The Defence Department has issued an edict to Government-owned shipbuilder ASC that it must deal “fairly and equally” with all prospective international contractors for the lucrative future submarines project.
The missive, revealed today by SA Senator Nick Xenophon during a Senate committee hearing in Adelaide, belies the Abbott Government’s public rhetoric that the Osborne-based shipbuilder should pick an international partner with which to put forward a joint bid.
Defence Minister Kevin Andrews announced in February that the contract would be determined by a “competitive evaluation process”, saying “for the best opportunity to maximise their involvement in the program (ASC) needs to work with an international partner”.
Just last week, SA-based Liberal heavyweight Christopher Pyne urged Xenophon to “assist ASC in putting together a competitive bid for the new submarine project as part of a joint venture with another submarine builder”.
Xenophon today quizzed ASC representatives to the Senate inquiry into the future submarine project whether such a joint venture was actually allowed, “given your instruction from defence”.
“You can’t act on that on the basis that you’ve received quite reasonable instructions from defence to deal with prospective international bidders in an even-handed manner,” asserted Xenophon.
Andrew Keogh, ASC’s General Manager of Business and Strategic Development, said the company’s “role at the moment is to help those potential partners understand the skills capability and where we can assist, particularly because we’ve had many decades of shipbuilding in Australia”.
He said a potential design partner would not be known until the evaluation process was completed.
“From an ASC perspective, we’re agnostic in relation to whether it’s Japan or Germany or France – we’ll work with any one of those,” Keogh said.
He said from ASC’s view “the engagement of any overseas designer for the future submarines is not an illogical step” as “we have design capacity in Australia, but only in terms of sustainment”.
“We have not in Australia designed from a blank sheet of paper a brand new submarine,” he said.
He and ASC’s chief operating officer Martin Edwards gave evidence that the shipbuilder had significantly streamlined its operations in relation to the oft-criticised Air Warfare Destroyer project, which former Defence Minister David Johnston used as evidence that the shipbuilder couldn’t be trusted “to build a canoe”.
Now, ASC argues, it is seeing a greater than 30 per cent cost performance improvement in the second ship and around 15 per cent in the third, compared to the same point in the cycle of the initial build.
They argued ASC was tracking towards “world-class benchmarks by 2017” and delivering maintenance activity ahead of schedule over the last three years.
Earlier, AMWU assistant national secretary Glenn Thompson gave evidence, saying Defence Minister Andrews had to acknowledge the productivity improvements made on the project.
Speaking to InDaily ahead of his appearance, he urged the Government to take up an option for a fourth air warfare destroyer, to avoid a sudden loss of skilled workers – the so-called Valley of Death.
“That will give Government and industry some certainty to look at long term continuous build projects,” he said.
