Labor prepares to place its stamp on navy’s future capability with decision on $10bn frigate program

The Albanese government is believed to be days away from selecting its preferred frigate builder in what will be its most consequential Defence procurement decision in three years.

Mitsubishi Heavy Industries’ Mogami frigate is considered the frontrunner for Australia’s general purpose frigate contract.

The Albanese government is poised to select its preferred design for the navy’s new $10bn general purpose frigates in what will be its most consequential Defence procurement decision since its election in 2022.

The choice – between Japan’s upgraded Mogami frigate and Germany’s Meko-A200 – will place Labor’s stamp on the navy’s composition and lethality for a generation, and will have a lasting influence over Canberra’s critical relationship with Tokyo.

Multiple defence industry sources have told The Australian that after eight months of detailed assessments by the Department of Defence, the national security committee of cabinet is believed to be days away from selecting either Japan’s Mitsubishi Heavy Industries or Germany’s Thyssen­Krupp Marine Systems as its preferred frigate builder.

The Japanese bid is widely considered to be the favourite; its frigate is newer and better armed, and the government will be reluctant to disappoint its “quasi ally” which was controversially passed over in 2016 for a now-cancelled submarine contract that went to the French.

However, the Mogami is believed to be at least 20 per cent more expensive than its German rival, which would be equipped with the familiar Saab 9LV combat system, while the MHI bid is said to be risky because Japan has never built warships in another country.

The frigate plan calls for 11 ships, with the first three to be built offshore and the remainder at Western Australia’s Henderson shipbuilding precinct.

But there is growing speculation that up to six of the frigates could be built offshore, amid doubts the facility near Perth will be ready in time, and an expected backlog for the winning bidder’s likely industrial partner, Austal, which has to build two classes of heavy landing vessels for the army before switching to the ­frigate build.

It’s unclear if Defence supports one design or the other, potentially leaving cabinet members with a high degree of latitude on the final decision.

One industry source with first-hand knowledge of the bidding process said it was a “coin toss” as to which bid would be successful.

Egypt’s ENS Al-Jabbar, a Meko-A200 frigate built by Germany’s ThyssenKrupp Marine Systems. Picture: TKMS

Professor Peter Dean, from the ANU’s Strategic and Defence Studies Centre, said he believed the Japanese ship would win.

“It meets the requirements for enhanced lethality, but most importantly the Japanese have offered ships to the RAN that are already being built,” he said.

“This means that the Mogami has a far better chance of meeting the government’s 2029 deadline to have the first ship in the water. TKMS would struggle to meet that deadline as they can’t start to build until contracts are signed.

“The wildcard is the German ship is supposed cheaper and that TKMS has an established record of partnering for industrial builds – experience the Japanese don’t have.”

Australian Strategic Policy Institute senior analyst Euan Graham said he had been told the Japanese were “ahead on every significant criteria except price”.

He said Japan’s offer to provide a first ship to Australia out of its own production schedule would also mitigate program risk for Australia.

Former naval officer Jennifer Parker said: “I’m honestly not sure who they’ll go with. Obviously there’s a big push for Japan, it’s the better ship. But we also can’t afford to get another shipbuilding project wrong. The TKMS bid is less risky and likely easier to ­integrate into the fleet.”

The looming decision comes amid the botched Hunter-class frigate program, which has blown out in cost to a whopping $9bn a ship, with the first not due to enter service until at least 2032.

The government is yet to conduct a full tender process for the general purpose frigates but well-placed sources said it had sufficient technical information on both proposals to “downselect” to a single bidder for final pricing ­negotiations, with the option of going back to the other bidder if negotiations broke down.

The process would be a break with the government’s preferred model of staging a competitive tender – something Defence Minister Richard Marles was critical of in opposition when the Coalition downselected to France’s Naval Group as preferred tenderer for the navy’s now cancelled conventional submarine fleet.

The government wants to sign a contract for the frigate build by the end of the year to ensure it receives the first ship before the end of the decade, leaving it with little time to conduct a full tender.

The decision was expected a fortnight ago but was pushed back and is now expected this week.