Monday, March 23, 2020

PM Morrison can save billions by terminating the DCNS/Naval Group "Attack Class" submarine contracts : Covid 19 could be a Force Majeure event

by Ganesh Sahathevan

Collins class submarines HMAS Dechaineux, HMAS Waller and HMAS Sheean
PHOTO: Australia is being urged to buy nuclear-powered submarines when it replaces its fleet of Collins class subs. (ADF)

The Covid-19/Wuhan Virus contagion has economic consequences that are already becoming apparent, and Australians have been told that matters can only get worse.

The contagion and its consequences could not have been foreseen when the Australian Government entered into contracts with DCNS/Naval Group to design and build Australia's next generation of submarines. It does appear to be a force majeure event; indeed the consequences might create a series of force majeure events in for example continuing and  extreme Commonwealth budgets deficits that put the cost of even designing the submarines beyond the capacity of the Commonwealth.

See Also

Now that Alan Jones has (correctly) condemned the Turnbull submarines, l'affaire Adelaide has become a Sydney as well as Canberra issue

To Be Read With
French submarine program 'dangerously off track' warns report urging Australia to consider nuclear alternativeBy defence correspondent 

Andrew Greene

Updated 11 Mar 2020, 9:41am

Australia's $80 billion Future Submarine Program is "dangerously off track" according to a new report that urges the Government to ditch the controversial project and consider a nuclear option.

Key points:

  • The report indicates there are fears the current project is at a high risk of failing
  • The Defence Minister denies those fears and maintains the project remains on track
  • Under a proposed "Plan B" scenario, the company that designed the Collins class submarines would prepare an updated design
Businessman Gary Johnston, who commissioned and funded the study, fears the current plan to build 12 attack class submarines designed by French company Naval Group is at "high risk" of failing.
His report, prepared by Insight Economics, suggests Australia should instead immediately begin work on a "Plan B" — an evolved version of the current Collins class fleet — before eventually acquiring nuclear-powered boats.
Earlier this year, a report from the auditor-general confirmed the Future Submarine Program was running nine months late and Defence was unable to show whether the $396 million spent so far had been "fully effective".
"The Government's own advisory body, including three American admirals, even recommended the Government should consider walking away from the project," Mr Johnston said.
Under the proposed "Plan B", Swedish company Saab Kockums, which designed the navy's Collins class submarines, would be asked to prepare an updated design for the future submarine fleet.
In 2022-23, both Naval Group and Saab will present their competing preliminary design studies for building the first batch of three submarines in Adelaide — based on a fixed price, capability, delivery and local content.
Mr Johnston, along with former naval officers in the Submarines for Australia organisation, argue that over the long term the Government should begin preparing to acquire nuclear submarines.
With Beijing's growing military assertiveness in the South China Sea, Mr Johnston said the most disturbing finding in the report was that by the 2030s the effectiveness and survivability of Australia's submarines in a high-intensity theatre would be threatened.
"If the Government wants to continue deploying submarines to this theatre alongside the US Navy, the nation's duty of care to the dedicated men and women of the ADF means we will need to begin the long and difficult process of acquiring nuclear-powered submarines," Mr Johnston said.
"With our very small nuclear industry, that will not be easy — but we can make a start."

Government rejects report, issues warning

The Submarines for Australia report will be formally launched by ANU Emeritus Professor Hugh White at the National Press Club today, but it is already drawing fire from the Morrison Government.
"I totally reject the premise that this project is 'dangerously off track', as stated in the new Submarines for Australia report", Defence Minister Linda Reynolds said.
"The delivery of the attack class submarine remains on track, with construction set to commence in 2023."
Senator Reynolds said the technical feasibility of delivering an evolved Collins class submarine was reviewed in 2013-14, but a review found it would be equivalent to a whole new design, involving similar costs and risks, without a commensurate gain in capability.
"This assessment by Submarines for Australia will only increase cost, delay the delivery, and put at risk our submarine capability."
The Defence Minister also flatly rejected any suggestion of a nuclear-powered submarine in the future.
"As has been the policy of successive Australian Governments, a nuclear-powered submarine is not being considered as an option for the attack class submarine," Senator Reynolds said.
First posted 11 Mar 2020, 2:28am

While the terms of the contracts have been kept confidential it does appear that Covid-19 is a Force Majeure event that the Morrison Government could rely on to terminate the contracts at minimal penalty, if any.

As reported by very many (see for example story below) the contracts are riddled with problems, and the economic consequences of Covid-19 will amplify those problems. 

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