Minister’s ‘disappointment’ and conflicting comms reveals messy relationship with stakeholder


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The Defence Minister has hit back at comments made by the executive in charge of designing Australia’s future submarines as part of the largest Defence procurement in Australian history.

Linda Reynolds responded to remarks made by Naval Group Australia chief executive John Davis, who had questioned the capability of local suppliers, and suggested the boats’ Australian industry content might not reach 50%, as originally expected.

Meanwhile, the company and Reynolds’ department issued their own statement on Australian industry involvement in the program.

In an interview with The Australian, Davis said the France-based company had faced “specific challenges” with the Australian industry, such as unfamiliarity with its market and the large number of small and ­medium-sized enterprises in its ­defence sector which would be ­unable to make the required investments.

“So the question for us is: how do we get Australian industry up to that capability level?” he said on Thursday.

The company had anticipated “difficult and hard ­conversations” with Defence, Davis said, and faced what The Australian described as “cultural ­problems” with the department.

According to the article, Davis was “unable to say” whether Australian businesses would receive 50% of the value of contracts under the $80 billion program.

In a blistering statement released hours after the interview, Reynolds condemned the comments, describing her “disappointment”.

“Our government will hold Naval Group to account for the commitments they signed on for to work with Australia’s world-leading defence and shipbuilding industry,” she said.

“In making the commitment to the Future Submarine Program, there are shared mutual expectations and obligations with both Defence and Naval Group. The maximisation of Australian industry involvement through all phases of the submarine program is one of these, which is outlined in the Government’s Strategic Partnering Agreement with Naval Group.

“The national security significance of this commitment however is not just between Defence and Naval Group, but between Australia and France.”

The minister said she would meet with her French counterpart Minister Florence Parly during the Munich Security Conference on Friday, “to continue discussions on this ongoing commitment”.

“This is a highly complex project which is being carefully managed to get this crucial capability right,” she added.

Also on Thursday, in what appeared to be an attempt to clean-up the mismanaged communications mess, the department and Naval Group released a joint statement on Australian industry involvement in the program.

“Sovereign control over the Attack Class Submarine fleet and maximising Australian industry involvement throughout all phases of the Attack Class Submarine Program are contracted objectives in the Strategic Partnering Agreement between Defence and Naval Group,” they said.

“Defence remains focused on these objectives and Naval Group is committed to their achievement.”

They noted that the design of the Attack Class would continue into the 2020s.

“As these activities progress, we will also be systematically approaching Australian industry to identify suitable suppliers of the vast array of equipment to be fitted to the submarine, ranging from hydraulic systems to galley equipment,” they said.

“Providing Australian industry with opportunities to become involved in the program during design of the submarine offers us the best opportunity to develop capability and build the enduring industrial base we will need for the sovereign sustainment of the Attack Class fleet.”

The national auditor-general last month released a report on the Future Submarine Program, which emphasised that the success of the program would depend on the department establishing an “effective long term partnership with Naval Group”.

The report stated the decision to engage a “strategic partner” to design and deliver the submarines rather than a military‐off‐the-shelf submarine platform increased the risk of the program.

 

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