We have to fix defence procurement before we stuff up another subs decision

Is Australia about to make another disastrous decision around its submarine fleet?

In 2016, the Turnbull government made a poor decision to contract France’s Naval Group to build a new generation of submarines here in Australia — reflecting the fusing of industry policy with defence policy. Last year, the Morrison government made a radically worse decision, throwing the Naval Group contract out at a cost of at least $4 billion and starting over with a study of nuclear submarines that probably wouldn’t be built here and not arrive until the 2040s and 2050s — if then.

Peter Dutton now claims the Americans would simply sell us two new Virginia-class nuclear submarines, complete with submariners to crew them, before 2030 to address the massive gap between the end of the lifespan of the existing Collins-class fleet and the arrival of the new boats.

Defence Minister Richard Marles has said he’s not ruling out the purchase of an interim vessel to cover the gap between the Collins era and the nuclear era.

Both options seem bizarre when you recall the Naval Group’s Barracuda vessel, the basis for the original contract in a modified form, is a highly rated nuclear-powered attack vessel that needs a far smaller crew.

In his op-ed piece for the Murdoch press Dutton suggests Australia couldn’t handle three submarine classes. Given that we were not able to handle one class due to maintenance and crewing problems — the crewing problem is so bad one solution is to build a new sub base on the east coast so submariners and engineers wouldn’t have to live in Perth — Dutton might have a point.

But there’s a threshold issue before any decision is made, whether it’s to pursue the unlikely scenario that the Americans cough up two boats they would have otherwise integrated into their own fleet, or an interim fleet, or just accept the gap and hope the Chinese play nice until the 2050s.

Australian defence procurement is broken, and Defence has repeatedly proven it struggles to properly handle major procurement decisions. The most recent Auditor-General review of Defence’s Major Projects at the end of last year showed them collectively over 400 months late. The Taipan helicopter program was subsequently abandoned altogether and Australia still has no armed drone capacity to speak of, many years after beginning the procurement process. Not merely do we handle procurement poorly, we seem to be incapable of making procurement choices that reflect the likely military environment we’ll face.

After years of blunders and poor procurement management, even The Australian took to routinely attacking the previous government’s defence spending record, with Greg Sheridan — a savage critic of the nuclear submarine decision — repeatedly excoriating the Morrison government for failures across all arms of the ADF.

As the Australian National Audit Office pointed out last year, what appears to cause difficulties is Australia’s predilection for ignoring off-the-shelf major acquisitions in favour of either designing from scratch or significantly modifying off-the-shelf designs. This predilection was curbed in the 2000s but has been returning since 2014, and it makes big projects far riskier and far more likely to be delayed and cost more.

Part of that, of course, is that politicians gleefully confuse industry policy and defence policy and want to add up to 30% to the cost of major projects by making them here. Our procurement problems lie both at Russell Hill and at Parliament House in Canberra.

The submarine decision — unless we decide that all the nuclear subs will be built in the US and be the unaltered Virginia-class boat — will be no different to the many poor decisions we’ve made in recent years.

Taxpayers can have no confidence in any decision Defence makes about the subs until a fundamental review of defence procurement is undertaken. No one thinks defence procurement is easy — all countries take a long time to build major defence projects and few have ever cracked the secret of building them on time and within budget. But it’s not clear at all that the procurement systems within Defence — from acquisition choice to contract management — are fit for purpose. Very likely we’ll be discussing the failure of whichever alternative we pursue in another decade, 10 years older and no wiser.