Scott Morrison sets ‘gates’ for French submarine contract

Scott Morrison flags series of ‘gates’ in $90bn submarines program after raising concerns directly with Naval Group and French President.

Scott Morrison with Emmanuel Macron at the Élysée Presidential Palace in Paris. Picture: Adam Taylor

Scott Morrison has flagged a series of crucial “gates” in Naval Group’s $90bn future submarines program, after raising concerns about the contract directly with the company and French President Emmanuel Macron.

The Prime Minister has met with Naval Group and Mr Macron separately in France on Wednesday (AEST), where he raised Australia’s expectations over a series of key milestones and speeding-up timelines on the project.

After meeting with OECD secretary-general Mathias Cormann in Paris, Mr Morrison confirmed he had talked to Mr Macron about the contract.

“We’re coming up to some important gates in that contract and there have been issues we’ve had to address over particularly the last eight months,” Mr Morrison said.

“President Macron and I have a very open and a very transparent and very friendly relationship where we can speak candidly to each other about these issues. But what is most important is we understand the strategic imperative of our broader relationship, we obviously have a relationship as it presents with that contract.

“But it is far bigger than that. We both have a shared interest in the strategic security of the Indo-Pacific.”

Defence Minister Peter ­Dutton told The Australian last week the government would conduct full rebuilds of all six Collins-class submarines, at an estimated cost of $10bn, to guard against a capability gap because of the late ­arrival of the French boats.

The project has been hit by delays and disagreements ­about the level of Australian industry content and pricing. The program is at an impasse over the price of the contract for the detailed design of the ­submarines, which will be a first-of-type conventional long-range submarine based partly on the ­design of France’s Barracuda-class nuclear-powered boats.

Mr Morrison said Mr Macron has taken a “very active role” in the Naval Group contract, and the President had provided an “open invitation” for Australia to raise issues.

“I appreciate the direct role that he has played in ensuring that we’ve seen a much improved position come forward from Naval over the last six months. But there is still a long way to go,” he said.

Mr Morrison said the next contract gates would involve scope two works, the master schedule and the total cost.

“These are all the next steps. Contracts have gates and that’s the next gate.”

He said Australia’s expectation was for the Naval Group to be able to deliver on its contract and ensure they provide the “capability that we’re looking to establish”.

“You can get very focused on contracts, as we absolutely should on value for money and performance on the contract and building on some of our workforce, and that remains a challenge for us which we need to be working on. And that is a constant focus of our government.”