Australia’s troubled $45B warship program spared, despite criticism

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After a comprehensive evaluation, Australia’s notable, yet troublesome, defense initiative, the Hunter-class frigate program, narrowly avoided cancellation. This analysis was part of a larger review of the country’s naval fleet. 

Photo credit: BAE Systems

The review proposed a resolution to pursue the construction of at least six – or potentially more – of these large and costly military vessels shortly. 

An ABC report indicates that the Australian government plans to release its “Future Navy” blueprint next week. This plan significantly demonstrates their commitment to “continuous naval shipbuilding.” 

BAE Systems’ engagement

The blueprint will confirm British-owned BAE Systems’ engagement in a significant project worth US$45 billion. This project is set to rejuvenate Australia’s fleet by replacing the aging Anzac-class frigates. 

This news could be a great relief for the project, which has often confronted expert criticism. Concerns typically revolve around an increased weight in the frigate’s design, scheduling delays, and what some perceive as a scarcity of vertical launching system cells. 

The project originated in 2018 when BAE Systems was, amidst controversy, chosen to oversee the construction of nine anti-submarine ships modeled after the UK’s Type 26 warship. BAE Systems succeeded in becoming the primary contractor for the Hunter-class frigate program, outperforming proposals from the Italian firm Fincantieri’s FREMM pitch, and the modified F100 variant from Spanish shipbuilder Navantia. 

Complications

However, the program, located in South Australia, has encountered design complications and delays, causing the first frigate to not be projected for readiness until the early part of the 2030s. BAE Systems is currently engaged in prototyping exercises at a specially constructed shipyard situated in Osborne, South Australia. 

A source, citing defense and industry insiders, conveyed that British Prime Minister Rishi Sunak has individually advocated for the project’s continuation, conducting direct conversations with Australian Prime Minister Anthony Albanese. Navy Chief Vice Admiral Mark Hammond is also reported as a fervent supporter of the program. 

In recent developments, industry rumors suggest that BAE Systems might be contracted to construct as many as 16 warships. In this possible circumstance, modifications would be applied to the hulls in subsequent batches to replace Australia’s current and notably smaller, Air Warfare Destroyers.

Photo credit: Wikipedia

Costliest surface warfare vessel globally

Critics often hurl criticisms at the Hunter-class frigate program due to rising cost concerns. From an initial estimate of US$30 billion in 2016, the program’s budget skyrocketed to US$45 billion within a few years. Moreover, it’s anticipated that this figure won’t remain static for long. 

An insider at the epicenter of the project explained to ABC Australia, “When you take into account that each frigate might end up costing over US$4.5 billion – the Hunter Class could potentially become the most expensive surface combatant worldwide.” 

The debate intensified last year, following a scathing report from the auditor-general. This report raised serious concerns about Australia’s new US$45-billion frigate fleet. 

‘Hot water’

The Australian Defence Department found itself in hot water, criticized for its insufficient evaluation of whether the taxpayers’ money was utilized judiciously, highlighting substantial cost overruns and additional delays. 

The shipbuilder, BAE Systems, also faced criticism, accused of underestimating the costs related to ship design, combat systems, and construction. The report highlighted additional rental costs at the Adelaide shipyard, inflation, and escalating supply chain costs, which all contributed to making the project financially unsustainable. 

Back in 2018, when the Turnbull government entrusted BAE Systems with the contract to construct the nine Hunter-class frigates, it couldn’t elude critiques. The absence of documentation explaining why BAE’s Type 26 design was selected over the seemingly “two most viable designs” from rival companies Navantia and Fincantieri, was particularly disconcerting. 

‘Purely theoretical’

While Navantia’s F-100 frigate and Fincantieri’s FREMM were battle-proven in European navies, the Type 26 remained purely theoretical, which inevitably raised questions about its practical application. Concerns were also raised about the increased dimensions and weight of the ship to meet Australian specifications, which could potentially compromise its performance. 

On the flip side, Alex Luck, a defense analyst specializing in areas like German military modernization, NATO, and global naval programs, endorsed Australia’s policy of incorporating through-life costs into significant projects. 

He noted that this strategy might make prices appear higher than purchases in other parts of the world, where costs might only cover the physical product and associated research and development, or even less in some instances. 

‘Minimal penalty clauses’

Naval authorities have also enumerated numerous challenges, such as “minimal penalty clauses” in the comprehensive SEA5000 shipbuilding contract and the rudimentary state of the British Type 26 design. Nonetheless, it’s recognized that the company has made substantial progress in surmounting many of these obstacles. 

Additionally, BAE Systems announced an ambitious overhaul of the warship last year, looking to address concerns about the Hunter-class’s limited firepower. This modification intends to augment the count of vertical launch missile cells from a modest 32 to a more formidable configuration of 96.

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