What … we should order more ships from this lot?

Australia’s $8 billion air warfare destroyer project is plagued by management and structural flaws and the blame is spread across almost every contractor involved in the project.

The Australian Financial Review understands a final report to be released by the Australian National Audit Office on Thursday is damning of every aspect of the project.

The report criticises Spanish ship designer Navantia over poor design drawings, the government weapons purchaser and partner in the project – the Defence Materiel Organisation – over its conflict as both partner and customer, and government-owned shipbuilder ASC over inefficient shipyard management as well as shipbuilder BAE over early construction shortcomings. The report says Australian industry was simply not ready to take on the massive project.

It is particularly critical of the inability of the partners to work together on the project and the lack of a coherent plan to support the ships after construction. One defence source suggested to the Financial Review that the report was “so damning it might make it difficult for the government to credibly award new ship projects in Australia’’.

The Air Warfare Destroyer Alliance involves a partnership between the DMO, Adelaide-based shipbuilder ASC and systems integrator Raytheon.

But the three 6500-tonne warships being built for the Royal Australian Navy are based on a Spanish Navantia design with hull blocks for the ships being built at BAE’s Melbourne shipyard in Williamstown and Forgacs shipyard in Newcastle, and assembled at ASC in Adelaide.

ASC, BAE and Forgacs have been lobbying Defence Minister David Johnston to announce new projects to fill the “valley of death’’ – a hiatus for big ship projects from 2015 to 2018. BAE has warned unless a decision is made soon it will have to cut up to 1100 jobs and close its ­Williamstown shipyard from next year and Forgacs has warned it will close its Newcastle and Tomago shipyards with the loss of 900 jobs .

An interim report in December found the air warfare destroyer project budget was blowing out by $10 million a month, with half the $4.5 billion budget spent before any of the first three ships were completed. It also reported that the government may have to pump in up to $800 million more to remediate the project.

The project has already been put back by two years, initially in 2010 over hull block defects, but this was extended a further 12 months in late 2012 because of defence budget cuts and shortages of critical skills. Last week Mr Johnston announced before the release of the final report that the government had ordered an independent review of the project to be carried out by the former head of the US department of Navy, Don ­Winter, and John White, who played a major role in sorting out the problem with building the Navy’s fleet of Anzac frigates.

The duo have to deliver a report within three months.

The first of the new destroyers, HMAS Hobart, was to be delivered this year but the date has been pushed out to 2016.

The other two are due in 2017 and 2019 respectively, but further delays are possible.

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23 Responses to What … we should order more ships from this lot?

  1. Matt

    Is there any reason we can’t simply order them from the Americans/Japanese/Germans/someone competent?

  2. Ant

    Let’s face it, while we run significant industries under the iron fisted rule of union domination, we’re always going to bloody hopeless at it.

    Think Collins Class submarine. A first class boondoggle that struggles to swim, let alone sink.

  3. Driftforge

    Hmm. That is not at all the sense in the industry over this. No one is happy about the outcome to this stage, but they’ve ended up working together reasonably well. Yes, it has been a learning experience.

    And 20% overrun on a tranche of only three ships, with a screw up on the hull and a client side programs change in the middle?

    That’s actually not too bad; it’s not ideal, but in larger navies it would disappear as the longer run efficiencies of the project kicked in.

    Seems like they may have covered some of the ‘v.o.d’ just with delays though :|

    Time to kick the Collins replacement design process into high gear.

  4. Driftforge

    Think Collins Class submarine. A first class boondoggle that struggles to swim, let alone sink.

    Or maybe lets just repeat the idiocy put about by parties interested in picking up the $30B worth of work on the next set.

    Collins is doing just fine now, and the work done here is the reason for that.

  5. .

    Yep.

    Get all the money back from these swine. Buy ships off the shelf at the right price.

  6. Digger

    Defence aquisition in Australia NEVER changes and it never gets it right. Manoora, Kanimbla, Australian made FFG’s, Anzacs, Collins Class and now AWD… What a farce, just buy good vessels from competent suppliers like the US. We could ave had US arleigh Burke Destroyers in service right noe had the inept decision makers chosen a proven platform with ALL systems already integrated. This industry, overseen by DMO, wants to design and manufacture new submarines… Give us a break… They get nothing right.

  7. .

    Yes the Collins is good now by all reports. A shame it doesn’t have true cruise missile capability though – or that we don’t have more of them.

  8. Craig Mc

    We haven’t had a defence project that hasn’t run over-time or over-budget since The Boomerang. I dare say, neither has any other country.

  9. Old Salt

    The fact that anyone thinks that designing and producing the Collins replacement submarine in Australia is a good idea defies all logic.

    A risk reduction approach would see all replacement submarines built in either Germany or France with crews and Australian engineers seconded to the shipyard to receive training and technology transfer to allow the boats to be supported in Australia. Politics, of course, will ensure that this does not happen – but at least we could produce the first two overseas to sort out the technical issues and then build the remainder in Australia, albeit at additional cost to the taxpayer.

  10. john constantine

    i see that a collins class sub caught fire recently. pity that the collins class arer seen as such death traps that the navy can’t get people to sail in them,unless they go overseas and offer australian citizenship as bait.

  11. LABCR-TV

    Seems we can never get it right when it comes to ship and sub building. Stupid government decisions mixed with useless trade unions. How much have we spent over recent decades and what do we have to show for it? Not even sure if we could keep the Fijian air force at bay. Let’s just buy what we need from the Chinese, or better still, hire the Chinese military to safeguard our borders!

  12. James Barlow, NT

    At a bare minimum, the Coalition Government announced review into the AWD Project must note that the previous Coalition Government ignored the advice of the then Chief of Navy (and hence our entire naval organisation which assisted in the advice), selected a platform from one provider, and a weapons system from another, and then (it simply beggars belief) ordered that the ships be built in different shipyards.

    As noted by yours truly ad nauseum, until governments (of all stripes) stop treating naval procurement as a sop to industry and start using the process for procuring effective maritime capability – we’ll keep ending up with this type of mess.

  13. Craig Mc

    Feast or famine. That’s just how it is for government contractors. I’ve seen it all before. All the taps get turned on at the same time, and then turned off at the same time.

    I worked on a defence project 20+ years ago. Defence specs were peculiar things back then. You were told what equipment you’d have to incorporate, but nothing about how it would be used – that was an operational secret. A lot of the time you’re putting stuff together in a way that wouldn’t do the job – because you weren’t allowed to know the job. Major corrections are inevitable in that development environment.

    Also, contractors in Australia – unlike say, Boeing – wait until they’re asked before working on product. That reactionary approach to business isn’t something that happens in a functional free enterprise. OS contractors would always be working on the next generation as well as delivering the current one. That means they’re more in control of their future and can market themselves to other nations. Also, they’re more privy to how their equipment is used by the customers than ours are.

  14. Squirrel

    Sounds like it’s time for (yet) a(nother) review of that part of the Defence organisation – or they could save time and money by dusting off one of the earlier review reports and just updating the cover and the typeface.

  15. Dave Owen

    I cannot believe we are using a Spanish design. I thought Sir Francis Drake proved that their ships were inferior to his. I have not heard that the Spanish were world leaders in anything except midday siestas.

  16. Zulu Kilo Two Alpha

    I had not heard that the Spanish were world leaders in any thing except midday siestas

    Don’t knock the siesta. We have a Mediterranean climate. When we were borrowing customs from other cultures to make up the multicultural society, wheres’ the idiot who passed up the siesta?

  17. james

    Don’t knock the siesta.

    Having one now.

    Show up early so the boss don’t bitch.

    ¡Siesta is Muy bien!

  18. rickw

    If you are going to successfully execute defence project in Australia, then you need to do a couple of things:

    - Committ to long term programs that involve multiple builds. There unfortunately needs to be time to build up the skills and iron out the kinks.

    - De-unionise the work forces involved.

    Large and complex projects in general industry might run 15 years from start to finish. How long do these projects run for?

  19. .

    Truth be told we should take on more Mediterranean custom and architecture, and just reject their shitty socialist economic policies which have ruined them.

  20. Warwick Beattie

    Never seemed like a good idea this Spanish design. The Yanks have made 60 odd Arleigh Burke class, in different configurations. But they were considered too big for our needs and we were offered an evolved ship lighter by 2k tonnes, but choose the Spanish design as it was considered less risk. Now we are going to spend at least 2 billion more on these, receive a ship that is less capable then the Arleigh Burke and only has one room for one helicopter. Our purchase decisions seem extremely odd sometimes. And without a doubt this waste reduces the money available for our service people to get on and do their job and train for those jobs.

  21. .

    Just buy the $@#*ing Arleigh Burke class and get them jazzed up with the NMD gear, cruise missiles and maximum air fleet arm facilities…FFS

    DMO are scoundrels.

  22. MHalblaub

    “Collins is doing just fine now, and the work done here is the reason for that.”

    A Collins-class submarine may work fine then ready but the price is just to high and readiness is a rare occasion compared to other submarines (see Coles report). The Collins-class submarine cost about $500 million a year just for maintenance.

    According to AWD and Collins-class Australia made the same error twice. Navantia and Kockums are good at building ships but are rather unexperienced with licensed built units. The upfront price might have been cheaper but the price Australia has to pay now for Collins-class tells the answer. Just compare the South Korean submarine program with the Australian. South Korea now exports submarines.

    Btw. $500 million is about the price for one new European submarine. – There are no special Australian needs. There are just some Admirals who want more.

    KISS!

  23. Bons

    I recently read a book about a heroic Boston squadron leader pilot who was killed in a Beaufort accident.
    The book then went on to explore the whole issue of the Beaufort.
    It was a mirror of the Nomad scandal.
    The boss of CAC approached union fool Curtin and suggested that those pilots exposing the dangers of the killer Beaufort should be charged with treason. Curtin called in the chief of the Air Force and directed him to take action against those who were exposing the lethality of the aircraft.
    Fifty years later. CAC dodged any criticism of the Nomad by using the same tactic.
    Public servants cannot build things or project manage any outcome that has a complex technical content.

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