The report, commissioned by Gary Johnston, founder of Jaycar Electronics and owner of the Submarines for Australia website, and led by former head of the Australian Public Service and former secretary of the Department of Finance Michael Keating, has said the risk of delays to the project, common among maritime projects, would drastically effect Australia's maritime defence capabilities.
"When the government announced the decision to make another custom piece of military hardware ... the alarm bells rang," Johnston said in the report's preface.
The report slams Defence's risk management assessment skills and suggests it should only have a military and technical advisory role.
"Defence doesn’t understand how to deal with risk when making investment decisions. When analysing alternative options for investment in military hardware, they need to involve people who are totally independent from the process, people with a financial or commercial background who understand how to generate better outcomes with an appropriate adjustment for risk. Of course, Defence would still have a role, but mainly as military and technical advisers," the report said.
Keating's analysis discusses the dramatic change of the project from its original plan in 2009 and concludes that Australia took the highest-risk, highest-cost option in the submarine decision and failed to consider alternatives.
"The question, therefore, is not whether the Navy needs to renew its submarine capability, but what would be the most appropriate type of submarine for the RAN and how many we need," the analysis reads.
Under the current schedule for the Future Submarine project, a new submarine is due to come into service in 2033, the same year the last of the Collins Class boats is due for decommissioning, presenting a sizable gap in capability for the RAN.
To address this, the report suggests buying six off-the-shelf submarines from France to help fill the gap between when the Collins fleet is decommissioned and the new fleet is ready.
Naval Group (formerly DCNS) was awarded the contract for the 12 Future Submarines last year, beating out bids from Germany and Japan.
Construction of the submarines will begin in 2021-22. Construction will extend into the late 2040s to 2050 timeframe.