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Air warfare destroyer project under threat

Jun 05, 2014
Work on the HMAS Hobart at the Adelaide construction site. Photo: AAP

Work on the HMAS Hobart at the Adelaide construction site. Photo: AAP

The $8.5 billion air warfare destroyer project is too important to South Australia to be allowed to fail, says SA Minister for Defence Industries Martin Hamilton-Smith.

The minister believes “systemic problems” within Australia’s naval shipbuilding industry are to blame for the AWD project running almost two years behind and costing $360 million more than planned.

The Federal Government yesterday announced it planned a management shake-up at the prime contractor, Adelaide-based ASC. It said it had added the troubled AWD project to the list of defence acquisition “projects of concern” and warned it could look overseas for new frigates if local shipbuilders don’t life their game.

Speaking on local ABC radio this morning, Hamilton-Smith said it was “a very serious development”.

“I understand the quality of the work is superb but it is a project where warning lights are flashing so action does need to be taken.

“This is too important for South Australia for it to lose its way … if we get this wrong it throws a question over all the other work upon which this state’s economy and jobs so much depends.”

Pressed over whether he had confidence in ASC chairman Bruce Carter, the minister said: “The quick answer is yes.”

Hamilton-Smith said South Australia would work with the Federal Government to sort out the problems.

He told 891 Adelaide that the problems with naval shipbuilding were systemic and went back decades, blaming an inconsistent approach by government and a lack of infrastructure for a long-term industry.

Chris Burns, from the Defence Teaming Centre in Adelaide, has also said that the issues with the AWD project highlight the dangers of an “inconsistent industry”, where one project doesn’t start until another has been completed.

Under the AWD project, the Navy will field three high-tech warships able to defend vast areas of ocean against aircraft and missile attack. But the first ship, HMAS Hobart, is already well behind schedule, with delivery expected in March 2016 rather than December 2014.

A review by former US Navy secretary Don Winter found a range of problems, including inadequate management and contractor performance. His findings were in line with UK consultant First Marine International’s regular reviews of ASC and sub-contractors BAE Systems in Melbourne and Forgacs in Newcastle, which found they were outside performance benchmark standards in all but a few measures.

Federal Finance Minister Mathias Cormann said yesterday that a remediation plan would seek to get the project back on track, beginning with the insertion of an experienced shipbuilding management team into the government-owned ASC.

“This is a final opportunity to get this right – there’s no two ways about it,” he told reporters in Canberra.

ASC released a statement saying it welcomed the recommendations of Professor Winter’s review and would work with the Federal Government to implement the actions needed to successfully deliver the AWD program.

“We are committed to the safe and timely delivery of three air warfare destroyers,” it said.

Federal Defence Minister David Johnston warned there might not be local capacity for future projects – including eight new vessels to replace the Navy’s Australian-made Anzac frigates – if Australian firms couldn’t achieve acceptable productivity.

“I don’t believe the government will support an enterprise that cannot deliver productively,” he said.

– with AAP

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