Type 26 wins $35-billion Oz frigate tender
Australia has chosen BAE Systems’ Hunter-class frigate as the winning contender in Project SEA 5000 Phase 1 – ‘Future Frigate’.
SEA 5000 Phase 1 (Future Frigate) will introduce into service the next generation of naval surface combatants – at an estimated cost of more than $35 billion for acquisition.
SEA 5000 Phase 1 will replace Australia’s existing fleet of eight Anzac-class frigates with a new fleet of nine anti-submarine-warfare frigates.
The first batch of three will be named HMA Ships Flinders (II) (SA region named for explorer Captain Matthew Flinders – first circumnavigation of Australia and identified it as a continent); Hunter (NSW region named for Vice-Admiral John Hunter – first fleet Captain and 2nd Governor of NSW); and Tasman (state and sea named for explorer Abel Tasman – first known European explorer to reach Tasmania, New Zealand and Fiji).
Hunter-class will conduct a variety of missions, and have sufficient range and endurance to operate effectively throughout our region.
They will be equipped with a range of offensive and self-protection systems and incorporate the Australian-developed CEA Phased-Array Radar.
In today’s announcement, BAE Systems has been named as preferred tenderer with ASC Shipbuilding actually doing the bulk of the build, at the Osborne Naval Shipyard, South Australia.
This $35 billion program will create an estimated 4000 Australian jobs around the country.
The first Hunter-class will enter Royal Australian Navy service in about 10 years from now, all going to schedule – replacing the Anzac-class frigates that have been in service since the mid 1990s.
Naval Shipbuilding Sovereignty
The Future Frigate program is one of Australia’s most significant investments in military capability – at around $35billion for acquisition – with sustainment and upgrade costs to follow.
Prime Minister Malcolm Turnbull said this program provides a unique opportunity to not just strengthen, but guarantee Australia’s naval shipbuilding sovereignty.
“The next generation of frigates will be built by ASC Shipbuilding at the Osborne Naval Shipyard. ASC Shipbuilding, currently wholly owned by the Commonwealth, will become a subsidiary of BAE Systems during the build,” he said.
“[Selling our only government-owned shipbuilding company to a foreign company] ensures BAE Systems is fully responsible and accountable for the delivery of the frigates and ensures the work will be carried out by Australian workers and create Australian jobs.
“The Commonwealth of Australia will retain a sovereign share in ASC Shipbuilding while BAE manages the program.
“At the end of the program the Commonwealth will resume complete ownership of ASC Shipbuilding, thereby ensuring the retention in Australia of intellectual property, a highly skilled workforce and the associated equipment.
“By the conclusion of the frigate build, ASC Shipbuilding will be a strategic national asset capable of independently designing, developing and leading the construction of complex, large naval warships.
“This does not affect the Offshore Patrol Vessels, Air Warfare Destroyers, or the sustainment of the Collins Class submarines and will not preclude ASC Group from pursuing future shipbuilding opportunities.”
Prime Minister Turnbull said that following a rigorous and comprehensive Competitive Evaluation Process, the Government had assessed BAE’s Global Combat Ship – Australia as the capability best suited for our nation.
“Hunter-class will provide the Australian Defence Force with the highest levels of lethality and deterrence our major surface combatants need in periods of global uncertainty.
“Hunter-class will have the capability to conduct a variety of missions independently, or as part of a task group, with sufficient range and endurance to operate effectively throughout the region.
“The frigates will also have the flexibility to support non-warfare roles such as humanitarian assistance and disaster relief” – [he just had to say it, didn’t he!]
“Incorporating the leading-edge Australian-developed CEA Phased-Array Radar and the US Navy’s Aegis combat management system, with an Australian interface developed by Saab Australia, the Hunter-class will be one of the most capable warships in the world.”
Australian Industry Content
“The Turnbull Government’s commitment to maximise Australian Industry Content in our military capability is delivering for Australian workers and Australian businesses,” Mr Turnbull said.
“BAE expects the Australian industry content for the Hunter-class build will be 65-70 per cent, which will create and secure thousands of jobs for decades.
“BAE has prequalified over 500 Australian businesses from every state and territory to be in the Hunter-class supply chain.
“The Turnbull Government would like to thank BAE Systems, Fincantieri and Navantia for their participation in the extensive and thorough process of selecting Australia’s new Hunter class.”
17 thoughts on “Type 26 wins $35-billion Oz frigate tender”
Rather then replying to each post.
The cost of Australian programs include through life costs. Only a portion of them (Circa 50%) is for the build and outfit side of things. So suggestions that we can get a larger fleet or magically save tens of billions aren’t the case. Should also note that these programs also include a portion of them as a safety net for any cost over runs.
The claim that it is also more expensive to build in Australia is also false when you look at the history in depth. Costs have been more expensive when programs have either been a limited number of hulls or the federal government fails to listen to expert advice on how it should be run. Case in point: The Anzac frigates actually came in under budget with the last few ships actually being cheaper then vessels built in Germany. The Anzac program was well thought out and ran across 10 hulls but people tend to ignore this. The Hobart class DDG’s (AWD) is the black sheep which is often as used as the argument that we are so expensive, What people do not take into account is that the federal government did not listen to experts on several matters including the risk of going with Navantia (They hadn’t even finished the blue prints before we started cutting steel which forced us to go and rework a number of blocks), They nixed the idea of inspectors going around to check on and if need to correct any work ongoing (Was there attempt to cost save but it is a common practice to have and will find a problem and fix it before it goes too far, Nixing this left problems only being found out way too late requiring far more to fix then would have before), Federal government didnt have any single entity in charge (The program was a shambles, Several different companies/organizations all doing there own bit but no single one in charge to take the lead and be the team captain giving out orders and calling our the players when they stuffed up).
The AWD program was a lesson in not what to do yes but it wasn’t all bad. Between the 1st and 3rd ship hulls the cost of the hulls fell almost 50% with an efficiency level actually reaching that of what US yards achieve in building the Burkes.
The Anzac program is a lesson on what we should do. You have the one entity in charge of everything, You ensure the right procedures are in place to make the build risk free or as risk free as humanly possible,You do it over a long production run to ensure the cost and efficiency curve is captured and eventually retained.
With the Hunter class BAE is the top person, Everything stops at them meaning they will ensure the program runs perfectly or its there ass. The build is being run over a long period of time with the intent that once the 9 ships are finished we will go straight onto a replacement for the Hobarts and following them the future replacement of the Hunters meaning the stop start nature and valley of death that has plagued Australian shipbuilding will finally be gone and dusted.
Our future programs are actually better placed then any before with the costs better calculated then ever before. We have a long term acquisition strategy that will see Australia acquire a shipbuilding capability that will be a very important strategic asset while also lowering our costs to international levels or lower (As the Anzac build showed).
Another line of thinking, since most of the time these Frigates will be doing training and practice runs up and down the east coast of Aus, or diplomatic missions to foreign ports, or patrolling for pirates, drug runners & refugee boats, a major and minor surface combatant fleet mix might make more sense.
For example – and I’m not saying this is the choice you would go with, just using the British example since we are buying the British type 26 design. The Brit’s are budgeting 2Bil pounds ($3.5Bil AusD) to build 6 type 31 Frigates, that’s only 333Mil pounds ($590Mil AusD) per ship.
For the $35Bil we are spending on 9 Frigates we could have the Brits build us 9 Type 26’s (they are only paying $2.2Bil AusD for their type 26’s) & get them to build us 12 type 31 Frigates, with plenty of money left over.
Yep, for exactly the same money we could get the 9 type 26 Frigates plus 12 type 31 Frigates & with the left over money we saved either pay for all the extra sailors needed over the life of the vessels, or have about $400Mil / ship to pay for mid-life upgrades on each of the 21 new Frigates.
Of course we don’t need 21 Frigates. I’m just giving an example of how much more we could have got for exactly the same amount of money.
What about 6 X Australian built Destroyers, 6 X UK built type 26 Frigates & 6 X UK built type 31 Frigates & left over money in the kitty to pay for mid-life upgrades on all 18 surface combatants ($525Mil / ship).
Again, not saying this is the right mix for Australia, but think of the endless possibilities.
Then get into the insane $50Bil sub fleet debacle and you can theoretically build Australia at least 2 fully equipped Aircraft carrier battle groups for the money we are going to spend.
Each made up for 1 British ACC, 4 Destroyers, 2 Nuclear subs, a tanker, a supply ship, 35 F35B’s, pay for the extra sailors on the Carriers, & have money left over to pay for mid-life upgrades for each of these vessels, & still have Amphib, OPV, surplus Destroyers, minesweepers, & other ancillary vessels.
Your making the common mistake of thinking that the $35 billion is just the build cost. In Australia the common method of calculating and tendering a program is to include the build and through life costs. So this $35 billion will be the cost not just to buy the ships but to also operate them. When you take into account that factor and through life costs can equal and often exceed the build cost the program isn’t actually on the expensive side. The same applies to the shortfin barracudas, future OPV’s, etc
That said the UK’s attempt at cost cutting by acquiring lower end ships isnt in Australia’s best interest nor is it in the Interest of the UK. It’s a ship the size of a frigate that is no more capable then an OPV at 2 – 3 times the price. As for UK builds that would negate what we are trying to do down under in creating a sustainable non stop shipbuilding industry. History has shown when we build ship after ship our costs actually decrease to at or below global standards (HMAS Perth actually ended up costing less then the Frigates Germany built for South Africa while being more capable itself) and with our lowering of the ships life spans from 30+ years down to 24 we will be able to build 1 major surface combatant and 1 submarine every 24 months, Or 1 major warship every 12 months over a 24 year period at which point the follow on class will start. So doing it all at home will make them cost effective over the long term while also at the same time creating a strategic capability, Due to our distance from major allies in a worst case situation the RAN needs to have the local capability not only to maintain but also replace losses. If we build them abroad we wont have that, We build them at home and the industry will exist giving us a good starting off point not only to replace losses but expand if needed which is far easier then starting from scratch.
The old dog – cat game. They want a dog but buy a cat. Spend years and to much money training and modifying the cat to be a dog. Finally the cat becomes a dog but it’s to old and then they get another cat. Defence acquisition.
Segway; Canada is also looking for a new boat, be interesting to see if they choose the type 26. Would that bring the coast down?
It will be intriguing to see what Canada does.
Love your cat dog game.
I agree with Paul about building more destroyers at the cost of frigates, the government wanted to keep our ship building capacity while avoiding the “valley of death” of a reduced build period. They come up with the patrol boat build and replenishment ship build plans to reduce that period. Surely the easiest option was to increase the destroyers numbers to 4 or even 5 and reduce the total frigate purchase?
They were making great cost savings as the AWD project went on, if we built as many as the US then we might of even got to your magic 2 billion per boat price tag.
totally different roles awd is air defence with some anti sub capabilities type 26 is deticated anti sub warfare ship with prolly the same air defence capabilities but i agree we needed at least 6 awd 3 for each side of continent and 10-12 type 26 5-6 to go with the 3 awd in the west. 1 hld 3 awd and 6 type 26 and 2 subs and thats 2 very capable task forces plus the other 4 subs clearing and killing anything of concern.
I agree, the Frigate will have stronger ASW capabilities and quite good AWD. Whilst the Destroyers will have slightly stronger AWD and quite good ASW.
But I wouldn’t say they are “totally different roles”. For most of their service lives, both classes of ship will do nearly identical work in reality.
When you look at the specs they are very similar ships. In broad terms, both ships with 1 Helo, ESSM, SM2, Harpoon, CIWS, Aegis combat system, similar ship sizes, similar crew numbers, similar range, similar top speeds, perform Anti Sub, Air defense & Surface warfare etc.
I understand the type 26 has a number of unique specialist ASW capabilities which makes it very good at ASW.
The issue is for a medium sized country like Australia with a modest defense budget, is it worth investing an extra $15Bil to have both the Destroyer and the Frigate? plus the ongoing cost of maintaining 2 different classes as opposed to 1.
If we just had the Destroyer’s, we’d still have the Australian build element we all want (& the political capital this has for the decision making pollies), we’d still have 12 very good sub killers, we’d have outstanding Air Defence, & we’d have about $15Bil left over to spend on some fantastic new capabilities the Australian Defense force currently doesn’t have. $15Bil buys a hell of a lot of bang. We could nearly double our F35 order, or we could buy 2-3 small Aircraft Carriers, or a very large fleet of drones, or a very large fleet of attack helicopters, or a fleet of medium/long range bombers, etc etc (pick your own particular brand of poison).
Agree, almost never do they pull out once a decision is made.
But I think if journalist at press conferences asked pressing and consistent questions to the Defense Minister/PM & Treasurer, regarding the price & other options availabe, every time they announced a new spend (& they realised they were going to be examined on value for money and why we always seem to pay way over the top to make in Aus). Then they might pay more attention to the cost born by the tax payer. And Australia might end up with a much better equipped defense force.
We seem to always want to add Australian unique features to otherwise proven designs. I get it, you can always add specific features to make something work even better for the end user but at what cost?
Lets face it, in broad terms Australia seems to want 12 uniquely Australian variant surface combatants (spread over 2 classes) + 12 uniquely Australian conventional subs, all built in Australia. Cost seems to be irrelevant. So we are going to pay $8Bil + $35Bil + $50Bil = $93Bil.
If you gave me $93Bil to spend I could have theoretically delivered to the Navy 12 (US Built) nuclear subs, 12 (Australian built) destroyers, 3 (British built) aircraft carriers plus 120 (US Built) F35B’s to put on those carriers.
In my books Australia is getting completely ripped off. I myself would prefer a much better equipped Navy.
The Navy I could buy with $93Bil would slap the Navy Australia is actually getting back to the stone age.
The media almost seem to giggle with excitement about each new massive spend without stringent journalistic assessments of the decisions being made.
I like you, agree that making defense equipment where practical in Aus is strategically important for our national defense. But not at any cost. This Frigate cost is astonishing to me (on top of the crazy Sub prices).
The fact that journo’s never seem to ask probing pricing questions allows the decision makers to continually pay crazy prices that seem difficult to reconcile. If we were paying 20% more for Aus made, I wouldn’t complain, but we appear to pay double or more for Australian made that are sometimes even inferior to what is available off the shelf.
$50Bil on 12 conventional (high risk unproven) subs and no one in the press again seemed to even think to ask hard hitting & persistent questions. While the US builds 10 nuclear subs for $17Bil US dollars (sure add in some price for inflation & convert to Aus D). But we are getting lesser capability for much greater costs.
Or the Brits paid $5.5Bil (Aus dollar) for each of their two 65,000 tonne aircraft carriers. That’s a hell of a lot more ship for not much more than we are paying for each of our 9 Frigates. & many insiders in Britain thought they were overpaying.
Or the American’s only pay $1.843Bil USD (2013 pricing) for their Arleigh Burke destroyers (one of the best all round surface combatants in the world).
I detest politicians wastefully spending my money. But it doesn’t seem like it is about to stop any time soon.
Again, I’m not arguing, because I generally agree with the thrust of what you’re, but….
Re “journalists asking pressing questions regarding other options available” presupposes that Australian journalists understand, know about or even care about Defence (most are happy just to ‘trip up’ a politician to get a giggle headline for tomorrow’s paper). On the other hand, the very few Defence-interested Aussie journalists who know about these things did already asked the questions way back when it was pertinent – and now know that it’s not pertinent or prudent – it’s too late to press that case.
Also, it’s not really a journalist’s job to second guess spending decisions. That’s more appropriately the relevant Senate Standing Committee or Senate Estimates.
Then there’s the significant discrepancy over cost reporting between different jurisdictions. While the Arleigh Burke may have cost ‘only’ $1.843Bil USD, that’s per boat ‘off the shop floor’ – whereas Aussie prices are for the whole project, which includes the ships, ship-building facilities, slipways, moorings, state-of-the-art refuelling ports, spare parts, a training college, student accomodation, virtual-reality this-and-thats, sustainment bits-and-bobs etc etc etc. To take the $35billion package and divide by 9 is not an apples-for-apples reflection of the cost per boat. In the US (and possibly UK too), the real cost per boat grows if you measure it with the same yardstick.
That said, Aussie boats will be more expensive, because Aussie wages and Aussie steel costs more – but not by the factors you’re suggesting – and for the reasons I’m suggesting – if that makes sense (it’s getting late and I’m distracted 😉 ).
BTW – I did question the 12 subs idea when that first came out – and still don’t understand why we need 12 or how we’re going to man 12 when we can’t currently man six properly.
My conspiracy-theory brain tells me that “America told us we had to”, because the Aussie decision to buy 12 was announced suspiciously close to when the US announced its Pacific Pivot policy. In other words, Australia doesn’t need 12 subs to protect Australia – America needs Australia to have 12 subs to protect Australia’s part of America’s Pacific.
All good comments.
With regard to journos that know. I do think it is their job to press on behalf of the rest of Aus who don’t have the knowledge or availability to politicians to press with such questions. & just because a decision is made doesn’t mean the decision makers shouldn’t be made to look foolish with facts and figures. The price per ship on the Aussie built Destroyers compared with the 45% greater cost on the Frigates was an easy comparison that I never once heard put the the Defense Minister or Prime Minister. It was a must ask question.
I have no confidence in Senate committees or parliamentary inquiries as they are run by clueless politicians informed by nameless bureaucrats (the same sorts that are making the mistakes in power).
The cost discrepancies you are talking about is why we can save when buying off shelf, without modifications. You don’t need the ship-building facilities, training the builders, rectifying early build and design errors, etc.
Where we can build at a semi reasonable price (like with the Anzacs, Destroyers), I’m all for it.
US/Japs/UK/Korea/German/French/Italian/Spanish etc would happily keep their production lines open and run off several more types they are already expert at making (having long since ironed out the kinks). The expensive fixed price initial design costs, facilities to build, training people to build, early product line errors etc, have all already been paid for.
Ingalls shipbuilding would be just as happy to build Arleigh Burke’s for Aus as for the US (as long as Congress approved) & there is no reason they’d charge us more (unless we tinkered with the design). The Aus Destroyer is not quite as good, but similarly priced & much smaller crew, so justifiable decision to go with the Australian build.
Likewise General Dynamics would be just as happy to build another 6-8 block IV Virginia class subs for Aus as for the US (subject to Congress approval) & the price was $1.7Bil each USD (say $1.8Bil USD for inflation = $2.44Bil Aus D) X 8 = $20Bil plus say $5Bil for bits and bobs. I’ve just saved $25Bil on the crazy $50Bil, & got a better boat to boot (NB: I strongly agree with your manning of 12 subs view).
Interesting discussions all around.
i get your point and agree totally with your point about the capability gap between what we could have and what we have, but if australia is serious about becoming a player in the defence industry we need to get the skills and experience in this very skilled industry. if the ASC is government owned then lets get the designers, engineers and the skilled men an women that put it all together i dont know why we dont do the same as isreal and design and make our own defence hardware i know this will stop ppl asking for bigger then what we can actually man in peace time. 2 crews for each sub is great way to get the maximum out of the 6b the gov spent on them but at least they chose the right type of sub for its role in Australia its a proper ssn hunter killer i really hope that they have the aip or equivalent technology to give them the endurance of a nuclear sub.plus we need at least 30 f35b’s 15 for each ship the british aircraft carrier’s are only displacing 2-60000 tonnes more then our own equivalent practically the same size but to try and take a navy with army brigade inside of the ship with equipment without air cover would be foolish, the f35b is the only option we cannot put catapults on ours they’re finished and commissioned 3 squadrons on each ship the navy should have a fleet airarm again.
Has anyone considered asking about the price compared with our destroyers?
We are currently building 3 destroyers (usually considered much more expensive than a frigate) for $8Bil ($2.66Bil per ship). This includes all facility factory construction costs to be spread across only 3 vessels. At the time of signing this was considered very expensive for a Destroyer. If you extended this contract each new vessel would cost less than the $2.66Bil the first 3 cost (as the infrastructure to build the vessels has already been paid for).
Yet we are building now 9 frigates for $35Bil ($3.88Bil per ship). Have a look at what other navies around the world are paying for their frigates (usually well under $2Bil AusD per ship). I understand these are quite large frigates but they are 45% more expensive than the destroyers we are currently building, and about twice the price (if not more) than what other countries are paying for their Frigates.
Why not simply build 12 destroyers & no Frigates and spend the $10Bil-$15Bil savings on other important military capabilities?
Even if we extended the destroyer numbers to 6 with 6 of these super expensive frigates we’d still have several billions saved for other capabilities.
Perhaps I have missed some basic point of logic. Any feedback to enlighten me would be appreciated.
I’m not sure you’ve missed any ‘logic’ here Paul. But they do say ‘logic’ and ‘military’ don’t go together 😉
Seriously though, re the ‘cheaper overseas’ argument – it was always a given that it would be significantly more expensive to build in Australia on Australian wages and with Australian steel. And that’s a cost the government is willing to wear (and I support, in principle) to re-establish a sovereign and sustainable shipbuilding industry.
Your argument re more destroyers is a good one I hadn’t thought of – especially since there is a large chunk of money in the frigate spend that will go on facilities and training – a lot of which could in fact be a duplication. That said, the specific capabilities of both ship types and what we want to use them for is obviously very different, and therefore a big factor in the decision.
And all those are just my humble thoughts.
Thanks for your reply.
I understand that these Hunter frigates will be designed to be very good at ASW (in principle better than the destroyers).
But when you are talking about a saving of up to $15Bil, you can buy a lot of other ASW capabilities, still get 9 (12 in total) new outstanding Aus built ships (re-establishing a strong Aus shipbuilding skillbase). And at the same time expand our Air Warfare Capabilities (what the destroyers do a bit better than these frigates)
Also, it’s not like our destroyers aren’t also going to be excellent at ASW (albeit from what I’ve read – likely not quite as good).
As for other functions, both ships seem very similarly sized and armed (harpoon, SM2, ESSM, CIWS, Aegis equipped, 180 crew).
It seems cost savings to maintain 1 fleet of 12 ships and commonality of parts, labour, training, expertise is much cheaper than 2 smaller fleets of different types.
Ultimately if the better ASW capabilities of the Frigate were so vastly superior to our destroyers that we couldn’t do without them (more conjecture than fact). Surely building 6 – 9 destroyers and 6-3 Frigates would have covered this need & we still would have saved billions for other important new capability expenditure.
I honestly wonder if anyone in the decision making process even considered either of my alternative options above. I doubt it. Money really matters. For a country with a modest defense budget like Aus we need to get maximum bang for our buck. I have not heard a single journalist ask the same pricing questions I have posted about.
I have no agenda, other than seeing best results for Aus defense generally.
I’m not going to argue with you Paul – you are making perfect sense to me.
I’ll just say two things however, both of which, in my humble opinion, reflect reality as it exists today…
1. One can only hope that there was logic and reason behind the decisions made (but one remains sceptical and doubtful, based on government (both sides) track records, and one’s own experience of Defence decision-making processes).
2. Now that the decision is made, it is far too late and completely pointless for journalists (or anyone) to ask these sorts of questions, if the intent is to alter the outcome. These sorts of questions may have been valid and valuable (and may have actually been asked and answered) during the decision-making process, which has been running for the past several years.
We can ask, we can complain, we can bitch, we can moan, we can pontificate all we like. But, the decision is now made (after years of deliberations), and we the tax payers have to accept it. What choice do we have? – except to bitch, moan, pontificate – and ask rhetorical questions.
P.S. I absolutely mean no offence by any of this, and am enjoying this ‘debate’. So please feel free to come back with more 😉