Protracted negotiations between Defence and French submarine maker Naval Group on a vital Strategic Partnering Agreement (SPA) are making progress but no timeline has yet been set for their completion, Rear Admiral Greg Sammut, head of the Future Submarine program, told ADM.
“We haven’t put a timeline on it because it’s more important to get the agreement right. Of course we want to conclude it as soon as possible. We’re at stages now where we’re dealing with the remaining difficult issues,” he said.
“Naturally the Commonwealth team has focused on ensuring we have the appropriate allocation of risk in the program and that those matters are managed in an equitable way throughout the life of this long contract.
“We must ensure there is an equitable set of arrangements in place such that both parties can continue to work together through problems, not end up with a contractual impasse where we can’t manage the issue and have to halt work because we have to renegotiate terms and conditions that didn’t exist.
“Naval Group is similarly focused and this shouldn’t be a surprise when we’re talking about a program of such magnitude.”
The overarching SPA is intended to set out terms and conditions that will endure for the entire $50 billion Future Submarine program, avoiding the need to renegotiate a known set of provisions as work transitions from phase to phase.
Negotiations on the SPA began in early 2017 and were intended to have been completed during that year.
Then Vice-Chief of the Defence Force Vice Admiral Ray Griggs told Senate Estimates on 28 February this year that he saw no reason why SPA negotiations should not be completed “before the middle of the year.”
Secretary of Defence Greg Moriarty added that “another month or two” beyond that on a contract of such consequence was likely to get a reasonable hearing from government.
RADM Sammut said work on the Future Submarine’s design had continued unimpeded under the Design and Mobilisation Contract (DMC) signed in September 2016. This $500 million agreement was originally intended to be succeeded before 2019 by the Submarine Design Contract (SDC), which itself will sit under the yet-to-be-agreed SPA.
However RADM Sammut said the DMC had been set up so it could be extended. The ongoing flow of work included the transfer of the necessary intellectual property to the Commonwealth and to combat systems integrator Lockheed Martin.
Current work is focused on finalising the Concept Design so more resources can be moved in 2019 to Basic Design, which itself would move to Detailed Design around 2022.
Other work undertaken during the DMC phase had included progressing the design of the submarine construction yard at Osborne North to the extent that ground works could begin there in December.
Steel qualification work had continued with Bisalloy and BlueScope, and the latter had produced a first heat of 212 tonnes of steel to the HLES specification – steel of particular properties used in the construction of French submarines.
That heat had passed and in a number of cases exceeded required standards in tests in Australia. According to RADM Sammut, further tests would be undertaken in France, primarily on its ability to be welded.