Greek firm’s ‘favour in subs contract is a scandal in the making’

Australian industry fears the only local company in the running to win a big contract on the new submar­ines will be beaten by a Greek rival.

A Naval Group submarine.

Australian industry fears the only local company in the running to win a main systems contract on the nation’s new $90bn submar­ines will be beaten by a Greek rival that has been declared a “strategic supplier” by the French company building the boats.

France’s Naval Group has presented a new industrial partnership plan to Greece as part of its bid to build two new multi-­mission frigates for the Hellenic Navy, vowing to forge a long-term partnership with the country’s defence­ industry.

The bid has Australian industry worried, after Adelaide company PMB Defence — which has supplied batteries for the Collins-class subs for 30 years — was forced into a run-off with Greek company Systems Sunlight to design­ the Future Submarine’s main batteries.

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

Naval Group senior vice-president Alain Guillou talked up the capabilities of Greek defence suppliers­ in a speech in February, singling­ out the battery company for praise. “Sunlight in particular is a strategic supplier for Naval Group’s submarines programs,” he said at the time.

Australian Industry & Defence Network chief executive Brent Clark said local defence companies were concerned that Naval Group would benefit by giving the contract to the Greek company.

“It is concerning to us that Alain Guillou … was quoted recent­ly as saying that the Greek battery supplier, Sunlight, was a vital component of the Naval Group supply chain, and the Aust­ralian company now finds itself in a competitive process with that company,” Mr Clark said.

“We would expect that Defence­, given this conflict, will be responsible for conducting this process and we would assume that Defence will make the final decis­ion on this matter.”

Centre Alliance senator Rex Pat­rick warned that the battery contract was a “scandal in the making”, saying Naval Group’s need to provide Greece with industr­ial “offsets” would influence its decision.

“They are trying to win favour with the Greek government in the hope that this will help them win the Greek frigate program and meet their offset expectations,” Senator Patrick said.

A Naval Group spokesman said PMB Defence and Systems Sunlight were awarded contracts to design the main storage batteries “following a rigorous source selectio­n process”. “Any accus­ation that other international activ­ities influenced the acquis­ition process is false,” he said.

Defence said Naval Group recom­mended the run-off between the companies last August, and contracts were signed in December.

“Regardless of which design is selected, both suppliers have agreed to manufacture the batteries in Australia,” Defence said.

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 the program might not hit 50 per cent.

The Australian defence sector was furious at the decision to force PMB Defence into a competitive process to design the Future Submarine­s’ batteries, given its long and successful record on the Collins-class program.