Australian submarine tender narrows to Japanese and French bids: sources

by and

Reuters

The competition for a 50 billion Australian dollar ($34.55 billion) contract to build Australia’s next submarine fleet is narrowing to a race between Japan and France as a bid from Germany’s Thyssen-Krupp Marine Systems (TKMS) has lost ground over technical concerns, multiple sources said.

Australia is expected to decide the winner of one of the world’s most lucrative defense contracts within the next six months, ahead of a national election in which the deal and the jobs it will create is expected to be a key issue for the conservative government.

TKMS is proposing to scale up its 2,000-ton Type 214 class vessel, while Japan is offering a variant of its 4,000-ton Soryu submarine made by Mitsubishi Heavy Industries and Kawasaki Heavy Industries.

France’s state-controlled naval contractor, DCNS, has proposed a diesel-electric version of its 5,000-ton Barracuda nuclear-powered boat.

Australia has said it wants a boat in the 4,000-ton class.

Scaling a submarine to twice its original size presents exponential technical challenges, experts say.

That puts TKMS furthest from having the experience to offer what Australia wants in a large, long-range, stealthy submarine to replace its aging Collins-class fleet, said six industrial sources in Asia and Australia with knowledge of the situation.

“The German proposal is an enlarged version of a smaller existing submarine, and that technically is risky,” said one source.

TKMS and one of the sources in Australia, who has decades of experience in the global arms industry, cautioned against jumping to conclusions as each side jockeys for the best outcome in what may ultimately be a political decision.

Australia wanted a partner to design and build a new submarine, which neutralizes any perceived advantage with existing bigger boats, said TKMS Australia Director Jim Duncan.

“The rumors could well be right. Who knows,” Duncan said when asked to respond to what the industrial sources said. “My only advice, having spent many years in this environment is believe nothing that you hear and only half of what you see.”

Officials at the Future Submarine Program at the Australian Department of Defense did not respond to a request for comment.

DCNS Australia CEO Sean Costello declined to comment on his competitors, but said experience in large submarine design is critical for the Australian project.

Japan was initially seen as the front-runner, partly due to close ties between Prime Minister Shinzo Abe and former Australian Prime Minister Tony Abbott, who was ousted in a party coup by Malcolm Turnbull last September.

With Turnbull quiet on the matter, Japan is touting its offer as a way to build military ties between two allies in Asia, something U.S. officials have said they want to see as China emerges as a regional power.

But Japan, which until two years ago had a decades-long ban on arms exports, has been hobbled throughout the process by a lack of experience in managing overseas defense contracts and the shifting political tide in Canberra.

With Australia facing an economic slowdown, that has put job creation and innovation atop the political agenda.

Japan was slow to commit to build all vessels at South Australian shipyards, a politically significant pledge that both DCNS and TKMS made quickly.

At the same time, DCNS and TKMS pledged to share sensitive technology with the Australian government and promised packages of economic incentives.

Australia’s Defense Department is formulating a recommendation based on materials submitted by the bidders late last year and is expected to give that to its Cabinet as early as March.

  • Christian Morales Moya

    mmm….build an sub twice a size is not so complicated really for germans, for other side, the german technology AIP is much superior of french or japanese (hydrogen stored in solid deposits or methanol), that is much more important, and the stealth technology also the germans are superior

  • CaptainAsia

    If Australia want the best, aside from the USA, then Japan is the only real choice. We all know how the German, French and Russian tech works in detail, but the Japanese have kept their program so secret up to date. It is said that Japanese subs can do a sing and dance around and over the Chinese ones and the Chinese would not even know about it. The Japanese subs even manage to evade to most advanced detection equipment ie: high sensor capability ocean laid cable alerts, something all accept the USA can avoid, all the rest stand out like a sore thumb with their sonic signatures.

  • http://www.sheldonthinks.com/ Andrew Sheldon

    This sub contract is the biggest waste of money. Why does Australia need subs? There is no prospect of defending its coast. We should be building fox holes in old mine shafts. Let the US, Japan, Britain and French rule the seas; Australia can rule the lithosphere. We can hide. What a waste of money. NZ has the right idea. We should be a role model for civic politics, not engaging in war-mongering. Let these states that are invested in war pursue that. This shoddy investments, aside from being corrupt, will result in Aust taxpayers being bankrupted by corrupt govt getting kickbacks from Japanese military machine.
    Aust & NZ should be investing in a new political framework based on anarcho-capitalism; not perpetuating the failed US military state. This is the US doing a Rome-style collapse. Let’s not take Australia down with them. How can Australia possibly fund this? The globe is going into a deflationary spiral. There will be no mineral demand for Australia to finance this ‘blotch’ on its terms of trade. This is suicide for Australia, from politicians who don’t understand economics, or much else. Remember the last time Aust purchased submarines?

  • Alexander Judzewitsch

    The advisors advising the Prime Minister and Defence Minister would do well to make these senior ministers aware of a couple of excellent papers written by Jon Stanford and published by John Menadue:

    Jon Stanford. Australia’s New Submarine: What is its Mission? Posted on 22/10/2015 by John Menadue

    The Defence requirements stated In the 2009 Defence White Paper,cannot be met by any diesel powered attack submarine. So are we going to dumb down the requirements to suit an inadequate, pre-determined solution?

    Jon Stanford. Defence procurement and the new submarine Posted on 11/12/2015 by John Menadue

    Look at past mistakes and please don’t repeat them anymore. We should not try to build another unique submarine, one that has never been built before and can’t be evaluated by taking it for a test drive. You wouldn’t even buy a car like that and yet the Government seems to be embarked on selecting a critical, very complex weapons system, costing billions of dollars of taxpayer money, just like that.

    Check out the Virginia class submarine. It is available off the shelf for a fixed price, can be built and delivered with a minimum of risk, has an extensive plan for future upgrades, is the only boat that would need a minimum if any modifications to fit into Australia’s mostly USA sourced weapons systems with a unique assurance that it will remain so. It is the best attack submarine in the world currently in production with a service life planned out to around 2070 which meets our requirements. The training establishments are proven and so are the simulators. We might even be able to get some boats early to save money by decommissioning the Collins boats early. That alone would save $600m per year.
    I would hate to think of the extra cost if we had to keep them longer than
    planned which is a real risk we take with a new, unique design made in
    Australia. Oh yes, and we can take the Virginia for a test dive whenever we’re ready.

    If we are serious about creating long term job opportunities for Australia then let’s negotiate a deal with the USA along these lines:

    Jointly build a maintenance facility in WA (if our boats are to be located in
    WA the maintenance facilities should also be there!) and then use Aussies to maintain the USN boats serving in our region as well as our own. Good for the USN as it makes their fleet more productive (no need to travel to the USA and then back again) and creates jobs and foreign exchange earnings for Australia for a very long time. It would in effect be a new export business!

    The Virginia option has a lot of unique benefits. Shouldn’t we at least evaluate it?