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The Department of Defence is negotiating a newly updated contract offer from BAE Systems Australia for the production of the first three Hunter Class frigates.
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Defence was grilled on a possible cost blowout of the Hunter Class frigates during a Senate foreign affairs, defence and trade legislation committee meeting on 14 February.
Defence outlined that the department came across a significant increase in the cost estimate for the frigate program in early 2023 (over the initial costing of $44.3 billion).
During the Senate estimates meeting, the Department detailed that an offer had been received from BAE in June 2023 and new updated offer for the first batch of three ships had been received on 1 February this year.
The exact amount detailed in the new offer was withheld by Defence during the meeting, however, staff said the cost is expected to increase further. Defence said the department is analysing the new offer, which is understood to be impacted by cost pressures including time, inflation, the COVID-19 pandemic and supply issues.
Defence has an estimate for sustainment of the Hunter Class based on parent ships (Type 26 and Anzac Class sustainment costs) and ADF experience.
Senator David Shoebridge questioned Defence regarding whether the Hunter Class frigate costings would be consistent with 15 Type 26 Future Frigate vessels ordered for Canada worth $83 billion (AU$95 billion).
“When is the final operational capability? At the moment, you have no contracts to build ships ... no target date for operational service,” Senator Shoebridge said.
Under the current program, the Australian Defence Force would receive nine anti-submarine optimised frigates (based on modified UK Type 26 Global Combat Ship designs) built at Osbourne, South Australia. The modifications include incorporating Australian CEA phased-array radar, Aegis combat management system, and integration of a Seahawk Romeo Maritime Combat Helicopter.
In addition, BAE Systems Australia has announced a newly designed Hunter frigate at the Indo Pacific 2023 International Maritime Exposition late last year. That model featured an additional 64 MK41 vertical launch cells and eight more Naval Strike Missiles (96 total VLS and 16 NSMs).
An update on the Hunter Class Frigate program is expected to be provided under the yet-to-be-released “surface fleet review” independent analysis provided to government last year led by United States Navy Vice Admiral (Ret’d) William Hilarides, assisted by former secretary of the Department of Finance Rosemary Huxtable, and former Commander Australian Fleet, Vice Admiral Stuart Mayer.
