ASC Wins Australian Shipbuilding Contract with $455M First Pass Funding
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In Dec. 2004 rumors were heard a quid pro quo between the West and South Australian governments would result in South Australia shipyards building the SEA 4000 Air Warfare Destroyers. We also reported widespread industry belief back in December 2004 that government-owned ASC Pty Ltd. would receive the shipbuilding contract for the USD $ 4.5 billion SEA 4000 program.
Both of those reports have now come true. The Australian government has officially designated ASC Pty Ltd. subsidiary ASC Shipbuilder as the preferred shipbuilder for the SEA 4000 program. Australian Defence Minister Robert Hill announced that the 3 destroyers will be built at ASC’s shipyards in Adelaide, South Australia, shifting the Australian shipbuilding industry away from its current center in Melbourne, Victoria. Several important details remain to be finalized, however.
The destroyer contract is the biggest single domestic construction program under Australia’s 10-year, $50 billion Australian dollar (USD $37.8 billion) defense acquisition plan.
ASC was unanimously chosen by a Source Selection Board through a tender evaluation process involving ASC Shipbuilder (who had built the new Collins Class submarines for the RAN) Northrop Grumman Ship Systems and Tenix Defence (who had built the joint Australia/ New Zealand Anzac Class frigate). The conduct of the evaluation and selection of ASC Shipbuilder was reviewed by the Air Warfare Destroyers Program Probity Advisers KPMG, and also independently by Sir Laurence Street, both of whom reported that the process was fair and equitable.
ASC, previously known as the Australian Submarine Corp., is due to be privatized in 2006. With this contract in hand, its value will receive a significant boost.
The Australian government has now granted first pass approval and provided ASC with AUS $455 million (USD $343 million) toward the next phase of the SEA 4000 project, including further design work, workforce skilling and initial infrastructure investment. This investment will fund the program until mid 2007, and will further reduce project risk in accordance with the recommendations of Australia’s Defence Procurement (Kinnaird) Review. In 2007, the Government will consider second pass program approval.
More than 1000 direct jobs will be created in South Australia as part of the build contract. In addition, up to 70% of the module construction will be sub-contracted to other shipyards around Australia, creating around 1000 additional jobs throughout the country. In line with the Government’s Skilling Australia’s Defence Industry program, companies bidding for these contracts are required to include Australian skills and training components in their tenders.
Raytheon Australia has already secured a contract to evaluate the combat systems, which will definitely include Lockheed’s AEGIS radar and combat system. What the program still lacks is a ship design.
The Australian Ministry of Defence is currently evaluating three ship designer proposals. Blohm + Voss will be offering a version of its F124 Sachsen Class Frigate. Navantia (formerly Izar) will offer an Australianised version of Spain’s existing F100 Alvaro de Bazan Class AEGIS Frigate. Gibbs & Cox, meanwhile, will offer a design modeled closely on the USA’s DDG 51 Arleigh Burke Class AEGIS Destroyer.
ASC Shipbuilder is now in a position to assist the Commonwealth to select one of those designers in mid 2005.
Barring program schedule slippage, the first Air Warfare Destroyers are due to begin service with the Royal Australian Navy in 2013.
UPDATE: There has been some follow-up activity on the political front, with Victoria expressing its unhappiness over the decision. Australia has also placed a somewhat related order for SM-2 Block IV missiles.
Additional Readings & Sources
- SEA 4000 Air Warfare Destroyer: Official Program Site and MoD page.
- Air Warfare Destroyer Alliance: contractor team site
- Government Release: ASC Chosen to Build Air Warfare Destroyers
- Government Release: Bids to Build Air Warfare Destroyers Announced
- AEGIS Combat system for Air Warfare Destroyers
- Naval-Technology.com – Arleigh Burke Class (AEGIS) Guided Missile Destroyers, USA
- Naval-Technology.com – F100 Alvaro De Bazan Multi-Purpose Frigate, Spain
