The Future Submarine Program (FSP) will span decades and decisions that are made today will affect generations to come. If the program is to ultimately succeed in providing the Royal Australian Navy (RAN) with a reliable, operationally effective and safe capability, it will require continued political support for managing the significant costs and risks associated with such a long-term enterprise. This in turn requires the Parliament to be informed. As such, the aim of this paper is to document some of the key decision points and incorporate relevant information about the FSP that is useful to the Parliament.
Submarine Politics
Former Prime Minister of Australia Malcolm Turnbull made the announcement that France’s Naval Group will build Royal Australian Navy’s future submarine worth $90 billion. DCNS’ Shortfin Barracuda offering beat out Germany’s Type 216 and Japan’s Soryu-class offerings for the deal, which is Australia’s biggest-ever defense deal.
While the reasons outlined by Defence Department played a pivotal role in Australia’s evaluation of the Shortfin Barracuda against its two competitors, a critical detail has emerged in a recent report that reveals the deceptively simple reason why the Type 216 and Soryu never really had a chance.
When former Prime Minister Malcolm Turnball took power in Canberra replacing Tony Abbott, the fate of the Soryu-class was sealed in Australia. It was for sure the Turnball government took a different approach than the Abbott government, hence the political victory favors Naval Group’s short-fin Barracuda class submarine.
A report that appeared in the Australian Financial Review noted, while nuclear marine propulsion for Australian attack submarines is a politically untenable position for the government in Canberra today, the former Turnbull government wants to keep its options open. The design, development, and construction of the new submarines could take well over a decade and political attitudes could change considerably in that time. Leaving the nuclear option open was a serious consideration for the previous Turnbull government.
That may have been an area where DCNS had a particularly appealing offering. The French Navy’s incoming Barracuda-class submarines are nuclear attack subs (SSN). The Shortfin variant on offer for the Australian Navy will see a conversion of the propulsion system to a conventional diesel-electric bid. Of course, should an SSN become politically viable for Australian needs in the future, converting the Shortfin Barracuda‘s propulsion system back would be viable? With the diesel-electric Soryu and Type 216, this is option is effectively closed off without significant research and development.
Nuclear propulsion for submarines has unique advantages over the diesel-electric option, a key advantage amongst all which is the effective endless amount of time a nuclear sub can remain submerged. (Nuclear submarine endurance is limited by sailor endurance). Diesel-electric submarines are considerably cheaper, but, even with advanced air-independent propulsion (AIP) systems, they need to eventually resurface. Nuclear- and diesel-electric propulsions have a range of other advantages and drawbacks, but these are some of the main considerations.
While public opinion is one barrier for Australian SSNs–between 35 and 50 percent of Australians surveyed at various times between 2006 and 2009 supported nuclear power more generally–there are institutional shortcomings. For example, as Australian Defense Minister Marise Payne has noted “Australia does not have the qualified personnel, experience, infrastructure, training facilities and regulatory systems required to design, construct, operate and maintain a fleet of nuclear-powered submarines.” With the Shortfin Barracuda, Australia could eventually get nuclear-powered boats, but it’s not clear if that’ll make sense without the defence-industrial, bureaucratic, and institutional experience necessary to operate an advanced SSN fleet.
TKMS Proposal
The compact attack submarines are the latest in a long line of German designed and built submarines. TKMS has constructed 161 boats for 20 navies around the world since 1960 at Kiel including more than 50 built-in customer countries that have benefited from a philosophy of total technology transfer.
TKMS is the world leader in non-nuclear submarine construction and it is pushing very hard to win the contract to build Australia’s future submarine. The navy wants to buy more than eight 4000-tonne submarines to replace its six ageing Collins Class boats from about 2026.
Sadly there was no “transparency” requirement in the process but that stopped the Germans from opening their doors to share almost everything about their submarines and what they can offer Australian taxpayers.
The same cannot be said for Japan and France whose submarine proposals are shrouded in secrecy.
For TKMS this was a rare opportunity to win the biggest contract in history for non-nuclear submarines and the firm pulled out all stops.
TKMS Australia chief executive and former submarine commander Philip Stanford said all the German technology was exportable and the firm was willing to design an Australian built capability tailored to Australia’s needs. “We don’t hide things,” he said.
Mr Stanford said another major advantage was the fact that the synergies between the German and Australian navies were very strong and likely to become even closer. “The German navy is similar to ours,” he said.
TKMS’ View Of Australian Submarine Facilities
The company also viewed an Australian submarine and warship hub in Adelaide possibly building boats for countries such as Canada and maintaining TKMS submarines for regional nations and its bid is strongly supported by a German Government that is keen for close cooperation with Australia.
According to Mr Konker the German firm has a good record of cooperating with very different companies and diverse cultures including Israel, Turkey, Italy and Colombia to deliver cutting edge submarines.
“We have quite a good track record,” he said.
It was a robust Blohm and Voss Meko design that was chosen for the navy’s Anzac Frigate project that is widely regarded as the most successful Australian navy shipbuilding project ever.
Australia should learn the lesson from the flawed Air Warfare Destroyer alliance and look to the company that has done it before for Australia.
The man behind the Anzac ship was Dr John White who was now the chairman of TKMS Australia. When John White speaks governments usually take notice and he is speaking a great deal of sense when it comes to the navy’ future submarine and future frigate projects.
He was recently contracted by the government with American expert Donald Winter to examine the troubled Air Warfare Destroyer Alliance that is running years late and hundreds of millions over budget. The report remains a closely guarded secret.
Why Other Contenders Were Overlooked By Defense Department?
Japan, the onetime frontrunner for a $90 billion contract to build Australia’s new submarine fleet in partnership with the Australian industry under the so-called SEA 1000 Future Submarine Programme, failed in its bid to assemble the boats.
Australian former Prime Minister Malcolm Turnbull announced that French shipbuilder Direction Des Constructions Navales Services (DCNS) awarded the contract–Australia’s largest defense deal ever– to build 12 Shortfin Barracuda Block 1A subs, a diesel-electric derivative of DCNS’ Barracuda-class nuclear attack submarine, for the Royal Australian Navy.
Japan’s Minister of Defense Gen Nakatani appeared bewildered over Australia’s decision. “We will ask Australia to explain why they didn’t pick our design,” he said at that time of the announcement, according to Reuters.
Japan with its 4,000-ton Soryu-class diesel-electric attack stealth submarine fitted with a new lithium-ion battery propulsion system was long considered to be both the Australian government’s and analysts’ favorite pick.
Like with any large defense deal, the reasons for picking the military hardware of one country over that of another are manifold and not only confined to technical and military considerations, but are also subject to political and geostrategic calculi.
Engagement of Thales and Lockheed Martin Australia
In November 2015, the former Turnbull Government ‘endorsed’ the AN/BYG-1 Tactical Weapon and Control Sub-system and the Mark 48 Heavyweight Torpedo ‘as the combat system and main armament for the Future Submarines’.
The AN/BYG-1 Tactical Weapon and Control Sub-system and the Mark 48 Heavyweight Torpedo are systems jointly developed by the US and Australia and are based on systems currently in use in the CCSMs and the US Navy’s Los Angeles, Seawolf and Virginia class submarines. US company General Dynamics Mission Systems, the Tactical Control System developer for existing US and Australian submarines, explains:
The AN/BYG-1 acronym is derived from the Joint Electronics Type Designation System (JETDS): AN refers to Army/Navy, B indicates underwater systems, Y refers to data processing, and G indicates Fire Control or Searchlight Directing.
Each of the AN/BYG-1 systems incorporates a variety of advanced processor build (APB) software algorithms developed by industry, government, and academic sources.
There are five major reasons why France won.
First, Japan heavily betted on the close relationship between Japanese former Prime Minister Shinzo Abe and former Australian Prime Minister Tony Abbott, who purportedly promised Tokyo a sweetheart deal in which the submarines would be domestically constructed in Japan in order to bolster the Australia-Japan strategic relationship–and ultimately lost. It was only reluctantly that Abbott eventually agreed to a competitive evaluation process in February 2015 inviting, next to Mitsubishi Heavy Industries (MHI) and Kawasaki Shipbuilding Corporation (KSC), French shipbuilder DCNS and the German company ThyssenKrupp AG (TKMS) to compete.
Once Abbott was ousted from power, Japan was merely one of three bidders and no longer received the political support it was accustomed to from the new Australian government under Malcolm Turnbull and had to revamp its strategy to win the bid. Japanese defense industry representatives were simply outmanoeuvred by their French and German counterparts. Australia’s Senate Economics Legislation References Committee already rejected the Soryu-class as a suitable Collins-class replacement option once before in November 2014.
Second, picking DCNS over the MHI and KSC—both Japanese shipmakers building the Soryu-class boats—is also politically more opportune for Malcolm Turnbull at that time and took a different path from his predecessor. Australians were heading to the polls for federal elections, in what is predicted to be a tight race between the governing Liberal-National Coalition and the Australian Labor Party. During the press conference, Turnbull said that the 12 submarines in their entirety (save some specialized parts) will be built in Adelaide, the capital city of South Australia and the home base of the Australian Submarine Corporation (ASC) protecting the minority seats of Liberal-National Coalition government.
South Australia is facing deindustrialization with the state’s last auto plant to be shut down at the end of 2016. As a consequence, creating new jobs will be vital for the Liberal-National Coalition to retain seats in the state and the decision to go with DCNS, according to Turnbull, will create more than 2,800 jobs. “Australian built, Australian jobs, Australian steel, here right where we stand,” he emphasized. DCNS purportedly agreed that all major work on the submarines will be done in Adelaide using domestic materials. Japan, however, initially was reluctant to build the submarines in Australia, given Tokyo’s general reluctance to transfer sensitive military technology abroad. Japan softened its stance on this issue just before the winning bid announced, but, it is too late and too little to keep Soryu-class in the race to win $90 billion contract.
Third, Japan’s defense industry was not enthusiastic about selling Soryu-class submarines overseas. The two companies producing the submarine, MHI and KSC, currently have only the capacity to meet the domestic demand for submarines. Overall, the Japan Maritime Self-Defense Force plans to induct a total of 11 Soryu-class submarines by 2020. As of now, seven Soryu-class subs have been commissioned. Due to the Japanese defense industries inexperience in dealing with international clients, there was also a growing concern in Australia that this could lead to a work culture clash, which would make collaboration on the project unnecessarily difficult.
Also, as The Diplomat reported previously, Japan still lacks experience in selling its military hardware including transferring sensitive defense technology to another country. Furthermore, “the Australian Defense Department appears concerned that any deal signed with Japan could be negated by the powerful Japanese bureaucracy, which allegedly [according to defense department sources] also showed ‘less enthusiasm for the deal and that would undo it in the long run.
Fourth, the United States has tacitly been supporting the Japanese bid, but recently signaled former Prime Minister Turnbull that its opposition to a potential European submarine supplier has plummeted. “Quiet U.S. pressure to opt for the Japanese submarines–U.S. officials allegedly indicated that the United States would not allow its most advanced weapons systems to be installed on European-made subs–has also apparently been dropped. Former U.S. President Barack Obama made it clear to former Prime Minister Malcolm Turnbull that the submarine deal was a sovereign issue of Australia and that the selection of France or Germany would not in any way affect the Australia-U.S. alliance,
Given that the Australian evaluation team and an expert advisory panel included senior former U.S. Navy officers, it is fair to assume that the U.S. Navy will allow its submarine systems, including a tactical control system, a Raytheon combat system and Lockheed Martin sensors, as well as weapons systems (e.g., Mark-48 torpedoes, Harpoon anti-ship missiles and Tomahawk cruise missiles) to be installed on the Shortfin Barracuda Block 1A subs.
Fifth, while it is difficult to assess any submarine bid on an unclassified level, there is a fair argument to be made that the new Barracuda-class better meets Australia’s needs than the Japanese stealth submarines, although it remains to be seen how difficult a swap from nuclear power to a conventional system will be for DCNS. “This decision was driven by DCNS’s ability to best meet all of our unique capability requirements,” said former Prime Minister Malcolm Turnbull and Australia’s Minister for Defense Marine Payne in a joint statement published a few years ago.
“These included superior sensor performance and stealth characteristics, as well as range and endurance similar to the Collins Class submarine. The Government’s considerations also included cost, schedule, program execution, through-life support and Australian industry involvement.” DCNS has built more than 100 submarines for nine different navies and its ships are sailing on all five oceans–a major advantage over Japan, which has no submarine export experience.
To Summarize
Although Minister Reynolds added, “This is a significant step in the right direction to build up Australian capability for the Future Submarine Program. By bringing together the best underwater sensing technology with local industry, it will ensure we deliver a sovereign regionally superior submarine.”
It is becoming increasingly clear that SEA 1000 is in trouble because of a breakdown in the relationship between Australia and the platform prime contractor, the French company Naval Group. The Naval Group is reluctant to use local contents in the SEA1000 project making it difficult for the Australian government to agree on the contract. After all, the purpose of spending billions on the SEA1000 project is to create jobs in Australia. This is a politically sensitive issue government will not scarify to get attack submarines. A reflection of this is the inability of the two sides to sign an overarching Strategic Partnership Agreement, which in turn has been frustrated by the refusal of Naval Group to accept a fair share of commercial risk in this gigantic multi-billion dollar program.
Australian SEA1000 Project is smeared with a long list of political and bureaucratic tug of war between Australian politician, the Department of Defense, the Naval Group and the Royal Australian Navy. The contract has been signed with Thales UK, through Lockheed Martin Australia, for the design of the outboard flank array and partnering arrangements with the Australian industry. Although a contract is signed between the Naval Group and the Australian Department of Defense, this bureaucratic war is not over yet.
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