Patrick Durrant | Sydney
CASG Deputy Secretary Kim Gillis has revealed to the Senate, Foreign Affairs, Defence and Trade Legislation Committee (Senate Estimates) that a $646 million contract was signed on Thursday with Navantia for construction of the two RAN replenishment ships under Sea 1654.
Under intense questioning from Senators Nick Xenophon and shadow Defence minister Stephen Conroy, Defence officials defended the decision, stating that earlier funding constraints and the increasing cost of sustaining the current two ships (HMAS Success and HMAS Sirius) had meant that a proven design in service with another navy was required.
Navantia and Daewoo Shipbuilding and Marine Engineering (DSME) had been competing for the contact but last month Navantia was confirmed as the preferred tender.
Vice Admiral Tim Barrett told Estimates Navy needed to replace the ships as quickly as possible, and it was also revealed by CASG that the two ships would be delivered earlier than the original 2020/21, 2023/24 dates.
Gillis said the first ship would now be delivered in 2019 followed by the second in 2020, with IOC in 2021 and FOC in 2022.
The $640 million contract incorporates a minimum $130.4 million component that according to Gillis would be made up by local manufacturers. The ships communications and combat system would be supplied by Australian industry as well as cranes and other ancillary components but the majority ship building would be conducted at Navantia's yard in Ferrol, Spain.
Senator Xenophon was surprised by the announcement, but Defence Minister Senator Marise Payne said the reasons for opting to build overseas had been discussed in detail during previous hearings. Minister Payne said the time and cost necssary to install the infrastructure in Australian shipyards to build ships of that size, coupled with the short timeframe to replace the ageing tankers, meant that the option was untenable. She said it would also interfere with present work on the AWDs at the ASC shipyard in Osborne.
Both Senators Xenophon and Conroy expressed their dismay at the timing of the contract signing, one day before the anticipated election date announcement.