In September last year, the Australian government made a bombshell decision to abandon the French-built Attack-class diesel-electric submarines in favour of a nuclear-powered alternative, to be developed under the umbrella of a new security arrangement with the UK and the US known as AUKUS.
In May 2022, we are little closer to understanding how exactly the government came to make such a monumental decision.
This article intends to shed some light on that process. In doing so it will ask significant questions about who exactly makes defence capability decisions in Australia and to what end.
How did we get here?
Planning for the move to allow Australia access to one of Washington’s most treasured military secrets – nuclear propulsion – began 18 months before the public announcement, just as the pandemic was beginning.
At first, Prime Minister Scott Morrison was seemingly unwilling to begin high-level discussions with then-US President Donald Trump. At this point the only Australian ministers with any knowledge of the plan are believed to be then-Defence Minister Linda Reynolds and Morrison himself.
Following the US election, Morrison set up a cabinet subcommittee called the Naval Shipbuilding Enterprise Governance Committee, chaired by himself and including Minister for Foreign Affairs Marise Payne, Minister for Defence Peter Dutton, Minister for Defence Industry Melissa Price, and three other senior ministers.
The purpose of the committee is to “ensure the naval shipbuilding enterprise and each component of it is on track to deliver against Commonwealth agreed outcomes.”
Morrison also appointed Don Winter, a former US Navy Secretary, as his special advisor on naval shipbuilding and told the National Naval Shipbuilding Enterprise team in the Department of Defence that he was ‘concerned’ about the Attack-class.
He also personally appointed Chief of Joint Capability Vice Admiral Jonathan Mead and Director-General of Submarine Capability Commodore Timothy Brown to secretly review the ADF’s ‘undersea force structure requirements’ and look for alternative options, including Saab Kockum’s long-range conventional submarine offer to the Dutch Navy.
The media began reporting on sensitive details of the Attack class and two key issues began to surface: a purported $40 billion cost blow-out – since revealed to be inaccurate – and whether Naval Group would sign up to 60 per cent Australian Industry Content (AIC) target. Exactly how those sensitive details made it onto the front pages remains unclear.
ADM understands that Naval Group actually raised the 60 per cent target in response to a question in Senate Estimates. The original Strategic Partnering Agreement (SPA) only required the company to ‘maximise Australian content’ and the Commonwealth initially did not want to set an exact target until after the design phase was complete.
Yet around this time, then-Defence Minister Linda Reynolds made public complaints about the state of negotiations with Naval Group just as CEO Pierre Eric Pommellet landed in Australia to conduct those negotiations. ADM understands that senior leadership in the ADF at this time shared Reynolds’ public frustration.
According to sources close to the talks, Morrison refused to meet Pommellet, and Reynolds insisted on a contract change that would oblige Naval Group to meet its offer of a 60 per cent target or face termination for breach. Pommellet, under pressure from negative headlines, agreed to what sources describe as a ‘fair deal’ with Defence Secretary Greg Moriarty – but the damage to Naval Group’s public reputation was already done.
In May, Minister Dutton and Minister Price appointed new members to the Submarine Advisory Committee, which ‘provides independent critical peer review of the current and projected submarine capability’: Donald Kirkland, Jim Hughes, and Donald McCormack.
Interestingly, Hughes is a former vice president of submarines at Newport News Shipbuilding, the company that constructs the nuclear-powered Virginia class submarines for the US Navy, and Kirkland is Chairman of the Board of Huntington Ingalls Industries, the company that owns Newport News Shipbuilding. The Virginia-class submarines are (at the time of writing) a likely contender for Australia’s future nuclear-powered submarine fleet.
In June, media reports suggested that Moriarty tried to prevent CDRE Brown from appearing in front of Senate Estimates.
In July, Morrison met US President Joe Biden and British PM Boris Johnson on the sidelines of the G7. By this point there had been regular leaks appearing in the media on the ‘troubled state’ of the Attack class program – including a ‘senior government source’ speaking to the AFR, who revealed that VADM Mead was sent to Washington DC on Morrison’s instructions in late August.
On August 27 2021 – around the time VADM Mead was in Washington – Greg Sammut, General Manager Submarines for CASG, sent an email to Moriarty that has since been obtained by the media under FOI. Sammut said: “The schedule forecasts delivery of the first Attack class submarine within the window August 2033 to February 2035 at a confidence level of 80 per cent.
“The updated program cost estimate is $46.4 billion in 2016 constant dollars, which remains within the original acquisition cost estimate of $50 billion in 2016 constant dollars announced at the outset.
“Naval Group work collaboratively with Defence since then to achieve substantial progress, and there are no extreme program strategic risks.”
On 31 August, Moriarty responded: “[This] is a reflection of… the good working relationship that you and your team has established with Naval Group and LMA. I will ensure that the good progress to date is part of the advice we take to Government, and you will hear that message repeated in the 2+2 [Ministerial Consultations] with France.”
At the time this email was sent, it is unclear whether Moriarty knew about the forthcoming decision to ditch the program. The 2+2 consultations were held the same day.
In hindsight, two pictures emerge: one of significant American influence in Australia’s defence capability decision-making; and another of an effort from within the Morrison government to undermine its own program.
Who killed the Attack-class?
Was this all Morrison’s own initiative, or did someone with an ambition for a nuclear-powered RAN influence his decision-making? The answer is unknowable, but it has caused a dramatic backflip in Defence’s capability planning with clear consequences for Australia’s military readiness.
To justify the backflip, Morrison said: “Australia was not in a position at the time we took the decision back in 2016 to build and operate a nuclear-powered submarine.”
However, that same year Naval Group’s chief Herve Guillou said Australia could have a nuclear submarine; one of the reasons the French submarines were chosen was their ability to switch to nuclear propulsion from 2030; and ADM understands the French offered to switch the Attack class to nuclear propulsion and were turned down.
Yet now the first nuclear-powered boat may not hit the water until the 2040s. No matter who killed the Attack-class, or why they killed it, surely we could have done better than that.
Patterns of behaviour
This goes far beyond submarines. The death of the Attack-class fits a pattern of behaviour (pre-dating the Morrison government) that was also evident in the replacement of the Tiger Armed Reconnaissance Helicopters, the MRH 90 Taipans and the Elbit (ELSA) Battle Management System (BMS).
The pattern is simple: generate negative press about a platform, then pin the blame on defence industry for a costly replacement.
For example, in 2018, editor Nigel Pittaway reported: “Someone in Defence or Government, or both, is actively suppressing any good news stories regarding Tiger.
“Tiger was singled out in the 2016 Defence White Paper for criticism, the only platform to be treated in this manner, and it was also the subject of an Australian National Audit Office (ANAO) report in September 2016… that listed no fewer than 76 ‘deficiencies’ which, according to informed sources, were actually capabilities not specified in the original ARH requirements.”
The drip feed of negative stories around Tiger continued, prompting Airbus Australia’s then-CEO Andrew Mathewson to publicly call for an ‘open competition’ to replace the platform amid media reports that Defence was negotiating a sole source foreign military sales acquisition of the Boeing Apache – which is, of course, what ended up happening in early 2021.
In another example, Defence grounded its fleet of MRH 90 Taipan helicopters in July 2021, which prompted media stories quoting anonymous Army aviators alleging the helicopters are “no longer safe to fly” following “potentially catastrophic” maintenance issues. These turned out to involve the Army’s own software (the computerised maintenance system) that was unable to adequately track flight hours logged by components that had swapped between aircraft.
A further investigation by ADM revealed that the components in question were not critical to flight safety and the decision to ground the fleet was made suddenly, even though Army’s ‘faulty’ software had been used for years.
Six months later, Minister Dutton announced the government was negotiating to buy up to 40 Sikorsky UH-60M Black Hawk battlefield mobility helicopters to replace the Taipans.
In yet another example, Army suddenly withdrew Elbit’s BMS from service in May 2021, and media subsequently cited ‘anonymous military insiders’ who claimed Israel could use the Australian system as a backdoor to spy on the United States. As it later turned out, the actual reason for the withdrawal was the ‘looming expiry’ of provisional Defence accreditation for the BMS’ Version 7.1 software.
ADM understands the Commonwealth had decided not to patch Version 7.1 while it waited for ELSA’s software update (Version 9.1, which was delayed for not meeting contractual requirements). Instead, it jettisoned the whole system and ‘military insiders’ made public allegations of Israeli spy-craft. This was publicly refuted by ELSA Managing Director Paul McLachlan – who was later to be proved correct by Defence’s own admission in Senate Estimates – but the damage to ELSA’s reputation was already done.
A fifth example: on 04 March this year, the ABC ‘revealed’ that Defence was not accepting delivery of Thales’ Hawkei vehicles due to ‘braking issues’ and fears over soldiers’ safety. In a statement provided to ADM, Defence said: “Army will not accept these vehicles into service until the vehicles are safe to operate.”
Yet over a year earlier, the Australian National Audit Office (ANAO) said Thales had developed a software fix, that administrative controls would prevent the issue from occurring until the fix was rolled out, and that the brakes were ‘no longer a major issue’. Initial Operating Capability was reached on 20 May 2021, and in July 2021 Minister Dutton and Minister Price announced the braking issue was resolved in a press release that is still available online at the time of writing.
So why did Defence contradict itself? With the above pattern of behaviour in mind, ADM asked Defence whether the Hawkei’s route to Final Operational Capability (FOC) will be modified or delayed. Defence acknowledged receipt of the question but never provided an answer.
This is not to say that the companies mentioned here are blameless, but there is clear pattern emerging: the current government publicly undermines its own programs. It remains unclear who exactly is responsible.
In the case of the Tiger ARH, who exactly wanted the Apache badly enough to single out the Tiger for criticism in the White Paper and suppress positive news of the platform until it was politically expedient to replace it?
In the case of the Attack-class, who leaked confidential information about negotiations with Naval Group, and why?
In the case of the MRH 90, who ordered a very sudden and public grounding of the fleet despite the longstanding use of Army software in question, generating what they must have known would be a suite of negative headlines? Whoever it was certainly laid convenient groundwork for the announcement of the fleet’s replacement shortly afterwards.
In the case of ELSA’s BMS, who leaked news of the withdrawal to the media, and which ‘military insiders’ subsequently made inaccurate public allegations of Israeli spy-craft?
In the case of the Thales Hawkei, who prompted Defence to publicly resurface a ‘braking issue’, which two ministers and an independent body had previously agreed was no longer an issue?
Most recently, a classified engineering assessment critical of the anticipated performance of the Hunter class frigates was leaked to the media, prompting Minister Dutton to say ‘there is no Plan B’ – funnily enough, the same words used about the Attack-class prior to the big reveal of Plan B. Who leaked that assessment to the media, and why?
But all these leaks and political manoeuvres must surely cause us to wonder: how exactly does Australia make defence capability decisions? Is it on the basis of strategic justification and due commercial process? Or is it on the personal preferences of an elite few?