Friday's announcement by Prime Minister Malcolm Turnbull on the award of the $3.6 billion Sea 1180 Offshore Patrol Vessel (OPV) tender to German designer and shipbuilder Luerssen served to raise further questions.
Of particular note was the Commonwealth's decision to disregard the allegiances of bidders in making its final choice. Austal was of course teamed with other German bidder Fassmer, and will now need to realign itself with Luerssen as prime.
Another twist in the announcement was that Henderson based heavy engineering and fabrication services company and Luerssen partner Civmec/Forgacs Marine and Defence would also have a share in the construction of the 10 vessels to be built in WA. ASC Shipbuilding will construct the first two OPVs in Adelaide; both it and Civmec/Forgacs Marine and Defence had formed a joint venture to build the Luerssen design if selected.
Luerssen CEO Peter Luerssen said the company's ambition had been to deliver the best vessel for the Royal Australian Navy from a proven low-risk design; to build that vessel by investing in the development of Australian shipbuilding skills; and to open up new opportunities for Australian businesses and suppliers by contributing to a sustainable and globally competitive industrial base.
"Now is the time for Luerssen and its partners to roll up the sleeves and get down to work.”
Luerssen’s Australian team includes major subcontractors L3 Australia, SAAB Australia and Penske and, as part of its commitment to Australian Industry Content, Luerssen has committed to involving Australian SMEs and subcontractors in the project.
ASC Shipbuilding CEO Mark Lamarre said he looked forward to continued engagement with Luerssen at the earliest opportunity to prepare for the project.
“ASC Shipbuilding has worked closely with Luerssen over the past 12 months as part of its OPV bid and we look forward to continuing that close collaboration. Luerssen is renowned for its navy ships, its long history and its track record of exporting to countries around the world.”
Civmec acquired Forgacs Marine and Defence in early 2016. Forgacs Marine and Defence managing director and former naval officer Mike Deeks told ADM there hadn't been an expectation that such an arrangement would be chosen by the Commonwealth but said in many ways it made sense.
"When you think about it, when you want to buy a car you decide which model you want and you then decide which caryard you are going to purchase it from."
Deeks explained that that the decision would bring naval minor war vessel construction to WA in a big way and would provide the opportunity to bring out the best that Austal and Civmec could offer.
He confirmed the Luerssen reference ship for the Sea 1180 tender was the Darussalam class OPV in service with the Royal Bruneian Navy.
"I had the good fortune to spend a few hours aboard the ship when it was alongside in Singapore earlier this year - it's very impressive and as a former naval officer I could easily picture an Australian crew being very comfortable in that ship."
He explained the layout is very spacious with plenty of room for expansion and additional equipment, with the stern ramp RHIB launch and recovery system one of the most impressive features.
"It has a good-sized flight deck and whatever aircraft Navy decides to operate it should serve its purpose well."
More detail and background on the Luerssen OPV can be found in ADM Editor Katherine Ziesing's story Deep dive into Sea 1180 OPVs.
Deeks said there were a lot of things that would need to be resolved regarding the division of responsibilities on work between ASC, Austal and Forgacs Marine and Defence.
"It's fairly obvious who will be best placed to perform certain elements of the work packages and the rest will be resolved between CASG and Luerssen. We had expected to perform the build here in conjunction with ASC but now we'll have a different dance partner."
"Our strength is steel fabrication; Austal's is more with ship systems, outfitting and those sorts of things. Perhaps we would do the steel hulls and the modules and they do the outfitting and systems integration - but this is all just speculation at this stage."
Austal CEO David Singleton said during a teleconference this morning the announcement "wasn't entirely what Austal had expected" and that further contract negotiations would now take place to get the new building arrangements "bedded down".
"This will result in a contract between the Government and Luerssen and Austal in February or March of next year, with the intention to start construction on the program immediately thereafter."
Singleton expected the first delivery three years after contract with additional deliveries occurring at a rate of one per year thereafter.
He also mentioned the Commonwealth had alluded to other vessels it would be looking to build in the mid-2030s which would extend the program beyond the anticipated 15 years.
"It's expected the Government will issue a contract covering servicing and sustainment some time in 2018 - probably mid-year - there will be plenty of time given the first ship will be three years away at that point."
In reponse to an ADM question regarding the allocation of work between Forgacs Marine and Defence and Austal, Singleton said it was early days but approximately 70 per cent of the work on every ship built by Austal was assigned to other companies.
"If I take the Pacific Patrol Boat as an example, all of the steel cutting is done by local steel fabricators so it's not unusual that that type of construction would occur."
He didn't envisage the split would be along the lines of whole ships.
"It certainly won't be five for them and five for us - it'll be one construction program and there will be involvement from a whole load of companies along the strip here.
"Civmec have been named because they were an integral part of the Luerssen bid from the beginning, and this recognises that they'll continue to be involved into the future."
He dismissed suggestions Civmec/Forgacs would be involved in hull construction: "You know there is only one company that builds naval ships along the Henderson strip."
Singleton said that Luerssen was a company Austal knew well and envisaged the process of forming a relationship with the prime would be a quick one.
"Peter Luerssen is well known to us and we've touched base with them on a number of occasions throughout the process."
Regarding the adjustment to the Luerssen design, Singleton said Austal was familiar with winning overseas contracts which required steel cutting only months later.
"We're pretty good at getting into production but remember the first two ships will be built in Osborne by ASC so we won't be cutting steel until around about late FY19 - that's good because we have a lot of work in our Henderson shipyard at the moment."
Forgacs Marine and Defence is currently constructing a large 20 storey-high shipbuilding hall adjacent to parent company Civmec's existing site at Henderson and good progress is being made on the project, according to MD Deeks.
"We've cleared the land and we've started work on the paint and blast facility, the smaller of the two halls, and we expect that to be completed by mid-next year; the build of the large hall construction will commence early next year."
Deeks said once finished towards the end of 2019, the facility, which was planned despite the Sea 1180 tender, would be a wonderful new facility for shipbuilding in Australia.
"When you consider construction of OPV number three, with plate forming and initial single deck modules, we wouldn't anticipate needing the new shed until late in 2020, so we'll have 12 months to fine tune the hall for the OPVs."
Deeks offered his commiserations to Damen, which had also partnered with Civmec and ASC for the build.
"Damen were equally professional and had a very good offering, we would have been delighted if they had been selected but of course we have a very good relationship with Luerssen as well."