Fraud, deception and missed targets: inside the shambles of the AUKUS submarines 

This is part of a series on AUKUS. Click here to read the full series.

In a US Federal Court in late 2021 an extraordinary 30-year fraud case finally came to an end when metallurgist Elaine Thomas pleaded guilty to falsifying test results on the strength of metal used to build the US Navy’s submarines. Thomas worked at a foundry in Tacoma, Washington state. The submarines included the navy’s fleet of Virginia-class nuclear-powered submarines. Australia is due to inherit two or more used submarines from this fleet.

It emerged that between 1985 and 2017, the metallurgist had systematically falsified test results that measured the strength and toughness of some 240 separate productions of steel. This represented a “substantial percentage” of the castings that the foundry, Bradken, produced for the two giant defence contractors that build nuclear-powered submarines.  

Quoting the indictment against her, The New York Times reported that Thomas’ actions had “caused the US Navy to make payments it would not have made if it had known the true characteristics of the steel”.  

The company paid US$10.8m (A$16.6m) as a settlement for making and selling substandard steel components for installation on US submarines, according to the US Department of Justice.

When it discovered the falsified tests, the company reportedly misled the navy by suggesting the discrepancies were not the result of fraud. This hindered the navy’s investigation and its efforts to address the risks to safety.  

The US Navy was ultimately forced to carry out checks on the affected submarines, a move which led to increased costs and maintenance time. 

The case of the falsified tests is one example of the problems that have plagued the US Navy’s Virginia-class nuclear-powered submarine fleet.  

A host of others are detailed in a US Congressional Research Service (CRS) report released this month. The 70-page report is meant to provide clear, independent information for members of the US Congress as they prepare to vote on key aspects of the AUKUS agreement, including laws that would enable Australia to send billions of dollars to the US to build facilities.  

The CRS report includes much that dispels the myth of invincibility promoted by the AUKUS sales job. It raises serious questions about US power and competence — and in turn, makes one wonder how hard it really was to convince the Americans to share their nuclear secrets, given the evident disarray of the US Navy’s nuclear submarine program. 

Is Australia inheriting lemons?

Australia is set to acquire at least three (and possibly five) nuclear-powered submarines directly from the US in order to bridge the looming gap in Australia’s submarine capability following Scott Morrison’s decision to cancel the French submarine contract.

The numbers and details vary, with the latest version emerging through Australian Senate committee hearings that two of the submarines will be drawn from the US Navy’s current Virginia-class fleet.  

So what kind of used sub might Australia get for its money?

The CRS report details that older Virginia-class submarines — the type Australia would likely inherit — have been beset with repair and maintenance problems.

Nearly 40% of subs under repair

Eighteen of the US Navy’s nuclear submarines — about 37% of the total fleet — are in maintenance or are awaiting maintenance. According to the CRS report, industry best practice calls for about 20% of the nuclear submarine force to be in maintenance — and for none to be waiting for maintenance — at any given moment.

This has “substantially” reduced the number of operationally ready submarines to 31 out of a force of 49. (In 2008, for example, 40 submarines were classed as operationally ready.) 

A key reason for the backlog is that there have not been enough workers to do the maintenance.

The workforce crisis 

Reports quoted by the CRS said that the US Navy and its suppliers had “thousands of open jobs” at government repair yards and in the private shipbuilding and ship repair industrial base.

Hiring and retaining skilled workers has become the “number one strategic challenge across the enterprise”, according to Vice Admiral Bill Galinis, the head of Naval Sea Systems Command, who pointed to “an undersized pool of talent”. The report said 100,000 people would need to be recruited over 10 years to meet the demands of submarine construction alone.

The replacement parts problem

According to the CRS, the US Navy discovered that Virginia-class submarine components which were supposed to last more than three decades had in fact worn out years earlier.  

At the same time it has emerged that some submarine parts are no longer available. This means that since 2013 the US Navy has been forced to swap more than 1600 parts among its Virginia-class submarines to ease maintenance bottlenecks. 

US Rear Admiral Scott Brown blamed the parts problem on a lack of “sustainment” planning at the time the early subs were commissioned. 

Brown reportedly said the navy hadn’t made the required upfront investments when designing and acquiring the Virginia-class subs, meaning shipyard workers today reach for parts and components only to find they’re not there. 

“It’s resulting in a lot of churn, a lot of cannibalisation — so we have to take things off other boats to stick them on the boat we’re trying to get out — and a lot of, frankly, frustration with the workforce on waiting for stuff that doesn’t exist,” Brown said. “Of course, that leads to delays.”  

The shoddy hull coatings 

The CRS report also pointed to ongoing questions about the hull coating used on Virginia-class boats, noting this was “first reported years ago, and then again 2017 and 2019”. 

The quality of the hull coating matters because the coating consists of sonar-absorbing material designed to make submarines harder to detect — a key to the submarine’s much-vaunted “stealth” ability.

In 2017 media reports showed a picture of the USS Mississippi returning to base with large amounts of soundproofing material peeling off its hull.  

Asked about the missing hull coating, the Naval Sea Systems Command reportedly said that “an integrated process team was assembled to address conditions such as those reflected in the (USS Mississippi) photograph, and improvements to materials, processes and testing were subsequently identified, evaluated and implemented. The navy is continually assessing and developing more effective solutions.”

According to a 2019 report referenced by the CRS, an engineer who worked with defence contractor Huntington Ingalls Industries (HII) claimed problems continued with the hull coating and that this jeopardised the safety of submariners.

The claims emerged in legal action filed by engineer Ari Lawrence in 2019 in which he alleged that the company had failed to follow the navy’s contracting requirements and specifications and that submarines had been “plagued” with “serious adhesive failures” of the exterior sound-absorbing material. 

Lawrence claimed HII falsified testing, inspection results and certifications related to the coatings. The company said it would vigorously defend itself against the claims. 

Lawrence made his complaint under US whistleblower laws which provide for a financial reward if a case is proven. He claimed he was sacked after telling the company of his concerns. The case was dismissed in 2020 without Lawrence’s claims being put to the test.  

When contacted by Crikey, US-based HII pointed to the dismissal of the case. It did not respond to questions on the substance of Lawrence’s claims. Crikey has sought comment from Lawrence’s attorney but we have not received a response.  

Australian Submarine Agency responds

In response to the findings of the CRS report, the Defence Department’s newly established Australian Submarine Agency (ASA) told Crikey via email that it was “confident” in the US Navy’s ability to maintain its fleet of Virginia-class submarines and that Virginia-class submarines provided to Australia would be “of a high quality”. Furthermore, Australia’s nuclear-powered submarine fleet would be maintained in Australia, a spokesperson said.

A trough approaches

However, a separate capability issue has emerged which poses further questions about the AUKUS deal.

The CRS report identifies that the US faces a possible threat with a trough in the number of nuclear-powered submarines in its fleet, set to last roughly 10 years from around 2025 into the early 2030s. 

The trough is due to a drop in production stemming back to decisions made during the 1990s, in the early years of the post-Cold War era. The CRS report observes that China has long taken note of the coming trough and quotes “some” being concerned about whether the US could meet the demands of the Asia-Pacific “rebalance”. To bridge the gap the US will seek to give added life to its older subs, the report notes.

Yet under present plans, Australia is set to draw on three (or up to five) submarines from the US fleet just as the US Navy faces its own trough in capability. It remains to be seen what this means for the much-touted deal to transfer used US submarines to Australia.