Xenophon said leaked Defence Department tender documents for the Future Frigates program revealing that Australian shipbuilders, especially Adelaide's ASC, will be shut out of the $35 billion project is "an act of bastardry and deception on a grand scale".
In an interview on Adelaide breakfast radio, Minister Pyne said there is "no possibility" ASC workers will be overlooked for the Future Frigates build, despite leaked tender documents revealing there is no binding requirement to use an Adelaide or Australian workforce.
"There's absolutely no possibility of that. The ASC workers are the most skilled and experienced shipyard workers in the country," said Minister Pyne.
"We need 5,000 workers at Osborne between now and mid-2020. The idea that every one of those people who wants a job wouldn’t get one is quite frankly ridiculous; this is an absurd media beat-up.
"The truth is every single one of the ASC workers who wants a job on the Offshore Patrol Vessels and the Future Frigates or the submarines, thanks to this government, will get one, and 4,000 more will get jobs who want them at Osborne."
On Wednesday afternoon, Xenophon tabled a motion to scrap the "fundamentally flawed" tender process, a motion backed by Labor Senator Kim Carr and Greens Senator Sarah Hanson-Young.
Xenophon has been seeking the tender documents under the Freedom of Information Act, but has been unsuccessful.
"Now I know why the government and Defence has been desperately refusing my bid for these documents. There is a secret plan to exclude Australian shipbuilders, particularly ASC," he said.
In June this year, Australia's Austal and ASC Shipbuilding entered into a teaming agreement for the Future Frigates project, which will see the companies pool their resources, skills and experience and act as one in support of the program.
Minister Pyne said workers unions were the reason the government failed to mandate the use of the ASC workforce as part of the requirements for the tender.
"The government is not going to mandate that the ASC workforce must work on whoever wins the bid, otherwise the union and the workers, but particularly the union, would have the successful bidder over a barrel," Minister Pyne stated.
"They wouldn’t need to negotiate at all, they’d be able to write their own check, and that of course would be quite irresponsible. So the government is doing everything it can to make sure that we have a continuous naval ship build, the first in Australia’s history."
As part of the tender process, the three downselected tenderers – BAE Systems (UK), Ficantieri (Italy) and Navantia (Spain) – have been required to put forward a bid that maximises Australian industry content.
BAE Systems, the first of the three contenders to publicly announce it submitted its bid, said its bid not only included construction of the nine frigates, but also commitment to develop a long-term shipbuilding strategy in Australia for complex warships.
BAE Systems has offered the Global Combat Ship-Australia, a variant of its Type 26 Global Combat Ship for the UK Navy, a project that recently commenced manufacturing.
"Our commitment is to establish a world-class shipbuilding capability in Australia that will build Australian ships with an Australian work force," said BAE Systems' global maritime business development director Nigel Stewart.
"The opportunity we will bring to Australia through SEA 5000 is unique. It offers us the chance to collaborate across the company by sharing our expertise and experience, transferring embedded knowledge from one market to benefit another. In addition, BAE Systems is committed to representing Australia in the global marketplace, helping grow Australia’s export opportunities and opening up new markets for Australian industry through our global supply chain."
A spokesperson for BAE Systems told Defence Connect, "If successful, the company will invest in a domestic naval shipbuilding workforce, growing on the existing skills, talent and numbers of employees already employed in South Australia and across the nation to deliver the engineering, science and highly skilled technicians that will be needed over the life of the program, and that will be essential to supporting a sustainable shipbuilding capability in Australia."
Navantia has put forward its F-5000 and said it will be designed locally to meet specific requirements of the Royal Australian Navy and built in Adelaide using expertise, experience and equipment from Australia.
"Navantia Australia has developed the intimate customer knowledge, understanding of Australian industry capability and commitment to building Australia’s own shipbuilding industry," said Navantia Australia board member Warren King.
Danato Martínez, Navantia Australia managing director, said, "When we already have an experienced shipbuilding workforce in Australia, why would we look anywhere else?"
Italian firm Fincantieri, which has put forward its FREMM Frigate, has also thrown its support behind the South Australian workforce, with Fincantieri Australia chairman Dario Deste saying: "Fincantieri will have more say in coming months but our proposal will create long-term security for the Adelaide shipbuilding workforce, build a new advanced manufacturing industry nationally and would join Australia to our global network of 20 shipyards on four continents."
The nine frigates will be constructed in Adelaide and construction is due to commence in 2020.
The frigates will incorporate the Australian-developed CEA Phased-Array Radar and the weaponry will be US, according to Minister Pyne.
"The weaponry of course will be United States' weaponry," the minister said in March. "That will be integrated into the winning vessel."