ASPI’s Robert Macklin has released a ‘warts and all’ case study into the procurement of the RAN’s three Air Warfare Destroyers (AWDs), from the people on the shipyard to the politics and technology that both enabled and hindered one of Australia’s largest procurement projects.
The goal of the case study, in the words of ASPI Executive Director Peter Jennings, is to “help those in Defence, industry and parliament, and interested observers, to better understand the complexities of the business—all with the aim of improving how Australia equips the ADF.”
ASPI is supported in that mission by outgoing CASG Deputy Secretary Kim Gillis, who “wants to build a library of case studies in the interests of helping government, defence and industry leaders make the best possible capability decisions.”
Macklin opens with an acknowledgement of the program’s many difficulties.
“The AWD procurement was like none other,” Macklin writes. “It involved the reluctant departure from office of two defence ministers; it fell into almost every organisational pitfall imaginable; it ran wildly over budget and schedule; yet it laid the foundation for a continuous naval shipbuilding industry for the first time in Australian history.”
Macklin points to the period between the 2000 Defence White Paper and the 2005 first pass as the source of many subsequent issues with the project.
“By 2002, when Vice Admiral Chris Ritchie became Chief of Navy, the White Paper, he says, ‘was almost worthless because we’d run out of money’. This was but one of the impediments in the vital Phase 1 of the AWD Project between 2000 and the first pass by the National Security Committee of Cabinet scheduled for 2005.”
The decision to procure AWDs, of course, was made alongside the decision to acquire two Landing Helicopter Docks (LHDs), today’s HMA Ships Canberra and Adelaide.
Macklin also highlights the influence wielded by John Wylie and Mark Carnegie, consultants who had both been involved in the privatisation of Qantas and the redevelopment of the Melbourne Cricket Ground.
“Shipbuilding didn’t figure at all prominently in Wiley’s and Carnegie’s experience at the time. While the sale of ASC to a private concern was the trigger for their engagement, they were also asked to advise on which of the big shipbuilding projects should take priority.”
The integration of Aegis brought competition between Raytheon and Lockheed Martin front and centre: “So lively was the competition between the two US defence contractors that, when one of them scored a tender win over the other, the winner sent a van to park outside the loser’s office carrying a big painted sign saying, “WE WON!’”
However, Raytheon was then given the task of integrating Aegis into the AWDS, and consequently took up a leading role in the build.
Politics also played a role. The ousting of Kevin Rudd in 2010 “led directly to the replacement of the well-liked Defence Minister, John Faulkner, by much less popular Stephen Smith from Western Australia.
“Indeed, one senior member of the AWD leadership team would resign his post rather than continue to work for and with the minister.”
Issues also arose between companies involved: “The relationships between the parties were starting to deteriorate quite badly because of money and schedule pressures.”
Then came former Defence Minister David Johnston’s infamous remark that ‘devastated’ morale at ASC: “You wonder why I’m worried about ASC and what they’re delivering to the Australian taxpayer; you wonder why I wouldn’t trust them to build a canoe.”
Ultimately, Macklin credits Commodore Craig Burke for getting the program back on track, thanks to a mammoth “emotional, intellectual, and physical commitment.”
He concludes on a positive note.
“From my experience of many days and weeks of conversation with all the key players in the AWD program, I have no doubt that we possess a cohort of extraordinarily well-qualified executives, naval officers, public service administrators, scientific and technical personnel—as well as an eager and motivated shipyard workforce—perfectly able to accomplish the challenges set for them.”
“Provided always that they remember the hard-won lessons afforded them by the AWD procurement.”