The French company building the $80 billion future submarine project has recommitted to giving Australian firms more than half of the work on the major shipbuilding program, amid doubts from local industry over its rollout.
Relations between the Australian government and Naval Group hit boiling point last week after Naval Group Australia's chief executive John Davis reportedly suggested local firms might not get even half the submarine contracts.
Naval Group has committed to a 60 per cent local build of submarines for Australia.Credit: Naval Group
Defence officials and Naval Group were on Monday night questioned by a parliamentary inquiry over concerns the biggest military project in Australia's history was not meeting its local content requirements.
Naval Group's executive vice president of the Future Submarine program, Jean-Michel Billig, said the company was committed to "maximising industry opportunity at every phase of the program".
Mr Billig said the company was now committing to give Australian firms at least 60 per cent of the multibillion-dollar contract.
“There has been recent commentary questioning Naval Group’s commitment to industry, which has been both disappointing and inaccurate," he said.
“In the programs we have been associated with in Brazil and India, we exceeded our ambitions for local content and capability, and we are extremely confident we will do the same in Australia even though Australia is a much more demanding customer.
“Therefore, herewith, we commit to a level of Australian industry capability that will have the effect of at least 60 per cent of the Naval Group contract value spent in Australia. We are confident this can be achieved as we will build the entire fleet of the 12 submarines in Australia.
“Make no mistake, Australian suppliers will always be the first point of call and the preferred source in our procurement process."
Mr Billig said the 60 per cent commitment would be formally embedded in a written agreement with the Australian government within the coming years.
In 2016, Naval Group's parent company DCNS said "over 90 per cent" of the build would happen in Australia, but this has been revised down over the years.
Australian Defence Minister Linda Reynolds last week launched an unprecedented attack on Naval Group and took her concerns up directly with her French counterpart.
Defence Minister Linda Reynolds Credit: James Alcock
Currently there is about a quarter of workers on the project based in Australia.
At its peak, there is expected to be about 1800 direct jobs on the project, with the company saying the Australian workforce will increase over time.
Naval Gorup was also questioned over why it last year asked for a 15-month extension in the design phase of the project, which it said was needed to minimise delays down the track during construction, pushing out the design completion date from July 2022 to September 2023.
Defence and Naval Group then settled on a nine-month extension.
"During the pre-contract phase we realised there were probably some more design activities to be performed to further mature the design, to better integrate all operational requirements set by the Commonwealth," Mr Billig said.
"As a consequence, the Commonwealth agreed to an extended schedule tot hose activities related to the maturity of the design without impacting the start of construction for the submarines."
The company also faced questions about why three contracts for critical pieces of infrastructure - including medium and high-capacity presses and milling machines - were given to overseas firms.
“Those three contracts have been signed with overseas suppliers, but all of those contracts include a significant component of Australian industry content," Mr Davis said.
“In the case of those equipment of the submarine construction yard, there wasn’t a supplier in Australia that had that capability."