Australian Company Offers Cheaper Submarines Than That Offered By Foreign Shipyards

An Australian state owned shipbuilder has claimed that it could construct a new fleet of submarines for less than the AUS $24 billion which the MoD was planning to spend on foreign procured subs, The Age reported today.

The interim head of Adelaide based ASC, Staurt Whiley was quoted as saying to the senate hearing on Thursday morning that the firm believed that it could offer the 12 submarines that will replace the ageing Collins Class Subs for an approximate $18 billion to $24 billion. The government favored overseas options, SAAB, Sorayu and DCNS would cost anywhere between $20 billion to $30 billion.

The government however has reportedly calculated a figure of between $50 billion and $80 billion required by the Adelaide ASC though this appears to include lifetime sustainment costs.

Whiley said he had "no idea" how the figure of up to $80 billion had been calculated.

Finance Minister Mathias Cormann in response to Whiley’s statement said the latest ASC estimate was "hypothetical" because the government had not yet told ASC what it wants in the new submarines.

"Any such numbers are actually entirely meaningless because it is the specifications that are provided that drive the cost outcomes, so to have a discussion around numbers that are quite frankly irrelevant without having the right assumptions underpinning them is not in the public interest," he was quoted as saying by the daily.

The decision by the government to look for overseas shipbuilders is partly because of the costs and time frame. Defense Minister David Johnston had said that he is concerned that building them locally would take longer and open up a disastrous "capability gap" in which the new boats are not ready by the time the Collins is due to be retired.

The Japanese option has been estimated in defense circles at somewhere between $20 billion and $30 billion.

However Germany's TKMS, Sweden's Saab and France's DCNS in partnership with Thales has also expressed interest in making bids if the government opts for an international tender. Both TKMS and Saab have reportedly indicated a price tag of about $20 billion.

Thales and DCNS would likely offer a conventional diesel-electric version of DCNS's nuclear-powered Barracuda boat, suggesting a similar cost of about $20 billion.