Post by whitehorse on May 18, 2020 10:27:19 GMT
Again?! The price has exploded, again?! Future sub price grows by $10bn
It is starting to sound like a bad joke, but unfortunately, it isn’t. Australia’s most-complex defence procurement project ever, the Attack Class submarines, has seen yet another price increase, this time amounting to $10 billion in just a matter of five months, which raises the question – could we have gotten a better deal somewhere else?
It is the gift that keeps on giving, Australia's multibillion-dollar SEA 1000 program continues to stir debate among Australia's strategic policy, defence and industry communities and even the public as the government and Defence seek to avoid the troubles of the Collins Class program.
Despite repeated rebuffs by senior Defence uniformed personnel, bureaucrats and successive ministers of defence and defence industry, concerns released recently by the Australian National Audit Office (ANAO) in the report titled Future Submarine – Transition to design, combined with political concerns, all serve as powerful fuel to question the program.
When first announced, the Attack Class was promised to deliver a quantum leap in the capability delivered to the Royal Australian Navy and its submarine service by leveraging technology and capabilities developed for nuclear submarines, implemented on a conventional submarine.
Further complicating matters is the constantly fluctuating price associated with the program, with figures ranging from the original $80 billion as stated by former defence industry and defence minister Christopher Pyne, however, even that figure now appears to be in dispute, as the costs appear to have blown out by an additional $10 billion in five months due to what is described as fluctuations in the Australian currency.
Yes, you read that correctly five months.
It is important to recognise that this figure doesn't take into account the now estimated $145 billion, 'whole-of-life, turned out cost' as revealed by Future Submarine Program manager Rear Admiral Greg Sammut during Senate estimates.
This cost explosion is further exacerbated by an apparent 'slip' in the planned commencement date for construction of the lead boat, HMAS Attack, which was widely publicised as 2022-23 and has now subsequently been pushed back to the 2024 time frame – further exposing Australia's ageing Collins Class vessels to potential adversary over match.
RADM Sammut was quick to explain this away, like a skilled operator, informing Senate estimates that the slated time frame was referencing the standing up of construction personnel, tools, infrastructure, processes and equipment to commence the construction of HMAS Attack's pressure hull in 2024.
Finally, with the first vessel expected to enter the water in the mid-to-late 2030s, concerns regarding the cost, delivery and capability of the vessels is serving to raise questions about the value proposition for a conventional submarine at a time of increasing technological advancement in comparable vessels operated by peer and near-peer competitors in the Indo-Pacific.
While each of these individual challenges will impact the recapitalisation of the Royal Australian Navy's submarine fleet, the growing program delays and estimated cost overruns will have dramatic impacts on the long-term modernisation and recapitalisation of the Royal Australian Navy in the middle of the 21st century.
Ben Packham, writing for The Australian, has shed light on the mounting cost overruns, the slipped delivery schedules, each of which are compounded by the mounting challenges of a rapidly disrupted Indo-Pacific, which raises the question – could we have gotten a better deal somewhere else?
Could we get a better deal? Should we consider it?
The fever pitch of robust, public discourse gathered further steam in recent weeks following the release and launch of a report by Submarines for Australia, conducted by Insight Economics, on the troubled program and the challenges facing cost, delivery and the potential for capability gaps – with Australian strategist Hugh White launching the report at the National Press Club.
Gary Johnston of Submarines for Australia, who commissioned the report earlier in the year, said not only are we heading for an inevitable capability gap, but there was a "high risk" the project will fail.
The report, which was prepared by Insight Economics supported by an expert reference group that includes four retired admirals, said that the budget jumped by 60 per cent in two years and that already two project milestones have been missed.
Also, after initially promising 90 per cent local content, the French government-owned company, Naval Group, has shown an "extremely low level of commitment" to Australian industry participation in the project.
Johnston said at the time, "The government’s own advisory body, including three American admirals, even recommended the government should consider walking away from the project."
To get the project back on track with no further delays to the process, the report proposes a low-cost risk mitigation strategy – a ‘plan B’ – to inject competition into the process.
Under plan B, the government would commission Saab Kockums, designers of the Navy’s existing submarines, to develop a preliminary design study (PDS) for an evolved version of the Collins Class submarine.
In 2022-23, both Naval Group and Saab would present a PDS for their respective designs together with a fixed price tender for building the first batch of three submarines in Adelaide. The selection between the two designs would then be based on capability, delivery and local content, as well as price.
A second and more fundamental area of concern, however, is whether the submarines will even be fit for purpose in the 2030s and beyond. To address this, the review of submarine technologies flagged in the last Defence White Paper should be brought forward to the present.
Johnston said with China seeking to deny access to the South China Sea by investing heavily in advanced ships, aircraft and satellites, the finding in the report that caused him the greatest worry is that by the 2030s our submarines’ effectiveness and survivability in a high-intensity theatre will be threatened.
"If the government wants to continue deploying submarines to this theatre alongside the US Navy, the nation’s duty of care to the dedicated men and women of the ADF means we will need to begin the long and difficult process of acquiring nuclear-powered submarines," he said.
Adding further fuel to the fire, White in a recent piece for the Australian Strategic Policy Institute, titled 'Australia's Attack-class submarines need competition', has called for greater consideration of Australia's rapidly evolving strategic circumstances to best inform the program moving forward.
"Australia’s strategic circumstances over the next few decades will mean we cannot afford to be without a submarine capability. But that’s an area in which we are terribly vulnerable. Serious concerns have been raised over both the ability of the future submarine program to produce the Attack Class boats and the time it will take to comprehensively upgrade the Royal Australian Navy’s Collins Class submarines so that we avoid a capability gap," White establishes.
The alternate options? Leveraging hunter-killer, cruise missile subs and unmanned systems
Drawing on advances in unmanned underwater systems like the Boeing Orca system, combined with a fleet of complementary, highly capable hunter-killer and cruise missile submarines designed to modified off-the-shelf solutions, further serves as a capability aggregator for the RAN.
The increasing proliferation of conventionally powered submarines incorporating vertical launch modules for accommodating advanced cruise missile systems, provides an important capability for Australian consideration, particularly when paired with unmanned underwater and aerial systems providing ISR capabilities enhancing the nation's deterrence capabilities.
Developing mutually complementary submarine fleets of approximately nine dedicated hunter-killer submarines for critical maritime interdiction, task force escort and anti-submarine operations, combined with a fleet of approximately nine dedicated cruise missile submarines, enables the development of a complementary and highly capable submarine fleet.
When using the costs for the sixth Soryu Class submarine of approximately US$540 million ($803.5 million), a fleet of 18 such submarines could cost Australia approximately between US$10 billion ($14.8 billion) and US$15 billion ($22.3 billion), while delivering the pound-for-pound most lethal conventional submarine force in the world.
By contrast, the Saab/Kockums A-26 Oceanic ER is estimated to have a unit price worth approximately US$945 million ($1.46 billion) compared to the multibillion-dollar unit costs associated with the Attack Class submarines depending on the figures chosen, be it the $50 billion, the $80 billion or larger figures associated with turned out costs.
Finally, establishing and maintaining a dedicated fleet of hunter-killer submarines designed to a common standard as the fleet of cruise missile submarines serves to lower costs, crewing requirements and long-term sustainment and operational costs despite acquiring a larger fleet of submarines than outlined in the 2016 Defence White Paper.
Your thoughts
Given the geographic area of responsibility Australia will become increasingly responsible for and dependent on, will the RAN and the recapitalisation and modernisation programs currently underway be enough for Australia to maintain its qualitative and quantitative lead over regional peers?
As an island nation, Australia is defined by its relationship and access to the ocean, with strategic sea lines of communication supporting over 90 per cent of global trade, a result of the cost-effective and reliable nature of sea transport.
Indo-Pacific Asia is at the epicentre of the global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and chokepoints of south-east Asia annually.
The Indian Ocean and its critical global sea lines of communication are responsible for more than 80 per cent of the world’s seaborne trade in critical energy supplies, namely oil and natural gas, which serve as the lifeblood of any advanced economy.
Submarines are critical to the nation’s ability to protect these strategically vital waterways and key naval assets, as well as providing a viable tactical and strategic deterrent and ensure the nation’s enduring national and economic security. Recognising this, the previously posed questions will serve as conversation starting points.
Traditionally, Australia has focused on a platform-for-platform acquisition program – focused on replacing, modernising or upgrading key capabilities on a like-for-like basis without a guiding policy, doctrine or strategy, limiting the overall effectiveness, survivability and capability of the RAN.
Let us know your thoughts in the comments section below
By: Stephen Kuper
It is the gift that keeps on giving, Australia's multibillion-dollar SEA 1000 program continues to stir debate among Australia's strategic policy, defence and industry communities and even the public as the government and Defence seek to avoid the troubles of the Collins Class program.
Despite repeated rebuffs by senior Defence uniformed personnel, bureaucrats and successive ministers of defence and defence industry, concerns released recently by the Australian National Audit Office (ANAO) in the report titled Future Submarine – Transition to design, combined with political concerns, all serve as powerful fuel to question the program.
When first announced, the Attack Class was promised to deliver a quantum leap in the capability delivered to the Royal Australian Navy and its submarine service by leveraging technology and capabilities developed for nuclear submarines, implemented on a conventional submarine.
Further complicating matters is the constantly fluctuating price associated with the program, with figures ranging from the original $80 billion as stated by former defence industry and defence minister Christopher Pyne, however, even that figure now appears to be in dispute, as the costs appear to have blown out by an additional $10 billion in five months due to what is described as fluctuations in the Australian currency.
Yes, you read that correctly five months.
It is important to recognise that this figure doesn't take into account the now estimated $145 billion, 'whole-of-life, turned out cost' as revealed by Future Submarine Program manager Rear Admiral Greg Sammut during Senate estimates.
This cost explosion is further exacerbated by an apparent 'slip' in the planned commencement date for construction of the lead boat, HMAS Attack, which was widely publicised as 2022-23 and has now subsequently been pushed back to the 2024 time frame – further exposing Australia's ageing Collins Class vessels to potential adversary over match.
RADM Sammut was quick to explain this away, like a skilled operator, informing Senate estimates that the slated time frame was referencing the standing up of construction personnel, tools, infrastructure, processes and equipment to commence the construction of HMAS Attack's pressure hull in 2024.
Finally, with the first vessel expected to enter the water in the mid-to-late 2030s, concerns regarding the cost, delivery and capability of the vessels is serving to raise questions about the value proposition for a conventional submarine at a time of increasing technological advancement in comparable vessels operated by peer and near-peer competitors in the Indo-Pacific.
While each of these individual challenges will impact the recapitalisation of the Royal Australian Navy's submarine fleet, the growing program delays and estimated cost overruns will have dramatic impacts on the long-term modernisation and recapitalisation of the Royal Australian Navy in the middle of the 21st century.
Ben Packham, writing for The Australian, has shed light on the mounting cost overruns, the slipped delivery schedules, each of which are compounded by the mounting challenges of a rapidly disrupted Indo-Pacific, which raises the question – could we have gotten a better deal somewhere else?
Could we get a better deal? Should we consider it?
The fever pitch of robust, public discourse gathered further steam in recent weeks following the release and launch of a report by Submarines for Australia, conducted by Insight Economics, on the troubled program and the challenges facing cost, delivery and the potential for capability gaps – with Australian strategist Hugh White launching the report at the National Press Club.
Gary Johnston of Submarines for Australia, who commissioned the report earlier in the year, said not only are we heading for an inevitable capability gap, but there was a "high risk" the project will fail.
The report, which was prepared by Insight Economics supported by an expert reference group that includes four retired admirals, said that the budget jumped by 60 per cent in two years and that already two project milestones have been missed.
Also, after initially promising 90 per cent local content, the French government-owned company, Naval Group, has shown an "extremely low level of commitment" to Australian industry participation in the project.
Johnston said at the time, "The government’s own advisory body, including three American admirals, even recommended the government should consider walking away from the project."
To get the project back on track with no further delays to the process, the report proposes a low-cost risk mitigation strategy – a ‘plan B’ – to inject competition into the process.
Under plan B, the government would commission Saab Kockums, designers of the Navy’s existing submarines, to develop a preliminary design study (PDS) for an evolved version of the Collins Class submarine.
In 2022-23, both Naval Group and Saab would present a PDS for their respective designs together with a fixed price tender for building the first batch of three submarines in Adelaide. The selection between the two designs would then be based on capability, delivery and local content, as well as price.
A second and more fundamental area of concern, however, is whether the submarines will even be fit for purpose in the 2030s and beyond. To address this, the review of submarine technologies flagged in the last Defence White Paper should be brought forward to the present.
Johnston said with China seeking to deny access to the South China Sea by investing heavily in advanced ships, aircraft and satellites, the finding in the report that caused him the greatest worry is that by the 2030s our submarines’ effectiveness and survivability in a high-intensity theatre will be threatened.
"If the government wants to continue deploying submarines to this theatre alongside the US Navy, the nation’s duty of care to the dedicated men and women of the ADF means we will need to begin the long and difficult process of acquiring nuclear-powered submarines," he said.
Adding further fuel to the fire, White in a recent piece for the Australian Strategic Policy Institute, titled 'Australia's Attack-class submarines need competition', has called for greater consideration of Australia's rapidly evolving strategic circumstances to best inform the program moving forward.
"Australia’s strategic circumstances over the next few decades will mean we cannot afford to be without a submarine capability. But that’s an area in which we are terribly vulnerable. Serious concerns have been raised over both the ability of the future submarine program to produce the Attack Class boats and the time it will take to comprehensively upgrade the Royal Australian Navy’s Collins Class submarines so that we avoid a capability gap," White establishes.
The alternate options? Leveraging hunter-killer, cruise missile subs and unmanned systems
Drawing on advances in unmanned underwater systems like the Boeing Orca system, combined with a fleet of complementary, highly capable hunter-killer and cruise missile submarines designed to modified off-the-shelf solutions, further serves as a capability aggregator for the RAN.
The increasing proliferation of conventionally powered submarines incorporating vertical launch modules for accommodating advanced cruise missile systems, provides an important capability for Australian consideration, particularly when paired with unmanned underwater and aerial systems providing ISR capabilities enhancing the nation's deterrence capabilities.
Developing mutually complementary submarine fleets of approximately nine dedicated hunter-killer submarines for critical maritime interdiction, task force escort and anti-submarine operations, combined with a fleet of approximately nine dedicated cruise missile submarines, enables the development of a complementary and highly capable submarine fleet.
When using the costs for the sixth Soryu Class submarine of approximately US$540 million ($803.5 million), a fleet of 18 such submarines could cost Australia approximately between US$10 billion ($14.8 billion) and US$15 billion ($22.3 billion), while delivering the pound-for-pound most lethal conventional submarine force in the world.
By contrast, the Saab/Kockums A-26 Oceanic ER is estimated to have a unit price worth approximately US$945 million ($1.46 billion) compared to the multibillion-dollar unit costs associated with the Attack Class submarines depending on the figures chosen, be it the $50 billion, the $80 billion or larger figures associated with turned out costs.
Finally, establishing and maintaining a dedicated fleet of hunter-killer submarines designed to a common standard as the fleet of cruise missile submarines serves to lower costs, crewing requirements and long-term sustainment and operational costs despite acquiring a larger fleet of submarines than outlined in the 2016 Defence White Paper.
Your thoughts
Given the geographic area of responsibility Australia will become increasingly responsible for and dependent on, will the RAN and the recapitalisation and modernisation programs currently underway be enough for Australia to maintain its qualitative and quantitative lead over regional peers?
As an island nation, Australia is defined by its relationship and access to the ocean, with strategic sea lines of communication supporting over 90 per cent of global trade, a result of the cost-effective and reliable nature of sea transport.
Indo-Pacific Asia is at the epicentre of the global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and chokepoints of south-east Asia annually.
The Indian Ocean and its critical global sea lines of communication are responsible for more than 80 per cent of the world’s seaborne trade in critical energy supplies, namely oil and natural gas, which serve as the lifeblood of any advanced economy.
Submarines are critical to the nation’s ability to protect these strategically vital waterways and key naval assets, as well as providing a viable tactical and strategic deterrent and ensure the nation’s enduring national and economic security. Recognising this, the previously posed questions will serve as conversation starting points.
Traditionally, Australia has focused on a platform-for-platform acquisition program – focused on replacing, modernising or upgrading key capabilities on a like-for-like basis without a guiding policy, doctrine or strategy, limiting the overall effectiveness, survivability and capability of the RAN.
Let us know your thoughts in the comments section below
