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Defence, Naval Group reach agreement on Future Subs program

The parties have come to terms on key elements of the SEA 1000 contract following protracted negotiations.

The parties have come to terms on key elements of the SEA 1000 contract following protracted negotiations.

Naval Group has committed to spending 60 per cent of the value of its SEA 1000 contract in Australia over the life of the program, after formally signing a revised Strategic Partnering Agreement with Defence.  

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The amendments, which mark the conclusion of prolonged negotiations, contractually oblige Naval Group to achieve the 60 per cent target in a bid to support the government’s objective of fuelling local jobs growth and bolstering sovereign industrial capability.

Other contractual obligations in the agreement involve establishing procurement organisations in Australia, and requiring Naval Group to approach local industry first for the majority of equipment required for the development of the 12 Attack Class submarines.

Naval Group is expected to continue reporting the level of contract expenditure in Australia over the course of SEA 1000 contract.

Acting Minister for Defence Marise Payne welcomed the new agreement, stating it would generate opportunities for local industry worth “hundreds of millions of dollars”.

“Beyond maximising opportunities for engagement with Australian industry, this will also ensure that the Morrison government’s requirement for a sovereign Future Submarine capability is met,” Minister Payne said

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“Importantly, the amendments have been incorporated to uphold the current structure of the Strategic Partnering Agreement, which the Auditor General concluded had established a fit-for-purpose strategic partnering framework that addresses this government’s objectives for the program.

“These include maximising Australian industry involvement in all phases of the program.”

Naval Group global chief executive Pierre Eric Pommellet, who visited Australia last month to meet with Commonwealth government officials, said the firm is “fully committed” to supporting sovereign submarine capability.

“I have been very impressed by the existing capacity of Australia’s manufacturing sector, and its enthusiasm for the Attack Class project,” he said.

“This program will deliver to the Royal Australian Navy 12 regionally-superior Attack Class submarines, which are specially designed for Australia’s unique conditions.

“But it will also create a new and sovereign submarine building industry in Australia. Strong local supply chains will ensure that Australia has new self-reliance in this critical defence capability.”

Pommellet added: “France understands the value of sovereignty. It is one that we share with Australia. This is a very unique program and partnership. Naval Group will deliver for Australia.”

Naval Group Australia CEO John Davis said the firm is already working with local industry in support of the country’s AIC objectives.

“There will be increasing levels of local content in each of the 12 Attack Class submarines, as we continue working with local businesses to boost Australia’s sovereign capability,” Davis said.

“Ensuring that at least 60 per cent of the Attack Class contract value is spent locally will create hundreds of Australian jobs, for the long term, in new supply chains around the country.”

According to Naval Group, it’s program has generated almost 300 direct jobs in Australia, with the workforce expected to double in 2021.

Over 120 local firms have reportedly registered their interest with Naval Group in response to the release of the first local manufacturing package, worth approximately $900 million.

“We have been encouraged by the quality of responses to our $900 million local manufacturing package for the building of major submarine parts,” Davis added.

“This program has already made great progress in creating jobs and designing the world’s most advanced conventionally-powered submarines.

“There is so much more still to come.”

[Related: Attack Class sub milestone for Aussie industry participation]

Defence, Naval Group reach agreement on Future Subs program
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