The Shortfin BARRACUDA, slightly smaller than the existing BARRACUDA
nuclear-powered submarine under construction for the French Navy, evolved
as the winning design in Australia’s Future Submarine project.
Monday, 4 July 2016
Australia Decided Over Future Submarine
On 26 April 2016, when Australia’s Prime Minister, Malcom Turnbull, faced the cameras on the premises of the South Australian ASC shipyard in Adelaide, he had good news for the laggard region.
For the German and Japanese bidders, however, it was a bitter pill to swallow when he said, “DCNS of France has been selected as our preferred international partner for the design of the 12 future submarines, subject to further discussions on commercial matters.” With just a few weeks to go until the parliamentary elections on 2 July, the Prime Minister claimed that, “this AUD50Bn investment would directly sustain around 1,100 Australian jobs and a further 1,700 Australian jobs through the supply chain.” The decision came 14 months after the Competitive Evaluation Process (CEP) had been initiated and five months after the submarine design’s submission. Nearly 30 years after Howaldtswerke-Deutsche Werft (HDW) had lost the bid for the “Collins” project to Sweden, today’s thyssenkrupp Marine Systems (TKMS) must once again suffer a painful defeat. It is also a big blow to Japan which despite its inexperience in global defence deals was long considered to be the favourite pick for what Turnbull referred to as the “largest and most complex defence acquisition Australia has ever undertaken”.
What were the decisive factors? Why did the champagne corks pop in Cherbourg? Why do Kiel and Kobe have to lick their wounds? In the following, I will first briefly highlight the CEP from its kick-off on 20 February 2015 until the deadline for submitting the designs on 30 November that year. Then, I will address the evaluation phase of the competitive designs before finally analysing the causes that determined the outcome of the decision. There are rumours that the result could be an indication for a ‘hidden agenda’ to eventually go for nuclear-powered submarines, although Minister for Defence Marise Payne vehemently denies this.
The three CEP competitors, TKMS, DCNS and the Japanese government together with Mitsubishi Heavy Industries (MHI) and Kawasaki Heavy Industries (KHI) shipyards, announced on 20 February 2015 that they had been working since for long times on their Australian submarine designs. DCNS proposed a conventionally-powered derivative of the BARRACUDA attack submarine now under construction for the Marine Nationale, displacing approximately 5,000 tons. TkMS, with its 4,000 tons Type 216, has a certain design relationship to the German Navy’s existing, but much smaller Type 212A boats. The Japanese, with their GORYU, proposed a design based on the “Soryu” class submarine already in service, displacing roughly 4,000 tons.
The CEP team was headed by an active Australian and a retired American Rear Admiral. The Australian Government established an Expert Advisory Panel chaired by a former Secretary of the US Navy to oversee the process that was peer reviewed by two other retired US admirals. The two European competitors founded Australian subsidiaries (TKMS-A, DCNS-A) and appointed two completely different indigenous personalities as Chairman and CEO, respectively. The Germans selected an experienced senior industry executive who had already cooperated with the German licensor B+V when he managed the ANZAC frigate project. Bringing it to a successful conclusion had earned him high reputation in Australia’s naval surface shipbuilding community. The French appointed a former submarine officer with close ties to the Government, who had previously held the position of chief of staff with Australia’s Minister for Defence. The Japanese, represented in the competition by their Government, apparently did not deem the establishment of an Australian-based project office necessary – at least until the spring of 2016 – counting instead on the commitment of the Ambassador in Canberra. They seemed to be relying on the fact that the submarine deal had been practically sealed by handshake between Prime Minister Tony Abbott and his Japanese counterpart Shinzo Abe.
During the CEP, the competitors realised more and more how much importance – for employment policy reasons – Australia attached to an Australian build of the Future Submarine Programme (FSP), even though all three bidders were also required to submit an overseas build and a hybrid build option, with the first submarines to be built overseas. Right from the beginning, TKMS readily provided the media with drawings and data of its Type 216, and the Germans were just as accommodating with respect to the actual business. As early as October 2014, TKMS’ Deputy CEO was the first to agree to having the complete FSP built at the ASC shipyard, guaranteeing a fixed price of AUD20Bn. The Chairman of TKMS-A adopted this position, advocating in a senate hearing that the boats could be built in Australia for the same price and within the same timeframe as in Kiel. He added that TKMS was interested in buying and modernising the shipyard and in turning it into a service hub for all TKMS submarines in the Asia-Pacific region. In August 2015, he told the Nikkei Asian Review that TKMS would deliver “a superior submarine for the Australian Navy with the latest technology from all over the world”. During his visit to Australia in early September that year, TKMS’ Chairman again confirmed the fixed price of AUD20Bn for 12 submarines, assuring that his company would spend over 70 percent of the overall amount in Australia. According to the Daily Telegraph he said, “A group like ours has deep pockets and if we promise to do something we have to deliver.”
The French employed different tactics. They did not endorse the Australian build option until July 2015 and openly stated their opinion that the most efficient option was the hybrid build involving the training of Australian personnel during the construction of up to two submarines in France. Cost estimates were only given in a vague and cautious manner. DCNS informed media that the French design was dubbed Shortfin BARRACUDA Block 1A and released an artist’s impression which apparently was the look-alike of its nuclear-powered sister. In an interview with Nikkei, DCNS-A’s CEO emphasised that his company would use France’s best technology to build the FSP. This country’s submarines were very powerful, disposed of unique stealth signatures, and Paris had never approved to share their technology. That this was now possible with Australia was due to the fact that the government of the French Republic had declared the FSP to be a strategic programme. They would offer a fixed price contract but were not yet in a position to make binding commitments.
The Japanese, who had established the legal requirements for restricted arms exports no earlier than 2014, were reluctant to make any promises. A conference held in Adelaide in March 2015 dubbed
‘Submarine Summit’ was neither attended by the two shipyards nor by any Japanese Government representatives, only two retired Vice Admirals delivered presentations and were available for interviews. They caught media attention, saying that Prime Ministers Abe and Abbott were determined when it comes to cementing the submarine deal and that there was no problem in building Japanese submarines in Australia. It was not until early May 2015 that Defence Minister Nakatani approved Japan’s participation in the CEP and confirmed Tokyo’s willingness to establish a strategic partnership with Australia. Shortly afterwards the National Security Council of Japan gave ‘green light’ to the release of classified information within the framework of the bidding process.
In April 2015, Australian Minister for Defence Andrews visited Germany and France, accompanied by naval experts and journalists to meet his German and French counterparts Ursula von der Leyen and Jean-Yves Le Drian, and to tour the shipyards. Various newspapers reported that Andrews had spent a couple of hours at the Kiel shipyard, where he had been informed that over the last 50 years TKMS had delivered 161 submarines to 20 Navies around the world and that he had been impressed when spotting nine submarines in different construction and repair states during a helicopter flight over the premises. He reportedly had grasped the message, “Germany is an industrial power house and submarines are its specialty.”
The French presented the venerable DCNS shipyard at Cherbourg, informing the Minister that more than 100 submarines had been built there to the present day and did not tire to stress that submarine technology, due to its relevance for nuclear deterrence, counted among France’s best-kept state secrets, which one was not ready to share with any other country than with Australia. When asked about his impressions, Andrews was quoted with having said, “gigantic”. This comes as no surprise.
Witnessing full shipyard capacity utilisation with the ongoing serial production of the six nuclear-powered BARRACUDA (“Suffren” class) submarines displacing over 5,000 tons provides a first-hand impression of what Australia is up to with its FSP comprising 12 submarines of almost the same size: “Think big”.
Although, primarily in view of the country’s majority pacifist sentiment, it remained unsaid during Andrews’ visit to Japan in early July 2015 that Tokyo considers a Japanese submarine design for the Royal Australian Navy a milestone toward establishing a future US-Japan-Australia triple alliance, Andrews certainly drew the right conclusions. Naturally, the two shipyards MHI and KHI did not fail to impress Australia’s Defence Minister with their potential. In light of the previous strict export ban, both shipbuilders had for decades been guaranteed cost-effective shipyard utilisation with the implementation of a new submarine design for the Japanese Maritime Self Defence Force (JMSDF) every 10 years. Japan’s inexperience in global defence deals became obvious when Japanese representatives gave apparently uncoordinated interviews during Andrew’s visit. ABC News published a retired Vice Admiral’s opinion that the lack of skilled welders in Adelaide could complicate the successful processing of the extremely high tensile steel required for building the Japanese submarines. Two senior officers were reportedly expressed being convinced that Japanese submarines were the world’s best non-nuclear boats and therefore Japan must refrain from sharing their core technologies. The same newspaper quoted them as saying that they were concerned about proliferation to China once their know-how was in Australian hands. Although the Japanese side later denied the correctness of these interview quotations, damage was done and the article probably thwarted official assertions that Japan was seriously considering the Australian build option.
The majority of Australian media speculated that there had been a ‘captain’s pick’, i.e. that a secret deal between Abbott and Abe had already been made back in 2014. The reader may recall that Abbott Government’s announcement of a CEP was suspected to have been initiated to dispel rumours of a setup in favour of Japan in the first place. Still in August 2015, a Japanese delegation of industry officials visiting Adelaide remained tight-lipped with respect to questions about cooperation options with the local supply chain, i.e. the involvement of Australian companies in case Japan should be awarded the submarine contract. The alleged captain’s pick was no longer an issue when Malcom Turnbull had ousted Tony Abbott and seized the prime ministership on 15 September 2015. This did not bode well for the Japanese as Turnbull is seen as being pro-China and it was believed to also play into the hands of TKMS given that Turnbull’s wife was the then-honorary President of the German-Australian Chamber of Industry and Commerce. On 21 September, the Turnbull Government appointed Senator Payne Minister for Defence, making her the first female to hold this post.
The three competitors had timely submitted their design proposals by 30 November 2015. Shielded from external influences and fully committed to its task of identifying the best solution for Australia, the evaluation team went to work, advised and overseen by high-ranking experts from the US. In the ‘outside world’ actions erupted that are best described as propaganda war of each against all. Every day journalists presumably on the payroll of the respective competitors published newspaper articles and blogs providing the public with new speculations and analyses, alleged technical deficits of competitive designs, politico-strategic hypotheses, personal defamations, anti-Japanese comments close to xenophobia, and conspiracy theories relating to the alleged influence of Beijing and particularly Washington. I will only single out a few aspects to illustrate the battles that were fought. With its gigantic financial framework and its long term influence on regional employment , this most complex military procurement project Australia has ever undertaken is of fundamental domestic political significance, which I will, however, refrain from addressing any further.
In February 2016, the CEO of DCNS-A attracted attention with a publication about a strategic partnership of both countries. He called France a “complete submarine power”, which on the one hand played in the same club as the US and Great Britain by exclusively operating nuclear-powered submarines, but on the other hand had the expertise to also design and build conventionally-powered boats. If Australia selected the French design, it would join this club, acquire regionally superior capabilities, and gain access to technologies derived from nuclear missile and nuclear attack submarines. The best technological example was pump-jet propulsion only possessed by the club members mentioned above, which would be exclusively shared with Australia as part of the Shortfin BARRACUDA design. DCNS proposed to develop centres of excellence in Australia from the beginning of the FSP that would focus on advanced manufacturing, engineering methods, and emerging, as well as evolving technologies, which would be embedded into the French scientific, educational, and research and development programme planned to beyond 2080.
TKMS was not slow to respond. The Germans, not members of this exclusive club, focused on putting straight some technological aspects and pointed out that pump-jet propulsion systems were not suitable for the low-speed spectrum that conventionally-powered submarines operate in most of the time. TKMS emphasised that they had developed a new lightweight composite carbon fibre propeller already being in operation on the German Navy’s Type 212A submarines. In mid-March, the TKMS’ Chairman, together with Germany’s Ambassador to Australia, spoke at the National Press Club in Canberra promising that, if being awarded the contract, TKMS would introduce the ‘digital shipyard’ concept in Adelaide and bring to bear the advantages of the German transformation to Industry 4.0, equivalent to nothing less than the next phase of the industrial revolution. The Chairman went on to announce that TKMS would massively expand its existing Australian subsidiary turning it into a ‘Shipbuilding Centre of Excellence’ that, in the long term, could support the Royal Australian Navy not only in the area of submarines but beyond.
Despite the replacement of the ‘japanophile’ Abbott by Turnbull, Japan for the time being remained the favourite in the eyes of the media, now no longer due to an alleged deal between the two Heads of Government but to the strategic interest of the US in a future triple alliance. The Financial Times reported that both the French and the Germans had lost significant ground on their Japanese rival; the former over security concerns of the US and the latter as they had never built such a large submarine before. Furthermore, the deal was purely strategic for Japan, whereas for the Germans, in particular, it had an exclusively commercial value given that they were not a regional power. While officially Washington declared its neutrality among the rival bids, and denied allegations that the combat system to be integrated on the FSP would only be provided to a Japanese boat, claims by an US Admiral that the Japanese held the undisputed technological leadership in the field of conventionally-powered submarines were hitting the headlines. Shortly afterwards, in early April, an article authored by an anonymous team, appeared in Australian Defence Reporter dispelling all pro-Japanese myths. Japan did not possess the sophisticated submarine technology it claimed, on the contrary, the Japanese “Soryu” class boats were in most respects even technically inferior to the Australian “Collins” class. Shortly afterwards, MHI made public that it was in the process of hiring an Australian Managing Director and committed to establishing an Australian design centre which would – adapting an ‘Australia first’ approach – progressively grow even larger than their own in Kobe.
Then came 19 April 2016, when a funeral service was held in Canberra for a former State Secretary of the Defence Department that was attended by many knowledgeable people, some of whom considered it appropriate to leak FSP insider information. Rumours spread that the recommendation of the CEP had been submitted to the Minister for Defence and that the decision would be announced as soon as 28 April. Also, the National Security Committee had already discussed the issue, it said. Referring to “two people familiar with the matter”, the Wallstreet Journal reported on 20 April that Japan had been “virtually eliminated” from the competition as the Japanese bid was viewed as having “considerable risk” given their inexperience building naval equipment overseas. The German competitor was “emerging as a front runner”, the article said. As a consequence, the Germans took it as an indication in their favour that the Prime Minister’s wife had resigned as honorary President of the German-Australian Chamber of Industry already on 13 April.
Reasons, Mistakes, Influencing Factors
On 26 April, two days earlier than the rumours had it, Prime Minister Turnbull announced the award to DCNS. This was not only due to the pressure caused by the leaks, especially concerning the elimination of the Japanese, but prompt action was also needed since the Head of Government intended a ‘double dissolution’ of both Houses of Parliament on 11 May in order to call for federal elections on 2 July. As the Government cannot take any budget decisions while in ‘caretaker mode’, the early announcement to build 12 new submarines in Adelaide was a welcome AUD50Bn election pledge, promising thousands of new jobs in South Australia.
The Japanese had gradually lost their position as a favourite and the bonus of a political deal after Prime Minister Abbott’s ousting. In retrospect, the support by the US, unofficial though, but subtly leaked to the public by influential persons, had not been helpful, it seems. It may even have been counterproductive, as nothing offends Australians more than allusions to ‘51st state of America’. It is noticeable that Turnbull’s announcement explicitly named the three former US Admirals and the former Secretary of the Navy as responsible players in the CEP, as if to say, “Look how independent we have been in our decision-making in spite of this.” In the media, analysts concluded that opposition to the export deal had been unmistakably widespread among Japanese Government and industry alike, that the presentations by some representatives had not been very convincing and their interviews uncoordinated at best, and that the concession of a complete build in Australia had been offered too late. Almost more humiliating to the Japanese than the official defeat was the fact that their early elimination from the CEP became public through a leak. Some Japanese media also speculated that the submarine decision might have something to do with a ‘kowtow’ by the ‘sinophile’ Turnbull to pressure from Beijing.
On 13 May, the Australians were as fair as to hold debriefings for the defeated contenders at their respective shipyards. Leaks of the event’s content in Kiel made it into the media, and the The Australian ran a detailed article, entitled “Why Germany lost subs bid”, on 30 May. As for the Kobe event, a similar article appeared in the same newspaper on 16 June. So why did the German and the Japanese bids fail?
Reportedly, TKMS engineers and government officials were stunned to hear that their design was assessed to radiate noise at an unacceptable level, especially at a particular – yet undisclosed – frequency; in other words, the French boat was seen to be stealthier. Obviously, DCNS had managed to penetrate the thinking of the CEP evaluators to such an extent that they believed whatever they were told, even that the modelled noise projection of the French paper design was by far superior to the projection of the German opponent’s likewise non-existent boat. The reported revelation that the Type 216 was modeled using the noise signature of the SCORPENE boats contains three subtle, if not perfidious messages: First, the German offer was nothing else than an up-scaled, off-the-shelf export design – its signatures interchangeable with the one DCNS sells to third world customers; second, the Shortfin’s better performance therefore is self-explanatory since its technology is based on the French Navy’s premium nuclear attack submarine; and fourth, Australia alone, as DCNS’ valued customer would benefit from this ‘second-to-none’ technology. In their debriefing at the MHI shipyard, according to The Australian, a different approach was taken to prove the likewise acoustic inferiority of GORYU design relative to Shortfin, since the Japanese do not export off-the-shelf submarines and competed with a variant of their own premium “Soryu” class. By claiming they could model the SORYU’s noise profile using the very limited set of data provided by the Japanese for the CEP, the Australians had the nerve to rebuff the Japanese even more than they had done with the Germans. Furthermore, the Japanese were told that they lost the bid because their inexperience in defence exports was deemed too high a risk. The debriefing concentrated on technical reasons and broader strategic issues reportedly were not a factor in the final decision. With respect to my focus on Germany, I will not elaborate any further on how much all of this strained relations with Japan. As to whether Tokyo would now reconsider its ties with Canberra, a Japanese analyst stated that a deepened security partnership with Australia not only continued to be in his country’s interest but, from a strategic point of view, Japan needed Australia more than vice versa.
DCNS had not only convinced the Royal Australian Navy but also the American experts in the CEP team of the advantages of the pump-jet propulsor. The Shortfin BARRACUDA was considered to be quieter than the Type 216 over the entire speed range and to have significantly more efficient sonar systems. In both, the German and the Japanese designs, the proposed lithium-ion batteries met reservations about safety and the German ‘digital shipyard’ concept had failed to dispel doubts about a successful up-scaling from the current maximum displacement of 2,400 tons the Germans have built so far to more than 4,000 tons. DCNS’ clever move to prepare its CEP bid to a large part in its Canberra office instead of in headquarters, as the rivals did, was another convincing point.
As disappointing an outcome it was for the Germans, it has to be noted, though, that their media campaign was elaborate and the political support exceptionally committed by German standards, with supporters ranging from the Chancellor, over the Defence Minister and State Secretaries, the German Navy Chief, down to the branch levels. The German Federal Foreign Office, too, recognised the enormous geopolitical and defence industrial significance that attaches to a submarine deal with a country like Australia. Notably, the German Ambassador did not seem to have any reservations towards the armaments industry in his efforts to support the German cause.
Yet, the overall effort was still a ‘far cry’ from the ‘unified national endeavour’ of the French. In their 2008 book, entitled “The Collins Class Submarine Story”, Yule and Woolner explained the reasons why IKL/HDW lost their tender to Kockums in 1987: “...the Germans were too conservative with their design and since the Swedes were agreeing to give Australia everything it asked for the Germans should have responded. [...] that message never got through to the German designers, who remained with their strategy of satisfying the base requirement and winning on price.” This time, however, the design was not conservative and to some extent exceeded the basic requirements. It certainly was the best German engineering can offer and, in terms of technology, at least equal to the French design. It is therefore surprising that TKMS did not rectify the media’s repeated allegations that Type 216 was merely an up-scaled version of the Type 214 submarine, an off-the-shelf design for export, so to speak. As a double deck submarine, Type 216 has indeed a lot more design commonality with U212A, that is, the premium boat of the German Navy, the “special and unique one”, which is so important to the Australians.
It is true that the Germans have never built a boat displacing more than 2,400 tons. However, the claim that it was difficult or even impossible to achieve the required displacement of more than 4,000 tons for the Type 216 boat by up-scaling a smaller design is nonsense, and there is ample proof: For the FSP, the displacement is to be almost twice the displacement of the largest boat made in Germany to date, the DOLPHIN AIP (Air Independent Propulsion) for Israel. The development of the U212A as the successor of U206A, however, already was a triplication in size. Nevertheless, U212A had been a success right from the start. Why did TKMS never bring up this simple truth? Instead, media users almost daily read about the powerful company and its successful export history over the past 50 years, that is, with off-the-shelf boats. If they looked in the business section, however, the balance sheet information on TKMS was far from positive. Moreover, the Germans tried again and needlessly (AUD50Bn is not an austerity budget) to win on price. The early and repeatedly confirmed promise of a fixed price of AUD20Bn, together with the unconvincing assertion that a build in Adelaide could be accomplished as well-priced as in Kiel, may have been a grave mistake.
In the German Navy, unlike in France and in Australia, submarines are considered as operational assets at best, such as Mine Countermeasures (MCM) forces or corvettes. This probably had not gone unnoticed by the attentive Australians, who for strategic reasons opted for the most expensive defence project in their history and finally chose a partner that had positioned itself strategically from the start: For more than a hundred years, France has been an ally and a Pacific power – even though with rather modest military presence in the regional overseas territories. It is also a nuclear power whose nuclear deterrence is almost entirely based on globally-deployed submarines. Germany is not part of this club.
The design philosophy of German post-war submarines was determined by the operational situation of the Cold War, resulting in compact boats according to the principle “as small as possible and as large as necessary”. With its approximately 4,000 tons, the Type 216 is still significantly smaller than the French winning design. The Australians, however, never shared the German philosophy; their principle was “think big” from the start. But you cannot outsmart the laws of physics. With almost 5,000 tons, the Shortfin BARRACUDA, which evolved from the nuclear sister design, will have a dangerous ‘target strength’ especially versus low-frequency active sonar detection, highly advanced coating, and structural acoustic reflection measures. Nuclear-powered submarines have unlimited sprint reserves, can therefore rapidly clear a datum (position of detection) and cover a large distance. In contrast, a conventional boat of this size probably can run at flank speed for little more than half an hour, even if its batteries are fully-charged, before having to slow down drastically. The pump-jet propulsor that the Australians obviously value so much will even worsen this condition. The Japanese, being the only contender with operational experience in boats of this size, have already taken the necessary action against this ‘sitting duck’ phenomenon: From 2020 on, the last two “Soryu” class boats to be commissioned will be equipped entirely with lithium-ion batteries instead of a Stirling AIP system and conventional lead acid batteries. Not only will this substantially improve their indiscretion ratio (reduce snort time), i.e. make them stealthier on transit; but, another key advantage of this new technology – shunned by the French and their new Australian following – is a four times higher discharge reserve at maximum speed.
There is no doubt; the CEP team included the Royal Australian Navy’s most outstanding submarine experts who certainly know about these parameters. For this reason, I cannot exclude the possibility of a hidden agenda envisaging the transition to the Shortfin’s nuclear-powered sister. Following a five-year design phase, the build will not commence until the 2020s, with the commissioning to be expected no sooner than in 2030. Enough time for Australia, not least in light of China’s rising sea power, eventually to choose to go nuclear.
By Raimund Wallner
Raimund Wallner, Captain German Navy (Ret.), was in command of submarines and a submarine squadron. He also served as his country’s defence attaché in Tokyo. When the Australian project SEA 1000 began in 2008, he was branch chief for underwater systems in the Armaments Directorate of the Federal Ministry of Defence and was involved in the government support provided to German industry.