• HMAS Parramatta during training exercises on the Coral Sea at dawn.
    HMAS Parramatta during training exercises on the Coral Sea at dawn. Defence

The Australian National Audit Office (ANAO) released its report into Anzac class sustainment last week.

With the class half way through its Life of Type, the report notes that whilst “the Anzac class frigates are meeting Navy’s current capability requirements and continue to be deployed on operations in Australian, Middle Eastern and Asia-Pacific waters, Defence has been aware since at least 2012 that sustainment arrangements have not kept pace with higher than expected operational usage.

“Further, Defence cannot demonstrate the efficiency or outcomes of its sustainment arrangements, as the necessary performance information has not been captured.

“Defence will need to address relevant shortcomings in its sustainment arrangements to meet the requirement that the Anzac class remain in service for an extra 10 years to 2043, pending the entry into service of the replacement Hunter class.”

Sustainment efforts are being conducted under the Warship Asset Management Agreement (WAMA), which is an alliance between BAE Systems, SAAB Australia, Naval Ship Management (NSM) and the Commonwealth with support from CEA Australia for the various CEAFAR elements.

Broadly, the latest efforts on HMAS Perth (work now complete) and now HMAS Arunta have included:

  •  Upgraded ventilation systems;
  •  New sewage systems;
  •  Improvements to the Control and Monitoring System,
  •  Engine modifications to improve power and efficiency; and
  •  A new communications suite (SEA1442).

The ANAO report notes that Defence has not managed to align the operational requirements of the class with their needed maintenance efforts, and has known about the issue since 2012 while effectively doing nothing about it.

In 2015, Navy delayed expenditure on three Anzac class frigates’ sustainment to address funding pressures. HMAS Anzac had $600,000 of maintenance tasks deferred, and HMA Ships Perth and Ballarat each had $3 million of maintenance tasks deferred. Navy was aware that delaying expenditure on maintenance tasks would ‘result in deferred maintenance creating a large body of outstanding work and associated cost and risk to seaworthiness’.

The report is also blunt in its assessment of Defence’s ability to manage this process effectively: “Defence’s advice to the government to extend the Anzac class’ life-of-type to 2043 was not based on a transition plan or informed by an analysis of the frigates’ physical capacity to deliver the required capability until then. Navy will need to address potential risks, relating to the frigates’ material condition, to maintain seaworthiness and capability.”

Performance of the contract is also an issue, with most of the Key Performance Indicators reported against consistently unmet in 2017-2018. It must be noted, however, that during the time of the ANAO snapshot, WAMA was in the middle of its 18-month time of transition in the wake of the ASMD framework.

Buried in the footnotes was another observation. In October 2017, HMAS Perth was scheduled to be reactivated following the completion of scheduled maintenance; however, it remains in lay-up due to crew shortages. Navy has advised a crew is expected to become available between July 2019 (medium confidence) and January 2020 (high confidence).

Of the five recommendations made in the report, Defence is happy to go with three of the five and the other two with qualifications.

ADM Comment: As always, ANAO reports are but a snapshot of a particular time and all the caveats that covers. Worryingly, why is Navy having trouble crewing its signature in-service fleet? And yet materiel ready days are hitting their marks.

Also of note is the observation about Defence’s leverage of BAE Systems Australia, arguably as both the largest shipbuilder and sustainer in the small Australian market.

“An additional consideration relates to the designer and builder of the new Hunter class frigates (BAE Systems Australia) also being a key member of the Anzac class frigates sustainment Alliance,” the report notes.

“In transitioning from the Anzac class to the Hunter class frigates, Defence’s commercial leverage over BAE Systems for any cost or schedule overruns in the Hunter class design and build will be limited due to the existing commercial relationship with BAE Systems to sustain the Anzac class.

“For example, any liquidated damages applied to BAE Systems for underperformance on the Hunter class program, may be offset by the benefit received by BAE Systems through the extended sustainment of the Anzac class. The ANAO found no arrangement within the WAMA contract to deal with this issue.”

In a nutshell, whatever happens in the frigate realm for both the old and new fleets, BAE wins.

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