Statement – Australian Submarine Corporation

I was delighted to visit the Australian Submarine Corporation (ASC) with a number of my South  Australian parliamentary colleagues earlier today.

This was my second formal visit to ASC as the newly appointed Defence Minister, underscoring the importance the Abbott Government places on South Australia as a centre for defence industry.

At ASC, I confirmed that decisions on Australia’s replacement submarines will be based on a competitive evaluation process, managed by the Department of Defence.

This process will take into account Australia’s unique capability requirements as well as considerations such as cost, schedule, technical risk and value for money.

Any Australian company that can credibly meet these requirements will be considered on merit, as will potential international partners.

My Department has a rigorous process for determining the appropriate acquisition strategy to be used for each major capability acquisition. Key factors such as the capability required, the available options and strategic requirements are all considered in the development of the specific acquisition strategy.

Notwithstanding much recent commentary, there are more effective and efficient ways to run a competitive evaluation process for complex capabilities such as submarines than just open tender.

I have been advised that Defence is not aware of any submarine project around the world that has been put out to open tender.

Previous governments, including the recent Labor Government, have used competitive evaluation processes to make major defence capability acquisitions.

For example, in 2010 Defence selected the MH-60 naval helicopter capability after undertaking a competitive evaluation of the respective offers.

The Government’s approach to acquiring replacement submarines will follow the process in place for major defence projects since the 2003 Kinnaird reforms to Defence procurement.

This process was used by Labor when they were in government. There will be a thorough “two pass” Cabinet process, and we will receive advice from Defence to ensure we get the very best capability.

The Government will ensure that Australia obtains the most capable conventional submarines in the world while avoiding a capability gap after the current Collins class submarines are retired from service.

The number of future submarines and other key capability requirements including range, endurance and combat system to be acquired is being considered through the Force Structure Review.

Whatever decision is taken, there will be more submarines and that means more jobs for South Australia.

It is good news that in South Australia over the next four years – subject to the outcomes of the Defence white paper – there will be up to $4.4 billion in Defence spending for building and sustaining Defence materiel.

This year alone there is almost $1 billion worth of Defence procurement and sustainment work being undertaken in South Australia.