“From Collins to Force 2030: The Challenge of the Future Submarine”

 

SPEECH TO THE SYDNEY INSTITUTE

 

Wednesday 4 November 2009

 

CHECK-AGAINST-DELIVERY

 

 

Director of the Institute, Mr Gerard Henderson, Ladies and Gentlemen.

 

I would like to talk to you tonight on the topic of “From Collins to Force 2030 – the Challenge of the Future Submarine” in order to highlight the importance of this project and deal with some of my roles and responsibilities as the Minister for Defence Personnel, Materiel and Science. 

 

Submarines represent incredibly challenging demands in the combined fields of personnel, acquisition and procurement, and science. 

 

The future submarine project is itself perhaps at the margins of Australia’s present scientific and technological capacity.  We should not ignore the demanding nature of this project, which will require every bit of scientific, technological and industrial capacity that Australia can muster.  And we will inevitably require assistance from our allies to succeed.

 

For this reason, I thought that you might be interested to know how we envisage setting about this challenging task.

 

But firstly some Australian submarine history.

 

Submarines in Australian Defence

 

Just on 100 years ago, Andrew Fisher, Australia’s second Labor Prime Minister, introduced legislation to create the national defence capabilities that would be tested a mere five years later. 

 

Only two years before, Alfred Deakin – against the advice of his Commander of Commonwealth Naval Forces, Captain William Creswell – had decided that Australia would purchase a force of nine submarines.

 

As costs escalated, nine quickly shrank to two, and on Sunday 24 May 1914 the submarines AE1 and AE2 completed their record-breaking journey from Portsmouth to Sydney. 

 

Following the loss of AE1 on 14 September 1914, AE2 was dispatched to Suez late in 1914, and then assigned to the Dardanelles campaign.  On 25 April 1915, as Australian and New Zealand forces were preparing their assault on the beaches of Gallipoli, AE2 slipped through the Dardanelles and into the Sea of Marmora where, a couple of days later, she was scuttled having “run amok” to the consternation of the Turks, but inflicting little damage.

 

Thus ended Australia’s first experiment with submarines, an experiment that would take some five decades to repeat.

 

World War Two saw submarines come into their own.  With John Curtin as Prime Minister, Fremantle, with 170 submarines home-ported there, became the second largest operating base for the US, UK and Dutch forces fighting in the Indian and Pacific Oceans. Following the war, the Royal Navy continued to maintain a submarine squadron in Australia. 

 

Advances in submarine technology, together with dramatic changes in the operating complexity of surface fleets, led to the recognition in Australia that submarines would be a significant strategic asset. 

 

Accordingly, in 1963 the Naval Board decided to re-establish the Australian submarine service with the purchase of four, later six, Oberon class submarines.  These highly effective vessels laid the foundation for the submarine force we have today.

 

In 1985, the Defence Minister Kim Beazley commissioned a major review of Australia’s defence needs, and in 1986 the Hawke Government initiated the Collins project to deliver six state-of-the-art submarines based on the successful Kockums design for the Swedish navy. 

 

The technological and industrial achievement of the Collins project was immense.  It is a matter of very considerable regret that public confidence in the Collins class was undermined in the late 1990s, just as the submarine was proving its formidable war fighting abilities in international combined exercises coordinated by the US.

 

Given the fundamental importance of our submarine force this has been very damaging.

 

The Strategic Argument for our Future Submarine

 

In May this year, the Rudd Government released the 2009 White Paper.  This outlined a force structure – Force 2030 – that will enable Australia to meet the strategic challenges of a rapidly changing region. 

 

The White Paper reaffirms the long-held view that the primary task of the ADF is to deter and defeat armed attacks against Australia.

 

To this end, the White Paper recognises that the aim of establishing sea and air control in our primary operating environment does not entail a purely defensive or reactive approach.  Rather, we must be able to conduct proactive combat operations at a distance from our shores. 

 

This demands a mix of intelligence, defensive and strike assets to ensure both deterrence and, if that were to fail, an ability to impose unacceptably high costs on any potential adversary.  Put simply, we need to be able to take warfare to an adversary’s front door.

 

The White Paper identified the need for Australia to develop and maintain a force that has a capability advantage and can provide protection against strategic uncertainty.

 

Submarines are able to stop an adversary from deploying its’ fleet by maintaining sea denial. By imposing disproportionate costs on an adversary, submarines represent an asymmetric threat well suited to Australia’s defence.

 

The Rudd Government has announced its decision to acquire 12 next generation submarines. The future submarine builds on our experience with the Collins class, aims to offer greater range, endurance and payload.

 

As I noted earlier, this is an extraordinarily complex task, imposing ground-breaking demands on both science and industry.  But the Rudd government is confident that Australian industry can again rise to the occasion, as it did with the Collins Project 25 years ago.

 

But it is important to recognise that the future submarine’s development and delivery is intimately dependent on our continuing ability to manage, crew and operate the Collins class. 

 

As they approach middle age, the Collins submarines are throwing up a series of engineering and operational problems that impose real demands on the Navy, the DMO and the ASC.  The Government is working together with each of these to address these problems.

 

The Navy is currently examining ways of building up the submarine personnel force in order to ensure that the future submarine is properly crewed. The DMO is looking to the improvement of its contract management to ensure that the technical problems that Collins confronts from time to time can be managed quickly and well, and the ASC is about to take on a new CEO.

 

So, within all of that context, I now want to highlight some of the challenges we face in the future submarine project, in the areas of my own responsibility including industry, acquisition, personnel and science.

 

The Industrial Challenge

 

Without a doubt, the key challenge for the future submarines will be the industrial challenge, which also presents the greatest opportunity of the program.

 

The challenge to industry covers facets of the design, construction and eventual maintenance of our future submarine.

 

The Government is carefully considering the issues that are raised under each of these phases in order to inform the acquisition strategy to be utilised for this program.

 

The Design Challenge

 

Firstly, on the design stage of the project.

 

A constant criticism of the Collins experience was the decision to design a submarine around an evolved Kockums platform rather than simply purchase an existing ‘Off the Shelf’ submarine.

 

It is worth asking the question would Australia be in a better situation if it had simply built one of the existing designs offered in the tender competition for Collins or invited someone else to build it for us?

 

The available evidence says no; the lead boat of the Dutch submarine design, Walrus, was delayed 3 years due to a fire. The British Type 2400, the initial favourite for the tender, suffered a three year delay due to construction faults and safety concerns. The first Thyssen TR 1700 to be built in Argentina was only 52 per cent complete before it was abandoned. The two HDW submarines built in India were delivered 5 and 6 years later respectively.

 

It should also be noted that none of these submarines matched the Collins in terms of performance, then or now.

 

In planning for the future submarine, we need to consider a range of engineering and production solutions, ranging from the acquisition of a Military Off The Shelf (MOTS) design, options consistent with the Kinnaird/Mortimer reforms, to a developmental solution designed indigenously.

 

Another issue for the Collins was the failure to adequately consider through life support issues in concept, design and construction phases.

 

I recently visited the US Navy’s Centre of Excellence for Ships and Ship Systems at Carderock and Electric Boat.  A key lesson reinforced during these visits was that design development must be very mature before construction commences.

 

Electric Boat have a rule known as the ‘law of 1:3:8’, that is, a task that takes an hour in module construction takes 3 hours when the hull has been assembled and 8 hours when the submarine is in the water. In other words, make sure the design is mature before you start cutting steel.

 

The Construction Challenge

 

Which brings me to the construction of the future submarine.

 

The design and construction of a fleet of 12 new advance submarines will be without doubt the largest defence acquisition this country has ever engaged in. I would go as far as to say that it is possibly the most complex and sophisticated industrial project ever pursued in this country.

 

Some commentators have begun to estimate costs in excess of $30 billion for the project. It is too early for this. However these estimates give some idea of the potential scale of the project depending on what choices are made.

 

To put this in perspective, the entire Snowy Mountains Scheme cost around $7 billion in today’s dollars. This project will be among the largest industrial project ever contemplated in Australia. If managed properly, in addition to providing the Navy with 12 highly capable submarines, it will contribute to the modernisation of the Australian manufacturing industry.

 

Submarines are extraordinarily complex systems. For example, each Collins Class Submarine has over 3,800,000 parts, 75 kilometres of cable, 200,000 on-board connections, 23.5 kilometres of pipe, 14,000 pipe welds and 34.5 kilometres of pipe welding. This complexity is akin to building a space shuttle.

 

The construction of the Collins Class submarines in Australia provided the catalyst for the rapid modernisation of significant sections of our manufacturing industry.

 

When the Collins project began, there were only 35 Australian companies certified to the quality levels required for defence work. By 1998 there were 1500.

 

The Collins construction involved 70 major subcontractors in Australia and overseas. It created over 2,000 jobs and more importantly the project drove more than 100 Australian companies to achieve the ISO 9000 quality assurance standard.

 

The Hawke-Keating Governments sought a minimum local content target of 70 per cent for the platform. This was a very ambitious target compared to the 30 per cent participation that was the defence project average at the time. That this was eventually exceeded is a tribute to all participants. Of the $5.1 billion cost of the original Collins project, $4 billion was spent in Australia.

 

However, we have found it difficult to maintain the industrial capacity built around this level of local content. Some of the ongoing maintenance problems of the Collins are driven by this issue. Accordingly, we are giving serious thought to what industrial capabilities must be supported within country to sustain this project.

 

The Sustainment Challenge

 

Finally, we should also consider the issues that we will face in maintaining our future submarine fleet.

 

Sustainment of submarines is always a challenge given the complexity of each boat.

 

However, on this front, Australia has come a long way over the last 25 years.

 

For the Oberon class submarines the Navy was dependent on overseas suppliers for some 85 to 90 per cent of the support and the refit of the first Oberon class submarine cost 76 per cent of its purchase price.

 

The maintenance of the Collins Class, while not perfect, has obviously improved on that. But significant challenges remain.

 

Quite simply, we must lift the availability of our current submarines.

 

It is one of my top priorities and is at the top of the project of concerns reports that I oversee each month.

 

Acquisition Strategy

 

Our ability to get on top of the design, construction and maintenance phases will largely determine our acquisition strategy for the future submarine.

Studies have shown that 90 per cent of the discretionary decisions that affect the outcome of a project are made in the first 7 to 12 per cent of the project’s life.

 

There are three things that we must get right:

 

·        We must adequately define the operating concepts and requirements for the future submarine. The consideration of this must involve a full understanding of the trade offs between different aspects of capability.

 

·        We must develop a sophisticated acquisition strategy that has the flexibility to solve any problems, but maintains focus on delivering the agreed outcome. The contracting strategy is a very important element of this.

 

·        Finally, we must understand the interaction between capability and the acquisition strategy. It is often the interaction between these two processes that leads to trouble.

 

One of the matters that we will need to tackle early in the project is the need to invest in and develop a sustainable industrial base that is capable of designing, constructing and maintaining 12 large submarines.  

 

On this subject, some commentators have recently canvassed the concept of rolling production.  Although it is far too early for the Government to consider a detailed acquisition strategy, two contrasting models would appear to provide the boundaries within which an acquisition strategy could be designed.

 

In many instances building 12 identical submarines may be the cheapest way to build the future submarine. If you can ensure that you can acquire all the sub-systems for each boat, building 12 submarines on the same design allows the boat builder to make huge savings on the ‘learning by doing’ curve.

 

However, there are good capability and industrial reasons why that strategy may be questioned. For instance, it is almost certain the 12th submarine to be delivered will be at least 15 years behind the latest technology. From a technological currency point of view, there may be certain advantages to building batches of submarines.

 

For example, designing and building in batches has been found elsewhere to support a more sustainable industrial design, skills and maintenance base – leading in turn to a greater capacity to develop a subsequent project and/or to deliver upgrade programs.

 

Moreover, to sustain the necessary design and engineering skills, it is critical that we factor in an appropriate throughput.  However, let me repeat that no decision has been made, but building 12 identical submarines or a few batches or blocks is one of the key choices that Government will need to consider.

 

Selecting the right contracting model will be an essential part of a successful acquisition strategy. The Collins submarines were built using a fixed priced contract. A rigid, inflexible commitment to the terms and conditions of the contract set in train many of the subsequent problems. An adversarial relationship between customer and builder was enshrined from the start.

 

This is not to say that we should choose a cost plus contract. I was interested to learn in my recent trip to the United States that even the Pentagon is moving away from cost plus contracts to more fixed priced contracting when the acquisition is in a mature stage.

 

Nevertheless, we must be imaginative when looking at contracting options.

 

One of the lessons from the Collins build was that there must be very close cooperation between the navy, the project manager, the combat systems integrator and platform builder. I am closely following the Alliance structure that is central to the Air Warfare Destroyer acquisition.

 

The “People” Challenge

Of course, we cannot discuss the future submarine force without also focusing on the workforce that is needed to support it.

 

Demographic trends indicate that Australia's population is getting older. Accordingly, Defence will face increasing competition for our young recruits, particularly those in high-skilled and technical occupations. Therefore, we need to focus on retaining our good people, while at the same time, continuing to attract quality candidates across all three Services.

 

The submarine force is one area where significant improvements are needed.

 

Navy continues to experience shortfalls in qualified submariners.  This is a significant vulnerability as Navy transitions from the Collins Class submarines to the new submarine.

 

To assist in addressing these shortfalls, the Government has budgeted for additional positions to support the future maritime force.

 

I would like to touch on some of the reasons for these shortfalls and how we intend to resolve them. 

 

While the life of a submariner can be one of excitement and professional satisfaction, it is not without its challenges. Recent reviews undertaken by Navy confirm some systemic problems within the submarine workforce that have impacted on morale and job satisfaction, and consequently, on retention.

 

They include insufficient support to families, a lack of posting stability, high stress, extreme fatigue and widespread concerns about the sustainability of the current submarine force. There has also been difficulty in finding the right balance between the need to conduct effective training at sea and the need for respite while on-shore.

 

We also should not underestimate anecdotal community perceptions that a career at sea is unappealing.  Unfortunately, some young people may be quickly discouraged from a life in the Navy by the prospect of what they see as long periods away from family, friends and broader social networks.

 

Navy is committed to developing a positive cultural shift and enhanced employment conditions that will help stabilise the submarine workforce.

 

Our key competitive advantage is the unique nature of military work which comes with a comprehensive package of pay, conditions and services. In short, the ADF is a rewarding profession in every sense.

 

Through sensible recruitment and retention measures, we can build a framework for a more sustainable workforce culture. 

 

The Science Challenge

Another challenge for the future submarine will be to lock in the scientific support that will be critical to the long-term sustainability of the future submarine.

 

If Force 2030 is to have a capability edge over other forces, we must have submarines with advanced technology and systems.

 

This capability edge will be science driven. To this end, we are very fortunate to have the Defence Science and Technology Organisation (DSTO).

 

The DSTO provided research in all phases of the Collins Submarine build. It played a vital role in the development of a new high-strength, low-alloy steel. The consistency offered by this steel and the ability to weld it was an essential element in the successful construction of the Collins.

 

Just as significant was DSTO’s development of advanced anechoic tiles that render the submarine “invisible” to enemy sonars and are at the leading edge of stealth.

 

The DSTO also made an invaluable contribution to the development of the active sonar for the Collins.  

 

The DSTO was instrumental in identifying the propeller and water flow around the hull as key drivers of the noise problems that affected HMAS Collins after launch.

 

The US Navy’s Centre of Excellence for Ships and Ship Systems at Carderock also provided invaluable support. We will be highly dependent on the US to provide science and technology support for the future submarine.

 

We need to start early on developing the science to underpin the future submarine. We have already begun investing in these efforts.

 

For example, the Government has invested $1 million in a new underwater test facility that will be used for experiments to control underwater noise.

 

The DSTO has also partnered with the Australian Maritime College to develop world class hydrodynamic facilities.

 

The DSTO is also looking at a range of additional technologies that will be key drivers of future submarine operation; these include energy storage, payload deployment, communications, autonomous systems, Air Independent Propulsion and submarine habitability.

 

The Management Challenge

The final challenge we face is the management challenge.

 

Project management performance during the design and construction of the Collins class was variable. The project management unit was split between Canberra and Adelaide with the prime contractor located in Adelaide. This led to poor communication at times with issues taking longer than they should to resolve.

 

It’s also fair to say that there was poor risk mitigation and inadequate contingency allocated. There was also insufficient recognition of the ‘Parent Navy’ challenge and an underestimation of through life support costs. Moreover, the through life support contract was not in place early enough.

 

A further issue that the Government is mindful of is the need to ensure, in light of the Collins experience, that there is clarity over the ownership and use of intellectual property.

 

One of the things that the Government will need to consider is a dedicated policy cell located in Canberra that could translate the strategic guidance into the actual detailed requirements of the future submarine. This will involve a deep understanding of the various tradeoffs between desired capabilities and the impact on cost, schedule and risk.

 

Additionally, consideration will need to be given to an appropriately resourced design and project management cell located in Adelaide. This cell must be located in Adelaide close to the builder. We have seen the benefits of this approach with the AWD project.

 

The ongoing upgrade of the Collins Class submarines will also be crucial to the successful management of the future submarine. Managing these upgrades well potentially provides a development path to the future submarine.

 

Conclusion

 

The future submarine project is evidently ambitious. 

 

In the view of the Rudd Government, it is also achievable. 

 

The combination of Australian scientific, technological and industrial know-how, potential technical support from Allies, sound project design and robust contract management should deliver an unparalleled strategic asset.

 

In this enterprise, we will strengthen our ties with the US, which places great value on the role that the RAN’s submarine force is able to play in combined operations.  The ability of Australia and the US to operate our submarines together is critical to our combined success.

 

Australia’s ability to conduct successful defence operations in theatres distant from our shores will be enormously strengthened by the surveillance, intelligence and strike capabilities of a long-range submarine. 

 

That is what we plan to deliver.

 

Thank you for your time this evening and I am happy to take your questions.