The fight to build our frigates

Tension is rising among the three bidders for a $35bn contract.

The three SEA 5000 bidders for the $35bn contract.

Later this month, or perhaps next, cabinet’s powerful National Security Committee will convene in Parliament House in Canberra. The exact date, like the subject matter of NSC meetings, is shrouded in secrecy.

It’s almost certain, however, that a key item on the agenda will be the final decision on one of the biggest defence procurements in Australian history — the Future Frigate Program to build nine anti-submarine warfare ships.

The $35 billion “SEA 5000” contract will be critical to Australia’s ability to protect its borders, safeguard maritime routes and deter threats to regional security in the Indo-Pacific until 2070.

The costs, both strategic and economic, of getting the decision wrong, are unthinkable.

Nine ministers, covering all the key security and economic portfolios, will file into the room that day, including Malcolm Turnbull, who will chair the meeting, and Defence Minister Marise Payne. ­Defence Industry Minister Christopher Pyne, who is not normally on the committee, will attend the meeting, along with key defence personnel and departmental secretaries. The Chief of Defence, Mark Binskin, will certainly be there, as will Kim Gillis, the Defence Department’s deputy secretary for capability acquisition and sustainment.

There will be three options on the table, each of them rigorously assessed by Defence bureaucrats and NSC member departments.

Spanish shipbuilder Navantia is offering the F-5000, an evolved version of its F-100 frigate that forms the basis for the Hobart-class air warfare destroyers being built in Adelaide.

British defence giant BAE Systems is proposing its Type 26 Global Combat Ship, a purpose-designed anti-submarine warfare frigate and the newest design on offer.

The third bidder, Italian shipbuilder Fincantieri, is offering the FREMM, a dedicated anti-submarine warfare frigate that is already in service with the Italian Navy.

All of the bids lay claim to “the most advanced” capability; all would be built in Adelaide, as stipulated in the tender documents; all have well-developed industry plans; all will commit to “cutting steel” for the first ship in 2020. But each has its own pros and cons.

If there’s a clear standout, sources say it’s likely one option would be recommended.

If it’s a closer race, officials may rule out one bid and leave it to the committee to choose between the remaining two.

 

With an expected four to six weeks before a decision is announced, nerves in the competing camps are becoming frayed. As one of the bidders confided to The Australian recently, last-minute jockeying by each of the bids had contributed to “a very confused state of play”.

BAE Systems chief executive Gabby Costigan, a former Australian Army colonel and ex-­Linfox Asia chief, put rivals further on edge last week when she panned the FREMM as “old” and the Navantia ship as “derivative”, in an interview with The Australian.

“From the customer’s perspective, they want the best capability. And I think that the Global Combat Ship, based on the Type 26, gives them that,” the Duntroon graduate said.

“The Italians have an old frigate, and the Spanish don’t have an anti-submarine warfare frigate. They are using a different hull and they are going to try ­to reverse-­engineer that ASW ­capability.”

The comments went off like a depth charge, upsetting the competitive but generally congenial process. According to defence procurement rules, bidders are supposed to spruik their own designs, not reflect negatively on their competitors.

Fincantieri Australia director Sean Costello responded with a terse statement saying the FREMM, first commissioned in 2013, was a cutting-edge vessel containing modern anti-submarine warfare technologies. “We are extremely proud of the fact our design performs to the demanding specifications of ASW and no other shipbuilder worldwide has bettered the proven anti-submarine performances of the FREMM,” Costello said. This week he also fired off letters to every MP and senator outlining the FREMM’s key selling points.

Navantia Australia, once seen as the frontrunner in the tender process, declined to comment on BAE’s assessment of its ship. It responded instead with a full-page advertisement in The Australian setting out a nine-point “guarantee” to taxpayers, signed by chief executive Warren King.

The first point argued the F-5000 had “the most advanced and proven anti-submarine warfare capability meeting all the requirements of the navy in a ship that has the best general-purpose destroyer capabilities”.

The company also promised its bid had more than 80 per cent local industry content — a ratio other bidders might find hard to match.

The Australian Strategic Policy Institute’s Marcus Hellyer says Defence had come up with three “quite different” contenders.

“There are trade-offs for all of them,” the senior analyst adds.

The BAE design is “probably the most modern”, he says, with “potentially the best ASW capability”. But its key disadvantage is that none of the boats was yet in the water.

Hellyer also questions BAE’s claim to have “de-risked” its bid because the Royal Navy’s program to build eight of the vessels is five years ahead.

“They really only started cutting steel in the middle of last year. They’re not really that far ahead of us. And we have had a history of accepting overseas designs where we thought they were off the shelf and the home country was ahead of us, and it turned out to be completely the opposite.”

The Navantia bid is “more of a known quantity”, as it would involve “rolling over” the work being done by the company on the Hobart class air warfare destroyer.

“But it’s an older design and it wasn’t designed primarily as an ASW platform. So there are some questions about your ability to future-proof that design,” Hellyer says. The FREMM is “more of a happy medium”, he adds — a purpose-designed ASW frigate, newer than the Navantia design but probably not quite as cutting-edge as the BAE Type 26.

“The FREMM was designed as an ASW platform, so it has probably got pretty good ASW capability, but it appears not to have as many vertical launch cells as the others, so it might not be quite as flexible in an air defence role or an anti-surface role.”

Hellyer says recent decisions on the $50bn Future Submarine and the $5bn Armoured Fighting Vehicle contracts had demonstrated that capability would be top of mind when the final decision is made.

“It looks like government wants to pick the best capability for the long term,” he says. “But my sense is if you haven’t got a good Australian industry plan, you’re not going to be in the running.”

Whichever design wins, it will require substantial modifications to integrate the mandated Aegis Combat Management System — used by the US — and the Australian-designed CEAFAR radar, Hellyer says.

The British can claim as a bonus their membership of the exclusive Five Eyes intelligence club that also includes the US, Australia, Canada and New Zealand.

The FREMM has two helicopters, rather than one, giving it added submarine-hunting abilities.

And Navantia has a proven capacity to build naval warships in Adelaide. It is due to hand over the third of the Navy’s Hobart class destroyers in 2020, which would enable its workforce to seamlessly shift to the Future Frigate project.

The project timeline also presents a risk for the bidders. The winner will have to “cut steel” on the first ship by 2020. That’s a year earlier than the Future Submarine project, won by France’s Naval Group in 2016. Each of the bidders will have to be sufficiently agile to make requested design modifications, ready its workforce, and finalise supply-chain arrangements, to be ready for the 2020 start.

Anti-submarine warfare is a combination of three factors, experts say: self-noise, sonar and helicopters.

All of the vessels will have towed sonar arrays, and one or two hull-mounted sonars. Each will have at least one helicopter, although the FREMM is arguing the benefits of having two.

This leaves ship acoustics. The Italians and the British are both offering purpose-designed ASW ships, where every component is designed to be quiet, and rated acoustically.

As BAE pointed out somewhat impolitely, there are question marks over the F-5000’s suitability for the Future Frigate’s stated purpose as a submarine hunter, because it was designed without acoustics as a top-line priority.

Having a louder ship gives the hunted submarine more of a chance to become the hunter.

However, much has also been made of the fact that modern warfare is about processing information and transmitting it to friendly forces.

“ASW is increasingly not just about how good that individual ship is, but how well it fits into a broader network,” ASPI’s Hellyer says.

That network consists not just of the ship and the sensors on the ship, its towed sonar and helicopters, but also P-8 Maritime Patrol Aircraft, seabed sonar arrays and other vessels in a taskforce group, he said.

“So there is all this information floating around, and it may not necessarily any more be about how quiet that individual ship is, but how well do you feed into that network, process it, and turn it into a picture of the battles space.”

It’s just another of the capability questions that will be weighed around the cabinet table in coming weeks.

The 2016 defence white paper set out the nation’s top three strategic defence priorities — a secure Australia; a secure Southeast Asia and South Pacific; and a stable Indo-Pacific region where the “rules-based order” is maintained.

This is the environment in which the future frigates will operate. It’s a region that is expected to generate half of the world’s economic output by 2050. It will also be the theatre of operation for half the world’s submarines.

The white paper says maintaining Australia’s “technological edge and capability superiority over potential adversaries” is an essential element of the nation’s strategic planning.

Doing so will require Australia to get the future frigates right first time, as potential rivals step up their capabilities, fuelled by growing economies and technological know-how.

“The capability superiority that Australia has traditionally maintained in the wider region will be challenged by military modernisation,” the white paper says.

“Over the next 20 years a larger number of regional forces will be able to operate at greater range and with more precision than ever before. The growth in the capability of China’s military forces is the most significant example of regional military modernisation, but other countries are also undertaking extensive modernisation programs.”

The white paper notes that by 2020, China’s submarine force is likely to grow to more than 70. Other nations across the region, friendly and less so, also have submarine fleets.

Being able to detect them, and take them out without being killed, is where the submarine hunter comes into its own.

As Pyne saidyesterday: “It will be an Australian build, create Australian jobs and use Australian steel no matter who is selected. The decision will come down to the capability of the vessel.”