Submarine and ship construction – welcome to the new normal

The recent ANAO report into Australia’s ATTACK class submarine project, ‘Future Submarine Program – Transition to Design’ (ANAO Report 22, 2019-20), triggered a lot of comment about the costs we’re likely to pay for the submarines.

What nobody seems to have grasped is that we shan’t know the final cost of the submarine construction program until fairly close to its end. Why? Because we’re not buying 12 identical submarines.

And the same applies, by the way, to the nine HUNTER class frigates that BAE Systems Australia will be building for us.

The submarines and frigates will be built in batches – the frigates in three batches of three; the submarines probably the same. Why? Because over a lengthy production run the technology that you put into the first of class will be obsolete, and possibly even quite unsupportable, long before you build the final ship in the class. We found this with the 10-ship ANZAC frigate build: some of the electronic equipment that went into the first ship, HMAS ANZAC, was already obsolescent; it was completely out of date and unsupportable by the time the tenth ship, HMAS PERTH, entered service 14 years later.

It was the same with the COLLINS class submarines: they were identical throughout the six-boat build. Not only was there no plan to update the platform or combat system during the construction phase, Defence absolutely refused to alter the contractual specifications for the original combat system in spite of the fact that this was proven to be incapable of delivering what the RAN wanted. Both the ANZAC frigates and COLLINS class submarines have undergone class-wide upgrades since then.

So each batch of Australia’s new submarines and frigates will represent an opportunity to introduce design changes – possibly for the platform and propulsion systems (you don’t change these lightly because that’s expensive, especially on a submarine); and certainly for elements of the combat system, weapons, platform management system and crew accommodation. The potential for innovation by Australian industry and research teams, as well as by the Navy, in tackling problems or seizing opportunities is immense.

So… what does that mean for these projects? It means that, if we want high levels of Australian industry involvement in each batch, on top of what we’ll be doing simply building these things, we need as a nation to develop the design, project management and manufacturing skills to be able to take an existing design and improve on it, possibly quite dramatically. Which companies will do that work? We may see different firms taking the lead on different batches, thanks to acquisitions, mergers and technology breakthroughs.

And what does that mean for costs? It means that we have no way of knowing what the fourth batch of submarines will cost, for example, because we don’t know what new technologies will be needed, nor what changes may need to be made to the platform and propulsion system – some of which may relate to changes in how the RAN operates these boats, and the Navy won’t be sharing those details gratuitously.

This is the big change that the Navy and Defence are grappling with: they’re embarking on a massive, complex submarine and shipbuilding program that’s not predicated on mass production of two static designs over 20 years. They can’t simply negotiate a fixed price for a single class of submarines or frigates; they’ll need to negotiate a new price for each batch. The same goes for the F-35, incidentally – planned software upgrades through its production life probably make it very hard to predict exact flyaway costs for future aircraft.

Oh, and Australia’s naval industry will need to fight for its growing share of work on each batch – it will need to achieve quality, capability and cost targets, which will mean innovation in both the kit they’re building and how it’s manufactured, tested and sustained in service.

It will be fascinating to watch how industry rises to this challenge. Welcome to the new normal.