Senator blasts government hypocrisy over SEA 5000 tender

The Nick Xenophon team has welcomed the announcement that will see ASC, Austal and Civmec involved in building the 12 Lürssen designed vessels, but has said the decision "puts a lie to the federal government's claims" that any changes to the tendering process for the $35 billion SEA 5000 project would significantly delay the project.

"The final shipbuilding configuration announced today, which is different, proves the government can change tack even very late in the piece to give Australian shipbuilders a prime role," said senator Rex Patrick, NXT's defence industry spokesperson.

Under the SEA 1180 bids, Lürssen had originally teamed up with ASC and Civmec, as had Dutch bidder Damen, while Austal was in a joint venture with German designer Fassmer.

Nick Xenophon, who has now been replaced by Patrick in the Senate since resigning earlier this year, was previously pursuing the government for answers after it was revealed that the request for tender (RFT) issued to the three SEA 5000 international tenderers – BAE Systems UK, Fincantieri and Navantia – contained no requirement for the use of an Australian shipbuilder – with specific reference to ASC.

"In particular, the Commonwealth is not mandating that the successful tenderer use the workforce of ASC Shipbuilding Pty Ltd currently working on the AWD Program," the RFT reads.

Officals from the Department of Defence, including Minister for Defence Industry Christopher Pyne, Deputy Secretary Capability Acquisition and Sustainment Group Kim Gillis and Associate Secretary to the Department of Defence Brendan Sargeant, have previously said any changes to the SEA 5000 Future Frigate project at this stage of the tender evaluation process would cause delays to the project by up to two years.

Senator Patrick said the government's decision to choose Lürssen's design, but not its build partner for the entire project, which Gillis said was the “smartest way of doing this acquisition”, leaves no excuse for ASC and Austal to not be included in the SEA 5000 project.

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"There is now no excuse for the government to maintain its stubborn course to not allow Austal and ASC to play leading roles with the Future Frigate build," Patrick said.

"If the government doesn't stand up for Australian shipbuilding and create a sovereign capability, it will undermine national security and compromise export markets and, in the process, cost thousands of local jobs and billions of dollars in economic activity."

In June this year, Austal and ASC Shipbuilding entered into a teaming agreement that would see them pool their resources, skills and experience and act as one in support of the Future Frigates project to whichever international company is selected as the successful tenderer.

At the Senate hearing Austal chief executive David Singleton and ASC Shipbuilding CEO Mark Lamarre said there was an abrupt change in both company's engagement with all three international contenders after they received the RFT.

"Prior to the release of the RFT we, Austal, were heavily involved with all three of the foreign design companies to provide an Australian shipbuilding solution to their offer to the government," Singleton told the hearing.

"When the RFT came out that was really the end of that engagement between us and those companies."

Lamarre echoed these sentiments, adding, "I would say there was a change [in dialogue] after the issue of the RFT, absolutely."

After Sargeant claimed that the SEA 5000 project could face delays of up to two years, the Senate requested further details from Minister Pyne.

"The Minister for Defence Industry directs the Senate to the detailed evidence given by Mr Brendan Sargeant, Associate Secretary to the Department of Defence on September 8, 201 (sic) to the Senate economics references committee enquiring (sic) into this matter, which reflects the advice provided to the Minister for Defence Industry by the Department of Defence,” the response from Minister Pyne said.

Xenophon slammed this response, saying it has exposed the two-year delay as a "non-answer".

"The level of bureaucratic buck passing and obfuscation here would make Yes Minister’s Sir Humphrey Appleby and Utopia’s Tony Woodford puff with pride," said Xenophon.

“Translated into plain English, Mr Sergeant’s response is: ‘I dunno, I’ll get back to you'. Yet this non-answer is the very basis of the reason Minister Pyne has given why this project can’t be led by an Australian shipbuilder."

Singleton also told the Senate committee running the inquiry into Australia's naval shipbuilding industry that Defence's decision to exclude an Australian prime from the SEA 5000 project has cost at least 8,000 jobs

"From the past, that has always been the case, so for every job we have created in this country as a result of Australian programs we've created four additional jobs in exports," Singleton told the committee.

"There is no doubt in my mind that as we strengthen, seek to strengthen and do strengthen Australian shipbuilding through these very large programs, we will win additional programs offshore and we will have a multiplying effect on jobs in this country.

"We speculate when we say these things ... our history has been that we've created four export jobs for every job from Australian programs if that were to be replicated as a result of strengthening our industry across OPV and frigates we won't create 2,500 jobs in Osborne, we'll create another 8,000 to 10,000 jobs on top of that if we are able to replicate that, and I believe that that's possible and should be our strategic aim."

The nine vessels are scheduled to begin construction in Adelaide in 2020. A decision on the successful tenderer is expected by April next year.

UK firm BAE Systems, Italy's Fincantieri and Spanish shipbuilder Navantia are all tendering to win the contract to design, build and sustain nine new anti-submarine warfare frigates to replace Australia's Anzac frigate fleet.