Submarine project navigating troubled waters
Mismanagement and delay in the hugely expensive replacement program for the Collins-class submarines is a nightmare for Australian defence and taxpayers, argues Rex Patrick.
Australia’s future submarines will be absolutely vital to Australia’s defence and national security for much of the 21st Century.
The projected cost of this project to taxpayers is huge. Consequently, a just-published report by the federal Auditor-General should be of considerable concern to all Australians as it shows deep bureaucratic dysfunction in the management of this critical project.
The failures identified by the Auditor-General are doubly concerning for South Australia, because the mismanagement team that has steered the Future Submarine Project into danger is the same team recommending that Collins Class submarine Full Cycle Dockings be shifted from SA to WA.
When the Future Submarine Project was first announced in 2009 it had a detailed design completion date and construction commencement date of 2016.
By 2016 the Defence Department, having already spent more than $200 million, had only navigated the project to a partner selection stage.
They have since spent considerably more time than they originally intended negotiating a Strategic Partnering Agreement with Naval Group, the French submarine designer and builder.
Defence started this project years late. Critical milestone dates in the contract have not been met, even after being rescheduled.
Defence’s bureaucrats say they can pick up the pace and recover the schedule, but that claim is naive at best, especially when the Auditor-General revealed that Naval Group had proposed to extend the completion date for Future Submarine design work from July 2022 to September 2023, but Defence only agreed to nine months.
It’s a project running late and also under extreme schedule pressure.
Project Management 101 says that a delayed project means cost overruns. Every day, month or year a project is late is a day, month or year of extra salaries and resources. And in the case of the Future Submarine Project, there will be huge costs involved in keeping an ageing fleet of Collins Class submarines going well beyond their originally planned retirements.
For a program acquisition budget that has already blown out to $80 billion dollars, this audit report is a nightmare for taxpayers.
And the Auditor-General has now revealed that hull construction work that would have been done in Australia will now be done in France because of the schedule pressure.
Sadly, Australian industry can expect more of that. With industry already suffering from a local content promise downgrade from 90% to 60% to actual local content of under 40%, the news could not be more disheartening.
To make matters worse, the Auditor-General has raised the risk assessment for this project to be high to extreme.
Naval Group’s original offer to Australia was to have ASC partner with them in the project. It was a very sensible risk reduction proposition noting ASC at Osborne are the centre of submarine knowledge and skill in Australia.
Defence rejected Naval Group’s proposal and that decision will likely be felt for the rest of the life of the project.
We need change in the Future Submarine Project. And that change must start with the current submarine leadership team inside Defence. A large broom is required. We also need to get ASC back into the picture.
And we certainly don’t want the further trouble that will be caused by shifting Collins Class Full Cycle Dockings to WA and away from the expert workforce we have built in SA, especially noting that the Collins submarines are Defence’s only real risk mitigation strategy for Australia’s future submarine capability.
That’s simply a daft idea that is harmful to our national security and will cost more than $1 billion.
A better use for that money could certainly be found elsewhere in Defence, or even on fire fighting and other aircraft to assist with the natural disasters that will continue to threaten not only people and property, but also our economic security.
Rex Patrick is a Centre Alliance Senator and former submariner.
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