defence sa submarine report

8/12/2019 Defence SA Submarine Report

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GUARDING OUR EDGEBuilding and sustaining the futuresubmarine in Australia


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December 2012


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Foreword

Why build submarines in Australia? The answer is simple -we cant afford not to.

In choosing the procurement strategy for our futuresubmarines, our Government has a unique opportunity todetermine and deliver Australias maritime defence capabilityinto the next century.

Submarines and necessarily large submarines at that - areour most important strategic deterrent and defence asset,integral to self-reliance in the direct defence of our islandcontinent and its trade routes. Australians cannot expectguaranteed and unconditional assistance from our allies intimes of crisis, despite the strength and closeness of manyof these relationships.

There are two clear paths. Do we outsource the design,development, build and maintenance of our submarines -and in doing so, surrender our sovereign independence andgift an entire industry to another country? Or, do we backourselves and commit to long-term investment in buildinga robust indigenous capability to deliver and sustain our

Navys future submarines, in perpetuity?

There is only one choice. If we are to protect and strengthenour self-reliance, we must design (or at a minimumcontrol the design), develop, build and maintain the futuresubmarines in Australia. This is no ordinary defence project but this is not a difcult decision.

All factors must be considered though. Short-term scalconsiderations alone may erroneously lead Governmentto an off-the-shelf option, supercially attracted by amarginally cheaper front-end purchase price for a

submarine that wont meet Australias unique needs. This isshort-sighted thinking, for it notably ignores the larger costof sustaining the submarine eet through its life, a markedlymore complex and costly task with an offshore purchase.

If the acquisition decision - as it must - truly takes intoaccount whole-of-life costs, development and protection ofnational intellectual property for a critical strategic capabilityand ow on benets to other Australian industries, offshorepurchase is simply not an option.

Australians need full control of our submarine program. Achieving and maintaining technological and operationaladvantage in conventional submarine operations isabsolutely essential. Its our edge. Assembly of an overseasdesign is one thing, but Australian-control of the designprovides the ability to upgrade and modernise over time andis absolutely fundamental to providing our Navy with thecapability it needs to ght and win.

The combat and weapons systems the heart of asubmarines ghting capability must be installed andintegrated in Australia. Our relationship with the USprovides unique and valuable access to the world leadingpractitioners design capability. Retrotting US systems intoa submarine built overseas, if indeed feasible and agreed toby the Americans, would be extremely high risk, costly andtime-consuming.

Again, this is no ordinary defence project it wont havean end date. Carefully managed, building submarines in Australia will create a new national industry, with continuousworkow for a century or more. It will spawn new skills and

technologies that can be applied to other industries.

We must not be averse to capacity building, nor allowour political system to stie investment in nation-buildinginitiatives. Naval shipbuilding and sustainment couldand should be a cornerstone of Australias advancedmanufacturing future, generating real economic and socialreturns. Lets back ourselves. The far-reaching rewardsshould be ours, not exported offshore.

Own the design, build in Australia, think and act long term.Its how well guard our edge.

General Peter Cosgrove AC MCChairman, Defence SA Advisory Board


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Contents

Australias Strategic Interest 7

Submarines are a Critical Australian Capability 7

Australia Needs Full Control of its Submarine Program 8

The Importance of the United States Relationship 10

Design in Australia to Build in Australia 13

Where the Costs Lie 15

A Solid Foundation 17

Not Forgetting the Benets 20Seizing the Opportunity 21

Notes and References 24


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Submarines are covert,agile, have great reach,and deploy a powerfulset of weapons andsensors. To those whomight aspire to controlthe sea, they are apowerful deterrent andeffective counter.


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Australia is fundamentally good at buildingsubmarines. In an evolving and often volatile projectmanagement environment, Australia successfullybuilt and subsequently rectied many of theunexpected, complex and challenging technicalissues associated with the Swedish-designed Collinsclass submarines.1 This result was more than just aset of noteworthy achievements.

The high quality national industrial capability thatthe Collins project spawned is now a signicantand strategically vital Australian national asset.The shortcomings in some of the Collins class systemsare well documented, but their genesis was in a awedand ever-changing procurement strategy.2 Buildingthe submarines in Australia was not a factor thathandicapped the program. In fact, the decision to buildin Australia, and the later critical decision to secure Australian design authority over the platform, weretogether key enablers for the realisation of Collins asa world-class conventional submarine.

If the past lessons are heeded and appropriatechanges made, Australias national industrial basecan build and sustain the Navys future submarinesto the full satisfaction of the Federal Government. And it is undoubtedly in Australias strategic andeconomic interests to pursue this approach, for itwill maximise the breadth and depth of the potentialbenets to the nation and provide the greatestoverall return on investment. The future submarine

project will create an industry that could last for acentury or more. An industry that will generate owon benets by building skills for other industries andcreating technology that can be applied elsewhere. An indigenous capability in Australia that can design,develop, build and maintain submarines is a nationalimperative given the absolute need for Australia tohave sovereign control over its submarine capability.But it is not something that we can or should doon our own.3

Australias Strategic InterestThe most recent Defence White Paper4 states that

Australias basic strategic interest is the defenceof Australia against direct armed attack. This interestis a function of Australias geography and the leveland nature of regional military capabilities. Beforewe attend to anything else, we must address thisstrategic interest.

Submarines are a Critical Australian CapabilityThe oceans play a critical part in the global economy.

Around 90 per cent of world trade is carried by theinternational shipping industry.5 Over 90 per cent of

Australias trade is transported by sea.6

Australia has critical oil and gas resources locatedoffshore that are major contributors to the nationaleconomy. National exports of liqueed natural gas(LNG), all transported by sea, could more than triple

by 2016-17 and Australia is on track to become theworlds second largest exporter of LNG by 2015.7

Changes emerging in Australias strategic settingraise important questions as to the possibility ofmilitary attack upon Australia and its offshore interests,and how any such attack might be countered.8,9 Such a possibility of attack is often dismissedout of hand given the strength of Australiasallied relationships, regular political dialogue andcommitment to Coalition operations, but Australia

cannot expect guaranteed unconditional assistancefrom its allies in times of crisis.

Building and sustainingthe future submarinein Australia


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Countries will act in accordance with what theyperceive to be in their own national interest at the time.If that perception happens to align with Australiasnational interest, all well and good; if not, Australiahas a potential problem. Control of Australias defencecapabilities must be such as to allow the Governmentto act independently.

Current Government policy espouses that the mosteffective strategic posture continues to be a policy ofself-reliance in the direct defence of Australia, as wellas an ability to do more when required, consistentwith our strategic interests and within the limits ofour resources.10 In this context, self-reliance meanshaving the capabilities to address Australias uniquestrategic interests. It does not mean having a full suiteof capabilities for every occasion. Nor does it precludea degree of dependence on others through classiedcollaboration on certain critical technologies.

As an island nation, Australias air and sea approachesare its defensive bulwark and Australia must becapable of denying an adversary freedom of operationswithin those approaches as and when needs demand.

Submarines are our most important strategic defenceasset.11 Whatever future course the debate on Australias security takes, that the Government of theday requires an affordable, effective and enduringconventional submarine force capable of successfullyprosecuting the submarine mission, rightfully has

strong bipartisan consensus. The current Oppositionhas indicated that within 18 months of taking ofce,it would make the decisions necessary to ensure that Australia has no submarine capability gap and has alsoindicated a clear preference to buy Australian.12

Accepting the obvious national security constraints,the nature of the submarine mission must be clearlydened by Government, for it drives the designrequirement of the capability and the appropriateacquisition strategy to be adopted.

Respected strategists consider the submarine to bethe sea denial platformpar excellence , especially foroperations distant from the coast, and the submarineeet to be perhaps the most important singlecapability for the independent defence of Australia.13 Submarines are covert, agile, have great reach, anddeploy a powerful set of weapons and sensors. Tothose who might aspire to control the sea, they area powerful deterrent and effective counter. History isreplete with examples of submarines having achieveddisproportionate inuence. For Australia, with a smallpopulation and limited tax base, having a modestsubmarine eet capable of asymmetric militaryinuence is eminently sensible.14

Australia Needs Full Control of itsSubmarine ProgramTo be credible, Australias key military capabilitiesmust have a discernible edge over those of potentialadversaries. The vital deterrent role of an effectivesubmarine force and the critical contribution ofsubmarines to the Governments response options intimes of tension or conict, mean that achieving andmaintaining technological and operational advantagein conventional submarine operations (our edge) isabsolutely essential.

Because of that requirement, strategic and operationalmanagement of Australias submarine programdemands exceptional and constant attention.

Understanding and controlling the managementof design, engineering, procurement, integration,pre-testing, construction, reliability and continuousimprovement processes are all critical factors indelivering a future submarine capability on time,within budget and with a credible through-life supportplan that guarantees operational availability and atechnological edge.


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Production and delivery of the capability is one thing,but control of the design provides the ability to upgradeand modernise over time and is absolutely fundamentalto giving the Navy the submarine capability that itneeds to do the job.15 Sustaining this critical ability forthe long term will minimise sustainment costs, but isonly possible with in-country build and a sympathetic,rapidly responsive supply chain.16 In that regard, Australia is well placed.

The essence of control is in the nature of the chosenprocurement strategy.17 The Government is currentlyconsidering four options for acquiring a futuresubmarine capability, from evolutions of Europeanoff-the-shelf models through to new designs.18 The off-the-shelf options will not cut it for Australia.19 Such an acquisition would deliver a submarine not onlysignicantly less capable than that of the Collins class,but also unable to satisfy the Australian strategic andoperational requirement. The need is for a stealthy,operationally effective submarine eet capable of longrange and long endurance. Such demands would mostlikely lead to future submarines of similar size to theCollins class or larger.

As recently argued by Senator David Fawcett,20 the ability to evaluate and, where necessary, repairor modify and certify leading edge military technologyto a chosen standard is one of the things separatinga third world and a rst world nation, and Australiaaspires to the latter, particularly in the evolutionary

development of its most critical strategic capabilities,such as submarines. Fawcett goes on to state thatmany of Australias procurement problems stem fromthe growing gap between Australias perceived andactual ability in this regard. In its future submarine, Australia should have the best available combinationof platform and systems that the nation can affordwhilst maintaining sovereign control, meaning simplythat Australia should not place itself in a position whereit has no option but to accept the level of capability,risk, cost, safety and availability another nation maydeign to provide Australia at their convenience.

Australia could choose to embrace a foreign design,but would then be obliged to incur the cost ofsecuring control over that design, assuming it ispossible to do so. Not securing design authorityof a critically important capability has long-termnegative consequences of which Australia has somebitter experience.21 In the context of the ArmedReconnaissance Helicopter and the Joint StrikeFighter (JSF), Australia had no alternative but toaccept the constraints imposed by foreign design,for Australia has no ability to design and build advancedhelicopters or fth generation combat aircraft.This is not the case for conventional submarines arguably Australias most critical military capability where an extremely capable indigenous submarinebuilding and sustainment industry exists. For JSF,the unique US-Australia defence relationship is amitigating factor. For the in-country integration ofits submarine capability, Australia has the added,signicant benet of privileged classied access to

US combat and weapons system data.

Strategic and operationalmanagement of Australiassubmarine programdemands exceptional andconstant attention.


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The Design Authority is the organisation responsiblefor the development of the design or modication andpreparation of engineering data for materiel intendedfor Australian Defence Force use.22 Without designauthority, Australia is beholden to the foreign designowner and is not at will to enhance the platform. An overseas-based design authority leads invariablyto an overseas-based supply chain, the immediateconsequences of which being to drive up costs,lengthen supply time and compromise sovereigncontrol. Design authority over the new submarine iskey to the achievement of self-reliance.

Past lessons point to the establishment in Australiaof a resident design team23 to pull together thebest combination of platform and systems to meet Australias future submarine needs. That designworkforce exists only in part in Australia, but withcollaboration with international design partners,a resident team of appropriate capability is easilywithin reach.24 The product of that team would bean Australian owned design informed by the verybest of international experience and knowledge the ideal outcome for Australia, providing it with thenecessary control of the most critical of its nationalmilitary capabilities.

The Importance of the United StatesRelationshipThe Government has made it clear that it intendsto continue the very close level of Australia-UScollaboration in undersea warfare capability crucialto the development and through life management ofthe future submarine.25

The United States continues to have the largest andarguably, the most capable and technically advancedmilitary industrial capability in the world, backed up bysignicant public and private advanced research anddevelopment investment in highly relevant leading edgetechnologies. Australias special defence relationshipwith the United States allows privileged access toconsiderable elements of this impressive capability.

In the past, Australia has received special if notexclusive access to previously unavailable Americansubmarine-related systems and technologies.

The submarine systems dialogue continues to this day,but its continuance should not be taken for granted.26

In 2004, in a submission to the Australian Senate,27 respected Australia-born strategic analyst GregoryCopley noted that Australias commitment as a partnerto both the F-35 Joint Strike Fighter and ballisticmissile defence programs, led by the US, offer(ed)signicant opportunities for Australia to participatein defence industrial opportunities at the highesttechnological levels. As well, they offer(ed) Australia

the opportunity to participate in the planning andcontextual thinking behind the programs. Copleyexpresses concern that Australian defence industrialcapability is understated and, on occasion, has beendeserving of a higher status than subordinate partner.


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Copley goes on to observe that the 1985-86 Australian Government decision to once againachieve a measurable balance of defence industrialself-sufciency led to a world-class submarineconstruction capability, which is now being sought byUS corporations. It is Copleys view that Australiasextremely capable and innovative approaches todefence systems has been insufciently studied witha view to preserving national independence andnational export capabilities, as well as skills whichcould be passed to other, civil sectors.

Irrespective of current politico-strategic developmentsin the Asia Pacic and the growing strategicimportance of China and India, Australias defenceand security alliance with the United States and therelationship between respective armed forces andintelligence communities remains of utmost relevance.

The closeness of the relationship notwithstanding,the desire, indeed requirement for Australia to havesystems interoperability with US forces and the benetsthat potentially accrue to the Australian Defence Forcethrough joint and combined operations and training donot compel Australia to buy American.

However, Australia would be foolish not to avail itselfof the best available combat and weapons systemfor its future submarine. The extent of a submarinesoperational advantage over an adversary is entirelydependent on its combat and weapons system thesmart, highly complex software that combines sensors,weapons and submarine controls to deliver combatwinning performance. Combat and weapons systemdesign is a science and an art, of which the UnitedStates has long been the leading practitioner. Australia,through the nature of its relationship with the UnitedStates, has a unique opportunity to secure ongoingaccess to this design capability and to benet in bothcombat effectiveness and economic terms.

An American system, approved for Australian use,would probably only be released by the US forinstallation and integration in Australia. Should theGovernment embark on overseas design and build ofthe platform, the combat and weapon system wouldneed to be subsequently tted in Australia. Suchactivity would be extremely high risk, costly and timeconsuming, if indeed it was feasible at all, given thenature of modern submarine construction.

Australia, through the nature ofits relationship with the UnitedStates, has a unique opportunityto secure ongoing access tocombat and weapon systemdesign capability and to bene tin both combat effectivenessand economic terms.


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If the choice of combat and weapon system was otherthan American, Australia would still need to gain,maintain and evolve sufcient intellectual capital in thesystem in order to maximise its utility and adaptability,and ensure low-risk integration within the platform, anoutcome that would only truly be possible by buildingthe submarines in Australia.

The Governments posture of self-reliance entailsthe maintenance of alliances and internationaldefence relationships that enhance our own security.It is the strength of Australias relationship with theUnited States, and successive Governments beliefin the relationship, that allowed the eventual tting inthe Collins class submarines of a proven American,off-the-shelf combat and weapons system.28 The classied cooperation inherent in that specialrelationship, and the benet that accrues to bothnations as a consequence, would logically lead tothe conclusion that there is only one option whenconsidering the combat and weapons system for thefuture submarine.

The choice of combat and weapons system, andthe manner in which it may be used, ultimately shapedecisions about the physical characteristics of thesubmarine. The earlier these decisions are made,the earlier signicant submarine procurement,planning and design work can begin.29

Design in Australia to Build in Australia Australias maritime industry extends across many Australian states and is truly a national endeavour. Australia has an unprecedented opportunity to expandthis already capable industry to take advantage of amanaged build, integration and sustainment programfor Australias future naval requirements. As a totalprogram, these requirements represent an enormouschunk of national investment. The future submarineproject is but one critical component of a broadernational development strategy.

For large complex projects or programs, other nationshave demonstrated that by minimising the levelof required investment and maximising the returnfrom that investment, the net cost to the taxpayeris reduced; some have shown the investment canultimately return a net benet.30

As a nation, we must not be averse to capacity building,

nor allow short-term political perspectives to shun thebenecial development of nation-building initiatives.31 Especially in defence, the Australian governmentshould have a clear preference to buy Australian.32 Given the Governments existing multi-ship long-termprocurement program, naval shipbuilding shouldbe one of the cornerstones of Australias advancedmanufacturing future, generating real economic andsocial returns that would otherwise be exportedoff-shore, solely to the benet of other nations.

Fundamental to the value of Australian ownedintellectual capital33 is the experience and knowledgeof how to use it so as to be able to identify andcorrect deciencies and weaknesses, and to improvea capability over time without the need for recourseto third parties. Such experience and knowledge ishard-earned, but most meaningfully gained by owningand being intimate with the product design, buildingand sustaining the product in-country and continuallyimproving the product over time through innovation.

Australia has invested heavily in the development of itsnaval shipbuilding infrastructure and its national skillsbase now is not the time to let it dissipate.34


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Australia hasinvested heavily inthe development ofits naval shipbuildinginfrastructure and itsnational skills base now is not the time tolet it dissipate.


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Where the Costs LieThe affordability of a capability is directly related tothe priority that it is given by Government and thedegree of sacrice that the Government is willing tomake within other programs to achieve it. The levelof required military capability is dened by a continualassessment of risk to national security and nationalinterests in both the short and long term. No Australiangovernment should make savings in defence thatwould compromise national security interests.35

In considering relatively high cost strategic capabilitiessuch as submarines, the ability of the nation to controlsystem evolution as well as production rate, whilstsimultaneously maintaining the health of the nationalindustrial base, provides Government with exibility.This can only be achieved through local build and localsystems integration.

Producing, maintaining and evolving an effective

submarine capability is an endeavour enduring overmany decades and, typically, the cost to operateand support a military capability accounts for over70 per cent of the total cost over a systemslifetime.36 Whilst much of the initial debate rightlyaddresses the design and build aspects, when itcomes to cost/benet there must be a whole oflife consideration if the Government is to makeappropriately informed decisions.

It is a myth that having Australias submarines built

in Europe provides greater net national benet thanbuilding them at home.

So, what price a submarine? Predicting a unit pricefor a future submarine is difcult and validated datais hard to come by, but it is possible to get a broadindication of cost per tonne for physical construction.But as a single indicator, is this the most relevant orhelpful measure? The project procurement strategyand the value for money that it seeks to deliver is better judged by comparing investment and return over theentire life of the capability and assessing return in morethan just initial project procurement cost terms.

Ninety per cent of the discretionary decisions thataffect the outcome of a project are made within therst 12 per cent of its life,37 emphasising the volumeof effort that should be applied at the very early stagesto detailed whole of life planning in order to allowGovernment to make timely and effective decisions.Despite its importance, the design phase in termsof dollar expenditure historically accounts for no morethan two or three per cent of the total investmentthrough life.

The cost of building conventional submarines rosedramatically in the late 1980s with the introductionof sophisticated combat and weapons systems andstealthy materials, offering enhanced capability optionsto governments and leading to fundamental changesin the way submarines operated at sea. In the westernworld, the size of production runs reduced signicantly,making economies of scale less available than theywere in the rst two thirds of the 20th century. Inthe modern era, close examination of the cost forsubmarine construction shows a relatively consistentdollar cost per tonne (the globally accepted metric),irrespective of where the build is undertaken.38

As a percentage of overall investment, submarineconstruction accounts for approximately one thirdof the total and of that third, only 15 per cent or soare shipyard costs, the remainder being allocated tomaterials and systems for which all Western nationsbuilders pay similar prices to the relatively smallnumber of global suppliers.

As with the majority of major projects, more than twothirds of overall investment in the future submarineproject will be spent on the support of the system oncein service. In construction, shipyard labour amountsto no more than 15 per cent of the cost, whereassustainment is much more labour intensive with thepercentage being 50 per cent or higher.


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Submarine sustainment is a combination of regularline maintenance and deeper level maintenance,the latter of which comes into play once a submarinehas been in service for some years and then eventuallyreduces as the submarine approaches its end of usefullife. To estimate the cost of sustaining submarinesin order to produce a meaningful benchmark, it isessential to compare like with like. Few nations, if any,are obliged to operate conventional submarines in thesame way as Australia and therefore do not confrontthe same maintenance demands.

It is vitally important to recognise the differingcomplexity of the submarines being compared andthe varying levels of maintenance activity and intensityduring a particular submarine types life. It is alsocritical to estimate cost over the full predicted life ofthe platform. A snapshot of costs at any given time ofa submarines life is unlikely to reveal a true picture oftotal cost through life unless extrapolated appropriately.

There is currently no authoritative benchmarkinganalysis publicly available, but anecdotally,the sustainment cost of conventional submarinesin Australia compares favourably with those ofother nations, noting, however, that few, if any,of the overseas shipyards are maintaining conventionalsubmarines of the size and complexity of theCollins class.

In terms of sustainment and overhaul, and if non-recurring and infrastructure costs are left to oneside, costs of Swedish submarine yards appearrelatively low, but this is a good example of low andrelatively undemanding submarine usage leading to aconcomitant maintenance regime. In comparison toOberon maintenance costs of some years ago, presentday costs have reduced signicantly, with those ofthe United States, Germany and Australia for modernsimilar type platforms seeming to be generally onpar with each other, whereas France and the UnitedKingdom trend towards being a little more expensive.

So the key points that emerge from this analysis arethat costs should be considered with a whole of lifeperspective, the cost of submarine construction isgenerally comparable across the world, and withsustainment over the life of the platform accountingfor 70 per cent of total investment, the cost/benetequation invariably favours in-country sustainmentfounded on in-country design and build.

Whilst much of the initialdebate rightly addressesthe design and buildaspects, when it comesto cost/bene t theremust be a whole of lifeconsideration if theGovernment is to makeappropriately informeddecisions.


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A Solid Foundation Australia has been operating submarines for nearly100 years and has 25 years of modern submarinebuilding experience. This strong foundation ofsignicant submarine expertise and shipyardinfrastructure positions Australia as a world leaderin conventional submarine build and sustainment,able to readily adapt to technology shifts and guaranteesovereign independence.

The Future Submarine Project will undoubtedly testindustrys capacity to deliver. In the short term,that could require a spend to save approach and awell conceived and implemented plan to ensure thenecessary skills and infrastructure are in place to meetthe anticipated demand. Already, the Governmenthas taken positive steps in this regard by calling for aFuture Submarine Industry Skills Plan and a report onits initiatives by the end of 2012.39

Australian company ASC (formerly the AustralianSubmarine Corporation) has a good record forbuilding submarines. ASC produced all the Collinsclass submarines, mostly from scratch, without amajor mishap and developed a capacity to deliver onesubmarine per year, a rate faster than that achievedby Dutch and British yards in delivering their boatsthat were contenders for the Collins class program.Only one section of the rst boat(HMAS Collins) wasmanufactured offshore, which ultimately requiredmajor rework by Australian welders as it contained

an unacceptable number of welding defects which,incidentally, appeared nowhere else in the program.40

It is fair to say that from the moment Collins routinesustainment came into play until the present day,

ASC has had to be more concerned with addressingdesign aws, badly planned obsolescence andunforeseen program changes not of its making, thanit has traditional maintenance activity. The ndings ofthe recent Coles Review41 into submarine sustainmentwere not entirely surprising. Had the original programfeatured a prototype-style, evolutionary developmentunder Australian design control, the subsequentshortcomings may either have not emerged, or wouldat least have been more effectively managed.42

In June 2012, in response to the recommendations ofthe Coles Review, the Government put in place with

ASC a new, performance-based in-service supportcontract (ISSC) for the maintenance of the Collins classsubmarines. Successful execution of this contract isvital for Australias security. The ISSC goes a long waytowards rebuilding Government and public condencein Australias ability to efciently and effectively sustainnot only the Collins eet, but also the future submarine.In so doing, it ensures condence in the availabilityand reliability of a critical military capability.


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The new ISSC is a rolling ve-year contract withoptions to be exercised subject to satisfactoryperformance. By working closely in partnership, theGovernment, ASC and its supporting sub-contractorswill increase platform availability to meet operationalrequirements, reduce the cost of ownership, ensuretechnical integrity and be better positioned to enhancethe capability as and when required. It is a model thatmust work given the length of time that issues havecontinued unresolved and it will provide a rm basisfor designing the future submarine support concept.

The Collins class submarines were delivered to the RANby an Australian builder more efciently than the lastof the Australian Oberons, which were built in UnitedKingdom yards with a workforce that had considerableexperience of the task.43 Submarine programs globallyare replete with examples of major cost and scheduleoverruns, as well as the occasional cancellation.44 Many defence organisations worldwide acknowledgetheir own failings in their major acquisition projects.

Japan and Sweden, having built up a nationalcapability over time, have had relatively successfuldomestic submarine programs founded on a conceptof small batch production of evolving capability,incorporated where necessary in a changed designto avoid operational obsolescence. Australia iswell placed to emulate that approach in nurturingits industrial capability and developing its futuresubmarine, with potential for cooperation in niche

areas with both of these nations.

The building of a prototype in-country prior to startingfull production of the future submarine could reducerisk of emergent failures that, if allowed to occur,invariably result in increased budget demands and adelay in schedule. Minimising risk of failures deep intothe construction phase would prevent the workforcebeing diverted from the core business of constructionand sustainment.

The need for suitable infrastructure and facilities tosupport the design, construction, integration, testingand sustainment of future submarine is, in large part,already met through recent investments by Federaland State governments in the establishment of worldclass shipyard and common use facilities as well asskills centres and program management infrastructure.Similarly, development of a suppliers precinct iswell advanced as is preparation of a suitable site toaccommodate the integrated propulsion and energytest facility identied as a critical deciency withinthe RAND study.45


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Australia has a strongfoundation of signi cantsubmarine expertise andshipyard infrastructureto be a world leader inconventional submarinebuild and sustainment.


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Not Forgetting the BenetsNaval shipbuilding brings great economic benets tothe nation. Local build results in increased GDP fromcapital investment; new infrastructure, employmentand enhancement of the skilled labour market;extensive technology transfer; export potential of partsand services; contributions to through life logisticsupport; and, increased self reliance for repair andmaintenance.46 Nowhere was this more evident thanin the highly successful ANZAC ship project. With morethan 80 per cent local content, the project deliveredbenets way beyond the military value of 10 navalships. Analysis has shown that the project:

helped grow Australias GDP by at least $3 billionand created more than 7,500 full-time-equivalent

jobs among 1,300 Australian and NZ suppliers.Companies became more innovative throughaccess to foreign technology... and acquired skillsand capabilities which opened the door to further

opportunities in Australia. Navy beneted fromthe creation of a high-quality local support basewhich was estimated to save over $500 million inthrough-life support costs and which... enhancedreadiness and sustainability, and made possible thevarious ANZAC upgrades to be done in-country,providing crucial measure of Australian control overthe processes, costs and outcomes. ANZAC Shipproject built up condence within Government that

Australia could handle and deliver major, complexdefence projects and that Australias defenceindustry can adapt, build and support major,complex equipments.47

Similar stories resulted from the Mine Hunter andBushmaster projects and no doubt, if an in-depthanalysis of the Collins projects contribution to thenational economy as a whole was to be undertaken,it would carry a similar positive message. As it was,the project achieved 70 per cent Australian industrycontent when Defence generally was strugglingto achieve a 10 per cent offset in major acquisitioncontracts with overseas primes:

The program contributed to improving the qualityof Australian manufacturing on a national scale.

ASC... (built)... submarines from componentsprovided from across Australia. When the projectbegan there were only 35 Australian companiescertied to the quality levels required for defencework. By 1998 there were 1500. Not all of this canbe credited to the submarine project but, togetherwith the contemporary ANZAC frigate and otherprograms, naval shipbuilding provided for sectionsof Australian industry the modernising inuenceclaimed by its proponents at the beginning ofthe submarine program in the early 1980s. Inthe process of building the Collins class, ASCsuccessfully integrated many areas of technologywhich are equal to, or better than, that existingelsewhere. Finally, it cannot be thought insignicantto exceed the goals originally set for local contentof the project. Seventy per cent of the value ofphysical work and 45 per cent of its electronics

was performed in Australia. Thus, of the $5.1 billioncost of the original program, $4 billion was spent in Australia. At its peak, the project supported 7500 jobs in Australia.48

The benets from the Collins project in particularare not just economic. A key lesson from the Collinsexperience is that ultimately the Commonwealth cannotleave it to suppliers to solve problems in major defenceacquisition projects, as over a lengthy acquisitionit is the Commonwealth alone that maintains an

abiding interest in reaching a successful outcome.49 By ASC ultimately gaining the role of submarine designauthority, it was able to control the design processand effectively address the emergent issues resultingfrom defective overseas design and supply. Moreimportantly, the company was able to sustain and growits technical capabilities as a result of undertakingdesign modications. That deep experience isnow available to support in-country design, build,sustainment and development of the future submarineand, if necessary, to extend the life of Collins.


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Whilst the potential should not be overstated, extremelydetailed analysis by Professor Gunnar Eliasson50 hasshown that a major industrial government project ofappropriate complexity has the potential to generatea ow of technology spin-offs which, depending onthe capacity of local industry to exploit, could producean economic return to match, or partially offset thelevel of government investment in the original project.Through his analysis, Eliasson has demonstrated thatthe Swedish JAS 39 Gripen aircraft project generated,over and above opportunity costs, an additional returnto the Swedish economy of at least 2.6 times theoriginal development investment over a 25 year period,equating to an average investment per year of 0.17 percent of GNP against an annual return of 0.43 per cent.In effect, the Swedish people got one of the worldsmost advanced combat aircraft systems for free.

The future submarine project is certainly a large,complex and highly technical project that shouldgenerate technology spin-offs. The readinessof Australian industry to exploit these potentialopportunities and indeed the nature of the likely spin-offs have yet to be quantied, but Eliasson identiesthem as originating predominantly during the productdevelopment phase. For such potential benets tobe realised by Australia, rather than other nations,design, prototyping, integration, testing, constructionand sustainment of the future submarine must beconducted in Australia.

A number of emergent technologies have been evidentin past Defence projects, all of which have hadpotential application to other industry sectors both in Australia and beyond. For example, from the Collinsproject, advanced welding techniques and modularsubmarine construction, which made possible whatwas previously considered impossible; from the ANZCship project, systems integration in land based testsites and modular warship construction; from theMinehunter project, advanced breglass construction;and from the Hydrographic ship project, complexsurvey system suite integration.

Seizing the Opportunity Australia has the perfect opportunity to maximise itslearning from past experience and pursue in Australiaan effective and globally cost competitive submarineprogram fully capable of delivering the nations nextgeneration submarines. Key to achieving success arecontrol of the design; planning from the outset of allaspects of the capability including support and evolutionthrough life; an open, competitive and transparentindustrial activity program; pre-integration and land-based testing of systems; modular construction; andwell-informed, timely decision-making.51

As noted in the recent Senate Inquiry, dragging outdecisions allows skills, workforce and knowledge todissipate, thereby driving up risk.52 Giving adequatetime to the design process and the associatedGovernment decisions is important53, but it should notbe to the detriment of the nations standing militarycapability or its supporting industrial base.

By engaging appropriate levels of foreign assistance inthe design of the future submarine and building on theproven strengths of Australias local defence industry importantly seeing those strengths as a criticalpart of the national security capability Governmentcan embrace a build in Australia strategy, therebyminimising the level of required investment andmaximising the return.

As a minimum, Australia must have design authorityover its new submarine, an appropriate level oftechnical knowledge and expertise, and ready accessto a local supply chain which already exists all ofwhich lead to the conclusion that Australias futuresubmarine can and should be designed, built andsustained in Australia.

Naval shipbuilding bringsgreat economic bene tsto the nation.


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Construction in Australia is key to protecting ourgrowing submarine intellectual property base and ourability to effectively manage and evolve the submarinethroughout its life, including the integration of new orupgraded systems. When all aspects of the strategic,operational and broader economic benets are takeninto account, a future submarine capability produced in Australia as a continuous build in evolutionary batchesand locally sustained represents the best investmentreturn for the Australian tax payer. Moreover, Australiamaintains its essential technological superiority inconventional submarine operations.

One cannot ignore the potential of the future submarineproject, conducted in Australia, to take a centralsupporting role in the national agenda for a sustainableadvanced manufacturing future with its emphasison high-end, high-value, low volume activities.The alternative of offshore-build, with large amountsof foreign content locked-in for the long term(and potential lock-out of classied US technology),would leave Australia facing unnecessarily highsustainment costs and wrestling with all the strategicrisks previously identied.

Future submarine is but one highly important elementof a broader national development strategy, which isnot about job creation, but about job quality. Its aboutunprecedented opportunity to leverage Australiashighly capable and vibrant maritime industry. Its aboutthe multiplier effect, which doesnt just happen on itsown we have to recognise it, create it and fuel it.

The government of the day should be condent thatthe development, building and sustainment of futuresubmarines in Australia represents value for moneyand is cost effective. To build offshore would introduceunacceptable risks to national security by potentiallydiminishing the value, usability, effectiveness,sustainability and future evolution of arguably

Australias most important and strategically inuentialmilitary capability.

What is value for money if not a balance of cost andbenet? Own the design, build in Australia, think andact long term. Its how we guard our edge.

Australia must have designauthority over its newsubmarine, an appropriatelevel of technical knowledgeand expertise, and ready accessto a local supply chain.


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Notes and References

1 The valuable assistance provided by the US Navyin addressing some of the issues is acknowledged.

2 The Collins projects initial risk control strategy wasto select a design that, at the least, was based ona submarine in service or in the process of enteringservice with the parent navy. However, the RAN,having decided on the design criteria discovered that,as we now know, no existing design could meet itsrequirements. This being so, the assessment teamsrigorously determined the probability, cost and other

considerations in raising the decient aspects of eachdesign to the standard of the RSC. The very logic ofthe processes for adjudicating the best combinationof platform and systems performance, industrialprogram, price and schedule appears to have obscuredthe projects move away from its risk managementstrategy. It is now obvious that the project had clearlybecome a developmental vehicle for a unique class ofsubmarine and that the acquisition strategy no longerreected the nature of the project. This developmentwas compounded by a deteriorating economy where thegovernments scal priority was to reduce its spending.D. Woolner,Taking the Past to the Future: The CollinsSubmarine Project and Sea 1000 in Security Challenges, Vol. 5, No. 3 (Spring 2009), p64.

3 Hon Jason Clare MP, Minister for Defence Materiel ina speech to the Submarine Institute of Australia 6thBiennial Conference, Canberra, 14 November 2012 abridged extract

4 Defence White Paper 2009, Commonwealth of Australia.

5 Seaborne trade continues to expand, bringing benetsfor consumers across the world through competitivefreight costs. Thanks to the growing efciency ofshipping as a mode of transport and increased economicliberalisation, the prospects for the industrys furthergrowth continue to be strong. There are over 50,000merchant ships trading internationally, transportingevery kind of cargo. The world eet is registered in over150 nations, and manned by over a million seafarersof virtually every nationality. www.marisec.org/ shippingfacts/worldtrade

6 http://www.dfat.gov.au/trade/negotiations/services/ requests_cosponsored.html

7 http://minister.ret.gov.au/MediaCentre/MediaReleases/Pages/AustralianLNGExportsTriple.aspx

8 In White H. A Middling Power Whats the ADF meantto do exactly? , The Monthly, September 2012, Dr HughWhite supports Australia having a robust and effectivesubmarine capability, but argues that the ADFs overallforce structure requires deeper analysis: What kindsof forces we would need exactly, and how much thesemight cost, are then the critical questions of militarystrategy for Australias defence. We would expect the

ADF and the Defence Department to devote mucheffort to answering them. My impression is that theyhave done no such thing. Like the rest of us, they nd ithard to take the possibility (the risk of direct attack on

Australia) seriously, and have not yet woken up to howthe changing strategic setting makes it essential thatthey do so.

9 Professor Ross Babbage, one of Australias leadingstrategic thinkers and founder of the Kokoda Foundation,a defence and security think tank, has stated thatThe PLAs emerging capabilities should not be viewed

by Australian national security planners as a challengein a forward theatre but rather as a rising challengeto the direct defence of Australia itself, R. Babbage,

Australias Strategic Edge in 2030 , Kokoda Paper 15,February 2011.

10 Defence White Paper 2009, Commonwealth of Australia.

11 Submarines are our most important strategic defenceasset ... (they are) a very real deterrent to any countrythinking about harming us ... (our submarines) needto be able to undertake extended clandestine patrolsover the full distance of our strategic approaches andin operational areas ... a large submarine to defend

Australia is an extensive enterprise, but an importantone. There are no shortcuts. Hon Jason Clare MP,Minister for Defence Materiel in a speech to theSubmarine Institute of Australia 6th Biennial Conference,Canberra, 14 November 2012.

12 Hon Tony Abbott MP, Leader of the Opposition, in aspeech to the Returned and Services League, Sydney,25 September 2012.


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13 Within range of airbases, aircraft are cheaper, butbeyond that range, submarines are the sea-denialplatformpar excellence , because they are so difcultto nd. That makes them perhaps the most importantsingle capability for the independent defence of Australia,because the further from our shores we can start todeny the sea to an adversary, the further its costs andrisks rise. If we want the ability to use armed forcesto protect our wider strategic interests in a major-powerconict, submarines could be the only option we have.What Australia needs is large numbers of good, quiet,lethal boats optimised solely for the task of sinking ships.White H. A Middling Power Whats the ADF meant todo exactly? , The Monthly, September 2012.

14 The submarine force was the most effective anti-shipand anti-submarine weapon in the entire Americanarsenal during WWII. Though representing only two percent of the U.S. Navy, submarines destroyed over 30 percent of the Japanese Navy. They also destroyed over60 per cent of the Japanese merchant eet, cripplingJapans ability to supply its military forces and industrialwar effort. During the Falklands War of 1982, Britishsubmarines were the rst warships to reach the islands.The sinking of the light cruiser ARA General Belgrano byHMS Conqueror early on in the war caused the ArgentineNavy to recall its ships to port, including its only aircraftcarrier, for the remainder of the war, thereby removing asignicant threat to the British Task Force.

15 Complex project management is seldom done well.Research by an international management consultancyrm, involving some 3000 protects, found that only 10per cent performed better than expected and around50 per cent failed to achieve their objectives. A littleunderstood characteristic of project management isthat a focus on the production and delivery phasesof equipment programs misses the crucial aspectsgoverning success. Experience indicates that 90 percent of the discretionary decisions that affect theoutcome of a project are made in the rst seven to 12per cent of its life. Robert Cooper,Project Managementin Australia, Sea Australia 2000, conference proceedingspresentation 22.3, The Institution of Engineers Australia,Sydney, February 2000 in D. Woolner,Getting in Early:Lessons of the Collins Submarine Program for Improved

Oversight of Defence Procurement, Research Paper 32001-02 Foreign Affairs, Defence and Trade Group,18 September 2001.

16 Heavy dependence on overseas suppliers, andconsequential high costs and schedule delays, havefeatured prominently in the maintenance of bothOberon and Collins submarine classes; for Oberon,85 to 90 per cent of its supply chain companies werelocated overseas. D. Woolner,Getting in Early:Lessons of the Collins Submarine Program for ImprovedOversight of Defence Procurement,Research Paper 32001-02 Foreign Affairs, Defence and Trade Group,18 September 2001.

17 A key lesson from the Collins experience One featurethat stands throughout the Collins project, especiallyduring the period where its problems were beingovercome, is that the Commonwealth must command itsown access to the means to rectify problems if it intendsto have projects achieve their objectives. D. Woolner,Taking the Past to the Future: The Collins SubmarineProject and Sea 1000 in Security Challenges, Vol. 5,No. 3 (Spring 2009), p67.

18 Brief analysis of each option is contained inSubmarine Acquisition Options Impact for Australia, Defence SA,

July 2012.19 Historically, European boats have been designed to

sustain a deployment to a distance of about two-thirdsthat required by the RAN. The Collins class can maintaina 42-day patrol after deploying 2510 nm (see: ThePerformance Advantages of Size). A design that istypical of the level of technology submitted in the earlystages of the Collins submarine program is that of theFrench-designed Agosta 90B of the Pakistani Navy (thevariant ordered by Pakistan has been modernised). Ataround the 1510 tonnes (surfaced) it is also typical of

the size of most of the early responses. The Agosta canmaintain a 40-day patrol after deploying 1680 nm tothe patrol area. In Australias region of defence interest,potential patrol areas are more distant than this. RichardScott, Agosta 90B Surfaces for the Pakistan Navy,Janes Navy International, May 1999, p. 37 in D. Woolner,Getting in Early: Lessons of the Collins SubmarineProgram for Improved Oversight of Defence Procurement, Research Paper 3 2001-02 Foreign Affairs, Defence andTrade Group, 18 September 2001.


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20 Procurement Procedures for Defence Capital Projects Final Report, Australian Senate Foreign Affairs,Defence and Trade References Committee, August 2012,submission by Senator David Fawcett.

21 The Tiger Armed Reconnaissance Helicopter (ARH)Project Air 87 provides but one example: The projectwas approved to provide for a new and signicant all-weather reconnaissance and re support capabilityfor the Australian Defence Force (ADF). The Projectcontracted for delivery of 22 aircraft, with supporting

stores, facilities, ammunition and training equipment.The rst four aircraft were manufactured in, anddelivered from France; the remaining 18 aircraft weremanufactured in France, and assembled in Brisbane. Australianisation of the weapons and communicationssystems was a differentiating characteristic of the Australian Tiger ARH, compared to the French Tiger Variant. In 2003, the DMO became aware of productionand acceptance delays with supplying Tiger helicopters toFrance and Germany. The French Government acceptedits rst production aircraft in March 2005, four monthsafter the DMO. The lead Australian Tiger ARH aircraft(ARH 1 and 2) were the rst of this type of aircraft toundergo production acceptance by any nations DefenceForce, and were delivered into service as an aircrafttype more developmental than that which was originallyintended by the initial requirement. Consequently, theDMO was obligated to make its own assessment ofover 71 unresolved design issues. The ARH acquisitiontransitioned to become a more developmental programfor the ADF, which resulted in heightened exposure toschedule, cost and capability risks, both for acquisitionof the capability, and delivery of through-life support

services. ... The ANAO found that prior to the Through-Life-Support Contract signature, the DMO did not expectthe Contractor would apply for a signicant real increaseto the costs for support of the capability. In September2004, the Contractor sought to substantially increasethe costs associated with supporting the capability,which the DMO calculated would add in the order of$625 million to the whole-of-capability costs requiredto support the capability over the life of the Through-Life-Support Contract.Management of the Tiger ArmedReconnaissance Helicopter Project Air 87, ANAO Audit

Report No. 36, 200506 Performance Audit, AuditorGeneral, May 2006.

22 The Design Authority may be a Commonwealthor State statutory authority or private contractor.

23 Virtually linked if necessary to a pool ofinternational expertise.

24 The Commonwealth of Australia will need a domesticworkforce of roughly 1,000 skilled draftsmen andengineers in industry and Government to create andoversee the design of a new, conventionally poweredsubmarine for the Royal Australian Navy. Although aworkforce of this size and capabilities does not exist in

Australia today, under the right circumstances one couldbe cultivated over the next 15 to 20 years. However, theCommonwealth could shorten the duration and lessenthe costs of designing a new submarine if it were tocollaborate with foreign design partners rather thanrely exclusively on a domestic workforce to design thevessel. RAND, Australias Submarine Design Capabilitiesand Capacities: Challenges and Options for the FutureSubmarine, prepared for the Australian Departmentof Defence, 2011.

25 Defence White Paper 2009, para 9.6.


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26 Whilst there has been considerable political dialoguebetween Australia and the United States recently,comments made by Gregory Copley in a submissionto the Australian Senate in 2004 are still apposite:Australian diplomatic and Defence/Armed Servicespersonnel, by insisting on virtually only sustainingworking-level relationships with their career oruniformed counterparts in the US, have consistentlyrejected the opportunities to embrace relationships witheither Congress (on a meaningful and ongoing basis)or with the highly-professional and well connectednon-governmental policy networks which pervadeWashington. There has been a wilful neglect by

Australian ofcials based on prejudices developedfrom the way policy is formulated in Canberra tounderstand how defence and strategic policy is shapedin the United States. Even when Washington thinktanks are engaged by the Australian diplomatic ordefence process, they are not effectively or necessarilywisely engaged: there is little understanding of whichinstitutions can help with which tasks. By failingto embrace and systematically address the overall

complexity of the US strategic policy arena whichincludes the Congress as a priority of equal stature tothe White House; the educational base which includesthink tanks; the media at many levels; as well as the

Administrative labyrinth of defence and intelligenceofces the Australian strategic community fails toadequately command US priorities. Equally, Australianleadership, if it is to improve the benets to Australia,needs to elevate the defence relationship with theUS to a level of constant dialogue between heads-ofgovernment as is the case between, say, the US

and the UK in the knowledge that all other formsof political and economic bilateral benet will ourishbeneath this umbrella.Inquiry into Australias DefenceRelations with the United States, Submission 3,

Australian Senate Joint Standing Committee on Foreign Affairs, Defence and Trade, Defence Sub-Committee,February 2004.

27 Inquiry into Australias Defence Relations with the UnitedStates, Submission 3, Australian Senate Joint StandingCommittee on Foreign Affairs, Defence and Trade,Defence Sub-Committee, February 2004.

28 The Ministers reasoning (for selecting a US system)was that a comprehensive arrangement with the USNavy on submarine issues is in Australias beststrategic interests and he went on to note that the Australian and US navies were entering a Statementof Principles arrangement to maximise cooperationon submarine matters. D. Woolner,Getting in Early:Lessons of the Collins Submarine Program for ImprovedOversight of Defence Procurement, Research Paper 32001-02 Foreign Affairs, Defence and Trade Group,18 September 2001.

29 It makes sense to make the (combat, sensors andweapons systems) decision early as we did with AWD... Trying to design platform and combat systemssimultaneously is very difcult, and typically results inincreased risk and schedule delays. Hon Jason ClareMP, Minister for Defence Materiel in a speech to theSubmarine Institute of Australia 6th Biennial Conference,Canberra, 14 November 2012.

30 G. Eliasson, Advanced Public Procurement asIndustrial Policy, Springer Science and Business Media,

January 2010.31 Australia has a system of public expenditure that

is averse to capacity building and for which budgetrationing rather than budget maximising has becomethe Australian creed. This is a culture that is likelyto prejudge nation-building initiatives as recklessadventures and to shun large publicly fundedinfrastructure projects and capacity building. We seethen that we must again understand and use theeconomy in exactly the same way as our great NuggetCoombs generation of nation-builders did, namely as a

set of practical instruments for improving the lives of anational and now global population. What is the use ofmoney if it makes you poorer? M. Pusey,In the Wake ofEconomic Reform ... New Prospects for Nation-Building? in J. Butcher (ed), Australia Under Construction, nation- building past, present and future, ANZSOG series, ANUE Press, 2008.

32 Hon Tony Abbott MP, Leader of the Opposition, in aspeech to the Returned and Services League, Sydney,25 September 2012.


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33 Developing intellectual capital requires an amalgamof personnel skills, industrial capacity, and theorganizational structure and doctrinal concepts of theoperating Service, formally captured as knowledge.The development of superior intellectual capital is oneof the reasons why a military force can defeat anotherusing similar equipment or can continue to achievesuperior performance from systems whose origin maybe decades old. D. Woolner,Getting in Early: Lessons ofthe Collins Submarine Program for Improved Oversightof Defence Procurement, Research Paper 3 2001-02Foreign Affairs, Defence and Trade Group,18 September 2001.

34 In 1997, the United Kingdom initiated a program todevelop a nuclear attack submarine. But some ve tosix years into the program, it became clear that neitherthe prime contractor nor any other British rm had thenecessary design and production skills to build thenew submarine. Without a domestic ability to producesubmarines, the United Kingdom was forced to lookabroad in order to complete their project. Fortunately,the British were able to look to the United States andemploy one of its shipyards to provide the missing skillsand expertise. With American help, the Astute classwas completed in February 2010. However, by then thecost for the rst three Astute-class submarines hadreportedly grown by 90%, and the rst of the classwas some four years late. Sustaining Critical Sectors ofthe U.S. Defense Industrial Base, Center for Strategicand Budgetary Assessments, www.csbaonline.org/ wp-content/uploads/2011/09/2011.09.20-Defense-Industrial-Base.pdf

35 No Coalition government would ever make savings indefence that would compromise our national securityinterests or reduce the operational capabilities of ourdefence force. Hon Tony Abbott MP, Leader of theOpposition, in a speech to the Returned and ServicesLeague, Sydney, 25 September 2012

36 Littoral Combat Ship Actions Needed to ImproveOperating Cost Estimates and Mitigate Risks inImplementing New Concepts, GAO-10-257, United StatesGovernment Accountability Ofce, February 2010, p5.

37 Robert Cooper,Project Management in Australia,Sea Australia 2000, conference proceedingspresentation 22.3, The Institution of Engineers Australia,Sydney, February 2000 in D. Woolner,Getting in Early:Lessons of the Collins Submarine Program for ImprovedOversight of Defence Procurement,Research Paper 32001-02 Foreign Affairs, Defence and Trade Group,8 September 2001.

38 B. Pacey,Sub Judice: Australias Future Submarine,Kokoda Paper No 17, Kokoda Foundation, January

2012, p.48.39 From a speech titledBuilding a Bridge over the Valley

of Deathgiven by Hon Jason Clare MP, Minister forDefence Materiel, Australian Defence Magazine DefenceWorkforce Participation Summit, Hyatt Hotel Canberra,27 September 2012.

40 D. Woolner,Getting in Early: Lessons of the CollinsSubmarine Program for Improved Oversight of DefenceProcurement, Research Paper 3 2001-02 Foreign

Affairs, Defence and Trade Group, 18 September 2001.

41 J. Coles et al, Collins Class Sustainment Review Phase 1Report, Australian Government Department of Defence,4 November 2011.






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44 All 12 RN Swiftsure and Trafalgar class nuclear attacksubmarines were once withdrawn from service becauseof problems in their nuclear reactor cooling systems.Lead boat of the Dutch submarine design,Walrus , waslaunched at the end of 1985 but caught re the followingyear whilst being tted out by the shipbuilder. All internalttings and cabling were destroyed and completionof the Walrus was delayed for three years. The BritishType 2400 suffered a three-year delay, largely dueto faulty torpedo tube hatches and safety concernswith the power plant. In 1994, the British Governmentscrapped the Type 2400s to save money. They wereeventually purchased by Canada. Two of the Thyssen TR1700 class were built for Argentina in the contractorsGerman yard and kits for four more were shipped to

Argentina. Twelve years after the commissioning of therst submarine, the rst Argentinian built boat was only52 per cent complete. The yard was then sold, workon the submarines abandoned and the parts retainedfor spares. In Dec 1981, HDW, with the most extensiverecord of overseas sales and production programs,signed an order to supply four submarines to the Indian

navy, two them to be built in India. In the event, thesetwo submarines were delivered ve and six years late,cost twice as much as the two built in Germany andwere the subject of disputes about the adequacy oftechnical support from HDW and the costs of spareparts and support packages. Proposals to build a furthertwo HDW submarines in India were never pursued, Indiainstead turning to the purchase of the Russian-builtKilo (despite subsequently assessing them as inferior inperformance to the HDW submarine) as the means ofdeveloping its submarine capabilities.

45 RAND, Australias Submarine Design Capabilities andCapacities: Challenges and Options for the FutureSubmarine, prepared for the Australian Department ofDefence, 2011.

46 http://www.navy.gov.au/Publication:Semaphore_-_Issue_9,_August_2008

47 D. Ironeld,Impact of Major Defence Projects: A Case Study of the Anzac Ship Project, Tasman AsiaPacic, Canberra, February 2000, pp.9,10.

48 Procurement Procedures for Defence Capital Projects

Final Report, Australian Senate Foreign Affairs, Defenceand Trade References Committee, August 2012.

49 D. Woolner,Taking the Past to the Future: The CollinsSubmarine Project and Sea 1000 in Security Challenges, Vol. 5, No. 3 (Spring 2009), pp. 47-71.

50 G. Eliasson, Advanced Public Procurement as IndustrialPolicy, Springer Science and Business Media, January2010.

51 The committee is concerned that even at this Needsphase of SEA 1000 there are worrying indications thatgovernment and Defence have not heeded lessonsfrom past experience, especially the critical importanceof basing decisions on a sound and clear-eyedunderstanding of potential costs, benets and technicalrisk. The tardy start to upfront investment for capabilitystudies, the prescriptive nature of the projects inclusionin the White Paper and the short timeframe in which toacquire the requisite skills do not bode well for projectSEA 1000. The committee accepts the view that nosolution will be perfect or simple. An important lessonfor government to consider is that, except in the speciccase where another military is already using equipmentthat is good enough for Australia (for example C17),

evolution is lower risk and lower cost than leaping toa new standard via evolved military off the shelf ornew build. Procrastination and hoping to reduce riskby dragging out decisions allows skills, workforceand knowledge to dissipate thereby driving up risk.Procurement Procedures for Defence Capital Projects Final Report, Australian Senate Foreign Affairs, Defenceand Trade References Committee, August 2012. Para3-21.

52 Procrastination and hoping to reduce risk by draggingout decisions allows skills, workforce and knowledge

to dissipate thereby driving up risk.ProcurementProcedures for Defence Capital Projects Final Report, Australian Senate Foreign Affairs, Defence and TradeReferences Committee, August 2012. Para 3-21.

53 The design phase is important not only because itdenes the design of the platform and its combatsystem, but it also calls for detailed design of theprocurement strategy, the capability managementstructure, the construction capability, the long termsustainment arrangements and the method of upgradingthe capability over time.


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