Future Subs: Naval Group’s initial contract pitch for next phase of work was ‘not compliant’

Naval Group’s initial pitch for the next two years of work on the future submarines was not acceptable or compliant, a Defence official confirmed.

French defence giant Naval Group’s initial pitch for the next two years of work on the $89 billion Future Submarines was “not acceptable and not compliant”, a senior Defence official has confirmed.

As contract talks drag on, Defence’s general manager of submarines, Greg Sammut, has indicated Naval Group did not provide enough detail in its original proposal for the next stage of work and that it failed to match the work Defence required in the time frame. A contract for the next phase of work on the Attack-class submarines, set to be built in Adelaide, may not be signed until late September after Naval Group’s first two proposals were rejected.

“There was an initial offer to us but … that was not acceptable and not compliant,” Rear Admiral Sammut told a Senate estimates hearing in Canberra.

“Compliant would be that it matches the work scope that we have given Naval Group to conduct over the period,” he said on Tuesday.

The proposal needed “the right estimating parameters” and it needed to be “fully documented” so Defence could “trace and understand the basis of estimates that they are providing us with.”

An artist’s impression of the Future Submarine, to be built by Naval Group in Adelaide.

It was previously reported Naval Group’s initial cost estimate was also significantly higher than Defence was expecting.

Senior Defence Department officials rejected reports German-made subs were being considered as an interim option for Australia’s fleet before the French subs were built.

Officials confirmed Vice-Admiral Jonathan Mead had been tasked in February with conducting a review of Defence’s planned military investments.

But no details were made public, with Vice-Admiral Mead telling the estimates hearing: “The review is classified, the body of work we’re doing is classified, the terms of reference are classified.”

Former defence minister Linda Reynolds requested the review.

Defence is also poised to advise the federal government on whether construction of the first Future Frigate in Adelaide needs to be pushed back from the end of 2022.

It was scheduled for 2022 but senior Defence official Sheryl Lutz said Covid-19 had caused delays in Britain, which was affecting the UK’s Type 26 warship and the Hunter-class design maturity.

She said Defence was working with BAE to determine options in terms of design maturity and the time frame.