6 years ago
Australian Industry snubbed in Future Frigate program
Senator Rex Patrick
Future Frigate tender documents that Defence were forced to release to Nick Xenophon late last week show that Australia’s defence industry has been given "short shrift" in the $35 billion shipbuilding program.
“The documents represent nothing short of a massive policy failure”, said Senator Patrick, responding to the fact that Australian shipbuilders have been barred from any lead role in the program and that the Government has set Australian Industry Participation at a "measly" fifty per cent minimum.
The tender read in totality makes it very clear that the three overseas tender respondents, BAE (UK), Fincantieri (Italy) and Navantia (Spain), need to demonstrate that they can come to Australia, carry out the build in a Government supplied shipyard, control the workforce and take responsibility for the entire build process.
The tender states that:
Tenderers should be aware that the Commonwealth has selected the Tenderers on the basis of their Reference Ship Designs and their ability to undertake the design and build of the Ships. As such, the Commonwealth’s expectation is that the core design work relating to the Ships and the management and supervision of build activities will be undertaken by the successful Tenderer (or its Related Bodies Corporate) and not subcontracted to a third party entity. In particular, while the successful Tenderer may decide to engage a Subcontractor to provide shipbuilding labour resources, the Commonwealth expects the successful Tenderer (or its Related Bodies Corporate) to personally and directly manage and supervise the workforce and, in particular, the shipbuilding activities.
“The approach is nothing short of treachery”, said Rex.
“We have two established and highly capable shipbuilders in ASC and Austal that have been excluded from the role of shipbuilder in that program. Instead, the Government has invited a foreign ship designer into the country, will provide them with a taxpayer funded shipyard to build the future frigate, from where they will eventually go on to compete against those Aussie companies.”
Statements in the tender and the intellectual property terms also make it clear that building a shipbuilding export capability is not on Defence’s radar.
On evidence provided to a Senate committee on the Future of Australia’s Naval Shipbuilding Industry last September, this approach will cost Australia many thousands of export related jobs.
The approach revealed in the tender documents is consistent with Defence’s view in their Export Strategy paper released yesterday which defines Australian Defence Industry as ‘businesses with an ABN’.
“You can’t define an Australian company as one that turned up and registered for an ABN. We need to recognise and support those companies that have been here for years - companies that have invested locally, employed Australians and are developing their own products and intellectual property," said Rex.
The tender documents also reveal that the Federal Government has set Australian Industry Participation for the Future Frigate program at only a minimum of fifty per cent:
The Air Warfare Destroyer Program has achieved Australian contract expenditure in the order of 50% across the whole Program. While the Commonwealth acknowledges there are significant differences between the Air Warfare Destroyer Program and this Project, the Commonwealth expects that this Project will achieve the same or higher level of Australian contract expenditure.
“It seems Minister Pyne has gone from '90% man' to '60% man' and now down to '50% man'”, said Rex. “It’s an assault on Australian companies and jobs.
“Yesterday the Government announced a $3.8 billion dollar export program. It seems that was a $3.8 billion dollar consolation prize to a $35 billion dollar snub."
The contract contains clauses that allow for the contract to be amended:
The Commonwealth may amend this RFT upon giving Tenderers timely written notice of an amendment. If the Commonwealth amends this RFT under this clause 1.4.1 after tenders have been submitted, it may seek amended tenders.
Senator Patrick is calling on the Federal Government to amend the tender to allow Australian shipbuilders ASC and Austal to take full responsibility for the build and for the minimum Australian Industry Participation percentage to be significantly increased.