Defense Secretary Linda Reynolds has expressed “frustration” and “disappointment” with the French company building Australia’s $ 90 billion future submarine as she prepares to confront visiting global bosses over important contract negotiations.
The main point:
- The Naval Group’s global chief executive will meet Secretary of Defense Linda Reynolds on Wednesday
- Despite the tense negotiations, the government insisted that the complex schedule for building the submarine went ahead as planned
- Defense has dismissed concerns the Future Frigate Program might also face problems
A year after the Naval Group pledged to spend 60 percent of the massive contract value on local suppliers, the company has yet to immortalize that figure in a formal agreement with the Commonwealth.
At the same time, there are concerns that Australia’s ambitious $ 45 billion program to build a new anti-submarine frigate could disrupt a related Canadian warship project that is experiencing a huge cost and time boom.
The sources said Prime Minister Scott Morrison has become increasingly concerned in recent months about Defence’s ability to deliver major projects and has raised his concerns directly to the National Naval Shipbuilding Companies Department team.
Ahead of his meeting with the Naval Group, Senator Reynolds told Parliament he was annoyed at the slow progress of negotiations with France.
On Wednesday, the Naval Group’s global chief executive, Pierre Eric Pommellet, is expected to meet Senator Reynolds in Canberra after flying to Adelaide where he completed a mandatory two-week quarantine assignment.
“I am frustrated and I am very disappointed that the Naval Group has not been able to complete this contract with Defense, but it will not be done at the expense of Australian jobs, and Australian industry,” Senator Reynolds said Tuesday.
“This capability is too important for our nation to do that.”
The ABC understands that the Commonwealth is demanding an annual Australian Industrial Content (AIC) audit of a project to build 12 Attack Class submarines, but France has so far refused.
Despite tense and protracted negotiations, the government insists that the submarine’s complex construction schedule goes ahead as planned.
“Defense continues to work closely with the Naval Group to advance this project to ensure delivery is on time, within specifications and within budget,” a government spokesman told ABC.
The Naval Group has also restated its commitment to Australian industry ahead of Pommellet’s meeting with the Minister of Defense.
“Naval Group Australia is fully committed to maximizing the capabilities and content of the Australian industry in the design and construction of the Attack Class fleet,” said a company spokesman.
“We continue to have productive discussions with our Commonwealth partners on how best to achieve this common goal and include our commitments in the Strategic Partnership Agreement for Australia’s future submarine program.”
Defense insists a $ 45 billion warship program is on track
The Department of Defense has dismissed concerns that Australia’s $ 45 billion Future Frigate Program might also face problems, as warship-related projects in Canada face stiff scrutiny for costs and blast schedules.
In 2018, British owned company BAE Systems was selected to build nine new Hunter-class anti-submarine warships for the Australian Navy, based on the British Type 26 frigate, the decision was immediately followed by Canada.
However, the Canadian Surface Combatant project to build 15 British-designed warships is already facing significant delays and cost increases, with a price tag rising to $ 70 billion.
On Wednesday, the Canadian Parliament Budget Office will release a report on the controversial project, and a day later Canada’s auditor general is expected to produce a table report on the country’s National Shipbuilding Strategy.
Independent Senator Rex Patrick said warning signs in Canada should be taken seriously in Australia.
“The Canadian frigate and the Australian frigate are based on the same design, it is likely that similar problems will occur here in Australia,” Senator Patrick told the ABC.
A Defense spokesman said the department was closely monitoring developments in Canada and Britain.
“Defense has a close and cooperative relationship with defense partners in Canada and the UK and regularly discusses various topics related to the Global Combat Ship program which is distributed across the three countries,” the spokesman said.
“As the leading country currently building the Type 26, the UK provides lessons learned into the Australian Hunter Class program.”
Australian Defense and Industry Network chief executive Brent Clark said local firms also appeared to be losing jobs in a $ 45 billion Future Frigate Program.
“Australian companies could be at a disadvantage because they were asked to quote only a small number of programs, whereas overseas supply chain companies were asked to cite the entire global program,” he said.
BAE Systems has dismissed the statement, claiming that it has exceeded its goal of at least 58 percent Australian content and insisting that the company is “very confident of maximizing Australian industry engagement”.
“The Hunter Class Frigate Program is a program that will not only deliver the nine most modern anti-submarine warfare frigates, but is also designed to put the shipbuilding industry into a sovereign position,” said a spokesman.
“To achieve that we need an Australian company involved.”