Australia Proposes $50B Submarine Tender; Politicians Divided On How To Push Through With It

Australia’s Labor group has proposed an open tender process for other countries to bid for its new submarine fleet. It has invited Germany, France and Japan to pitch for an $50 billion (US$38.8 billion) contract that will replace Australia's six ageing Collins-class vessels. But the plan doesn’t sit high with Prime Minister Tony Abbott and other federal government officials who said the process is too long, placing Australia’s security at risk.

By procedure, Australia will invite Germany, France, Japan and Sweden to make initial proposals. Each participating country will then receive A$7 million for their involvement. One to two submarine builders will then be chosen to render full designs and fixed price contract bids. They will receive an additional A$8 million each, once they submit the more detailed final tender bids. The winning vessel would be chosen by end of 2016. All in all, the process could last 12-18 months.

The length of the process doesn’t sit well with Mr Abbott, who blasted Labor had enough time since late 2007 to implement the Sea 1000 program that will replace Australia's ageing in-service fleet of six Collins-class submarines. "The consequence of further delay would be that Australia would have no operational submarines towards the end of the next decade when the Collins class submarines go out of service," Mr Abbott told parliament on Wednesday. Defence Minister Kevin Andrews said during a Royal United Services Institute submarine conference in Adelaide earlier the same day that the evaluation phase alone would take 10 months to complete.

Labor’s proposal stipulated a "non-negotiable condition" that the submarines must be "built, maintained and sustained" in Australia. But Mr Abbott said the Labor group had been using the provision to dilly-dally on making an important decision on the Collins class fleet. From the six years since late 2007 that Labor had been in government, Mr Abbott said no single naval shipbuilding order was placed with an Australian shipyard. In fact, “three orders even went overseas,” Mr Abbott told parliament on Wednesday.

Reuters, citing an unidentified Australian industry source, reports Germany's ThyssenKrupp Marine Systems (TKMS) and France's state-controlled naval contractor DCNS had received the draft contract as well as the statement of work on the new submarines. This has been confirmed.

"We've got all of the data descriptions which tell us what we need to do and they've sent us through classified channels the functional performance specifications ... It literally is happening as we speak," Philip Stanford, TKMS Australia CEO, told Reuters.

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