French To Seek Compensation From Australian For Cancelled Submarine Project

Scott Morrison announces the AUKUS pact and nuclear submarine deal in Canberra, with Boris Johnson and Joe Biden on screen for their respective announcements in the UK and US. Photograph: Mick Tsikas/AAP

France will look to ensure any financial hit to Naval Group from a cancelled Australia submarine deal is limited, French Armed Forces Florence Parly said on last Thursday.

Parly did not rule out France seeking compensation from Australia. “We are studying all avenues,” Parly told French radio RFI when asked whether France might seek compensation.

Australia’s Ministry of Defense recommended three contenders for the competitive evaluation process, and it picked French shipbuilder Naval Group as the eventual winner. The company won the Collins-class replacement program, also known as SEA1000, in 2016 with its Shortfin Barracuda Block 1A design. This conventionally powered diesel-electric submarine is based on a scaled-down version of the nuclear-powered Barracuda (Suffren) design that is now entering French Navy service.

The Australian media have long been reporting citing sources in the Defense Ministry that the deal with Naval Group to build a dozen submarines for the Navy was not making progress.

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It is said to be due to a combination of reasons, including cost blowouts, missed delays and political. Since negotiations with France began, Australia has had three prime ministers, three deputy PMs, three failed treasurers, five defense ministers and four ministers for defense industry. Of the 15 individuals to have held these portfolios, seven have left the Parliament.

The total value of the contract, of which only the first phases have been concluded, amounted to A$50 billion (€31 billion) at the time of signing, or A$90 billion taking into account inflation over the duration of the programme and cost overruns.

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