Multibillion-dollar blowout on the horizon for Future Submarines

Defence is headed towards a multibillion-dollar blowout on the SEA 1000 Future Submarine project, a South Australian senator has said, calling on Defence to establish an independent board for oversight of the project.

Senator Rex Patrick of the Nick Xenophon Team (NXT), who replaced Nick Xenophon in the senate in November last year, said Defence's failure to meet milestones in this phase of the project will result in billions of dollars of extra cost and years of delays.

As previously reported on Defence Connect, under the design and mobilisation contract for the SEA 1000 project, signed on 30 September 2016, Defence and Naval Group were required to produce the Australian Industry Capability Plan and an Australian Steel Development and Qualification plan within five months of the contract signing.

Members of NXT have been pursuing the documents since last year, with former senator Nick Xenophon grilling Defence at the October Senate estimates.

Rear Admiral Greg Sammut, Head of the Future Submarine Program, said that while Defence was previously on schedule in meeting all milestones for the design and mobilisation contract, the relevant parties fell behind in August last year.

"We're still working on the Australian Industry Capability Plan with Naval Group, and similarly with the study for the Australian development of the steel and so forth," RADM Sammut said.

"There have been some delays with the work that we want to do with Australian industry on the steel study."

Senator Patrick said failure to meet these milestone suggests more troubles are ahead for the $50 billion project.

"These milestone signals are like the canary in the coalmine," said Patrick, a former submariner and project manager within defence industry.

"In this case, the canary has fallen off the perch and Defence are ignoring that fact. In the context of a $50 billion project spanning multiple decades, these small problems can easily cascade and turn into years of delays and billions of dollars of additional cost."

Defence is no stranger to mammoth blowouts on large projects, with the Wedgetail aircraft, the Navy Seasprite, the Air Warfare Destroyer project and the Tiger Armed Reconnaissance Helicopters experiencing a series of serious cost problems in recent years.

"There have been a litany of failures and blowouts in Defence projects over the years costing tens of billions of dollars with Defence never having once identified early in the piece that those projects were going off the rails," said Senator Patrick.

"Navy's Seasprite helicopter project is a case in point. Navy were holding on to that project right up until the day it was cancelled. In that project, $1.4 billion was spent with absolutely no outcome for Defence or the taxpayer."

Patrick has reignited calls for Defence to establish an independent panel of experts to have oversight of the Future Submarine project, as well as other large projects, in order to avoid delays and significant expense to the tax payers.

In 2011, the Australian Strategic Policy Institute also called for experienced project management involvement in the Future Submarine Program and Xenophon did the same in December 2016. Xenophon held a meeting with the Productivity Commissioner and Defence Industry Minister Christopher Pyne to establish an independent panel for the SEA 1000 project, but the request was rejected by Minister Pyne.

Senator Patrick said it is crucial for Defence to bring in an experienced project manager from outside Defence to run the SEA 1000 project efficiently and on budget.

"No disrespect is directed at the Admiral running the project. Just as you can't post an experienced project manager into the position of submarine Commanding Officer, you can't take a submarine Commanding Officer and place them in the position of a senior project manager," said Patrick.

"An independent oversight body is an absolute necessity. This is just too important. There are also serious national security implications at play here.

"On one hand, the government is cutting welfare, education, health and other important community programs, while slipping through the fingers of the other hand are billions of dollars in Defence project blowouts."

Defence Connect contracted Defence, Minister Pyne and Naval Group for comment but none were provided at the time of publication.

          

Multibillion-dollar blowout on the horizon for Future Submarines
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