Lockheed Martin refuses to lock in Australian content for subs

The company developing combat systems for the Future Submarines won’t commit to a specific level of Australian industry content.

Defence Minister Linda Reynolds. Picture: AAP

The US company developing combat systems for the nation’s $80bn Future Submarines won’t commit to a specific level of Australian industry content in its portion of the build, which could cost up to $32bn.

France’s Naval Group last month pledged to give 60 per cent of work on the subs’ design and construction to Australian companies, after earlier refusing to commit to a 50 per cent target.

But Lockheed Martin, which will deliver the boats’ weapons and sensor systems, would not give a similar commitment.

“I’m not thinking in percent­ages, to be honest. I’m thinking — if we can do it here, I’m looking to do it here,” Lockheed Martin Australia chief executive Joe North said. “And if we can find that match, and we can maintain the competitiveness on cost and everything else, then that’s what we are going to do.”

Lockheed Martin will provide the AN/BYG-1 combat control system for the boats, which includes acoustic, navigation, tactical and weapons control systems.

The company is contractually required to maximise Australian industry involvement in developing the system — which will cost an estimated 40 per cent of the submarines’ overall price — but the system must also use US technology and know-how.

Defence Minister Linda Rey­nolds said: “It is important to recognise that the work undertaken by Naval Group is not the same as Lockheed Martin.

“The submarine combat suite is a system that we jointly develop with the US to promote ongoing interoperability with our closest ally.”

However, she noted the contract would build Australia’s sovereign capability to sustain the systems through “the transfer of high-end skills and knowledge”.

“Already, Australian companies including Thomas Global Systems in Sydney and Acacia Research in Adelaide are undertaking work to support the combat system integration,” she said.

Australian defence sector lobby group Industry Voice said the submarine and combat systems contracts were effectively different procurement programs.

“The combat management system relies on systems that have come from our allies in which large amounts of money have been invested, and Australia has not been able to match that investment,” chief executive Brent Clarke said.

“What we would expect is that Australian companies that can enhance or improve those ­systems are given every opportunity to do so.”

Centre Alliance senator Rex Patrick, a former submariner, said Naval Group’s 60 per cent commitment “now contrasts strongly with Lockheed Martin’s lack of commitments” on Australian industry content.

“Lockheed Martin has a public Australian Industry Capability Plan which is scant on detail and makes no local content commitments. They must now step up and make a public commitment like Naval Group’s,” he said.

“A commitment from Lockheed Martin is important. In 2001, the US government made undertakings to Australian industry in relation to participation in the Collins-class submarine’s BYG-1 combat system program, but they turned out to be empty promises.

“As a result, many Australian industry players are quite untrusting of the US combat system fraternity.”

Mr North said Lockheed Martin’s Future Submarine workforce had gone from three in 2016 to more than 190, with just five ­expats.

He said after 20 years ­operating in the country, Lockheed Martin had a good understanding of the capabilities of the domestic industry, and had elevated Australian suppliers into its global supply chain.