issues will take time to resolve, and until we resolve them we cannot design the submarine. The laws of physics as they apply to submarines impose very rigorous constraints. The length to beam ratio must be in the range 1:7-10. Anything which adds weight must be offset either by removing an equivalent weight or by increasing the internal volume, which in turn requires an increase in the diameter of the pressure hull to maintain the required length:beam ratio.
Until we know the size, weight and performance of the main elements of the onboard equipment, we cannot begin to design the submarine.
This work must commence as a matter of urgency. It must be undertaken by the Defence Science and Technology Organisation (DSTO) and it must be funded in 2010-11. In order to set the scene, we must have the decisions outlined in Future submarine: no time to waste.
(3) Qualified submariners
While the size of the submarine workforce might have little direct impact on the time required to deliver the first of class, the size and skills of the submarine workforce are critical to the future submarines becoming a military capability – if we cannot crew the submarine fleet with submariners who have the skills and training to take it into harm’s way, why have it?
The history of the crewing of the Collins Class is not a good story. We have never been willing or able to crew the fleet, and the lack of available sea time has had a critical impact on our capacity to train additional crew – we are in a downward spiral in which we cannot put more than two out of six submarines to sea because of lack of crew, and we have trouble expanding the submarine workforce because we cannot put enough submarines to sea.
In Managing the submarine workforce, I described the measures being taken to address this problem and provided a link to the Submarine Workforce Sustainability Review which was undertaken by Rear Admiral Rowan Moffitt, now Project Director for SEA 1000, the future submarine project.
The Chief of Navy is addressing the problem, but I am not convinced we are doing enough to put ourselves in a position to crew twelve new submarines as they are delivered from 2025. On current plans, five years from now crew limitations mean we will still be operating only three out of six submarines, of which we could expect to put a maximum of two to sea at any one time. We will have to learn to do better at matching manpower to platforms than that, and we really need to accelerate the program to redress the crewing problem.
The Government has some very important decisions to make regarding the submarines that are to replace the Collins Class submarines currently in service, and it is starting to bump up against some stringent timelines.
The current stated objective is to begin introducing the new submarines into service in 2025, a mere 15 years away. This means that we will need to see contractor sea trials commence in about 2022.
The experience with the Collins Class submarine was that the time from concept development to the delivery of the first of class was 13 years. The time from the cutting of the first steel to delivery of the first of class was six years.
These are respectable timelines. For its latest Virginia Class attack submarines the United States took 15 years from concept development to delivery of the first of class, and six years from the cutting of the first steel.
This means that if we wish to allow ourselves, for the development of a much larger and more capable boat, at least as long as we had for Collins, we will need to be at work on concept development by 2012, and start cutting steel by 2016. These are the latest acceptable dates – even if we meet them, we will be depending upon just about everything going according to plan if we want to avoid the situation we faced in 1998, when acceptance of the Collins Class into naval service was delayed and the Oberon Class submarines were reaching the end of their permissible dive life.
Much has to happen before 2012. We have to settle our acquisition strategy, and then select the team that is to design, build and maintain our next generation submarine.
This means that some threshold decisions need to be made, and fast. Much time has been wasted in the futile pursuit of an off-the-shelf option and strange ideas like running a design competition between European designers who do not build boats anything like the ones we need, and who would not be permitted to build boats incorporating United States technology that we know we will need.
My suggestions for some decisions that the Government should take now in order to cut to the chase:
(1) Recognise that there is no European military off-the-shelf (MOTS) option that goes anywhere near complying with the requirements specified in the Defence White Paper.
Apart from the fact that there is nothing close to what we need, the laws of physics as they relate to submarine design mean that “near enough” is not good enough. Once it is necessary to adapt a submarine design the requirements for the shape of the pressure hull and the distribution of payload dictate that the “modification” task is essentially a new design.
(2) Accordingly, recognise from the outset that this is going to be a developmental project.
(3) Abandon the notion of a design competition.
A design competition between two European designers makes no sense. Why would we want to select a design house on the basis of a choice between two conceptual submarines, neither of which will meet our needs? And why would any European design house commit serious resources to developing the best design when it must know that it is simply a stalking horse for what will ultimately be an Australian project?
We have in this country the resources to design a submarine, but these are scarce resources and we cannot afford to divide them between two competing groups. Nor do we have the resources in the Defence Science and Technology Organisation (DSTO) to provide scientific and technical support to two competing groups.
Design represents less than 5% of total cost, so this is the wrong phase at which to compete the project. Spreading our scarce resources between two teams that are not permitted to communicate with each other runs the risk that we will end up with a choice between two inferior designs. There is plenty of room to compete aspects of the project between subcontractors and equipment suppliers.
(4) Agree that the future submarine can only be designed and built in an Australian environment.
This will give us optimum access to European and United States technology, which only we will be permitted by either to integrate.
The Collins Class is the appropriate starting point for the future submarine, and ASC Pty Ltd has been the design authority since 2001. ASC must be selected to design and build the future submarine.
An Australian design and build means that we must bear all of the schedule, cost and performance risk, and will become the parent navy. We must recognise this from the outset, and plan and budget accordingly.
(5) Benefit from US experience by emulating the Integrated Product Process Development (IPPD) model that was used to build the Virginia Class.
This means including designer, builder, major equipment and sub-systems suppliers, combat system integrator, through-life support agencies and key Defence stakeholders into the process from the outset.
The virtue of this system is that it avoids stop-start decision making, and enables resolution of issues where ease of building conflicts with ease of maintenance.
(6) Select from the outset the combat system pedigree and integrator.
Integration of the combat system was one of the most problematic aspects of the Collins project. The lowest risk approach for the future submarine will almost inevitably be to derive a system from a proven US Navy system.
The wheel-spinning that has taken place over the last twelve to eighteen months means that the project is already hard up against its timelines.
It is now time to develop an appropriate sense of urgency, make the necessary threshold decisions, ensure that adequate funding for commencement of the program is in the budget for 2010-11, and get on with it.
A piece by defence writer John Kerin in The Australian Financial Review’s Thursday 3 December Special Report on Defence throws some interesting light on the current thinking within Defence concerning the acquisition strategy for the future submarine which is to replace the Collins Class from about 2025, with the build to commence in 2016.
The key paragraphs are:
The government weapons purchaser, the Defence Materiel Organisation, has already embarked on a global search for designs, propulsion, weapons and sensor systems, talking to Spanish submarine builder Navantia, German builder HDW, US builder Electric Boat, Swedish builder Kockums and British builder BAE Systems.
Adelaide-based government-owned submarine builder ASC has a head start in terms of the project given its existing expertise. But government sources suggest that how big a slice of the build ASC gets will depend upon whether it can improve the efficiency of its maintenance of the Collins-class submarines.
Only two Collins-class submarines are now available, although the Defence Materiel Organisation, the navy and ASC are now working jointly to try to improve submarine availability.
The South Australian and federal governments have ensured there is a common user facility and vacant land near ASC at Port Adelaide which could be made available to a private sector rival.
The DMO has not yet recommended to the government how the acquisition strategy for the submarines should be handled.
DMO chief executive Stephen Gumley has warned that the project is simply too big for any one prime contractor.
The project may follow the alliance approach used with the $8 billion air warfare destroyer project, in which Raytheon, the Defence Materiel Organisation and ASC have formed a partnership to build three vessels for the navy.
The destroyer project is at this stage running to budget and on schedule.
There is still vigorous debate within the federal government and the defence community about an Australian-built submarine as the better option or whether an off-the-shelf solution may provide better value for money for taxpayers.
Some observations about the above:
(1) The suggestion from “government sources” that how big a slice of the build ASC gets “will depend on whether it can improve the efficiency of its maintenance of the Collins-class submarines” betrays extraordinarily muddled thinking, and suggests ongoing failure in the relationship between the two Government-owned entities the Defence Materiel Organisation (DMO) and ASC Pty Ltd. The Government owns ASC: if it has a sustainable case for dissatisfaction with ASC’s performance on the through-life support of the Collins class submarines, then it should address that question directly and resolve it. The industrial support of our platforms is a fundamental component of our defence capability, and problems in that regard must be resolved promptly, not simply used as an excuse to withhold future work on other projects.
(2) The odium being heaped upon ASC in relation to the through-life support of the Collins class seems to be a good example of the ancient principle of bureaucratic warfare that propinquity is power. The George Pappas-led Defence Budget Audit makes it quite clear that there are three organisations, DMO, Navy and ASC contributing to the current low level of submarine availability and long maintenance turn-around times, and it is no coincidence that the organisation furthest from the Minister’s ear is taking almost all of the public flak.
On page 114 the recently-released Defence Budget Audit says:
There are substantial systemic issues across the support landscape for the Collins Class (including Defence, ASC and its suppliers)), which are interacting to drive increased observed cost and low levels of availability. Frequent design modifications and upgrades (including significant legacy issues arising from the build phase), along with overlapping docking periods, drive higher demands upon finite resources. In turn, this leads to further extension in docking periods and causes further instability in the master maintenance schedule (exacerbated by lack of contingency built into the schedules to absorb emergent work). Schedule instability makes the planning of spares provisioning inaccurate, which further exacerbates productivity issues, extends repair turnaround times and increases docking periods. This cycle is further compounded when low submarine availability compromises training of seamen, which exacerbates crew shortages. These crew shortages can lead to submarines docking early, further disrupting the schedule. It will be impossible to break this cycle without coherent action at all levels – to the commercial arrangements between Defence and the ASC; in the repair facilities themselves; and in the end-to-end enabling system, including Defence.
Later in the Audit (page 118):
Maintenance efficiency is exacerbated by: low spare parts availability, currently at a 66% demand satisfaction rate, mainly due to the lack of a pool of repairable items ‘on the shelf’; very long turnaround times from many industry suppliers; increasing obsolescence; and schedule instability. As a result of Defence budget constraints in fulfilling the current ‘bow wave’ of maintenance, there are continual changes to the master maintenance schedule. This reduces the available forward planning time which, in turn, exacerbates the issues of parts availability and low labour productivity.
So it is quite explicit: budget constraints, maintenance schedule instability and crew shortages all contribute to the current problems and it will take ASC, DMO and Navy working together to fix them. It is a pity that our conventional media do not take the trouble to join up these dots.
(3) The crew shortages reflect well on neither the Navy nor the civilian Defence establishment including a succession of Ministers and Secretaries. It is the responsibility of the Chief of Navy to raise, train and sustain the Navy (in plain English that means that he is required to have trained sailors available to man all platforms) and he is the Capability Manager for all naval platforms. It is the job of the Minister, advised by the Secretary, to ensure that the Chief of Navy gets the resources he needs to perform his statutory functions – or accept political responsibility for deciding that the capability should be unavailable. Ships without crews are not capability, they are very expensive pieces of rusting metal and deteriorating systems.
To his credit, the current CN (Vice Admiral Russ Crane) is attempting to rectify this situation (see Managing the submarine workforce), but it is not going to happen any time soon, and the shortage of crew is itself contributing to the inability to train sufficient crew to put submarine manning on a sustainable basis.
(4) It is extraordinary that the South Australian and Commonwealth Governments have invested taxpayers’ money to ensure that “there is a common user facility and vacant land near ASC at Port Adelaide which could be made available to a private sector rival”. Why would a government want to do that when it already owns the necessary facilities and a company which is the national repository of submarine design and building expertise? Is this to be yet another very Australian story of investing billions of dollars in establishing a national capability and then insouciantly shredding it?
(5) The suggestion attributed to DMO chief Stephen Gumley that the future submarine project “is simply too big for any one prime contractor” is ridiculous. Leaving aside ASC’s claims for the moment, too big for Navantia? Too big for HDW? Electric Boat? Kockum? BAE Systems? Why would it be too big for any of the above? Surely someone is to be in charge of this complex project, and able to be held to account by the Commonwealth as client? Or is this code for DMO setting itself up to be the effective prime for this massive project, or indicative of a desire on the part of DMO, as implied by the AFR piece quoted above, to tilt the playing field in favour of another excursion into alliance contracting.
(6) In relation to alliance contracting, the article notes approvingly that the Air Warfare Destroyer (AWD) project is at this stage running to budget and on schedule. They always do at this stage; the hard part is the systems integration phase that comes at the end, as the Airborne Early Warning and Control project (Wedgetail) has demonstrated so abundantly. Yesterday Defence Materiel Minister Greg Combet put out a media release marking the achievement of another milestone in this project, the completion of testing of the Aegis Combat System equipment destined for HMAS Hobart. This is a step along the road, to be sure, but it doesn’t tell us much about the virtues of alliance contracting: the Aegis system is in service on nearly 100 warships in a number of navies, so we should expect that step to be completed without great problems.
(7) On 28 November 2001 the Australian Government Solicitor published some Commercial Notes that identified some substantial issues to be considered by Government agencies in considering whether to enter into an alliance contract (see Alliance contracting in Defence). In short, the key problems identified include the facts that it is difficult to select alliance partners fairly, there can be no meaningful sense that costs are fixed, and most compellingly in my view, the Commonwealth could be estopped from holding the contractor responsible for decisions in which it (the Commonwealth) participates.
(8) An “off-the-shelf solution”, as proposed by some, is not a solution if it does not do what we need it to do. The future submarine will inevitably be an evolution of the Collins class submarine which we currently have in service. No-one starts designing a submarine with a clean sheet of paper, and neither will we.
In Future submarine: why the design competition? (21 April 2009) I queried the thinking of Defence concerning the development of SEA 1000, the project to acquire a fleet of twelve next-generation submarines to replace the current Collins class boats when they begin to be withdrawn from service from 2025.
The thinking at the time appeared to be that Defence would engage two European designers to participate in a Defence-funded design development. For reasons outlined in that post, this struck me as an extraordinary and redundant step. The repository of submarine design knowledge relevant to Australia’s circumstances is our very own Government-owned ASC Pty Ltd.
Furthermore, it will take an Australian submarine builder to perform the necessary integration of technologies from United States and European companies that will not release their technologies to each other – another indicator of the central role that ASC must play.
These considerations nothwithstanding, the Defence Materiel Organisation’s approach seemed calculated to sideline ASC as far as possible.
In a welcome outbreak of commonsense the Minister for Defence, John Faulkner, and the Minister for Defence Personnel, Materiel and Science, Greg Combet, have today announced that Defence will call a Request for Tender (RFT) to complete a Domestic Design Study for SEA 1000.
In the media release announcing the intention to issue the RFT, Senator Faulkner said:
Investigations by the Future Submarine Project Office to date have covered a number of diverse areas aimed at developing an understanding of the capability of the international submarine industry.
This RFT adds to these preliminary investigations by examining Australia’s design capabilities, and forms part of a program of studies being undertaken to support the planning of Australia’s future submarines as outlined in the Defence White Paper.
The RFT would add to current information collected to help shape the approach to the design of the next generation submarine.
Mr Combet said:
We are undertaking a number of studies to identify and explore all the options to ensure we have the appropriate design capability to support our submarines throughout their life.The information we collect through this process will help to develop strategic options for the Government’s consideration.
This Government is committed to carefully planning for Australia’s next generation of submarines. This is clear through the program of studies and information we are gathering.
This request for tender recognises the skills that our Australian domestic defence industry has in the design and development of submarine technologies and systems.
All very polite stuff, but the reorientation of thinking is as clear as it is welcome – the earlier studies are being repositioned as “preliminary investigations”, part of the due diligence, but now we are going to take a good hard look at what our domestic industry can do, and give full weight to its capabilities: to repeat Mr Combet’s carefully chosen words, we are going to “identify and explore all the options to ensure we have the appropriate design capability to support our submarines throughout their life”.
