Future subs contract run-off to rile industry

The $80bn Future Submarine program is facing a fresh industry backlash, as Adelaide company PMB Defence is forced into a run-off with a Greek competitor.

Defence Minister Linda Reynolds. Picture: AAP

The nation’s $80bn Future Submarine program is facing a fresh industry backlash, as Adelaide company PMB Defence is forced into a run-off with a Greek competitor to design the boats’ main storage batteries.

Contracts for four other “critical systems” — the submarines’ main motor, diesel generators, electrical switchboard and weapons handling system — were handed to overseas companies without competitive tenders.

But Defence and France’s Naval Group have ordered PMB Defence, which has produced batteries for the Collins-class subs for 30 years, into a contest for the work against Greece’s Systems Sunlight.

The Greek company is Naval Group’s preferred supplier of batteries for its other projects, potentially lowering the risk premium associated with its bid.

If Systems Sunlight were contracted for the design work, it would have to be involved in every battery upgrade for the boats.

The tender process carries significant risks for PMB Defence, which would face loss of reputation and overseas sales if it were to be pipped for the contract.

It’s understood the local ­defence sector will be furious at the decision when it is officially announced on Friday.

Defence Minister Linda Rey­nolds said the selection of the companies was “another significant milestone in the design and delivery of the Attack-class submarine program”.

“A competitive process will ensure the final designer selected will deliver the very best battery technology to meet the key performance requirements of the ­Attack-class submarine,” she said.

Naval Group Australia chief John Davis said the contract would be awarded to the organisation “that provides a technically superior design, represents the best value for money and demonstrates a strong commitment to the program’s Australian industry capability requirements”.

The winning bidder will be sel­ected in early 2022.

Naval Group recently pledged Australian firms would get 60 per cent of the value of its Future Submarine contracts, after earlier saying local industry content in program might not hit 50 per cent.

Defence Industry Minister Melissa Price said the main storage batteries would be manufactured in ­Australia, no matter what company won the design contract.

“This commitment will provide enormous opportunities for more local companies to be part this world-class advanced manufacturing project,” she said.

French company Jeumont Electric has been contracted to provide the Future Submarines’ main motor, while Schneider Electric France will provide the DC electric switchboard.