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The Clock Is Ticking Down on Australia's Massive Submarine Deal

Technology, geopolitics, and geography are colliding head-on in the largest defense deal in Australian history: the replacement of their entire submarine fleet.
Photo by Petty Officer Damian Pawlenko/US Navy

By year's end, there should be resolution to Australia's thorniest and most expensive military procurement program: the replacement and upgrade of its current submarine fleet.

The sub saga includes domestic and international political dimensions, unusual operating requirements particular to Down Under, and all sorts of unique industry angles. In short, it's a classic case of the sprawling nature of modern defense procurement and the competing constituencies therein.

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Three bidders — France, Germany, and Japan — are duking it out at the invitation of the Australian government, with final bids for the construction of up to 12 subs to replace the current fleet of six due on November 30. Each of the three bidders received $6 million to complete their applications.

The smart money seems to remain on Japan, which sweetened the pot by agreeing to share top-secret technology relating to lithium-ion batteries as part of its package.

The world got a better look at the details of Japan's bid during the Royal Australian Navy's Seapower Conference in Sydney earlier this month. The Japanese team of Mitsubishi Heavy Industries Ltd. and Kawasaki Heavy Industries Ltd. proposes to construct a larger version of its Soryu-class submarine, a diesel-electric vessel that Australia's Sunday Times described as having "advanced welding technologies, top-secret stealth technology, combat system integration, unique high capacity lithium ion batteries, and an all weather snorkel system that can operate even during a typhoon."

Related: All About the Pacific Ocean's Newest SUB: Supersonic Underwater Bullshit

Though Japan's offer of lithium-ion battery technology is a significant development, the German proposal from ThyssenKrupp Marine Systems GmbH may yet gain momentum given the company's experience — 160 subs built for 20 different countries. And both the German and French teams (the French company SCNS group is putting together a bid) are considered ahead of Japan in the lobbying/public relations component of the bidding process.

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The initiative, known as the SEA1000 Future Submarine program, was officially kicked off with a December 2007 by then-Minister for Defense Joel Fitzgibbon. Australia's 2009 Defence White Paper confirmed that "the Government has decided to acquire 12 new Future Submarines, to be assembled in South Australia. This will be a major design and construction program spanning three decades, and will be Australia's largest ever single defense project. The Future Submarine will have greater range, longer endurance on patrol, and expanded capabilities compared to the current Collins-class submarine."

Australia's requirements for its submarine program are unique and reflect the country's isolated location, small population, and domestic and international political considerations.

"There are no off-the-shelf options available for Australia," said Dr. Adam Lockyer, senior lecturer of security studies at Macquarie University and a 2015 Fulbright scholar in US-Australia alliance studies, as he explained some of the requirements. "First, the new submarine needs to be diesel. Australia doesn't have the facilities to accommodate nuclear submarines. Second, it needs to have an ultra-long range. Many diesel submarines on the market don't even have the legs to sail from Australia's submarine ports all the way up Australia's coastline — let alone up into Southeast Asia. The Indian and Pacific Oceans are big areas to patrol, particularly for many of the smaller European boats."

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As Lockyer noted, the propulsion system is a challenge. Nuclear-powered submarines have theoretically unlimited range — range being a key consideration given Australia's location. A typical mission might require a sub to disappear for 55 days. Australia has chosen not to pursue an indigenous nuclear power industry, however, and would thus be wholly reliant on an ally or partner for nuclear-related upkeep and operational maintenance if they chose nuclear subs. Current plans for construction mostly within Australia would not be workable. But diesel-electric subs, like the aging Collins-class fleet, offer longer ranges that can accommodate Australia's strategic needs.

When it comes to the construction of the future subs, domestic politics are at play in determining the construction site. All three bidders have agreed to substantial construction taking place in Adelaide, South Australia. Adelaide, where the Australian Submarine Corporation is based, was previously home to a large shipbuilding industry, but more competitive construction sites abroad, mainly in Asia, have diminished its role. Currently, the shipbuilding industry in Adelaide depends on government contracts to remain viable. Both the Liberal and Labor parties have committed to manufacture future subs in Adelaide, in support of constituencies there and throughout South Australia. It would be faster to construct the subs in the winning bidder's country and would cost less, but politics dictate that the subs be built in Adelaide.

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International dynamics also play a major role in the decision as Australia manages its relationships around the world. Observers have long thought that Japan has a leg up on the competition, given Australia's efforts to cement the bond between the two countries. The government has described Japan as "Australia's best friend in Asia," has looked at reinvigorating the "Quadrilateral Dialogue" (with Japan, India, and the United States), and has in many ways been positioning itself to be stronger in the face of a rising China. A submarine deal with Japan would fit nicely with the Australian government's long-term objectives.

But the Australian government changed prime ministers in September, and new Prime Minister Malcolm Turnbull is likely to take a more moderate look at issues like Australia's relationship with China, seeing them more as a business partner than as a security threat. Critics of former Prime Minister Tony Abbott's approach note that Australia might be best off not siding with either Japan or China and preserving its strategic options, particularly given that both countries are among Australia's largest trading partners.

Even the demand for submariners to crew the boats is a particular challenge for Australia.

"It needs to be a small crew," Lockyer said. "The current company of the Collins-class submarines is 36. Australia has typically only been able to keep three of its six boats at sea because of a lack of available crew. Being a submariner is a tough job, especially when the mining boom means your [machine] skills are in demand by other sectors in the economy that are incredibly lucrative. We are now on the market for up to 12 submarines. Crewing them will be a challenge."

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The 2009 Defense White Paper also addressed stop-gap measures with the current Collins-class subs, noting: "The Government has also agreed to further incremental upgrades to the Collins-class submarines throughout the next decade, including new sonars, to ensure they remain highly effective through to their retirement."

Related: Submarines With Wheels, Underwater Blimps, and a New Nuclear Arms Race

Just last week, Saab, which is no longer participating in the future sub replacement program, proposed an upgrade package to the Collins-class vessels that would maintain Australia's submarine capability during the time before the new subs are complete.

"In Australia, you have decided on a new submarine program, which is fantastic, but it's not going to be here for a number of years and it is a very big undertaking," said Gunilla Fransson, Saab's senior vice president for security and defense solutions.

In sum, we have a hugely expensive procurement program in an era of low defense budgets that is influenced by unique operational requirements, and whose development has been pushed and pulled by local, national, and international constituencies. The Australians need a highly specialized vessel that no one else has, but don't have the resources to build the subs indigenously.

The problem is reminiscent of the camel and its description as a "horse designed by committee." With all the competing interests, it will be a lot of work for the Aussie sub program to come through without any humps.

Follow Shannon Hayden on Twitter: @ShannonKHayden Photo viaRoyal Australian Navy