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Dutton left with a sub-standard mess

Tuesday, June 15, 2021 2:30 PM | Alanna Mahlakolisane (Administrator)

Dutton left with a sub-standard mess

The Australian
By Cameron Stewart
12 June 2021

The new Defence Minister is being forced to make key decisions on the submarine fleet that will affect the nation’s security for decades, to say nothing of China.

The list of problems Peter Dutton has inherited on the submarine program is daunting and a wrong move either way could cost taxpayers many billions.

Of all the problems Peter Dutton inherited when he became Defence Minister, none is more urgent or more strategically vital to Australia than sorting out what he calls the “mess” of Australia’s future submarine project.

Dutton is being forced to make key decisions on the submarine fleet that will affect the nation’s security for decades, in the face of a rising China which is aggressively boosting its own submarine war-fighting capabilities.

But the list of problems Dutton has inherited on the submarine program is daunting and a wrong move either way could cost taxpayers many billions of extra dollars or, worse, leave the nation without a potent submarine fleet.

First of all Dutton has to decide how he will deal with the French giant Naval Group which, having won the $90bn bid to build 12 Attack-class submarines in Adelaide, has tried to play hardball over the level of Australian industry content and, more recently, by asking for what Defence believes is an excessive amount to produce the detailed design of the boats. The project, now five years old, is at a temporary impasse with the government refusing to sign new contracts to allow it to move forward.

The dispute has frustrated both Dutton and Prime Minister Scott Morrison, and even if the two countries resolve their differences soon the first of the Attack-class boats is not due to be operationally ready until 2035 – a strategic lifetime in an unsettled region.

This absurdly long time frame is due to a combination of Australia being too slow to select its future submarine in 2016, and then choosing the riskier French option which also had the slowest build time.

This leaves Dutton with a fundamental strategic dilemma: how to keep Australia’s six ageing Collins-class boats both operational and potent for two decades given that Defence admits that not until 2042 will there be more Attack-class boats than Collins boats in the navy’s submarine fleet.

The Collins-class boats, which came into service progressively from 1996-2003, are already fast reaching their original withdrawal date, which starts for the first boat in 2026.

The government simply has no choice but to undertake a major, risky and expensive rebuild of the Collins-class fleet in order to keep it not only in the water but also

regionally superior into the late 2030s and early 2040s, until it can be progressively replaced by the French submarines.

As The Weekend Australian reveals today, Dutton has made a major decision to extend the life of all six of the Collins fleet by a decade – double the three boats that the navy initially expected to extend – in order to try to avoid a capability gap in Australia’s defence from later this decade.

But this program, known as the Collins class life-of-type extension, or LOTE, is arguably in trouble before it begins. Despite knowing for years that it would be necessary to extend the life of the Collins fleet, Defence has been slow to make key decisions on the program, including what exactly these extensive refits will entail. No design or construction contracts have yet been finalised.

This is something that Dutton, as the new minister, will need to rectify quickly.

The budget for the life-extension program was estimated at up to $6bn but is now considered by experts to be more likely to cost about $10bn.

“The government knew of this problem back in 2012 and have not progressed this in anywhere near the speed it needed to be,” former submariner and independent senator Rex Patrick says.

Andrew Davies, author of a forthcoming book on the Collins-class boats, says the government now finds itself in a dilemma because Defence has been too slow to prepare for the extension of the Collins fleet.

“I think the fact that we have lost years in getting to decision points on both the future submarine and on the LOTE means that we have now got ourselves into a really fraught situation where you can’t afford to slip up on either,” he says. “And the ambition of expanding the submarine fleet (beyond six boats) has now disappeared into the 2040s. It’s absurd. This process should’ve begun much earlier and in a more robust way.”

Defence claims it will be able to keep the Collins fleet in the water and regionally superior until the Attack-class enters service.

It plans to do this by taking the first Collins-class submarine out of service in 2026 and giving it a two-year LOTE rebuild to re-enter the water in 2028 and thereby extend its service life by another decade. Defence will perform a two-year LOTE on each Collins-class boat at two-year intervals from 2026, meaning most of the fleet will still be sailing into the late 2030s and even early 2040s.

The first of the 12 Attack-class submarines is not due to enter service until 2035, the second in 2038 and then two-year intervals between new boats.

So even without any slip-ups, Australia will not have more than six submarines until well into the 2040s. But there is a real danger that even these tentative plans will be up-ended by reality, leaving Australia with a grossly inadequate submarine fleet of only a few operational boats from later this decade lasting all the way through the 2030s.

Dutton admits the timeline is tight but says he is committed to a serious investment in extending the Collins fleet to prevent such a gap.

“There is no doubt in my mind that we need to pursue life-of-type extension (for Collins) and we are working on that program now,” he tells Inquirer. “All six (submarines) would be on the schedule.

“It is a tight timeline, no question about that, and that’s why we need to make sure that Defence gets the contracting right, that our partners know that their undertakings and their commitments in the contract must be honoured and it’s important for us to get not only the timeline right but the costings right as well.

“We need to be realistic about what lies ahead by way of threat in our own region, and the submarine capacity is a significant part of how we mitigate that risk and it’s important we get the program right. Clearly there have been problems with the arrangements with Naval Group. There has been concern on both sides in relation to the program and I need to make sure that we have the best capacity available to us and that contractual arrangements are being met.”

The first risk to the navy’s submarine availability is the nature of the LOTE itself.

Expert advice recently given to Dutton’s office is that the two years which Defence has allowed to rebuild each Collins-class submarine is inadequate for the scale and complexity of such work, which amounts to designing and building a new submarine.

Defence admits it has never done a rebuild as large or as complicated as that required to extend the life of the Collins boats.

“Two years to carry out a full-cycle docking with LOTE is just completely unrealistic,” Patrick says. “It doesn’t show an appreciation of the risks that are involved. They are seeking to change out a main motor on the submarine with a new motor that has never been used in any other submarine before.”

A LOTE will require the submarine to be cut open with almost all the major systems replaced, a much larger job than the regular two-year full-cycle docking which each submarine undergoes after each decade of service. It will involve fitting the submarines with new diesel generators, main motors, batteries, sensors, digital periscopes and new systems across the entire submarine.

Shipbuilder ASC, which maintains the Collins fleet, has never done the sort of major work that a LOTE would entail and will almost certainly need to be assisted in the program by the original Swedish builders of the submarines, Saab Kockums. If the LOTE process cannot be completed for each boat within a two-year time frame it will blow out the government’s schedule, leaving Australia with fewer operational submarines than it wants from the late 2020s.

There is also the vexed question of whether a LOTE will be extensive enough to make the submarines as lethal as they will need to be more than a decade from now, when they will be approaching 40 years old. Installing new systems on very old boats can still work, but no matter how sophisticated the upgrades, the navy would naturally prefer not having to operate such an ageing fleet for so long.

“The challenge now becomes keeping the LOTE ambitious enough to provide the capability we need, but modest enough to not introduce more risks and delays into the process,” Davies says. “So it is a real balancing act if we are to have a continuous submarine capability.”

The second risk to the extension of the Collins fleet is the very real potential that the first of the Attack-class submarines will not be ready from 2035 as promised.

The Attack-class are a first-of-type submarine which will attempt to replicate some features of France’s nuclear-powered Barracuda-class boats, such as pump-jet propulsion, into a diesel electric boat.

The degree of difficulty and risk inherent in such a highly developmental concept is enormous, and global experience shows that almost all first-of-type submarines are delivered late and over budget.

The Collins-class boats, famously labelled “dud subs” in their early days, were between 21 and 41 months late and were so bedevilled with problems that the entire class was not clear for full operation service until 2004, eight years after the first submarine was commissioned.

So if the schedule for the Attack-class submarines is delayed, then the Collins fleet will reach the end of its life, even with the LOTE extensions, before the French boats arrive.

This is the dilemma Dutton faces and it is one of the reasons the government is now toying with a so-called plan B to give it options if the French boats are delayed, or if the government chooses to walk away from the French deal altogether.

Defence Secretary Greg Moriarty told the recent Senate estimates hearings that although the government was “absolutely committed” to building the 12 French submarines in Adelaide, “prudent contingency planning” was under way if for any reason the program could not proceed.

Moriarty did not say what plan B might entail, but the most radical option would be for Australia to take a closer look at the 3400-tonne long-range submarines that Saab Kockums is proposing to build for the Dutch navy.

These proposed conventional submarines would have a range similar to that of the Collins and Saab is promising to deliver the first two to the Dutch navy in 2027-28, seven years before the scheduled arrival of our first Attack-class submarine.

Dutton will not comment on the plan B option, although sources say the minister is yet to be convinced about ordering a scoping study for a so-called “son of Collins” concept, which would be a locally built submarine based loosely on the Saab proposal for the Dutch navy.

Regardless of how serious the government is about looking at the Swedish alternative, the fact of appearing interested in plan B options gives Australia much-needed leverage over France’s Naval Group.

As things stand, Naval Group enjoys a monopolistic position in which it can dictate the terms of its deal with Australia and has little incentive to improve its performance on cost, schedule and Australian industry involvement.

Keeping the “son of Collins” option alive, if only in theory, helps to keep pressure on France in its dealings with Canberra.

“It would be prudent for the government to look at a plan B and I don’t think it implies for a second there is an issue with Naval Group or the future submarine,” says Brent Clark, chief executive of the Australian Industry and Defence Network, which represents local small and medium defence contractors.

“You need a contingency plan because you just don’t know what may happen. You are talking massive dollars here and if for some reason the future submarine can’t continue in its current form, what are you going to do if you haven’t thought about the alternative? Are you going to go back to square one?’

Clark says that regardless of what the government chooses to do, it is in the country’s interests to ensure all options have the highest possible Australian industry involvement.

What Dutton does next is likely to be heavily influenced by the findings of the review the government commissioned this year to look at the options available on submarines.

The review, by Vice-Admiral Jonathan Mead and Commodore Tim Brown, is looking at the timing, scope and structure of the LOTE program, the problems and ways forward for the Attack-class program and the feasibility of looking more closely at the Swedish submarine for the Dutch navy.

In his short time as Defence Minister, Dutton has shown he is willing to take the hard decisions that some of his predecessors did not.

But nothing will have as much bearing on Australia’s long-term security as the decisions he now faces on submarines.

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