Luerssen have announced that negotiations with Austal, which have been underway since December 2017, have not been able to reach a viable commercial agreement.
Minister for Defence Industry Christopher Pyne said Luerssen will build the 10 WA OPVs at Henderson in partnership with Forgacs, a wholly owned subsidiary of CIVMEC.
CIVMEC will soon list on the Australian stock market and will have a key role as a shipbuilder in WA.
In November 2017 Luerssen was selected as the prime contractor to supply 12 new Offshore Patrol Vessels for the Navy. The government also asked Luerssen to explore options to leverage the wider shipbuilding experience base at Henderson in Western Australia, potentially opening an option for Austal to participate in the WA build program.
At the time, Austal CEO David Singleton said it "wasn't entirely what Austal had expected" and that further contract negotiations would take place to get the new building arrangements "bedded down".
Those negotiations have now failed, locking Austal out of participating in the OPV build.
In a statement, Luerssen said that it has "worked hard to explore options to leverage the experience base at Henderson for the construction of 10 vessels in Western Australia, including conducting lengthy negotiations with Austal.
"Ultimately the negotiations with Austal have not generated a proposal that represents an acceptable level of value for money and Austal will not be a participant in the OPV build team."
Austal has acknowledged Luerssen's announcement. "“We are grateful to the Government for the continuous support and endorsement they have provided to Austal, both in this program and in our commercial and defence operations around the world,” Austal CEO David Singleton said.
“The current pipeline of work enable Austal to sustain the operations at Henderson while we continue to compete for additional commercial and defence orders.”
ADM reached out to ASC for comment. "ASC Shipbuilding is in the final stages of contract negotiations with prime contractor Lurssen and we look forward to commencing construction of the lead OPV later this year," a spokesperson said.
“The Turnbull Government’s commitment to construct 10 OPVs at Henderson, as part of the continuous shipbuilding program for minor war vessels in WA, remains unwavering,” Minister Pyne said. “Construction of the first OPV will commence this year at Osborne in South Australia using ASC.”
“We will have Australian workers, in Australian shipyards, using Australian steel providing the capability Navy needs.”
ADM is currently seeking further comment.