Draft of full cycle docking study delivered to Defence

The study is being conducted by ASC, with CEO and managing director Stuart Whiley revealing a draft of a discussion plan relating to any potential move was delivered to Defence at the start of this month.

"We were tasked under a letter in December of last year to recommence that study work, we've recommenced that study work and we've delivered an initial draft discussion document to Defence in early May and we've had very high level preliminary feedback on that discussion," Whiley told Senate estimates.

Whiley said ASC is awaiting feedback from Defence before it can begin work on the final document.

If the plan to relocate goes ahead, hundreds of jobs could be moved from Adelaide to WA. There are currently around 700 ASC workers carrying out the maintenance and full cycle docking work in Adelaide on the Collins Class submarine fleet, while 400 staff in WA carry out other maintenance work.

While the details for the possible shift of sustainment from South Australia to Western Australia were unearthed via an FOI by former submariner senator Rex Patrick, the government said the potential move was signalled in the Naval Shipbuilding Plan.

Under the heading ‘Sustainment of the Submarine Fleet’, section 2.19, the Naval Shipbuilding Plan says the government is likely to consider advice from Defence in terms of long-term arrangements in regard to sustainment.

“The design of both surface ship and submarine construction infrastructure at the Osborne Naval Shipyard [in South Australia] will continue to be refined following release of this Naval Shipbuilding Plan,” it reads.

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“In this context, the government will likely need to consider advice from Defence in coming years on appropriate long-term arrangements, including the location of Collins Class and future submarine sustainment activities.

“Decisions on this aspect of submarine capability management will not be needed for some time to come.”

Further to this statement, in the Naval Shipbuilding Plan, under subheading ‘Osborne Naval Shipyard, South Australia’, section 3.19, the government telegraphs an assessment of the capabilities of the Osborne facility to support sustainment once the Future Submarine project gets underway.

“The Osborne North facilities will continue to support Collins Class sustainment for some time to come. Planning will be required to ensure this activity can continue without detriment while the submarine infrastructure construction activity is underway,” it reads.

The government also said any potential move may be in preparation for an enhancement of capability in South Australia to satisfy the needs of major shipbuilding programs that will be centred in the state, including the SEA 1000 Future Submarine project.

Senator Patrick said in March that transferring the work to Western Australia could disrupt the success of the program.

"Transferring major sustainment work to Western Australia would no doubt be welcomed by the [local] government, but would obviously disrupt both a successful program that now delivers much improved operational reliability for the Collins submarines," Senator Patrick said.

"This will break up the critical mass of defence maritime construction and sustainment capability and expertise that has been developed in South Australia. There will be many shocked ASC subcontractors and suppliers after today's news.

"The essentially political nature of the federal government’s decision-making in this vital national security area is obvious, but is further demonstrated by the Defence Department’s action in delaying the release of documents on this matter until after last Saturday’s SA election, when the FOI decision was actually made prior to the poll."

The secrecy of the plan has raised eyebrows in the defence industry, with concerns mounting a potential move could fall victim to political pork barrelling.

The costs and practical difficulties of such a move, including finding or moving an expert workforce, would be significant. The move of deep maintenance from Sydney to Adelaide in the 1990s, with the introduction of the Collins Class fleet, led to a sizeable blow-out in cost.

The Defence Teaming Centre (DTC), a nationally-focused member organisation supporting Australia's defence industry, has expressed concern over the secrecy of the draft plan being put together by ASC and the lack of consultation with industry.

"Why the secrecy? Let’s have an open discussion. The First Principles Review is about changing the culture of Defence procurement and decision-making; recognising industry as a fundamental input to capability. Revelations like this only seek to perpetuate the trust deficit between Defence and industry and pit states against each other," said DTC chief executive Margot Forster.

DTC said discovering the Department of Defence is investigating the feasibility of relocating a significant portion of Collins sustainment work through a FOI request has perpetuated distrust between Defence and industry.

"In short, the government cannot expect industry to take risks and invest in defence without honesty and reciprocal transparency," DTC said in a statement.

"If the government is truly committed to recognising industry as a fundamental input to capability, then decisions of this magnitude need to be discussed openly with industry."

The FOI documents also revealed that following inquiries to the Defence Minister’s office by media in August 2016, ASC was directed to temporarily suspend its study owing to what Defence described as "current sensitivity".

During the temporary suspension, ASC replied to questions from Nick Xenophon at Senate estimates in October 2016, saying, "There is no work currently ongoing to consider moving to WA."

The documents also include a letter dated 12 December 2017 from Defence to Whiley that asked him to "continue to work on the study concerning the potential relocations of full cycle dockings in the 2024 to 2026 time frame as an alternative to remaining in South Australia".

Defence Industry Minister Christopher Pyne reaffirmed the government's position that any decision would come down to the available capacity at Adelaide's Osborne facilities to Adelaide radio station FIVEaa in March this year.

"The truth is that by mid-2020s there will be submarines in full production at Osborne, employing 2,800 people directly; and frigates in full production at Osborne, employing 2,200 people directly. It would be quite insensible for the Department of Defence not to make contingency plans about what to do with the full cycle docking, which is 700 maintenance workers," Minister Pyne said.

"In the event that we find that physically it's not possible for it to all be done at Osborne, to have effectively 6,000 full-time workers at Osborne trying to do the building of submarines – which is not a small matter, the shed for the submarines is bigger than the Adelaide Oval stadium – these frigates – again, the sheds are bigger than the Adelaide Oval stadium – and also the full cycle docking. Now, it’s possible the full cycle docking will remain there, quite able to be done."