Defence Force advised to quit expensive Future Submarine Project

Australia’s future submarines program has hit a nine-month delay, an audit of the $80 billion program has found.

Two key contract milestones have also been extended.

“As a result, Defence cannot demonstrate that its expenditure of $396 million on design of the future submarine has been fully effective,” the Australian National Audit Office said.

The design and construction of the submarines is the largest Defence procurement in Australia’s history.

Australia is in the process of acquiring 12 new submarines to replace six Collins Class vessels.

The audit office found its decision not to acquire “off the shelf” military submarines has increased the risk of the acquisition.

The submarines are being designed and constructed by France’s Naval Group at the Osborne Shipyard in South Australia.

However, the report revealed Defence has approved the fabrication of hull parts for the first submarine to be built completely in France, in an effort to avoid delays.

US Defence contractor Lockheed Martin is the combat system integrator. The Australian arm of the American defence giant defeated US rival Raytheon in a deal to fit out the vessels.

The auditor-general found the success of the program is dependent on Defence establishing an effective long-term partnership with Naval Group.

“This key relationship is at a relatively early stage and the parties’ active management of both specific issues and the partnership is essential for effective risk management and program success,” he said.

In another sign of tension between Australia’s Defence Force and the French shipbuilding company, the report also revealed a comment made in September 2018 by the government’s Naval Shipbuilding Advisory Board.

“Defence should assess whether program risks outweighed the benefits of proceeding,” the board advised.

The differences in Australian and French engineering methodologies has also been cited as what could be a major issue.

The new submarines are expected to enter service by the mid-2030s with the first to be delivered to the Australian Navy by 2035.

Defence Minister Linda Reynolds told The Australian everything was on track and the delay was important in making sure the submarines were designed right.

Opposition Defence spokesman Richard Marles was not as forgiving, warning the government’s “mishandling” of the project presented major risks.