Seven deadly sins in the Defence industry

Jul 27, 2023
Top of nuclear submarine. Naval fleet.

If previous defence acquisitions are any guide, the enormous cost of nuclear-powered submarines for the Royal Australian Navy will almost certainly escalate well beyond the estimated but un-itemised initial price of $A368 billion. The record of corruption of the two US submarine builders suggests that the project will also probably suffer from mismanagement. The final bill is likely to be astronomical.

In my article ‘AUKUS exposes Australia’s incoherent defence policy’, (Pearls and Irritations 14 February 2022), I mentioned the findings of Fred Bennett, Chief of Capital Procurement in the Australian Department of Defence from 1984 to 1988. Bennett listed what he called the seven deadly sins of defence procurement projects – novelty, uncertainty, complexity, interdependence, resource limitations, creative destruction and political constraints. (Security Challenges Vol 6 No 3 Spring 2010).

Bennett claimed that all have been present to a greater or lesser degree in most acquisition projects, and none can be entirely evaded or eliminated. The record over several decades, both in Australia and Britain supports his view.

The Australian Jindalee over the horizon radar system suffered similar delays. The Lockheed Martin F-35 joint strike fighter, designed as a low-cost, lightweight high-performance stealth aircraft, is none of these things, and its project director was sacked in 2010 for cost overruns, schedule delays and a troubling performance record. The BAE Hunter class frigate program has been plagued by design changes which made the ships heavier and slower than intended.

Trying to adhere to a prime contract comprising 22,000 pages with 600 sub contracts, the Collins class submarine all but lost its way in a forest of complexity. This was exacerbated when Wormald, the lead corporation in the submarine consortium changed hands. The head of Wormald was also chair of the Australian Submarine Corporation. The ASC lost its CEO and a period of chaos followed.

But it is not just Bennett’s seven deadly sins we have to worry about with regard to the acquisition of US nuclear powered submarines. Nor is it just about confusion about their primary role, and whether they will be the best possible platform available to realise it. It is also about whether the Australian tax payer will be ripped off in the process of acquiring them.

There are precedents. Two egregious examples of Australia buying American ships are Saginaw and Fairfax County, two 8,000 tonne landing ships purchased from the United States Navy in 1994 for what seemed to be a bargain price of $A61 million. Invented by the US Navy during the Pacific War, they have flat bottoms and bows that open, allowing them to run onto a beach to discharge tanks and trucks without the need of a jetty and without tilting at low tide. The US Senate Committee on the Armed Services blocked the sale at the last minute, but deft Australian diplomacy got the decision revoked.

On delivery by Australian crews to Australia, the vessels were re-named Manoora and Kanimbla. During conversion into amphibious warfare transports at Newcastle, extensive corrosion was discovered, resulting in a further $A400 million for replacement and repair. The ships were rust buckets, a fact known by US authorities at the time. Further unexpected expense was incurred when it was found the engines in both ships needed urgent repair.

After nearly ten years of service interrupted by extensive refits and repairs, both ships were de-commissioned and scrapped. This left the Navy with no capacity to deliver urgently needed supplies to survivors of Typhoon Yasi, which devastated the Queensland coast on 30 January 2011.

General Dynamics Electric Boat and Huntington Ingalls Newport News are the only submarine manufacturers in the United States. Both make Virginia-class attack submarines, eight of which are slated for acquisition by the Royal Australian Navy. Both companies have a record of corrupt practices and poor management control.

In 2017, Elaine Marie Thomas, director of metallurgy at a foundry in Tacoma, was found to have supplied faulty steel castings to both companies since 1985. She thought it ‘stupid’ that the steel had to be tested at minus 100 degrees Fahrenheit. She was jailed and the steel was strengthened at enormous cost in Ohio, Los Angeles and Virginia class boats. The fraud was only revealed by a whistle blower after 30 years.

In 2019, Huntington Ingalls was found to have falsified tests and certification on stealth coatings for Virginia class boats. The acoustic tiles tended to detach from hulls during long undersea deployments. The fault went undetected for several years, as did faulty welds in missile tube assemblies. These and other faults have resulted in a queue of Virginia class boats waiting for repairs. Forty percent of a total of 53 Virginias are currently out of commission.

In the light of such revelations, and of the fact that nuclear-propelled submarines are really suitable only for deep sea operations, not littoral defence, Richard Marles’s obduracy in continuing to pursue Virginia-Class Attack submarines is astonishing. Much cheaper conventional submarines with air-independent propulsion (AIP) are available from Sweden, Germany, Korea or Japan. They are quieter than nuclear submarines, have the capacity to lurk undetected for 30 days or more, are almost as fast, and are very unlikely to suffer the kind of cost blow-outs we are likely to face in nuclear-powered Virginias. We could also get them sooner.

The pro-nuclear lobby in Australia is excited by the prospect that possession of nuclear-powered submarines will lead to the capacity to develop a complete nuclear industry in Australia. This is a pipe dream. Operating experience with ANSTO’s one small Argentinian-designed research reactor at Lucas Heights does not enhance our capacity to enrich uranium, fabricate fuel rods, construct power reactors, or permanently dispose of nuclear waste. Few if any local councils would welcome construction of power reactors in their backyards. Australia still has no designated burial place for low-level medical nuclear waste. A growing number of high-level highly toxic spent fuel rods remain unprocessed at Lucas Heights. Uranium and plutonium residue from rods that have been processed overseas remain in temporary storage.

One can only hope that it is not too late to abandon the purchase of Virginia submarines in favour of much cheaper non-nuclear boats with AIP.

[problems in defence procurement, submarines, corruption, AUKUS, faulty steel plate, nuclear propulsion versus AIP]

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