Australias Future Submarine Insight Economics Report 11 March 2020

Submarines for Australia
March 2020
Australia’s Future Submarine

Do we need a Plan B?
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AUSTRALIA’S FUTURE SUBMARINE: DO WE NEED A PLAN B?
Insight Economics Pty Ltd

ACN:141 097 565
ABN: 29 627 712 906
Cover: Four Collins class submarines off HMAS Stirling with the Los
Angeles class attack submarine, USS Santa Fe.
Photo: Licence: Alamy
Disclaimer:
While Insight Economics endeavours to provide reliable analysis and believes
the material it presents is accurate, it will not be liable for any claim by any party
acting on such information.
© Insight Economics 2020
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CONTENTS
Glossary of acronyms iii !
Acknowledgements 4!
Foreword 5!
Executive Summary 7!
Chapter 1 11 !
Emerging problems with SEA 1000 11!
1.1! Elimination of competition 12!
1.2! Ambitious capability requirement 12!
1.3! Structure of the report 15!
Chapter 2 16 !
Problems arising from lack of competition 16!
2.1! Excessive cost of design and construction 16!
2.2! Collins class life of type extension 21!
2.3! Sovereign capability – local content and access to IP 24!
2.4! Technical risks 29!
Chapter 3 33 !
Will the Attack class be fit for purpose? 33!
3.1! What do Australian submarines do? 33!
3.2! Submarine operations ‘up threat’ in the Indo Pacific 34!
3.3! Strategic capability requirement for the Attack class 39!
3.4! Operational and tactical capability requirements 41!
3.5! Would the Attack class be suitable for a different role? 48!
3.6! Will the Attack class be cost-effective? 49!
3.7! Conclusion 49!
Chapter 4 51 !
The way forward: a risk mitigation strategy 51!
4.1! Collins 2.0 preliminary design study 51!
4.2! Review of submarine technology requirements 56!
! ii!
Glossary of acronyms
A2/AD Anti-access and area denial
ADF Australian Defence Force
AEW&C Airborne early warning and control aircraft
AIP Air independent propulsion
AO Area of operations
ANAO Australian National Audit Office
ARPANSA Australian Radiation Protection and Nuclear Safety Agency
ASC Australian Submarine Corporation
ASW Anti submarine warfare
ASuW Anti surface ship warfare
AUV Autonomous underwater vehicle
AWD Air warfare destroyer
ASPI Australian Strategic Policy Institute
C3I Command, control, communications and Intelligence
CAD/CAM Computer assisted design/computer assisted manufacture
CAPEX Capital expenditure
CASG Capability, Acquisitions and Sustainment Group, Department of Defence
CDRE Commodore
CEP Competitive evaluation process
CMS Combat management system
DCNS Direction des Constructions Navales Services (predecessor of Naval Group)
DWP Defence White Paper
EEZ Exclusive economic zone
FCD Full cycle docking
FOC First of class
FSM Future submarine
IIP Integrated Investment program
IP Intellectual property
ISR Intelligence, surveillance and reconnaissance
IUSS Integrated Undersea Surveillance System
LOTE Life of type extension
MOTS Military off-the-shelf
MPA Maritime patrol aircraft
NATO North Atlantic Treaty Organisation
ORBAT Order of battle
PLA People’s Liberation Army (China)
PLAN PLA Navy
RAAF Royal Australian Air Force
RADM Rear Admiral
RAN Royal Australian Navy
RN Royal Navy (UK)
SF Special forces
SLOC Sea lines of communication
SOA Speed of advance
SSBN Nuclear powered ballistic missile submarine
SSK Conventionally powered attack submarine
SSN Nuclear powered attack submarine
TASS Towed array sonar system
T&E Test and evaluation
TKMS thyssenkrupp Marine Systems
TLAM Tomahawk land attack missile
UAV Uninhabited aerial vehicle
UUC Usage and upkeep cycle
UUV Uninhabited underwater vehicle
USN United States Navy
VLS Vertical launch system
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Acknowledgements
This independent report by Insight Economics has been commissioned by Submarines
for Australia, an entity with a website owned and operated by Gary Johnston, founder
and CEO of Jaycar Electronics Pty Ltd. Mr Johnston has no commercial interest in the
SEA 1000 program or Defence projects more generally. Over the last three years, Mr
Johnston has supported significant research by Insight Economics and others into
Australia’s future submarine project. We are extremely grateful for Mr Johnston’s
sponsorship of our work.
We are also keen to acknowledge the contributions from the members of an expert
reference group that has developed around this project. These individuals include
distinguished Australians with strong relevant experience who have contributed their
time and expertise in the national interest.
Inter alia, this group includes:
• Dr Michael Keating AC, former Secretary of the Department of Prime Minister and
Cabinet and head of the Australian Public Service
• Professor Hugh White AO, Emeritus Professor of Strategic Studies at the Australian
National University and former Deputy Secretary of the Defence Department
• Rear Admiral RAN (Retired), Peter Briggs AO, former commanding officer of
Oberon class submarines and CO of the Submarine Force, Director of Submarine
Warfare and Head of the Submarine Capability Team
• Rear Admiral RN (Retired), Chris Stanford CB, former anti-submarine warfare
expert and NATO squadron commander
• Commodore RAN (Retired), Paul Greenfield AM, former Engineering Officer in the
Submarine Force, and a principal of the Coles Review into Collins class
sustainment
• Commodore RAN (Retired), Terence Roach AM, former commanding officer of two
Oberon class submarines, former Director Submarine Policy and Warfare, Director
General Naval Warfare and Director General Maritime Development
• Dr Hans J Ohff, Visiting Research Fellow at the University of Adelaide, Managing
Director and CEO of the Australian Submarine Corporation from 1993 to 2002
• Dr Andrew Davies, Senior Fellow, Australian Strategic Policy Institute.
While these individuals have been extremely generous in contributing their expertise,
they may not all agree with some of the findings of this report. The responsibility for the
material in this report lies with Insight Economics and Submarines for Australia.
A large part of Chapter 4 of this report relies heavily on the work done by the retired
naval officers of flag rank in the context of the proposal they sent to the Prime Minister
in December 2018. This has been of very considerable assistance.
Finally, I would also like to acknowledge the contribution made by Senator Rex Patrick
who, before he entered Parliament, kindly sent me hard copies of a large number of
articles he had written on the future submarine. These were extremely helpful as I
began my long and arduous course of education on the subject.
Jon Stanford
Director, Insight Economics.
March 2020
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Foreword
by
Gary Johnston (Submarines for Australia)!
Over a century ago, the Royal Australian Navy acquired its first submarines. Built in the
UK, AE1 and AE2 were state-of-the-art platforms, embodying the world’s best
contemporary technology. They were powered by diesel engines and lead acid batteries.
Their challenging voyage to Australia was undertaken on the surface and mainly under
tow.
Forty years later, USS Nautilus, the world’s first nuclear-powered submarine, put to sea
for the first time. It had a similar revolutionary effect as the entry into service of HMS
Dreadnought in 1905. At least at the highest end of offensive operations, diesel
submarines were arguably rendered obsolete.
In April 2016, 101 years after AE2 entered the Dardanelles on a wartime mission and 62
years after the Nautilus’s maiden voyage, Prime Minister Turnbull announced that the
French government-owned Naval Group had been selected to design Australia’s future
submarine, now the Attack class. Like AE1, it would have diesel engines and lead acid
batteries. If all went well, the first submarine would enter service in 2035. The program
will cost an eye-watering $50 billion in constant 2018 prices. Australia already holds the
record for the most expensive surface warships of their size ever built with the air-
warfare destroyers. Why not see if we can extend our Gold Medal performance to the
underwater domain?
In December 2019, the US Navy ordered nine Virginia class nuclear powered attack
submarines at a contract price of US$22 billion (or around A$33 billion). This was said
at the time to be the largest warship building deal ever (watch this space). These will be
more than twice the size of Australia’s Attack class, with a significantly more potent
offensive capability and unlimited endurance. Over their 30-year life they will never
need refuelling. They will all enter service in this decade, the ninth boat being delivered
in 2029, when we will still be waiting for the first Attack class boat.
When I heard Malcolm Turnbull’s announcement about the future submarine, I literally
couldn’t believe it. At the time, the French proposed to convert their nuclear powered
Barracuda design to diesel-electric propulsion (now they acknowledge it will be a new
design). Together with the elimination of any further competition solely on the basis of
an early concept design, everything about the project – particularly the cost, delivery,
technology and extremely high risk – suggested this was a dud idea. Simply put, it
involved dumbing down a nuclear submarine by removing the whole basis of its
superior capability, and then charging at least twice as much for a far less capable
submarine. When the first of class is delivered it will likely be obsolete, with the final
submarine due to be delivered 100 years after the Nautilus put to sea.
When the Super Seasprite helicopter was cancelled after outlaying a cool $1.4 billion in
return for not one single helicopter that the Navy could use, I wondered what the
Defence department could possibly do for an encore. We soon found out. But were this
massive project to fail, the consequences for our national security are on a completely
different scale and are simply unthinkable.
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My first reaction, together with Dick Smith, was to place an advertisement in a national
newspaper at significant cost. Neither Defence nor the government took any notice.
Clearly this would be a hard nut to crack. I then commissioned Insight Economics to
undertake a substantial amount of research and come up with an alternative way
forward. Now working with an expert reference group, I am delighted with this new
Insight Economics report. It shows at least that if the government takes action now it is
not too late to change course.
But the most important message I draw from the report is that Australian submarines
are required to operate at the highest level of intensity, even in peacetime, in an
increasingly contested and congested theatre where four nations deploy nuclear
submarines and where the potential adversary is pursuing a strategy of anti-access and
area denial. With both the size and capability of the PLA Navy increasing at a prodigious
rate, by the time the Attack class are due to enter service the intensity of submarine
operations ‘up threat’ will be even greater. Not only will a diesel submarine have a lesser
effectiveness in our area of operations than the American nuclear submarines with
which we partner, but its lack of stealth while snorting and its low sustainable speed if
detected will give rise to an increasing threat to its survivability.
In my view, one of the most shameful episodes in our military history occurred in 1941-
42 when we sent brave young Australians, with predictable results, to fight the
advanced Japanese Zero fighters in obsolete aircraft. Never again should the nation
abrogate its duty of care towards its service men and women in this manner. We are a
wealthy country and have a moral obligation to provide ADF personnel with the best
possible military platforms when they are sent into harm’s way. I conclude, therefore,
that if the government wants to continue undertaking submarine operations at the
highest level of intensity, it should acquire a fleet of nuclear-powered attack
submarines, complemented by autonomous underwater vehicles.
If the government decides it is unwilling or unable to acquire nuclear submarines, it
should consider withdrawing from operations of this nature. But submarines are an
offensive weapons system and currently provide the ADF’s only substantial power
projection capability. If they can no longer be deployed in this capacity, the question
then arises of whether we should continue to operate submarines at all. With Australia’s
vast coastline to defend, there is little value in deploying a few conventional submarines
to chug around the archipelago. The answer may well be that two squadrons of
advanced bomber aircraft would provide a superior offensive capability, delivered much
earlier than the future submarine at a considerably lower cost.
But perhaps in light of the significant ongoing deterioration in Australia’s strategic
circumstances, in the future we will need both nuclear submarines and long-range
stealth bomber aircraft to provide a credible deterrent to any potential adversary.
Finally, I recognise the challenges involved in enhancing Australia’s capabilities in
nuclear science. Should the government decide to embark on the long and difficult road
to acquiring SSNs, I will commit to endowing a Chair in nuclear engineering in an
Australian university.
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Executive Summary*
The selection in April 2016 of the French government-owned company Naval Group as
Australia’s design partner for the Navy’s future submarine was the outcome of a novel
competitive evaluation process (CEP) between French, German and Japanese
companies.
The Turnbull government accepted Defence’s recommendation of Naval Group despite
the fact that Ministers did not know how much the submarine would cost, its level of
Australian industry content (AIC) and, with a very late delivery, the implications of a
capability gap. The government rejected an attractive German offer – fixed price of
$20bn; 12 submarines to be built locally in a new digital shipyard at same cost as in
Kiel; 70 per cent local content; and delivery in 2028.
A major difficulty was that with Defence intending to work in an integrated way with
Naval Group on the submarine design, the SEA 1000 team felt unable to manage any
further competitive process. One lesson from previous acquisitions was the need to
invite two or more proponents to prepare preliminary designs and then provide a
tender covering price, delivery and AIC. Instead, further competition was eliminated.
Naval Group were gifted a monopoly position on the basis of only a very early concept
design for the Attack class and with no commitments on cost, schedule and Australian
industry content.
The second problem was around capability. The Defence department was attracted by
the capability offered by the French during the CEP, but perhaps took insufficient
account of the risk that it could not all be delivered. As occurred with the original
combat system for the Collins class, it is possible that Defence’s ambitions for the
submarine’s capability are inconsistent with the limits of contemporary technologies. A
previous Defence Minister had stated that the Navy needed a conventional submarine
(SSK) with the capability of a nuclear submarine (SSN) – effectively an oxymoron. The
French offered the RAN just that, a diesel-electric platform based on their Suffren SSN.
Yet the French concept was the riskiest possible – an ab initio design with an extended
delivery schedule, with the first Attack class submarine due to enter service after the last
Collins boat reached the end of its design life. By emphasising capability over both cost
and delivery, Defence may have forgotten the maxim: “the last 10 per cent of the
performance sought generates one-third of the cost and two-thirds of the problems”.
In a recent report, the Auditor General noted the high risks in the SEA 1000 program
even at this very early stage. The ANAO also revealed that the government-appointed
Naval Shipbuilding Advisory Board, including US Admirals who had previously
endorsed the French proposal, advised the government to consider terminating the
arrangement with Naval Group. In March 2020, a member of that Board told the Senate
that the main problem with the program was that it lacked a contingency ‘Plan B’.
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*No!references!are!provided!in!the!Summary.!These!can!be!found!in!the!body!of!the!report.!
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Emerging problems
Excessive cost
The government should be deeply concerned at the cost of its naval acquisitions. The air
warfare destroyers, for example, are the most expensive warships of their size ever built
and cost nearly three times the benchmark global price. The budget for the Hunter class
frigates suggests that RAN will pay at least twice as much as the Royal Navy for those
ships. Even before a preliminary design has been produced, the cost of the Attack
program has escalated from an already extremely high level:
• The design of the submarines will cost at least $4bn, compared to the ~$1bn that
is a contemporary benchmark for complex submarine designs
• Since the announcement, the acquisition budget has been increased by 60 per
cent to $80bn in out-turned dollars (confirmed in the recent ANAO report) – an
outlandish cost for a conventional submarine
• Defence has confirmed that the whole of life cost for the 12 submarines will be
$225bn out-turned, compared to ~$90bn out-turned for the TKMS bid.
Inadequate Australian industry content
After experience with the cost of maintaining Oberon submarines and the unreliability
of supply from UK, the principal reason for building submarines in Australia is to
establish a sovereign capability to sustain them. Sustainment of Collins is now achieved
very efficiently with ~ 90 per cent AIC. With Naval Group having an economic and
political incentive to maximise French content, the outcome in terms of AIC is unlikely
to be satisfactory. The first CEO of Naval Group Australia promised 90 per cent AIC,
which Minister Pyne said he would ensure was a commitment. In February 2020, Naval
Group flagged less than 50 per cent Australian content, possibly much less if the
overseas content in work by local subsidiaries of French companies is taken into
account. The recent commitment to 60 per cent is not yet contracted and, with a
definition of local content that includes Australian resorts and other services, may not
meet the requirement to ensure the advanced industrial capability required for future
submarine sustainment.
Dangerous capability gap
The Collins class reaches the end of its design life between 2026 and 2034. The first
Attack class submarine is expected to be operational by 2035-36. This implies a very
substantial capability gap. Since ab initio submarine projects almost inevitably run late
or fail, it is possible that the first Attack will not enter service until 2040. For the first
time, Defence now acknowledges the possibility of a capability gap.
Beyond the obvious impact on national security, the implications of a gap in submarine
capability are far reaching. In particular, the effect on the availability of trained
submarine personnel can persist for a long time. Due to an early lack of operational
availability of the Collins class, the transition from the Oberons was a fraught
experience in regard to the impact on recruitment and retention, from which, over 15
years later, the Submarine Force has only recently recovered.
It is inevitable that all six Collins submarines will need a life extension (LOTE). This will
be a high risk exercise, including replacement of diesels, the main motor and other
major systems, with estimates of cost ranging between $6 and $15bn. The ANAO report
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states that planning for this is at an early stage. No budget for the LOTE separate from
that of SEA 1000 has been announced. Taken together with an increase in activity in
Attack class construction at the same time, in the late 2020s this will make a major
impact on Defence’s Integrated Investment Program (IIP).
The plan is also to undertake the LOTE within the 10-year full cycle docking major
maintenance schedule that take two years to complete. There is a high risk that the
LOTE will not be able to be completed within this timeframe. This would exacerbate the
likely capability gap. According to industry experts, the most efficient way of
incorporating the installation of new propulsion systems would be to build a
replacement hull section for the after end of the submarines. This would require
expertise beyond repair and maintenance, including in design and construction. The
high risks in this suggest that Saab Kockums, the designer and builder of Collins, should
be engaged by the Design Authority, ASC, to assist in what will be a very complex task.
Low cost-effectiveness and questionable strategic value
Apart from the vital considerations of cost, delivery, local content and the risk of a
capability gap, we have a more fundamental concern in regard to the Attack class. The
main role for RAN submarines is to operate with the US Navy in intelligence gathering
missions in the South China Sea, 3,500 NM from their base. The long distance to their
primary area of operations is a major challenge – no other conventional submarine in
the world undertakes similar operations – and means that nearly half of a RAN
submarine’s 70-day operation is spent in transit. Even with 12 submarines by 2050, in
peacetime generally only one submarine will be able to be on station at any time. By the
mid-2030s, half the world’s submarines will be operating in the South China Sea, many
of them nuclear powered. The cost-effectiveness of outlaying $225 billion in whole of
life costs in order to deploy one conventional submarine to such a congested theatre at
any time must be in doubt.
With the ongoing increase in the intensity of undersea operations in the South China
Sea, the operational effectiveness and survivability of conventional submarines become
ever more challenged. Developing its anti-submarine capability is now a high priority
for the PLA Navy, with the aim of creating an ‘underwater great wall’ and denying
access to foreign submarines. The first tactical problem for a diesel submarine is the
need to ‘snort’ near the surface every few days so as to recharge its batteries. This makes
them far more liable to detection. The second tactical problem is their inability to
sustain a high speed for any length of time. This limits their ability to track nuclear
submarines and other high value targets. Together with limited endurance, it also
compromises their ability to break contact if detected and escape at high speed, thereby
reducing survivability.
The operations undertaken by RAN submarines can be at the highest end of the
intensity scale, similar to NATO operations during the Cold War over 30 years ago
where ultimately all the parties used SSNs. As technologies continue to develop,
intensity is only likely to increase over time. Taking account also of the very long
transits for Australian submarines, we do not believe that a conventionally powered
submarine will be fit for the purpose of operating in this theatre in the 2030s and
beyond. Compared to the SSNs operated by the US Navy, a SSK will not only be less
effective but it will also have a lower level of survivability.
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Proposed risk mitigation strategy: Plan B

In responding to the ANAO report, Defence acknowledged, at the highest level, there
was a need to mitigate the very high level of risk in the SEA 1000 program.
Re-introducing competition
Our proposal for mitigating the risks around SEA 1000 would not involve delays to the
present program with the Attack class, and a very small increase in cost that we are
confident would be recouped many times over. Fundamentally, it would introduce a
parallel pathway that would give rise to valuable competitive pressure. The alternative
pathway is for an evolved Collins class submarine – Collins 2.0. This recognises that
evolving a new submarine from an existing successful platform – and the Collins class is
now performing extremely well – is the approach followed by all other countries that
build and operate submarines. The main advantage of this approach, which the
Americans advised Defence to follow in the first place, is that it involves a significantly
lower risk. But there are also benefits in terms of lower costs and a shorter delivery
schedule, as well as being able to utilise an existing supply chain.
On the basis of expert professional advice, we consider that an evolved Collins 2.0
submarine, with a comparable capability to Attack, could be delivered at least five years
earlier, at a much lower cost and with 70 per cent local content. There would also be
benefits from significant synergies with the Collins class LOTE.
We propose that in parallel with the Attack class program, the government should
commission a preliminary design of a Collins 2.0 option. The estimated cost of the
design is less than 0.2 per cent of the future submarine budget, money that would be
recovered many times over even if only by the effects of eliminating the current
monopoly. In 2022-23, the government could then choose between the Attack class and
Collins 2.0 on the basis of fixed price tenders for the first six submarines, also including
firm proposals for delivery, AIC and intellectual property rights. This task could be
undertaken by an independent expert review team reporting to the Minister for Defence
through the CDF and the Secretary of Defence.
Review of submarine technologies
Operations ‘up threat’ in an offensive, power projection role using conventional

submarines will be highly challenging by the 2030s. Only nuclear powered submarines
have limitless dived endurance on an operation and the speed required to put more
submarines on station – perhaps three times as many as with diesel boats – in the face
of RAN submarines’ long transits. Their sustainable high speed also offers major
advantages in terms of operational effectiveness and survivability. We recognise it
would be difficult for Australia to acquire SSNs, however, and would take 15-20 years.
The Navy would require 12 conventional submarines first (including six life extended
Collins boats) in order to build up numbers of trained personnel.
The 2016 Defence White Paper flagged a review of future submarine technologies in the
late 2020s. We believe this review should be brought forward and undertaken as a
matter of urgency. It should include an analysis of whether Australia should explore the
option of acquiring nuclear-powered submarines. The future role of autonomous
underwater vehicles (AUVs) should also be investigated in detail.
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Chapter 1
Emerging problems with SEA 1000
In April 2016, the Turnbull government announced that the French company Naval
Group (then DCNS) had been selected as Australia’s strategic partner to design the
Royal Australian Navy’s future submarine. Naval Group is majority owned by the
Government of France with major French defence companies as minority shareholders.
Now, nearly four years after the announcement, some significant problems are
beginning to emerge, as detailed in a report by the Auditor General released in January
2020.1 These include:
• A lengthy delay in concluding the Strategic Partnership Agreement (SPA)
between the Australian and French governments
• A 60 per cent increase in the acquisition budget, confirmed by the ANAO, for the
submarine to $80 billion in out-turned (inflated) dollars
• A delay of nine months in the completion of the preliminary design so that the
project has already missed two milestones
• A delivery schedule that requires all six Collins class submarines to have a ten-
year life extension (LOTE), but with little preparation having been made for the
LOTE even though the need for it was understood years ago
• A poor relationship has developed between Naval Group and Defence due to
cultural differences and disagreements about Australian industry content
• Very high risks around the SEA 1000 project, as also acknowledged by the
Defence Department
• Before the SPA was agreed, the government was advised by the Naval
Shipbuilding Advisory Board, which included three retired American admirals,
that the risks were so high that Australia should consider walking away from the
project even were the SPA to be concluded satisfactorily.
Abstracting from the individual problems around issues such as cost and risk, there are
two main categories of issues that require the government to intervene and establish a
‘Plan B’. The first problem, that underlies most of the current issues between the
parties, is the premature elimination of any competition long before a preliminary
design has been completed, and the serious issues that are arising as the consequence of
the gifting of monopoly power to Naval Group. The second is a much more fundamental
problem that will be even more difficult to address. This is the likely pursuit of an
unrealistic capability requirement for the Attack class in light of the unique role that
Australia requires its conventional submarines to undertake.
These two issues are discussed below.
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1!ANAO$(2020),$Future&Submarine&Program&–&Transition&to&Design,$Auditor0General$Report$No.$22$2019020,$para.11,$
https://www.anao.gov.au/sites/default/files/Auditor0General_Report_201902020_22.pdf!
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1.1 Elimination of competition
The elimination of competition beyond the concept design stage is giving rise to
problems that any economist would expect when a large contractor is gifted with a
monopoly position. The competitive evaluation process (CEP) that led to this decision
was controversial. In the largest ever Australian capital project, for the government to
commit to a single partner on the basis of a simple concept design seemed risky. It went
against all the lessons learned from previous unsuccessful acquisitions about
maintaining competitive pressure for as long as possible. Without negotiating any
bankable commitments while having stated that the budget for the project was $50
billion, the government had gifted Naval Group with a monopoly position. In doing so it
has severely compromised its negotiating position on every aspect of the project – cost,
delivery, Australian industry content and rights to intellectual property.
Even if the government was determined to down select to a single company so very early
in the program, this need not have occurred. Although ultimately unsuccessful, the
German group, thyssenkrupp Marine Systems (TKMS), had made a firm lump sum
offer. They proposed a fixed price of $20 billion for building 12 submarines, with the
first being delivered in 2028 with 70 per cent Australian industry content. They would
all be built in Adelaide at the same cost as in Kiel. This was in accord with the then best
practice global cost of a conventional submarine of about $400,000 to $450,000 per
tonne.2 This was not a will of the wisp proposal. The German principals needed to be
convinced that Australian industry could achieve this while delivering an acceptable
profit and at the same time maintaining a contingency margin.
We are not arguing that the German offer should necessarily have been accepted, but it
did establish a strong benchmark for acquiring a submarine of the same size as the
French design with a similar need to satisfy Defence’s ambitious capability requirement.
As was their right, the government selected the French on the basis of Defence’s
recommendation that the capability offered by Naval Group’s concept design was
markedly superior. But Ministers could at least have used the German proposal as a
benchmark and made acceptance of the Naval Group proposal contingent on the
negotiation of a comparable agreement, no doubt with some flexibility included. They
could also have nailed down the degree that Naval Group would guarantee that the
highly advanced capability they offered could be delivered. Indeed, it is surprising that
the three coordinating departments and their Ministers (Prime Minister and Cabinet,
Treasury and Finance) did not insist on a much tighter approach along the lines
suggested.
1.2 Ambitious capability requirement
The greatest underlying problem with the Attack class program is that the evidence
suggests that Defence is seeking to develop an unprecedented level of capability in a
conventionally powered submarine (SSK).
After the RAN began operating submarines again in the late 1970s, it was only later on
that an important role for the Oberon class became to undertake intelligence,
surveillance and reconnaissance (ISR) operations in waters far to Australia’s north.
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2!Unsurprisingly,!since!the!estimates!were!nonGbinding,!all!contenders!submitted!a!rough!order!of!magnitude!
cost!within!10!per!cent!of!each!other.!
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These operations involved very long transits. But they were conducted mainly on the
surface. This was commonplace for conventional submarines at that time operating in a
strategic environment with a low level of intensity and a fairly rudimentary anti-
submarine warfare (ASW) capability on the part of potential adversaries.
As submarine detection technologies improved and satellites became more numerous,
operations undertaken mainly on the surface became less tenable. The Collins class
submarines that replaced the Oberons with a similar role were designed to operate
dived throughout. In order to maintain the same speed of advance (SOA) as the
Oberons in transit, this required frequent recourse to snorting, close to the surface, so
as to recharge batteries. On a 3,500nm transit, frequent snorting imposes a degree of
stress both on a submarine’s crew and on its machinery. It also exposes the submarine
to a significantly greater risk of detection and interdiction, albeit a lower risk than when
travelling on the surface.
At the same time, high intensity blue water submarine operations in other parts of the
world, particularly the Atlantic theatre, increasingly became the preserve of nuclear-
powered attack submarines (SSNs). These operations were highly intense during the
Cold War, entering the dangerous ‘grey zone’ between peace and war. Both their speed
and their ability to remain fully dived throughout for a 90-day operation gave SSNs a
higher level of effectiveness. High speed and virtually unlimited dived endurance also
provided SSNs with a higher level of survivability because of their ability to break
contact when detected and escape at very high speed. By the end of the last century, the
US, Britain and France had discarded all their conventional submarines.
Because only six countries currently deploy SSNs – the US, Russia, China, Britain,
France and India – these blue water, high intensity operations ‘up threat’ now are
effectively limited to great powers – with a few exceptions. Countries that operate
conventional submarines generally undertake short operations – perhaps of around 21
days maximum – and operate dived throughout, with a minimal need to snort due to
their use of air-independent propulsion (AIP) systems and/or modern batteries with a
much greater level of energy intensity. Japanese Soryu class submarines, for example,
undertake covert ISR operations in liaison with the US Submarine Force in the East
China Sea, but we understand these are generally of two weeks duration undertaken
fully dived throughout. Their use of AIP, or more recently Li-Ion batteries, allows them
to achieve this without the need to snort.
Australia is the only country that requires its conventional submarines to undertake 70-
day operations involving 3,500nm transits and then a long patrol of 30+ days far from
base. When they reach their primary area of operations (AO) they also work in an
extremely high intensity operational and tactical environment. Given that Australian
governments from both sides of politics have rejected the use of nuclear propulsion for
Australian submarines while still seeking to undertake the same, increasingly
challenging, operations as in the past, this gives rise to a capability requirement for a
unique conventional submarine.
The then Defence Minister, David Johnston, said in 2015 that Australia required a
submarine with the capability of a nuclear powered boat but with diesel-electric
propulsion. Given that a SSN derives its capability from the advantages in terms of
speed and endurance offered by a nuclear reactor, this is an oxymoron. It is probable
13!
!
that the RAN’s capability requirement may well test the boundaries of what
conventional submarines can reasonably be expected to do.
We believe the desire to design and build what is essentially a unicorn lies at the heart
of most of what is wrong with the Attack class program. The major issue is that the
Naval Group won the SEA 1000 CEP not on the basis of cost, delivery or local content
but rather on the claimed superior capability it offered. But just as the CEP failed to lock
in any commitments on cost, schedule and local content, it also failed to lock in
commitments around capability.
The decision by the German group TKMS to offer a fixed price well below the budget for
the future submarine appeared a smart move at the time. But in retrospect it may have
been an own goal. It meant that unlike their rivals, they couldn’t afford to offer
capability that would be risky and perhaps impossible to deliver. But for other
proponents who had made no commitments around price or delivery, the sky was the
limit. Defence’s statements about the superiority of the capability offered by the French
suggest they apparently accepted all Naval Group’s claims without undertaking a
serious risk assessment of whether the capability could actually be delivered.
This can be illustrated by the much spruiked proposal by Naval Group to use a pump-jet
propulsor on the Attack class. Naval Group said at the time of the announcement that
pump-jets had rendered propellers ‘obsolete’ for submarines. Yet the physics of pump-
jets tell us that while they can provide a superior acoustic solution for power-rich SSNs,
they are too inefficient for use on conventional submarines. Indeed, four years later it
appears that none of Naval Group’s designs for SSKs have adopted pump jets. More
tellingly, within 18 months of winning the contest, the French head of the Australian
program suggested that propellers might be used in the Attack class after all. This drew
a response by Defence insisting on pump-jet propulsion as demonstrated during the
CEP process.
The second straw in the wind regarding the onerous nature of the capability
requirement is how the design schedule is blowing out, with Naval Group already
requesting a delay of 15 months in the preliminary design.
If there is a disconnect between the design partners on what level of capability can be
expected to be delivered, this substantially increases the risks around the project. A
former Secretary of the US Navy, Norman Augustine, proposed what he called ‘the law
of insatiable appetites’ in defence procurement. There was a strong basis in past
experience to support Augustine’s proposition that “the last 10 per cent of the
performance sought generates one-third of the cost and two-thirds of the problems”. In
Australia’s case, we may be looking at an even higher level than 10 per cent of the
required capability that is at risk.
With the exception of local content, this fundamental tension between the Navy’s
required capability and what is presently achievable dominates every issue around the
project.
Perhaps most importantly, it explains the lack of competition, which underlies current
issues around cost, delivery, local content and IP. Defence stated at the outset that it
only had the resources to manage one project proposal. This may well be correct,
although in any normal project it shouldn’t be. The reason is that in selecting a design
partner, they meant exactly what they said; Defence is the other partner in designing
14!
!
the submarine and a very active one. Early in the design process, there were more
Australian designers than French on the team. Defence, has been involved in designing
an ideal submarine since before the 2009 Defence White Paper (DWP). It intends to
make a major contribution to the design with Naval Group. This, no doubt, is why Naval
Group publicly refers to Defence as a very demanding customer. Also, if Defence’s
requirements for capability are regularly extending further into the wish list than was
understood at the time of the CEP, this is also probably why the design has encountered
a significant delay.
There is no way Defence could manage two competing design proposals and run a
neutral competition when it is working on a complex design in an embedded way with a
single partner. But this also reflects fundamental governance issues, when the customer
is also part of the team designing the submarine in liaison with the Prime contractor.
Should the design fail, this fundamental conflict could well be a major cause. But then
the same question arises as with the air warfare destroyers where all the parties to the
partnership arrangement seemed to be in bed together. If it the project fails, who does
the Australian government sue?
This also reflects another problem – the equivalent of “don’t ever let a fighter pilot
design the air force’s next fighter”. Without Ministers driving the project, the emphasis
is likely to be on capability with a lesser consideration for cost, schedule, local content,
ownership of IP or, particularly, deliverability. This is always inappropriate. It is
particularly inappropriate when Australia’s increasingly threatening strategic
circumstances suggest we need new submarine capability as soon as possible and when
there is a financial constraint in terms of the various new programs, across all three
services, that are making growing demands on the defence budget.
1.3 Structure of the report
The remainder of the report is structured as follows:

• In Chapter 2 we examine problems around cost, delivery, AIC and IP protocols
and discuss how these have been exacerbated by the lack of competition in the
process
• The significant challenges around what Australian submarines do and what
technologies are required to support their role are discussed in Chapter 3
• A proposed ‘Plan B’ risk mitigation strategy is presented in Chapter 4.
15!
!
Chapter 2
Problems arising from lack of competition
The Competitive Evaluation Process (CEP) to select a design partner for the FSM was a
novel initiative for the Defence department. Given that it effectively led to the selection
of a platform, based only on a design concept, a major source of risk source of risk to the
FSM project was the government’s decision to eliminate any further competition
following the selection of Naval Group as design partner.
As the Auditor-General pointed out in his initial (2017) audit of the CEP for the FSM,
this is a high-risk program. The implications of compounding these risks by eliminating
competition were identified clearly by the ANAO:
The approach taken by Defence for the Future Submarine program removes
competition in the design phase, and removes incentives for the international
partner (DCNS) to produce a more economical and efficient build. This places the
onus on Defence to ensure that its approach to the Future Submarine’s design and
build phases, where final costs and schedules will be determined, returns value-for-
money to the Commonwealth in the absence of a competitive process.3
We are especially concerned that the elimination of competition at a very early stage of
this project exposes the government and the taxpayer to a number of very substantial
risks and a contingent liability that is enormous both in financial terms and also in
respect of the delivery of what is a vital defence capability. Having been gifted a
monopoly position at the very start of the project, a rational approach by Naval Group
would be to maximise the commercial benefit it will derive from the project. We can
point to some emerging evidence, even at this very early stage, that significant problems
are becoming apparent as a result of abandoning competition so early in the acquisition
process. We discuss below the emerging effects of lack of competition on risks around:
• The cost of designing and building the Attack class
• The timely delivery of the submarine and the capability gap
• Australian industry participation and sovereign capability
• Australian access to and ownership of critical intellectual property
• Technical specifications of the Attack class.
These are considered below.
2.1 Excessive cost of design and construction
Among several issues apparent with SEA1000, excessive cost is perhaps the most
obvious. It has serious and broad implications. The budget breakdown has not been
explained but it appears to us to be far above what we should pay for the capability
sought. The problem of embarking on major acquisition programs much too late and
then paying much too much for them is not confined to the SEA1000 program.
Australia paid between two and three times the benchmark price for the AWD and we
look like paying much more for the frigates than we should. This is unacceptable,
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3
$ANAO$(2017),$Future&Submarine&—&Competitive&Evaluation&Process,$Performance$Audit$Report,$27$April,$para$3.31,$
https://www.anao.gov.au/work/performance0audit/future0submarine0competitive0evaluation0process$!
16!
!
particularly after the successful and cost-effective Anzac frigate program. We note too
that the first AWD was delivered 16 years after the last ship of the class it was replacing
was decommissioned.
Design cost and risks
Currently, approved expenditure on SEA 1000 is $5,959 million, including outlays to

date of $779 million. Defence had spent $396 million on design to 30 September 2019.4
But in addition, the Director of SEA 1000 told the Senate that the budget to complete
the design process would be ‘in the order of $4.5 billion’.5
Our research, including discussions with Australian shipbuilders, suggests that a
complete design of a contemporary submarine should not cost more than $1 billion.
Admittedly, however, this cost represents what you would expect to pay for an evolved
design, which is what most submarine builders around the world seek to undertake
because of the much lower risk. In many cases, around 60 to 70 per cent of systems
used in these designs are already proven in existing submarines. If indeed the designers
of the Attack class are starting with a clean sheet of paper, however, it seems clear that
the process would be more resource-intensive and take a much longer time.
It would also be much more risky. This is another significant problem with selecting an
ab initio design. It now appears that the Shortfin Barracuda, initially presented as a
diesel-electric version of the French Barracuda class SSN and then an evolved version of
the Scorpène (of which details of its performance were leaked to the world’s media), is
in fact rather more of a “new” design than were the other two contenders. Even so, to
pay $5 billion for designing a SSK seems excessive. Given that Defence told us that the
rough order of magnitude project price presented by the three contenders were fairly
close, it seems extraordinary that design costs could account for around 25 per cent of
the overall budget for a program to deliver 12 very large submarines. Perhaps the simple
answer to these imponderables, as one retired senior naval officer told us in regard to
the proposal to use pump-jet propulsion, is that “our guys just had the wool pulled over
their eyes”.
Another major risk in terms of the design task concerns the possibility that the
specifications may be subject to significant change. As discussed later in this
submission, the current design excludes air independent propulsion (AIP) and modern
batteries as well as including power-hungry pump-jet propulsion. Should the
requirements change in regard to any of these features, perhaps as a result of land-
based testing, a very substantial re-design would be required mainly because of
significant changes is weight distribution. This could give rise to a considerable delay.
In addition, with lead acid batteries embodied in the first ‘flight’ of three or four
submarines, it is almost inevitable that much more energy-dense batteries would be
incorporated in the second flight. This would also require a major change in the design.
For example, lead acid batteries play a second role in providing the submarine with the
required ballast, but lithium-based batteries are much lighter. If, however, a different
technology such as the emerging nickel zinc design, were to be adopted, this would
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
4
$ANAO$(2020),$Future&Submarine&Program&–&Transition&to&Design,$Auditor0General$Report$No.$22$2019020,$para.11,$
https://www.anao.gov.au/sites/default/files/Auditor0General_Report_201902020_22.pdf$
5!Hellyer,!Marcus!(2019),!“The!cost!of!defence,!ASPI’s!Defence!budget!brief,!2019G20”,!ASPI,!June,!pages!82G83,!
https://s3GapGsoutheastG2.amazonaws.com/adGaspi/2019G05/Cost%20of%20Defence%202019G2020.pdf!
17!
!
simplify things if only because the weight of a nickel zinc battery is similar to lead-acid,
although the energy density is much greater.
In a report released in January 2020, the Auditor-General found that Naval Group had
requested an extension of 15 months for the preliminary design process. In response,
Defence agreed to a nine months extension:
The program is currently experiencing a nine-month delay in the design phase against
Defence’s pre-design contract estimates, and two major contracted milestones were
extended. As a result, Defence cannot demonstrate that its expenditure of $396 million on
design of the Future Submarine has been fully effective in achieving the program’s two
major design milestones to date.6
This delay before even the preliminary design has been completed is a major concern. It
suggests some early difficulties, perhaps with delivering aspects of the advanced
capability that Defence requires.
Production cost
Under the CEP, each contender was required to provide a non-binding, rough order of
magnitude of their submarine’s overall cost. We understand these came in within about
ten per cent of each other – not surprisingly because the estimates were non-binding
and the three contenders, as well as Defence, would all have known the approximate
benchmark cost per tonne of building a submarine. Although TKMS publicly offered a
guaranteed fixed price, the others may have pitched at a similar level, being confident
they could quote a much higher price later if successful when monopoly status had been
achieved. A rational monopolist would be loath to leave money on the table, particularly
in a rare instance where the customer had thoughtfully published a program budget
that would have appeared generous to the point of extravagance.
When the initial budget for the FSM of $50 billion (excluding the combat system) was
announced, it caused many eyebrows to be raised. Compared to what other nations
spent on acquiring conventional submarines, this seemed excessive, even after
accounting for the large size of Australia’s requirement. Yet that budget was framed in
terms of what Defence calls future or out-turned dollars, meaning that it allows for
inflation at an assumed annual rate of 2.5 per cent until the completion of the program
in the mid- 2050s. In June 2018, however, Defence announced that while the headline
figure for the Attack class budget remained the same, it was now expressed in constant
dollars. This implied that the previous $50 billion in out-turned dollars had become
$80 billion overnight. Only a couple of years after the decision on the CEP and before
even a concept design of the submarine had been produced, the budget for SEA 1000
had increased by nearly 60 per cent. While the then Minister denied there had been any
increase – “it was always $50 billion” – the recent ANAO report confirmed the increase
from $50bn to $80bn in out-turned dollars.7
In evaluating whether the submarines will provide value for money, the key question is:
how much should submarines cost? This is a challenging exercise because comparable
and verifiable data are difficult to find. Credible analysis undertaken over several years
in Australia by people closely involved in the submarine enterprise has produced
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
6
$ANAO$(2020),$op.&cit.,&para.$11.$
7!Ibid,&page!7.&
18!
!
estimates of a global western benchmark cost for a conventional submarine. 8 Despite

all the hype and misinformation at the time, this study found that the average cost per
submarine for the Collins class was just under the contemporary benchmark. This was
quite a remarkable achievement for submarines built by an inexperienced work force in
a new shipyard built on a green field site and in a country that had never built
submarines before.
On the same basis, we are advised that the global benchmark cost per tonne at the time
of the CEP was around $450,000 per tonne. By 2018, this had risen to
$500,000/tonne.9 Using this parametric, we could accept that the average cost of the
Attack class at around 4,270 tonnes (the publicly available surfaced displacement)
should be in the order of $2,135 billion per submarine, This suggests an acquisition cost
for 12 submarines should cost $25.62 billion.
Defence has stated that the budget for SEA 1000 is $50 billion in constant 2018 dollars
(equivalent to $80 billion in out-turned dollars). Other statements lead us to
understand that this does not include the combat system (an additional $6 billion), the
cost of extending the life of the Collins class submarines or sustainment costs for the
Attack class. What then is the remaining $24.38b buying? Design fees, project
management costs, spare parts, integrated logistic support, new infrastructure
including a shipyard, training and education systems such as the Naval Shipbuilding
College, weapons, provision for project contingency and other foreseeable items would
all quite reasonably be a part of the $50 billion total. But based on what those items
should cost, it’s very hard to see anything like another $24.38b.
We note too that the unsuccessful German proposal was to build 12 Type 216
submarines in Australia with a high local content for a fixed price not to exceed $20
billion, or a maximum of $1,667 million per boat at 2016 prices. At 4,200 tonnes
surfaced displacement, this amounts to $400,000 per tonne, equivalent to eleven per
cent below the estimated global benchmark cost at that time. Although there is
insufficient information available on which to make a definitive judgement about the
difference between that bid and the current SEA 1000 budget, the size of the difference
must raise very serious questions. Even if we allow $10 billion for the ancillary items
identified above, which seems generous, at $40 billion the Attack class would still be
twice as expensive as the German Type 216.
In the absence of any official public breakdown of the budget for SEA 1000, this
analysis suggests that we are at risk of paying a great deal more for the Attack class than
we should. If SEA 1000 is costing even a few billion dollars more than we should pay,
the opportunity cost to the rest of the Defence IIP and to national security are very
serious indeed.
The problem is that with Naval Group knowing the size of the budget, it gives them a
free hit. Like any rational monopolist, they will set a price consistent with the budget, or
may even ask for more. Already the cost of the design is excessive and in a couple of
years or so when the construction contract will need to be signed, Defence will have
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
8!Pacey,!Brice!(2012),!Sub&Judice:&Australia’s&Future&Submarine,!Kokoda!Papers,!No.!17,!January,!page!50,!
https://www.regionalsecurity.org.au/Resources/Documents/KP17.pdf.!!
9!More!recent!estimates!are!based!on!correspondence!with!CDRE!(Rtd)!Paul!Greenfield!RAN,!who!contributed!
to!the!Kokoda!report.!The!estimates!are!expressed!in!constant!2018!dollars,!tonnage!being!the!submarine’s!
displacement!on!the!surface,!not!when!dived.!!This!cost!benchmark!figure!includes!the!combat!system!but!not!
the!weapons,!which!are!usually!costed!and!procured!separately.!
19!
!
little capacity to resist. As Bergmann suggests in the passage quoted above, “without
commercial leverage the Commonwealth will either have to pay whatever the designer
wants—or start the entire process again”. When that decision needs to be taken, around
six years after the 21016 announcement, the cancellation option would be untenable in
terms of the time it would take to ramp up a new design.
This situation argues for more than just the scrutiny of a review. Bringing pressure to
bear on the prime contractor by re-introducing competition into the project is probably
the only way in which the cost of the SEA 1000 project could be reduced to a more
acceptable level.
Equally critical and important is the absence of any information on funding for the
Collins LOTE, which we estimate will cost at least $1 billion per submarine and possibly
much more. If the LOTE funding must come from the existing SEA 1000 budget, what
is being traded off? If it is new money, this will be an additional opportunity cost to the
Defence capital budget, which the government has not suggested will be increased. This
could mean that when both the construction of Attack and the LOTE are commencing,
annual outlays on the submarines may amount to $2 billion or more. Already, pressures
on the annual Defence budget are causing some projects to be delayed. Without a
significant increase in the budget, perhaps to 2.5 per cent or even 3 per cent of GDP,
some major decisions on spending priorities may be required. It is difficult to see the
Army of RAAF agreeing to cut their programs in the IIP because RAN expenditure is
higher than expected. It may well be that Navy programs, including SEA 1000, may be
reduced or curtailed.
Based on discussions with Australian shipbuilders, we also strongly disagree with the
RAND group’s assessment that the cost of having naval platforms built in Australia
exceeds the global benchmark by over 100 per cent. The RAND study reflected the
experience with the only substantial platform being built in Australia at the time RAND
undertook its analysis, the Hobart class air warfare destroyers under SEA 4000. There
were several particular reasons as to why the acquisition process for those three ships
was highly inefficient, to the extent that they are the most expensive warships of their
size ever constructed in the world. But the preceding two substantial RAN platforms –
Anzac frigates and Collins class submarines – were built at a cost that was roughly on a
par with the global benchmark and with a local content probably nearly double that of
the Hobart class.
In addition, a commercially driven company like TKMS would not have offered the
same fixed price to build the Type 216 in Osborne as in Kiel had they not made a very
detailed study of the capability and costs of the Australian naval shipbuilding industry.
Interestingly, one of the reasons given for rejecting the German bid was that Defence
didn’t believe they could deliver the submarines for this price. Never mind that TKMS
was offering a fixed price guarantee as well as significant technology transfer with high
local content. Never mind that accelerated delivery of the Type 216 was designed to
obviate the need for a costly and risky LOTE for the Collins class. Given that Defence
recognises the very high risks around the Naval Shipbuilding Plan, any by a contractor
to share some of these risks surely should have been seen as a positive.10
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
10!In!reporting!the!German!proposal!for!the!FSM!at!length,!we!are!not!necessarily!endorsing!it.!But!given!the!
detail!around!the!bid!and!the!excellent!reputation!the!Germans!have!for!building!technologically!advanced!
conventional!submarines!the!value!for!money!on!offer!from!tkMS!appears!to!be!substantially!greater!than!that!
20!
!
Perhaps the very high risk of paying an excessive price for the future submarine is the
strongest of the many arguments for the need for competitive pressure.
2.2 Collins class life of type extension
According to the current delivery schedule, the 12 submarines of the Attack class will
enter service with the RAN between 2035 and the mid-2050s. This is if all goes well. But
all is very unlikely to go well with an ab initio design of a submarine. The experience of
other countries shows they are always delivered late. The Suffren, first of the French
nuclear powered Barracuda class, which is the reference design for the Attack class, is
already running five years late, although reportedly with reactor problems. Even Naval
Group’s program to deliver six Scorpène submarines, a well-established design, to India
is running five years late.11
With successive governments delaying taking a decision on the Collins replacement
program before deciding to take up the riskiest possible ab initio proposal, the
likelihood of a gap in the RAN’s submarine capability has increased over time. Only in
the last year has Defence acknowledged that the selection of Naval Group under the
CEP means that action needs to be taken to avoid a capability gap.
With the Collins class reaching the end of their design life between 2026 and 2034,
before the first Attack class boat enters service, all six submarines will need a ten-year
LOTE to reduce the extent of the capability gap. This needs to be added to the cost of
SEA 1000. As yet the government has not approved the LOTE and no budget for it has
been included in the Integrated Investment Plan. Estimates of the cost of the LOTE
range between $6 billion and $15 billion, but no announcement has yet been made on
how extensive it will be. As noted earlier, the 2020 ANAO report stated that “Defence’s
planning for a life-of-type extension for its Collins class submarines, to manage the risk
of a capability gap, remains at an early stage”.
Critical importance of the Collins class LOTE
Defence’s plans for the Collins LOTE were laid out in limited detail in answers to
questions at Senate Estimates. The objective is to undertake the LOTE within the two-
year maintenance schedule during the full cycle docking (FCD) process. Replacing
diesel generators, the main motor, elements of the power distribution system and
periscopes were all included in the LOTE. This is a very major scope of work that will be
complex, costly and risky. It will involve substantial design effort and very invasive
industrial activity. Industry experts have suggested that building the replacement
components into a new after end hull section, constructed before the submarine enters
the dockyard to begin the LOTE, would improve the likelihood of completing the work
within the FCD window, thereby minimising the impact on submarine availability.
Conceptually, such an approach makes sense but it moves the LOTE from being largely
a repair and maintenance activity to one with a heavy emphasis on shipbuilding, which
would require specialised infrastructure and industry skills. There would be
competition for the same resources required for the Attack construction program. The
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
of!the!French!bid.!Perhaps!the!French!submarine,!coming!from!a!blue!water!pedigree!of!nuclear!submarines,!
offered!a!substantially!greater!capability!than!the!Type!216.!But!if!so,!we!have!yet!to!understand!in!what!
respects!that!may!have!been!the!case.!Defence!has!never!justified!its!selection!in!any!significant!detail!but!has!
spruiked!the!Attack’s!substantial!advantages!in!terms!of!capability.!
11!https://www.navyrecognition.com/index.php/news/defenceGnews/2019/june/7192GprojectG75GscorpeneG
subsGofGindianGnavyGtoGgetGdelayedGdueGtoGseriousGdefects.html!!
21!
!
effects of this would be reduced if the FCDs were being undertaken in Western Australia
at that time.
Defence has experience of comprehensive LOTE programs, not all of it happy. The FFG
Upgrade Program is a worthwhile case study in how challenging it can be, particularly
for platforms, like Collins, with systems originally designed way back into the last
century. The capability provided by the LOTE did not meet the original requirement, it
was way over budget and only four of the six ships received the upgrade. Worst of all
was the fact that it ran so far behind schedule that the fleet had no area air defence
capability for a long period of time. Regardless of how thorough the preparatory work
may be, unseen deterioration of the vessel and unforeseeable problems always emerge
once the shipyard starts pulling things apart. Some of these will be major and even if
they are not, they can rarely be ignored, especially in a submarine. It will consume time
and effort to rectify such things. All sorts of things are discovered too when the shipyard
starts putting it all back together and trying to make it work.
Equally important, sensors, combat, communication and weapon systems will also need
to be upgraded to maintain the submarines’ relative capability in the context of
potential threats evolving in the region. Some of this work is scoped, funded and
underway or planning is advanced, but some has not yet even been identified.
There is a high risk that the totality of this work will result in the submarines’
availability being constrained, which will have a flow on impact on Navy’s ability to
generate the increased number of qualified and experienced submariners it needs to
provide crews for a much larger Submarine Force. If the Collins LOTE is to be
completed during scheduled FCD deep maintenance and docking periods, ASC will need
additional resources as well. This is one of the main reasons that the choice of location
for future Collins Full Cycle Dockings and the LOTE is so important. Getting this right,
so submarine availability is not reduced, will be critical if the risk to the recruitment and
retention of more submariners is to be minimised.
The design effort required for the major changes to the submarine mentioned above will
be significant and getting that work right will be vital. This will be especially important
if the LOTE entails major changes that alter the overall weight distribution and
therefore balance of the submarine. This is very likely for the scope mentioned above.
Yet, while ASC has substantial experience in cutting the hull of the submarines for
maintenance purposes, the design of a new after end and integrating the new complex
systems with the platform is no simple task. It is a submarine construction and systems
integration project rather than maintenance and repair. ASC has not built a submarine
for nearly 20 years and does not currently have the recent experience in a significant
submarine construction task to undertake such a major activity without support. In this
case, and notwithstanding ASC’s very useful design capability, expertise and capacity, as
a substantial risk mitigation measure we believe that ASC, as the Design Authority,
would be most unwise not to engage the services of an experienced design partner.
ASC’s capability partner, US submarine designer General Dynamics Electric Boat would
provide valuable but limited assistance. The original designer, now Saab Kockums, is
the company best equipped to provide such services, having designed the submarine in
the first place. Strict limitations on access to Collins intellectual property also restrict
the choice to Saab Kockums.
22!
!
Even if the ten-year life extension is successful, the last Collins class submarine would
be retired around 2045-6. If the Attack class does run late, there may very well be a
significant capability gap from the mid-2030s (Exhibit 2.1).
EXHIBIT 2.1: POTENTIAL GAP IN SUBMARINE CAPABILITY

Total submarines required: "Force 2030"
Number of Collins Class submarines in service
12 Number of Attack Class submarines in service
Number of Collins Class submarines in service with LOTE of 10 years
5 year delay in Attack Class submarines
10
8
Number of submarines
0
2020 2025 2030 2035 2040 2045 2050
Source: Insight Economics
If all goes well with the LOTE, life extended Collins submarines would be delivered
every two years between 2028 and 2038, with the first extended boat being retired in
2038. With the Attack class intended to be commissioned on a two-year drumbeat from
2036, in principle a six-submarine force would continue until 2046 when it would begin
to build up to 12 thereafter. In terms of delivering on the 2009 government decision to
double the size of the Submarine Force to 12 boats under the 2009, Force 2030 DWP,
this is a clear fail. A full 37 years later, there will still only be six to seven submarines in
the Force.12
The recent ANAO report showed that Defence had, for the first time, acknowledged the
possibility of a capability gap:
Defence has identified that a delay in the Future Submarine Program of more
than three years will create a gap in Navy’s submarine capability. Defence’s
planning for a life-of-type extension for its Collins class submarines, to manage
the risk of a capability gap, remains at an early stage.13
The worst possible outcome would be if the LOTE were unsuccessful and in addition the
Attack class were delayed. The capability gap would then be total and would last for
several years. This would have major implications not only for national security but also
for the ability of the Submarine Force to sustain its highly trained cadre of people who
need extended periods at sea in order to sustain their skills. In a situation where the
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
12!While!Defence!makes!a!convenient!target!for!delays!and!failures!in!military!programs,!Ministers!should!not!
be!let!off!the!hook.!Planning!for!a!followGon!submarine!to!Collins!should!have!begun!under!the!Howard!
government.!It!did!not.!While!the!Rudd!and!Gillard!governments!proposed!to!double!the!size!of!the!submarine!
fleet,!they!dropped!the!ball!in!terms!of!implementation.!
13!ANAO!(2020),!op.&cit,&page!10.&
23!
!
population of the Submarine Force will need to more than double in order to provide
crews for a fleet of 12 submarines, this is a very serious prospect. The looming problem
could well be worse than the situation with the transition from the Oberon to the Collins
class, which resulted in problems in recruiting, training and crewing that took the
Submarine Force 15 years to unwind. That occurred in a far more benign strategic
situation than Australia is likely to face in the 2030s and 2040s.
While it is now too late to avoid the need for the Collins LOTE, there is still an
imperative to bring new submarines on stream as quickly as possible so as to minimise
the capability gap. We note the German contender in the CEP, TKMS, provided not only
a fixed price tender for their Type 216 submarine, but also guaranteed delivery of the
first submarine in 2028 with the option of a much more rapid drumbeat than that
currently planned for the Attack class. But without the ability to apply competitive
pressure to Naval Group, there is no incentive for that company to raise performance
levels so as to accelerate delivery of the Attack class.
Finally, there is also a high risk that the LOTE will not provide sufficient advanced
capability to enable the Collins class to be deployed in a high threat environment in the
2030s. It is unlikely, for example, that the LOTE will include equipping the boats with
AIP or modern high energy density batteries that could significantly reduce their
indiscretion ratio. With some other countries in the region already greatly increasing
their capability in anti submarine warfare (ASW), the survivability of the extended
Collins boats while operating ‘up threat’ would be called into question. This is discussed
further in Chapter 3 below.
2.3 Sovereign capability – local content and access to IP
Australian industry content and the Naval Shipbuilding Plan
An excessive amount of debate around the future submarine focuses on the politics of
jobs in Adelaide rather than the best outcomes in terms of capability and national
security. There seems to be a view that naval shipbuilding can substitute for the car
industry in terms of bolstering economic activity and creating jobs. It cannot; the
automotive industry, at its peak, gave rise directly and indirectly to perhaps 200,000
jobs.
EXHIBIT 2.2: NAVAL SHIPBUILDING – EMPLOYMENT IN MID TO LATE 2020’S
!
!
Source: Department of Defence (2017), “Naval Shipbuilding Plan”, May, page 68.!
24!
!
The government’s own Naval Shipbuilding Plan did not support the view that the very
large naval acquisition program would give rise to a jobs bonanza (Exhibit 2.3).
As shown in Exhibit 2.3, Defence’s projections for Australian employment in the
industry when naval shipbuilding is in full swing in the late 2020s shows a total of
15,000 jobs, including the acquisition workforce (around 6,000 jobs), the sustainment
workforce (similarly about 6,000 jobs) and employment in the supply chain (about
3,000 jobs). An immediate observation is that many of these 15,000 jobs are already
there, with ASC still engaged in new construction (carry over from the Hobart class to
the OPVs) and large-scale, long-term work in sustaining both the Anzac and Collins
class vessels, activities that have a very high level of local content.
One implication of the data shown in Exhibit 2.3 is that only around 3,000 jobs will
exist in the supply chain, presumably covering both acquisition and sustainment, many
of which are already there as noted above. It may be, therefore, that only around 1,500
jobs will be in the acquisition supply chain. The implied job creation seems to represent
a very poor return for a projected capital expenditure of over $90 billion on these
acquisitions. It is clearly at odds with then Minister Pyne’s aspiration in 2016 to spend
90 per cent of the Defence acquisition budget in Australia.
Australian industry content and sovereign capability
As background to the discussion on AIC as well as intellectual property rights

(contained in the next section), we need to understand why the highly risky decision
was taken in the 1980s to build the new class of submarines in Australia. Experience
with the preceding Oberon class submarines, which were acquired off-the-shelf in the
UK, showed the disadvantages of being on the end of a very long supply chain for spare
and replacement parts. (Supply was cut off completely during the Falklands war.)
Also, as proposed by Commodore Paul Greenfield RAN (Retd):
Another major factor was to reduce the in-service support costs. For example,
with the Oberon submarines, one data point – OVENS’ 3rd refit - cost more than
the asset value itself. And the last two refits at Garden Island were so excessive
in costs that the Government cancelled the 3rd refits for both ORION and OTAMA.
The Navy believed that by building all the Collins boats in-country, the cost of
maintenance would be significantly reduced, through transfer of technology,
establishment of infrastructure, and establishment of the supply chain and
technical support networks, in-country, from the word “go”. The take-away from
all this is that the major driver behind building all the Collins boats in Australia
was to reduce the cost of maintenance.14
It was decided in the interests of national security that Australia needed a sovereign
submarine capability so as to ensure the efficient and cost-effective sustainment and the
required level of availability for the Submarine Force. One criterion underlying SEA
1000, therefore, is the need to build such a sovereign capability. An obvious question is
why we need to build sovereign capability all over again with a new entrant with no
experience of Australian industry and majority owned by a foreign government not
allied to Australia. After the expenditure of great effort and substantial funds over three
decades, with many disappointments along the way, we finally have achieved sovereign
capability as embodied in the publicly owned ASC and its associated supply chain. ASC
built the Collins class submarines to a high standard at a world competitive price –
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
14!Greenfield,!Paul!(2015),!“Engineering!considerations!of!sourcing!Australia’s!Future!Submarine!offGshore”,!
Address!to!the!Royal!United!Services!Institute,!Submarine!Summit,!25!March,!page!3.!
25!
!
remarkable for an ab initio design in a country that had never built a submarine before
– and is now maintaining them with a very high level of local content and achieving
world best practice availability. The risks around trying to replace this hard won
capability with a new supplier do not seem to be generally understood. There is the
definite prospect of experiencing déjà vu all over again, and not in a good way.
In any case, in order to achieve these goals and self-reliantly sustain the submarines, a
high level of local content is required. Despite the fact that Australian industry had no
prior experience of submarine construction, the original Collins class were built with
around 70 per cent local content. In sustaining the Collins submarines, over 90 per cent
of the budget is spent in Australia.
Ministers have stated that there will be a high level of local content in the SEA 1000
program. At the time of the announcement of the result of the CEP process, President
Hollande suggested that thousands of jobs would be created in France as a result of the
“historic contract”. According to an article in Le Monde, 4,000 jobs would be created in
DCNS (now Naval Group) and its 200 sub-contractors, while 2,900 jobs would be
created in Australia.15 Approximately $12 billion would be spent in France. This
imbalance created some consternation in Australia. Minister Pyne immediately stated
that all the submarines would be built in Adelaide. Soon after, Sean Costello, the then
CEO of Naval Group Australia, promised ‘at least 90 per cent’ Australian content. He
left Naval Group shortly afterwards. That commitment dropped to ‘at least 60 per cent’
from the next Australian CEO, Brent Clark. He left too. In January 2020, the current
CEO said he could not guarantee even 50 per cent local content because of the limited
capability of Australian industry and the fact that Australia was a demanding customer.
Following this downbeat assessment, the Defence Minister has extracted a commitment
to 60 per cent from her French counterpart. But what does this really mean? In May
2016, Minister Pyne said he would obtain a commitment from Naval Group for 90 per
cent AIC. Now out of office he says the government should “hold Naval Group’s feet to
the fire”. Industry remains unimpressed for two reasons. First, Naval Group will not
guarantee 60 per cent for at least two years when the construction contract is scheduled
to be signed. Secondly, local content is very broadly defined, and seems to include such
expenditures as lunches at the Novotel Barossa Resort, just up the road from Osborne,
and also revenues to Australian subsidiaries of French companies. Transfer payments
within global companies constitute a thriving business for the accounting firms these
days.
In this context it is interesting that the latest estimate of Australian jobs created in
constructing the Attack class is 2,800, slightly less than the 2016 Le Monde estimate
based on many more jobs in France. 16
Had the SEA 1000 team been genuinely focussing on the relative attributes of overseas
design partners/shipbuilders during the CEP rather than the potential capabilities of
pre-concept design platforms, they would surely have come to understand the risks in
selecting a partner owned by a foreign government with a record of a highly
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
15!Gallois,!Dominique!et!Taïx!,!Caroline!(2016)“SousGmarins!vendus!par!DCNS!à!l’Australie:!les!coulisses!d’un!
contrat!‘historique’,!&Le&Monde,!26!April,!https://www.lemonde.fr/entreprises/article/2016/04/26/leG
francaisGdcnsGremporteGunGmegacontratGdeGsousGmarinsGaG34GmilliardsGdGeurosGenG
australie_4908510_1656994.html!!
16!Hellyer,!Marcus!(2019),!op.&cit.,&page!79.!
26!
!
nationalistic approach to work sharing. On a massive project like this one, supposedly
extending over four decades and more, it would seem obvious that Defence would have
engaged closely with the proposed design partner and sought commitments from them
in a large number of areas such as Australian industry participation. Even if they had
undertaken any basic research, and talked to other friendly navies such as Britain’s
Royal Navy, they would have understood that French Primes have substantial form in
giving a clear preference to their own national defence industry. For example, this
extract from a House of Commons report on the reasons why the UK abandoned a joint
endeavour (Project Horizon) to design a frigate for the UK, France and Italy:
“The enforcement of a best value for money UK-style equipment selection decision was
always going to be difficult in such a situation ... In the Horizon procurement, the position
of the DCN—part of the French Ministry of Defence—meant that it was the customer
(working with the DGA [French procurement agency]), a shareholder in the prime
contractor organisation (the IJVC) and a subcontractor bidding ... its HEPICS combat
management system. This, combined with the French Government's support for its
national champion, had a significant impact on the prospects for a level playing-field
competition.
Differences in procurement procedures between the UK and the other partners were
clearly at the very heart of the difficulties encountered with Horizon, and the other partner
countries highlighted for us the difficulty of reconciling the UK's market approach with their
own focus on work-shares. Such differences in approach were ultimately dictated by
whether the relevant defence industries in each country were privately or publicly owned.
With hindsight, it seems clear that the Italian and (in particular) the French governments
were never going to be prepared to embrace the MoD's focus on competition, value for
money and contracting for system performance. Indeed, France's DCN appears to have
had every intention of buying certain equipment from sources close to home, whatever the
requirement or the equipment competitions might have otherwise suggested.” 17
This is a highly critical assessment. The French government, represented by the State-
owned company that is now Naval Group, engaged in a joint project with the UK and
Italy but was apparently determined to prioritise the employment of French suppliers
above the objectives of competition, value for money and technical performance.
Currently, every sign is that the same approach is being followed here. Without Naval
Group being subject to competitive pressure, they hold all the cards in any negotiation
about Australian industry participation. Unless the Australian government intervenes
decisively, this will not have a happy ending. The problem is that to be successful
Australian industry needs to be involved throughout the detailed design stage. As the
SEA 1000 programme proceeds and it becomes more and more difficult for the
government to change course, Australian industry’s unease about the process continues
to grow.
The two parties involved in the negotiations clearly have divergent interests. Naturally
enough, the priority of the French government, majority owner of Naval Group, is to
maximise economic activity and employment in France as a result of the project. They
appear to be playing hardball in pursuit of this objective and are now dismissing
Australia’s industrial capability and looking to secure local content by means, for
example, of frequenting French-owned resorts in the Barossa Valley. Yet if they succeed,
that would contravene Australia’s requirement for a sovereign submarine capability.
While companies are understandably reluctant to go on the record, some highly
capable, innovative Australian firms report an ominous lack of interest in their
capabilities on the part of Naval Group. This appears not to be so much about
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
17!House!of!Commons,!Select!Committee!on!Defence,!Eighth!Report!(1999),!paras!17!and!20,!
https://publications.parliament.uk/pa/cm199899/cmselect/cmdfence/544/54402.htm!!
27!
!
Australian industry seeking protection but rather to be allowed to compete on a level

playing field. A group of Australian companies has come together to put their case to
government (Exhibit 2.3).
EXHIBIT 2.3: WHAT DO AUSTRALIAN COMPANIES IN THE SUPPLY CHAIN WANT?

The Australian Industry Capability (AIC) policy framework established by the Coalition
Government is good and has been warmly welcomed by Australian industry but lacks
teeth and rigour compared to more developed and mature policies such as the Canadian
model which has proven to be best in class.
The reality on-the-ground does not reflect the ambition of the AIC policy setting.
Foreign original equipment manufacturers (OEMs) will always default to their own
indigenous supply chains and state that time and investment to qualify for alternative
options are a major risk. Early engagement with Australian industry is key to negate
this position. A pre-qualified, credible Australian supply chain with merit is key to this
initiative.
Non-resident majority owned foreign companies must be contractually obliged to
engage Australian Industry to engineer the platforms to enable integration of Australian
industry.
Australian companies must be included in early engagement in the design and supply
chains for the development program, to ensure they will inevitably be engaged on full
rate production, through life support and sovereign capability.
Australian industry is not after a hand-out, we are after the opportunity to quote for
work on a level playing field, from the outset.
Australian industry is creative, innovative and cost-competitive - but it needs strong
Government support to access the Defence procurement programs on a fair and equal
basis.
Source: Dr John White, communication to Insight Economics.
These local firms operate in a global industry corrupted in terms of conventional

industry economics by governments and Eisenhower’s ‘military industrial complex’,
providing highly favourable trading conditions to the domestic players in their defence
industries. The French play this lucrative game particularly well, but are by no means
alone in their endeavours. Australia already has built a sovereign capability, at great
pain and cost, which is performing very well in the successful Collins class sustainment
program. It now provides world-class availability of submarines, as illustrated in the
photo on the front cover of this report (four out of six at sea). The Naval Group
proposition is by no means sufficiently compelling to abandon this essential capability.
Finally, the government needs to develop a policy for enforcing a level playing field
approach on foreign Primes in respect of AIC so that competitive Australian firms are
provided with appropriate opportunities. One model is the one used by the Canadian
government in respect of defence procurement.18 Managed through an independent
agency, the Canadian government imposes contractual obligations for local content and
engagement with a points system tied and weighted to sovereign capability. If Australia
followed that model, it could, for example, in each major naval acquisition project,
mandate an expenditure level in Australia of say 70 per cent of the value of the contract.
If local firms were unable to offer the full 70 per cent at a competitive cost, the Prime
would be free to meet the target in another way. For example, the Prime could bring the
most efficient local firms into their global supply chains or purchase Australian defence
products unrelated to the particular acquisition, such as CEA radars or PMB batteries.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
18!See!http://www.ic.gc.ca/eic/site/086.nsf/eng/00006.html#itbpolicy $!
28!
!
Access to intellectual property
The inadequacy of Australian rights to relevant IP was a thorn in the side of Collins
class sustainment for a very long time. The failure to negotiate appropriate IP protocols
in the first place was a result of Australia’s lack of experience in acquiring major
complex platforms for which it had parent nation responsibility. It has now learned that
lesson. Appropriate rights to IP are vital in terms of both sustaining the submarines and
undertaking upgrades.
As with local content, IP protocols would generally have been included in the SPA. But if
so, we do not know whether an outcome satisfactory to Australia was achieved.
It is clearly in the interests of the French to maximise the value of their IP. If Naval
Group play hardball, in the absence of competitive pressure it is difficult to see how
Defence will be able to negotiate an acceptable outcome that also protects Australian
proprietary IP.
2.4 Technical risks
Although flagged as a ‘regionally superior’ submarine, even compared to other

conventional submarines the Attack class may not embody advanced technologies. As
ASPI’s Marcus Hellyer has pointed out: “even though the schedule seems to be
extremely long compared to other conventional submarine projects, Defence has said
that the project is adopting a low-risk approach to key technology, so only currently
existing technologies will be used in the first batch. Therefore, Defence has said it will
still use traditional lead-acid rather than higher density lithium-ion batteries, despite
the latter being used on a recently launched Japanese submarine.”19 With the German
navy also now trialling Li-Ion technology in a Type 212 submarine, there is a clear
tension here between reducing risk in the design and construction of the submarine and
the need to minimise operational risks and increase survivability. In many ways, the
adoption of a conservative approach to new technology carries a significant risk of its
own in that when the early Attack class submarines first go to sea in 15 years time, they
may in some respects be obsolescent.
In addition, although Defence has suggested that the Attack class may deploy AIP, the
current presumption is that, because of the weight penalty, it will not. This is a
controversial decision. While incorporating AIP may lead to penalties in terms of the
speed of advance (SOA) while in transit, it also provides substantial advantages in terms
of both effectiveness and survivability, particularly in a highly contested operating
environment. Although AIP is valuable mainly while on patrol, it can also be of value in
transits that are contested or while passing through areas where counterforce
interdiction is more likely, such as the choke points in the Indonesian archipelago.
Defence also seems determined to fit the submarines with pump-jet propulsion, which
can provide some signature advantages and is increasingly used on nuclear submarines.
If a fundamental reason Defence selected the French offering was the acoustically
superior performance (under certain scenarios) of its pump-jet system, they may not
have understood the possible downside of their choice. An obviously well informed
article by Cameron Stewart suggests that superior stealth in a particular tactical
scenario (possibly the need to break contact at high speed when detected) favoured the
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
19!Hellyer,!Marcus!(2019),!op.&cit.,!page!77.!
29!
!
DCNS pre-concept design. According to Stewart, the Germans were told their design
would have an unacceptable level of radiated noise on a particular frequency. The use of
pump-jets combined with an electric drive system rather than turbines arguably give
French nuclear submarines an acoustic advantage over those from other countries.
Again according to Stewart, DCNS presented to the Defence team an impressive
demonstration of the superior acoustic performance of a French nuclear submarine with
propulsors compared to a submarine with propellers.20
When the decision in favour of the French submarine was announced, DCNS declared
propellers on submarines to be “obsolete”. This was presented as a breakthrough
technology on the Shortfin Barracuda. On the DCNS website at the time, it was stated
that:
Pump jet propulsion means the Shortfin Barracuda can move more quietly than
submarines with obsolete propeller technology. In a confrontation between two
otherwise identical submarines, the one with pump jet propulsion always has the
tactical advantage.”
The problem with this is that despite some experiments in the past using pump-jets on
Russian and French conventional submarines, the downside is that a pump-jet
propulsor is more power-hungry than a propeller, at low speeds significantly so. While
this has no downside for a power-rich nuclear submarine and can even be a benefit, it is
a critical issue on a conventional submarine with restricted power supplies. Other
things being equal, pump-jets will increase the indiscretion ratio, perhaps considerably,
as well as reducing range.
Submarines for Australia has supported research in this area by Aidan Morrison, a
physicist with expertise in marine propulsion systems. Morrison stated that:
Unless the French have achieved a quantum leap in pump-jet technologies in the
past few years and none of the previous physics or experimental results apply, it
seems that the choice of a pump jet is curious indeed. Exactly what kind of
advantage would justify accepting such a penalty in terms of dived range, dived
endurance, indiscretion ratio and overall range is quite hard to imagine when
building a ‘regionally superior’ submarine.21
Despite numerous examples in Senate committee hearings of ongoing support by

Defence for pump-jets, we believe there are substantial concerns about using them on a
conventional submarine with limited power resources. In October 2017, a very senior
executive in Naval Group said that the Attack class might use a propeller, only to be
instantly refuted by Defence where RADM Sammut stated that they wanted the pump-
jet system demonstrated to them by the French during the CEP process. He also
claimed that pump-jets could be more efficient through the whole speed range, which is
quite contrary to our sponsored research. But as Hellyer recently pointed out, “Defence
also has not been able to provide a compelling plain English explanation to counter the
arguments of some analysts who have suggested that expecting a conventionally
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
20!Stewart,!Cameron!(2016),!“The!sound!of!silence!–!why!Germany!lost!its!subs!bid”,!The&Australian,!30!May,!
https://www.theaustralian.com.au/nation/defence/theGsoundGofGsilenceGGwhyGgermanyGlostGitsGsubsG
bid/newsGstory/4b3d69b49a8371e9837ed59e4f0faac2!!
21!Morrison,!Aidan!(2018G2),!“A!pump!jet!for!the!future!submarine?!Not!so!fast!(or!slow)”,!The&Strategist,!14!February,!
https://www.aspistrategist.org.au/pumpjetGfutureGsubmarineGnotGfastGslow/!
30!
!
powered submarine to perform better with a pump-jet than with a traditional propeller
defies the laws of physics”.22
With the Attack class presently being designed for lead acid batteries and no AIP, the
use of pump-jets could convert an already uncompetitive indiscretion ratio to one that
constitutes a threat to both operational effectiveness and survivability. Ultimately,
probably following land-based testing, this may well be understood and the design will
need to be changed so as to accommodate a propeller. But because of weight
distribution issues, this will be no easy task, possibly requiring changes amounting to
one third of the submarine’s design. The risk here is that the already lengthy delivery
schedule for the Attack class will be further delayed, possibly significantly, and
depending on contractual arrangements, the cost may well increase.
If all three of these issues – lead acid batteries, no AIP and pump-jet propulsors – play
out as presently appears likely, the Attack class will have an indiscretion ratio that is
likely to be no better than that of Collins and may be worse. It will also be higher than
most submarines operating in the Asia-Pacific in the 2030s, which will either be nuclear
powered or, if not, will incorporate AIP and/or modern batteries.
ASPI’s Marcus Hellyer also raises the question of “how the design is being ‘future-
proofed in order to adopt emergent technologies and capabilities, such as unmanned
and autonomous systems, that are likely to mature before 2035 … does the future
submarine’s low-risk approach to technology, while good for project management, push
risk into the resulting capability delivered by the submarines?”23 We understand, for
example, that the Attack class design will only be able to launch small autonomous
underwater vehicles (AUV), limited to the size of its torpedo tubes and the cavity
between the pressure hull and the outer skin. Indeed, one former Collins class
commanding officer told Insight Economics that if the Attack class does not at least
embody modern batteries, the first submarine “will be obsolete before it hits the water”.
Incorporating major new technology into the Attack class, such as new battery
technology that would probably significantly alter the submarine’s balance, will take a
significant amount of time. How much time will depend on many factors, such as the
maturity level of the new technology to be incorporated and therefore how much
research and development work is needed to bring it to readiness for service. Also, the
more the new technology impacts the original design, especially the overall weight
balance and margins (space, weight, reserve buoyancy, power, and cooling) the longer it
will take to do the necessary design work and the greater the cost and schedule
implications will be.
In practical terms, even if we started preparing significant changes to the Attack design
immediately, those changes would probably not be delivered in a new submarine until
well into the 2030s – Attack class submarine number three, four or possibly even five.
Defence has given no indication that any such capability and design development
process is underway or even yet contemplated. It seems likely, therefore, that obsolete
battery technology is already locked into the first flight of the Attack class.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
22!Hellyer,!Marcus!(2019),!op.&cit.,!Footnote!99.!
23!Hellyer,!Marcus!(2019),!op.&cit.,!page!77.!
31!
!
In conclusion, these risks are significant and generally reflect choices made by Defence.
The introduction of contestability could have a beneficial effect on the technological
choices made in the course of the acquisition program. As a Senate committee noted:
This reluctance of overseas countries to relinquish their most advanced technology
means that Australia needs to apply competitive pressure to ensure that it is best
placed to obtain the cutting edge technology it is seeking to acquire. Again this need to
test and encourage designers and builders to devise the best option for the future
submarine is another compelling reason for having a competitive tender.24
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
24!The!Senate!Economic!References!Committee!(2014),!Future&of&Australia’s&naval&shipbuilding&industry:&Future&
submarines,&November,!page!42.!
32!
!
Chapter 3
Will the Attack class be fit for purpose?
In Chapter 1 we suggested that the main criterion for success under the CEP was the
ability to propose an advanced capability – namely a ‘regionally superior’ submarine.
We don’t know what that means. How can a SSK of any type claim a superior capability
‘up threat’ in the Indo Pacific when it will be operating in the same battlespace as
nuclear-powered submarines from at least four other countries? How can the Attack
class be superior to other SSKs when it is unlikely to deploy either AIP or, at this stage,
modern, energy dense batteries?
Perhaps what Defence means by ‘regionally superior’ is the ability to do what other
conventional submarines generally do not attempt to do. Unlike other SSKs, Australia’s
submarines undertake 70-day operations with very long transits conducted at a
challengingly high SOA. They then undertake patrols in AOs where the operational and
tactical intensity is of the very highest order and where the opposition is growing, both
absolutely and relatively, in power and capability by the month.
But the important question is not whether the Attack class will be regionally superior. It
is whether, in terms both of effectiveness and survivability, it will be fit for the purpose
for which it is being designed, not now but in the 2030s and beyond.
3.1 What do Australian submarines do?
The primary operational requirement for the RAN Submarine Force is to undertake
anti-submarine warfare (ASW) in wartime and intelligence gathering, surveillance and
reconnaissance (ISR) more generally. As discussed below, this involves them operating
in high intensity areas ‘up threat’. These are inherently risky operations even in
peacetime. The key question addressed in this Chapter is whether the Attack class is
likely to be fit for this purpose when it begins to come on stream in the mid-2030s. In
order to evaluate this issue, we need to understand, in some detail, the nature of the
operations our submarines undertake and how those operations may need to change
over time as the strategic circumstances change and new technologies are developed
that disrupt existing operational and tactical doctrine.
This requires considerable research. Both the Australian and the British defence
departments have a longstanding policy of not commenting on submarine operations.
ADF officers are also commendably scrupulous about not revealing classified
information. The Americans, however, are generally more open about military
operations. As Chris Uhlmann wrote recently, “ask any journalist working in a theatre
where the US and Australian forces are working together and they will attest to the fact
that the fastest way to find out what the Australians are up to is to ask the Americans.”25
We didn’t ask any Americans but we did look at the Internet, which provides a rich
source of authoritative material on US military operations. The Commander of the US
Submarine Force, for example, periodically publishes a statement of his intent,
including how the Force works with allied submarines in their main areas of operations.
In addition, since the break-up of the Soviet Union, a great deal of material has been
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
25!Uhlmann,!Chris!(2019),!“We!Australians!are!wowsers”,!The&Age,!14!August,!page!19.!
33!
!
published about NATO submarine operations in the north Atlantic during the Cold War.
Much of this doctrine remains the same today in other theatres, although advances in
technology have had a considerable impact on its likely effectiveness
These insights provide valuable pointers as to how submarine operations are currently
developing in the South China Sea. Indeed, as the 2016 Defence White Paper made clear
the ADF’s force structure is increasingly designed to undertake operations in close
liaison with US forces or, as the Minister put it in a recent speech, “operating in high
threat environments with coalition partners”.26 Our research suggests that this is a good
summation of the role of the RAN’s Submarine Force, both currently with the Collins
class and what is planned for the future with the Attack class submarines.
3.2 Submarine operations ‘up threat’ in the Indo Pacific
Under RAN doctrine, submarines should be employed in an offensive role where their
covert qualities and, particularly for a middle power, their value as a force multiplier
can be used to greatest effect in prosecuting asymmetric warfare. Since submarines are
difficult to detect both in the commons of the open ocean and around the multitude of
target zones where they may loiter, ASW (and, in practice, ISR) operations are most
effective when undertaken close to an adversary’s base. These doctrinal points suggest
that Australian submarines operate ‘up threat’ in the waters far to our north. Indeed,
various Parliamentary inquiries have been given evidence that the main area of
operations (AO) for our submarines is up to 3,500 nautical miles from Fleet Base West
at Fremantle.
Although Defence is not specific, it is clear that the main AO for RAN submarines is in
the South China Sea. The PLA Navy (PLAN) has a major base at Hainan Island, where
its submarines are able to emerge and return to base covertly via a tunnel. As a former
commander of the Submarine Force, Rear Admiral RAN (retired) Peter Briggs, stated in
2014:
Our submarine force must be capable of operating and surviving north of the
archipelago, throughout the South China Sea, able to observe, report and if
necessary strike. … This is the high payoff area, where their impact is greatest
and unique amongst ADF assets. To be able to exploit the initiative gained from
their stealth, Australia’s submarines must be able to covertly reach sensitive
areas throughout our region with sufficient mobility, endurance and payload for
the long duration missions involved, frequently in or through demanding tropical
waters. … Without being specific about the scenario, it’s therefore likely that
Australia will wish to be capable of maintaining a deterrent submarine presence at
very long ranges, say 3,500 nm.27
In peacetime, the principal AO for the submarine force remains the same, up threat in
the South China Sea, with the emphasis being on ISR. This has been an important role
for the submarine force and one that, as well as producing intelligence for the ADF, also
provides Australia with valuable ‘coin’ in the Five Eyes intelligence network.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
26!Reynolds,!Senator!the!Hon!Linda!(2019),!address!to!the!RAN!Sea!Power!Conference,!Sydney,!8!October,!
https://www.minister.defence.gov.au/minister/lreynolds/speeches/royalGaustralianGnavyGseaGpowerG
conferenceGinternationalGconvention!
27!Briggs,!Peter!(2014),!“How!many!submarines?!(Part!1)”,!The&Strategist,!8!January,!
https://www.aspistrategist.org.au/howGmanyGsubmarinesGpartG1/!
!
34!
!
It would be idle to pretend that RAN submarines will operate alone in this theatre. As
the Defence Minister said in October 2019, “by 2035 we expect around 300 submarines
to be active in our region.”28 Indeed, the South China Sea has now become centre stage
for the strategic contest between the military forces of the United States and China. The
media reports, however, focus almost exclusively on the deployments on and above the
surface of the South China Sea. Here the contest is highly visible. China’s strategy
appears clear: it regards the South China Sea as its Mare Nostrum, to be militarised so
as to be able to enforce a strategy of anti-access and area denial (A2/AD) directed
particularly towards the US Navy. The militarisation of the disputed reefs and islands
with air bases and batteries of advanced anti-ship missiles, including DF-21Ds and DF-
26Bs, the so-called ‘carrier killer’ ballistic missiles, plays an important role in this
A2/AD strategy.
The US strategy, on the other hand, is to contest these initiatives, some of which have
no basis in international law. As well as conducting freedom of navigation operations
(FONOPS) within China’s newly claimed territorial waters in the disputed island chain,
the US Navy is unlikely to be fundamentally deterred by vulnerable PLA military
installations located a very long way from major bases on the mainland. The USN
maintains its powerful and highly visible Seventh Fleet in this theatre, operating out of
Guam. Indeed, it was the deployment of two American carrier battle groups in 1996 that
led to China backing down from its moves against Taiwan at that time. It is worthy of
note, however, that it is over a decade since a US aircraft carrier was deployed to the
Taiwan Strait.
Underwater contest in the South China Sea
But it is likely that the main arena where the contest in the South China Sea plays out is
not in the surface or above surface domains. To be sure, tension will be heightened
there from time to time by FONOPS or by some other interaction between opposing
forces, perhaps over competing territorial claims. But the history of the Cold War in the
northern hemisphere suggests that the main contest will be played out in the undersea
domain. Submarines, particularly nuclear-powered submarines, are now the capital
ships of great power navies and this is the theatre where they can be deployed to
greatest strategic effect.
The US Navy has developed its ASW doctrine over a long period during the Cold War as
a consequence of high intensity operations to counter the threat from the then Soviet
Union’s powerful submarine force in the north Atlantic. The details of the strategic
contest in the north Atlantic during the Cold War were largely declassified in the 1990s
and extensive material is now available on how NATO submarines (principally
American and British SSNs) operated in what was a grey zone positioned somewhere
between a cold and a hot war.29
During the Cold War, a major strategic objective of US forces was to locate the position
of every Soviet submarine in real time. As the Soviets developed a credible second-strike
capability, based on submarine launched ballistic missiles (SLBM), the particular focus
was to detect and track every Soviet ballistic missile submarine (SSBN). One objective
early on was to confine the SSBNs to defensive ‘coastal bastions’, where their ballistic
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
28!Reynolds,!Senator!the!Hon!Linda!(2019),!op.!cit.!
29!For!a!comprehensive!description!of!submarine!operations!in!the!north!Atlantic!during!the!Cold!War!see!
Hennessy,!Peter!and!James!Links!(2015),!The&Silent&Deep,!Penguin!Books,!London,!2016.!
35!
!
missiles would be out of range of the continental United States. Later, as the range of
Soviet SLBMs increased, the objective was to detect the Soviet SSBNs when they set out
on patrol and then track them closely so as to be able to eliminate them immediately at
the outset of any war. So successful were the NATO forces that increasingly desperate
Soviet countermeasures were said to reflect the Soviet High Command’s realisation at
one point that American and British submarines “could sink Soviet ballistic missile
submarines at will in the northern Atlantic and Pacific seas”.30
This objective was pursued assiduously by NATO using a multi-layered approach to
detection, including human intelligence (HUMINT), signals intelligence (SIGINT),
satellites (to detect sub-surface anomalies), maritime patrol aircraft (MPA), helicopters
with advanced radar and sonobuoys, surface ships with towed arrays and onboard sonar
and, not least, submarines, also with towed arrays and other sensors. As a vital
backdrop to all these assets, the Americans installed extensive seabed arrays of passive
sensors (SOSUS) in parts of both the Atlantic and Pacific oceans. Dating from 1954,
SOSUS is now part of the Integrated Undersea Surveillance System (IUSS). The IUSS
was constantly upgraded over time and incorporated data generated not only by
submarines but by many other layers in the network, including satellites; MPA,
helicopters; towed array and shipboard sonars on surface ships; and sonobuoys.
This complex system all required the development of a highly advanced and very costly
Command, Control, Communications and Intelligence (C3I) network to share
information in real time and to ‘cue’ allied assets onto tracking the adversary’s
submarines and high value surface ships. “At its cold war peak, SOSUS employed
around 4,000 personnel working at 20 shore stations.”31 The Americans also needed to
know the position of allied submarines and so a sophisticated system of water space
management was created within the C3I network. Each NATO submarine was given a
course to its AO and was required to keep within a virtual ‘box’ so that other assets knew
where it was at any time. If the submarine could not keep within its box, perhaps
because of mechanical problems or interdiction, it needed to notify the controller and
the progress of the box was changed. When a Soviet submarine was detected, its
coordinates were reported to the controller who cued other assets, or the asset that
detected it, onto tracking the submarine and maintaining contact.
With the rise of China, the Americans have focussed much more on submarine
detection in the Indo Pacific and have transferred their ASW priorities from the north
Atlantic to the Pacific (while still maintaining a close weather eye on Russian submarine
activity). In 2005, the Pentagon announced that 60 per cent of USN submarines would
be deployed to Asia (a very substantial shift).32 In terms of doctrine, it seems clear that
successful American ASW tactics, developed and proven during the Cold War, have
been transferred to the Indo Pacific. The very sophisticated and expensive
infrastructure that underpinned these operations in the Atlantic now operates in that
theatre. Technology has moved on substantially in the last 30 years, however, with the
enormous increase in computing power allowing a mountain of complex data generated
by the IUSS to be processed in real time. Existing systems like the Surveillance Towed
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
30!Hennessy,!Peter!and!James!Links!(2015),!The&Silent&Deep,!op.&cit.,!page!552.!
31!Save&the&Royal&Navy,!“Listening!to!the!oceans!–!the!secretive!enablers!in!the!underwater!battle”,!page!2,!
https://www.savetheroyalnavy.org/listeningGtoGtheGoceanGtheGsecretiveGenablersGinGtheGunderwaterGbattle/!
32!Ross,!Robert!(2012).!"The!Problem!with!the!Pivot:!Obama's!New!Asia!Policy!Is!Unnecessary!and!
Counterproductive".!Foreign&Affairs.!91(6):!70–82.!
36!
!
Array Sensor System (SURTASS) have also been complemented by new technologies
such as the Deep Reliable Acoustic Path Exploitation System (DRAPES):
As China and Russia have asserted themselves anew as “pacing competitors,” as
described by Undersecretary of Defense Robert Work, the U.S. Navy has taken a
renewed interest in its traditional Cold War antisubmarine warfare mission.
Together, DRAPES and SURTASS promise to provide a persistent, long-range
ability to detect adversary submarines around the globe. Using cueing data from
those platforms, improved local anti-submarine assets like the P-8 Poseidon sub
hunter aircraft (which replaces the 50 year-old P-3 Orion) and surface
combatants with new, improved towed sonar arrays of their own, like the Multi-
Function Towed Array, can then close on a target, and track or engage it as
needed.33
SURTASS ships are generally crewed by civilian mariners. “Following the ‘Asia Pivot’,
SURTASS vessels now operate mainly around the Chinese coast and the western Pacific,
but the USN is also in the process of fitting all its destroyers and cruisers with a new
Multi-Function Towed Array sonar system.”34 In a pivot away from a primary focus on
terrorism and the littoral back to blue water great power conflicts, it has also revived the
production of the Arleigh Bourke destroyers (all being fitted with towed array sonar)
and is in the process of procuring a new class of large frigates with a focus on ASW.
The task of American submarines in their various theatres was set out clearly by the
force commander in March 2018:
The main role of our Submarine Force is to hold the adversary’s strategic assets
at risk from the undersea, the same list we want to protect: their homeland,
SSBNs on patrol, carriers, critical undersea infrastructure, cyberspace, strategic
ports and chokepoints, and submarines.35
In pursuing these objectives, the Submarine Force will:

• “Conduct undetected operations such as strategic deterrent patrols,
intelligence collection, Special Operations Forces support, non-provocative
transits, and repositioning
• Penetrate adversary defensive perimeters to deny safe haven, reduce
defenses, and exploit opportunities created by being inside their fence
line.”36
We can reasonably assume that this is the current strategy being pursued by the US
Submarine Force in the South China Sea. The emphasis on ‘SSBNs on patrol’ is
significant. Until recently, the PLA has not possessed a credible second strike nuclear
capability, leaving open the theoretical possibility that the US could apply nuclear
blackmail in any crisis between the two nations. Now it appears China is deploying
operational SSBNs, each armed with 12 submarine-launched ballistic missiles (SLBMs)
with multiple independent re-entry vehicles. “In its most explicit assessment so far of
this Chinese capability, the Pentagon in its latest annual report on China’s military,
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
33
Stashwick,!Steven!(2016),!“US!Navy!Upgrading!Undersea!SubGDetecting!Sensor!Network”,!The&Diplomat,!
November,!https://thediplomat.com/2016/11/usGnavyGupgradingGunderseaGsubGdetectingGsensorGnetwork/!
34!Save&the&Royal&Navy,&op.&cit.,!page!3.!
35!Commander’s&Intent&for&the&United&States&Submarine&Force&and&Supporting&Organisations,&March!2018,!,!
https://www.public.navy.mil/subfor/hq/Documents/Commanders%20Intent%20March%202018.pdf.!pages!
1G2!
36!Ibid,!page!4.!
37!
!
published in August [2018], said that Beijing now has a “credible” and “viable” sea-
based nuclear deterrent.”37
This is a game changer in the Asia Pacific. When the PLA Navy’s bomber submarines
are fully operational, which may occur in the next couple of years, the doctrine of
mutual assured destruction will apply and America will lose its theoretical ability to
blackmail China with the threat of a first strike nuclear attack. If the American strategy
is the same as that pursued against the Soviet SSBNs, the US will aim to locate and track
every PLA Navy bomber submarine with the objective of eliminating the adversary’s
SSBNs immediately if war were to break out.38
While the US may have a well-developed strategy for prosecuting the contest with the
PLA in the subsea environment in the South China Sea, its operational capacity to do so
is less clear. The ratio of US military resources, particularly submarines, relative to
those ranged against it has become less advantageous:
The demands on the United States Submarine Force and supporting
organizations continue to grow at an unprecedented rate. The threat continues
to evolve and expand rapidly in at least three world regions, each posing
substantially different operational demands for both high-end warfighting and
peacetime operations. As a result of decisions made many years ago, the
number of [USN] submarines has begun a long sustained reduction that will
increase these demands on each ship and crew.39
EXHIBIT 3.1: PROJECTED FLEET OF US NAVY ATTACK SUBMARINES
Source: Colley, Christopher K. (2019), “Is America Now Directly Arming Against China?”, The Diplomat, 2
August, https://thediplomat.com/2019/08/is-america-now-directly-arming-against-china/
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
37!Torode,!Greg!and!David!Lague!(2019),!“China’s!furtive!fleet!of!missileGladen!submarines!tests!the!Pentagon”,!
Japan&Times,&May,!https://www.japantimes.co.jp/news/2019/05/07/asiaGpacific/chinasGfurtiveGfleetGnuclearG
missileGladenGsubmarinesGtestsGpentagon/#.XS9H2K2B2Rs!!
38!CarnegieGTsinghua!(2018),!“The!survivability!of!China’s!SSBNs!and!strategic!stability”,!24!October,!
https://carnegietsinghua.org/2018/10/24/survivabilityGofGchinaGsGssbnsGandGstrategicGstabilityGpubG77494!!
39!Commander’s&Intent&for&the&United&States&Submarine&Force,!op.&cit.,!pages!1–2.!
38!
!
The scheduled decline in US submarine numbers is significant. From a high point of 98

SSNs in 1987, the fleet declined to 51 at end-2018 and, with the retirement of the Los
Angeles class will fall to a low point of 42 in 2028. From there, new construction of
Virginia class boats, which is currently under way at a higher rate of two per year, will
see an increase to 56 submarines in 2036 (Figure 3.1).
In order to maximise their deployed submarine capability in a period where the number
of submarine platforms in the US fleet is declining, it makes very good sense for the
Americans to engage to the fullest extent possible the submarine forces of trusted allies
such as Britain and, in our region, Australia and Japan. In the words of the US
Submarine Force Commander: ‘We also integrate with our U.S., partner, and allied
Navy undersea forces – including ASW aircraft and ships – that have vital undersea
warfare roles.’40 In fact, one of his objectives as stated in March 2018 was to “formalize
US/Japan/Australia TASW [theatre anti-submarine warfare] initiatives”.41
It seems clear from this US statement, therefore, that when on patrol in their principal
AO, Australia’s Collins class submarines operate in liaison with American submarines
and other assets. Indeed, in practical terms it would be impossible for Australian
submarines to operate effectively in that theatre without being part of a much larger,
multi-layered force or without access to the highly sophisticated American IUSS and
C3I networks. In order for the controller to know their position, they would also need to
operate within the American water space management system, including when in
transit. It is no coincidence that the AN/BYG-1 combat management system and
associated communications suite installed in the Collins class (and specified for the
Attack class) are nearly identical to those employed on American nuclear submarines.
The jointly developed Mk48 CBASS torpedo is the primary ASW weapon in both
nations’ submarine armoury.
These operations are occurring in a situation where the level of intensity has increased
significantly since the 2016 DWP. As a senior ADF officer is reported to have said
recently, the waters where the ADF operates are becoming “more congested and more
contested”.42 With 300 submarines, many more of them nuclear-powered, projected to
be operating in these waters when the Attack class starts to come on stream in the mid
2030s, and with the PLA Navy increasing its capacity to enforce an A2/AD strategy, we
can expect the intensity of these operations to continue to increase.
In examining whether the Attack class will be fit for purpose in these highly challenging
operations up threat, we need to analyse the issue in terms of the capability it will offer
in strategic, operational and tactical terms. This is addressed below.
3.3 Strategic capability requirement for the Attack class
As the only significant power projection capability in the ADF’s order of battle, the RAN
Submarine Force plays an important strategic role in Australia’s defence. Because of the
covert nature of their operations and the power embodied principally in their Mk 48
CBASS torpedoes, Australian submarines have the potential to conduct asymmetric
warfare successfully against a much stronger adversary. Ideally, this could offer a
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
40!Ibid,!pages!1G2.!
41!Ibid,!page!9.!
42!Quoted!in!Tillett,!Andrew!(2019),!“China!puts!a!rocket!up!our!defence!dollar!challenge”,!Australian&Financial&
Review,!5!October,!page!47.!
39!
!
considerable deterrent effect and can provide Australia with the military capability to
punch above our weight. But in analysing the strategic value of this capability, we need
to be cognisant of the current and future relative weight between the RAN and the PLA
Navy.
In strategic terms, while the Collins class submarines are effective SSKs, Australia does
not possess a sufficiently powerful submarine force to deter the armed forces of a great
power, particularly one whose naval capability is developing very quickly. At least in
terms of the number of naval platforms, the PLA Navy is now larger than the US Navy
and it is building warships and submarines at a much more rapid rate. Despite
patronising remarks from some observers in the US and British navies, it would also be
foolish to underestimate the level of technology embodied in the PLA Navy’s latest
assets or the professionalism of its crews. In the words of the commander of the US
Submarine Force, “China is aggressively pursuing the most capable and well-funded
military in the world, after our own”.43 As one RAN Admiral told us: “Make no mistake.
They are mariners.”
Australia uses its submarines differently from other nations that operate conventionally
powered boats. No country other than Australia requires diesel-electric submarines to
undertake high intensity missions 3,500 nautical miles from base. While 70-day
operations are the established standard for RAN submarines, European submarines,
generally with air-independent propulsion, undertake much shorter missions, dived
throughout and without needing to snort. Japan’s Soryu submarines are understood
mainly to undertake two-week missions also dived throughout.
The major strategic problem for Australian conventional submarines is the long
transits, undertaken dived throughout, where the submarines are expected to achieve a
high average SOA of around ten knots. This requires frequent snorting, which together
with the high SOA can take its toll on both machinery and personnel. While this SOA
may have been readily achievable for the Oberons, which undertook transits on the
surface, it is far more difficult for a modern SSK operating dived throughout. With
adverse currents in some choke points and high temperatures in tropical waters, as well
as the possibility of being interdicted en route, overall transit times can blow out to
nearly 40 days, equivalent to half of the operation.
The relatively short time available for patrolling on station, a clear result of the tyranny
of distance, is a major contributor to the main strategic problem confronted by
Australia’s current six-boat Submarine Force.44 Submarine availability is now at least
consistent with world best practice, with four submarines available and three
operational at any time. Yet both because of the very long transits and the RAN’s
workplace agreements, in peacetime only one submarine can be on station in its AO for
around half the time in any year. By doubling the size of the Force to 12 submarines
with the new Attack class, this will allow one submarine to be operating on station at
any time. But this will not occur until the 2050s, over thirty years from now, when both
the strategic situation may be very different from what it is today and there will
inevitably have been profound and unforseen developments in technology. In addition,
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
43!Commander’s&Intent&for&the&United&States&Submarine&Force,!op.&cit.,!pages!1–2.!
44!There!are,!of!course,!offsetting!benefits!of!the!tyranny!of!distance!in!that!it!makes!an!invasion!of!Australia!a!
very!difficult!proposition!for!any!aggressor.!
40!
!
in 30 years time the power of the PLA Navy relative to the RAN will likely be much
greater than it is now.
Of course, the Navy’s workplace policies would change in an emergency so as to allow a
‘surge’ in submarine numbers to the AO. But it would still be several weeks, perhaps
months, before at least two submarines could be guaranteed to be on station at any
time. This also takes no account of attrition.
The length of RAN submarines’ transits means that the deployed capability, in terms of
time spent on patrol in the AO, is lacking and its deterrent effect must consequently be
relatively low. Even with 12 submarines, the value of maintaining one submarine on
patrol in its AO at any time must be assessed in terms of the opposing force that
confronts it. One conventional submarine is very unlikely to deter a PLA Navy that will
have well over 100 submarines, many of them nuclear powered, when HMAS Attack
makes its first patrol. Another very important consideration is that as currently
conceived without modern batteries or AIP, far from being ‘regionally superior’, the
Attack class will not be a state-of-the-art conventional submarine in that its indiscretion
ratio will make it more vulnerable when operating in a heavily congested and contested
battle space. 45 This again reduces the deterrent effect, since the PLA will fancy its
chances of eliminating any Australian submarine that seeks to breach its ‘underwater
Great Wall’ in the South China Sea. Of course the Attack class could be designed to
incorporate AIP. While this would bring a significant benefit in terms of underwater
endurance and stealth while on patrol, the AIP system could be used only for a quarter
of an 70-day patrol. The value of AIP, therefore, needs to be balanced against the
addition of considerable weight that, other things being equal, would further increase
transit times and thereby reduce patrol time on station.
Aside from the fact that the intention is eventually to acquire twice as many of them as
Collins, it is not clear that the Attack class will provide a more credible deterrent than
currently exists. By the time that the Submarine Force has doubled in size in the 2050s,
the opposing forces will have much more than doubled. It is difficult to see that the
Attacks will enjoy shorter transit times than Collins and therefore their patrols will be
similarly limited. One conventional submarine on station will not be a credible force in
the 2030s when, according to the Minister, it will be contesting the theatre with 300
0ther submarines. The PLA Navy is forecast to have 100 submarines by 2030, but this
may well be conservative. A new facility to construct nuclear powered submarines has
just been completed at Hainan Island and, once the PLA Navy is happy with the design,
we can expect to see new SSNs and SSBNs coming off the production line at a rapid
drumbeat. The quality of PLA Navy SSNs can be expected to improve significantly,
particularly now that the relationship between China and Russia has become closer in
terms of sharing military technologies.
3.4 Operational and tactical capability requirements
With its fleet of diesel-electric submarines, Australia brings a different capability to the
allied multi-layered force in the South China Sea and one that provides a complement to
the American SSNs. Advanced SSKs like the Collins class have some advantage in terms
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
45!A!submarine’s!indiscretion!ratio!refers!to!the!time!it!spends!‘snorting’,!or!running!its!diesel!generators!at!
periscope!depth!in!order!to!recharge!its!batteries.!A!submarine!is!far!more!vulnerable!to!detection!when!
snorting.!RAN!submarines!have!a!high!indiscretion!ratio!in!transit!because!of!their!rapid!SOA.!
41!
!
of stealth and, being less than half the size of a US Virginia class submarine, have a
more modest physical footprint. Other things being equal, they are generally more
difficult than SSNs to detect by passive sensors such as seabed hydrophones and towed
arrays, particularly when operating at low speed, although modern SSNs are much
quieter than earlier models and are closing the gap with SSKs in terms of stealth.
Nevertheless, a smaller SSK is still probably better suited to operate in the shallower
waters of the littoral than the large American submarines.
Given our broad understanding of the role of Australian submarines play in liaison with
the US Navy in the South China Sea – with a focus on ASW and ISR missions – how
well suited in terms of operational and tactical capability will the Attack class be in
prosecuting this task?
Counterforce ASW capability46
Any task such as intelligence gathering or detecting submarines in the South China Sea
will increasingly pose a significant challenge to Australian submarines because of the
rapid developments in ASW technologies and the increase in the PLA’s investment in
this capability. Once they reach their AO in the South China Sea, RAN submarines will
be operating in the most heavily contested, high intensity subsea environment in the
world. China’s strategy of seeking to enforce A2/AD on and above the surface of the
South and East China Seas, with the militarisation of disputed islands and the
installation of advanced anti-shipping missile batteries, is now being matched in the
sub-surface domain.
Only recently, the PLA’s capability in ASW was rated as relatively poor. To some degree,
this may have allowed some complacency to develop on the part of allied submarines
operating in the South and East China Seas. But it would be remiss for a nation to
design a new submarine capability to be deployed in 2036-2050 on the basis of an
assessment of inferior ASW capability on the part of the adversary at this point in time.
ASW capability is now an evident priority for the PLA and appears to be developing
rapidly. The Chinese media highlights the development of an ‘Underwater Great Wall’
in the South China Sea aimed at denying access to allied submarines. Seabed sensors
are being installed, along the lines of the American SOSUS network.
Having developed advanced technological solutions to submarine detection, new large
destroyers and frigates, together with small corvettes, all equipped with advanced ‘two-
tailed’ sonars, including linear towed-arrays (TASS) and towed variable depth sonar
(VDS) as well as hull mounted sonar, are joining the fleet at a rapid drumbeat.
Deploying two-tailed sonars on small corvettes (1,500 tonnes) is innovative as the ships
can be turned out in quantity and absorb a higher degree of attrition with less impact on
overall capability.47 The large platforms deploy new heavy helicopters, one model
apparently reverse engineered from the American M-60 Seahawk, with chin radars
optimised for detecting snort masts at ranges up to 35 nautical miles. In terms of anti-
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
46!The!information!in!this!section!is!sourced!primarily!from:!Joe,!Rick!(2018a),!“The!Chinese!Navy’s!growing!
antiGsubmarine!warfare!capabilities”,!The&Diplomat,!September!12,!https://thediplomat.com/2018/09/theG
chineseGsurfaceGfleetsGgrowingGantiGsubmarineGwarfareGcapabilities/,!and:!Joe,!Rick!(2018b),!“Chinese!antiG
submarine!warfare:!aviation!platforms,!strategy!and!doctrine”,!The&Diplomat,!October!16,!
https://thediplomat.com/2018/10/chineseGantiGsubmarineGwarfareGaviationGplatformsGstrategyGandG
doctrine/!!!
47!Australia!has!chosen!a!different!philosophy!by!focussing!its!ASW!capability!in!the!surface!fleet!on!a!smaller!
number!of!large!(7,000!tonnes)!and!very!expensive!Type!26!frigates.!
42!
!
submarine weaponry, PLA Navy warships deploy light torpedoes as well as a rocket
system, suspiciously similar to the American ASROC, that reputedly can engage a
submarine 30 nautical miles away, a safe distance from a possible counterattack. 48
China is also deploying more civilian manned ships with TASS, a direct copy of the
American SURTASS platforms, although currently they employ them in waters close to
home rather than up threat. While China still lags behind the west in terms of ASW
helicopters and MPAs, the sensors being deployed on new platforms appear to be
sophisticated and this state of affairs is unlikely to be the case in the late 2030s by the
time the Attacks are to be deployed.
The PLA appears to be investing significantly in developing submarine detection and
tracking capabilities, in particular using advanced new technologies. Chinese
universities are heavily involved in this research. For example, as part of the ‘Sea
Watcher’ programme, it has been reported that the Shanghai Institute of Optics and
Fine Mechanics has recently tested a laser device that can detect objects more than 160
metres underwater.49 Looking forward to the 2030s, ASW technologies are developing
rapidly, including the use of satellites and electromagnetic sensors for submarine
detection. In addition, while the USA leads the way in the use of uninhabited
underwater vehicles (UUVs), including their employment in an ASW counterforce role,
both Russia and China are investing heavily in this capability, According to Sylvia
Mishra of the Institute for International Science and Technology Policy at George
Washington University:
UUVs increasingly play a critical role in antisubmarine warfare (ASW) and perform
missions such as placing and monitoring sensors on the sea floor to track enemy
submarines. They can gather intelligence on opponents, detect and neutralise
mines, hunt submarines and chart the ocean floor. They could, potentially,
detonate warheads. And they could take part in a coordinated attack on an
enemy submarine in conjunction with ‘friendly’ submarines and surface vessels.
The United States, Russia and China are investing in this technology to bolster
their ASW capability and it’s evident that UUVs will be deployed in the near future
in combat operations.50
There is one important area in ASW where PLA Navy still falls short of western
capabilities, namely the use of attack submarines to operate up threat and seek and
destroy other submarines. This probably reflects the fact that the focus of naval
capability development has been on enforcing A2/AD in waters closer to home but also
that designing a competitive SSN has taken some time. This gap in capability is unlikely
to remain as the PLA Navy acquires more nuclear attack submarines and begins to flex
its muscles on a larger blue water canvas. Long before the Attack class enters service, it
would be no surprise to discover a PLA Navy submarine loitering around the HMAS
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
48!Goldstein,!Lyle!J.!(2015),!“A!frightening!thought:!China!erodes!America’s!submarine!advantage”,!The&National&
Interest,!17!August,!http://nationalinterest.org/feature/frighteningGthoughtGchinaGerodesGamericasG
submarineG13592?page=1!
49!Peck,!Michael!(2019),!“China!is!trying!to!use!lasers!and!magnets!to!‘unstealth’!US!Navy!submarines”,!The&
National&Interest,!9!October,!https://nationalinterest.org/blog/buzz/chinaGtryingGuseGlasersGandGmagnetsG
unstealthGusGnavyGsubmarinesG86846!!
50!Mishra,!Sylvia!(2019),!“Could!unmanned!underwater!vehicles!undermine!nuclear!deterrence?”,!The&
Strategist,&8!May,!https://www.aspistrategist.org.au/couldGunmannedGunderwaterGvehiclesGundermineG
nuclearG
deterrence/?utm_medium=email&utm_campaign=Daily%20The%20Strategist&utm_content=Daily%20The%2
0Strategist+CID_30e4b5ced72f9500c81e225dfd28896e&utm_source=CampaignMonitor&utm_term=Could%2
0unmanned%20underwater%20vehicles%20undermine%20nuclear%20deterrence&
43!
!
Stirling base near Fremantle ready to track an Australian submarine setting off on an
operation. Australian submarines in transit to their AO are also liable to be interdicted
by an adversary’s attack submarines as they pass through choke points, particularly if
they need to snort.
Growing risks to large conventional submarines
As discussed above, technological advances in ASW will make operations in contested

waters more dangerous for all populated submarines, not just diesel-electric boats.
Andrew Davies concluded five years ago that:
“The risks of operating large submarines in contested spaces will likely be higher—
possibly much higher—in the future than is the case today … It seems to me that
the combination of high-power processing and robotic systems is likely to make
submarine operations—at least in the form of sneaking large platforms into
contested spaces—much more difficult.”51
Davies concluded that future submarines will need to:

1. “Operate away from chokepoints and contested spaces but be able to
project influence into them
2. Have a low indiscretion rate
3. Be a hub for a suite of long-range sensor and weapon systems
4. Be networked with other units, including electronic warfare platforms and
systems
5. Be able to manoeuvre quickly in response to a rapidly changing threat
environment.” 52
Davies’s analysis is of critical importance for the Attack class. He states that “the design
of the future submarine has to be cognisant of these trends, which will make penetration
of adversary space or operations in contested chokepoints by the submarine itself very
much harder. Basing our investment around traditional ideas of submarine operations
isn’t likely to be a winning strategy a couple of decades from now.” Australia needs “to
decide whether our subs are going to play in the highest end operations. If we decide we
need to, we’re necessarily going up the risk reward curve for a conventional boat.” The
other option would be to “temper our ambitions and settle for a fleet that can still
operate effectively in less than the most challenging situations”.53
If we look at Davies’s five conditions for successful submarine operations above, neither
the Collins class nor, on the basis of what we understand about its design, the Attack
class, rate highly overall. In terms of the first criterion, the raison d’être for RAN
submarines is to transit through chokepoints so as “to play in the highest end
operations” in their increasingly challenging AO. Yet without flexibility in its design so
as to enable adequate provision for deploying autonomous systems (Criterion 3) in the
future, the Attack class will be unable to act as an effective hub for launching UUVs into
heavily contested spaces where it may not choose to venture itself. As Malcolm Davis of
ASPI wrote recently:
The navy is currently focusing on small, tube-launched unmanned underwater
vehicles that can undertake basic mine-clearance tasks or surveillance. But
that emphasis may prove to be misplaced if such systems are overtaken by
much more capable platforms that can operate entirely independently from
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
51!Davies,!Andrew!(2014),!“Trends!in!submarine!and!antiGsubmarine!warfare”,!ASPI,!
https://www.aspistrategist.org.au/wpGcontent/uploads/2014/04/ASPIGsubmarineGconferenceG2014G
Davies.pdf!
52!Ibid.!
53!Ibid.!
44!
!
manned submarines. Fully autonomous unmanned underwater and surface

vehicles with global range, extended time on station, and sophisticated sensor
and weapons capabilities are likely by the mid-2030s, at relatively low cost and
without the personnel challenges that manned naval vessels bring.54
Indeed, it is understood that the Attack class design allows only for the launch of a
necessarily small UUV via a standard 533mm torpedo tube.
In regard to Criterion 4, which prescribes a multi-layered and networked approach to
their operations, Australian submarines currently satisfy this condition but only when
they operate within the American C3I network. If the RAN were required to become
self-reliant in defending Australia and no such network were available, the nature of our
submarine operations may have to change in a fundamental way.
More recently, Andrew Davies has updated his earlier jeremiads about the future
prospects for manned submarines more generally and conventional boats in particular:
The proliferation of unmanned air, surface and underwater systems that we’re
already seeing will pose a much greater risk to covert conventional
submarines. Aircraft in the class of the MQ-4 Triton fly higher, faster and for
longer (up to 30 hours) than the manned patrol aircraft of the past and they
have much better sensors, being more capable of detecting submarines and far
less predictable than satellites. Unmanned surface vessels currently in
development have essentially unlimited endurance, and high-endurance
unmanned underwater systems are being trialled in several countries today.
Worse, from the submarine’s viewpoint, is that all of those platforms, perhaps
augmented by fixed acoustic arrays, can be networked together to produce a
persistent wide area system from which it will be difficult to hide—or even
detect. A submarine commander keen to recharge the boat’s batteries has little
chance of counter-detecting silent passive sensors.55
But perhaps the main risks to the future operational and tactical effectiveness of the
Attack class submarines are in regard to Davies’ earlier Criteria 2 and 5, namely their
indiscretion ratio and sustainable speed. These are addressed in more detail below.
Problem 1: Inferior indiscretion ratio
While in the past conventional submarines, like Australia’s Oberon class, undertook
patrols extending over many months, they operated in a more benign strategic
environment where they were able to operate mainly on the surface. Since then,
substantial advances in submarine detection technologies have occurred which, in turn,
has fostered countervailing advances in stealth. In order to reduce or even eliminate a
submarine’s indiscretion ratio while on patrol, AIP or, more recently, modern energy-
dense batteries have become widely adopted in contemporary SSKs. We understand
that Japanese submarines, which generally operate in the East China Sea, undertake
short patrols of about two weeks in which they operate dived throughout.
Australian submarines cannot do this. Indeed the ship’s company will arrive in what is
now a highly contested AO after more than two weeks dived at sea having endured
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
54!Davis,!Malcolm!(2019),!“Unmanned!systems!are!the!future,!and!Australia’s!navy!needs!to!get!on!board”,!The&
Strategist,!16!October,!https://www.aspistrategist.org.au/unmannedGsystemsGareGtheGfutureGandGaustraliasG
navyGneedsGtoGgetGonGboard/!
55!Davies,!Andrew!(2019),!“Australia!should!bring!forward!planned!submarine!technology!review”,!The&
Strategist,!22!October,!https://www.aspistrategist.org.au/australiaGshouldGbringGforwardGplannedGsubmarineG
technologyGreview/!
!
45!
!
regular snorts along the way. We would do well not to underestimate the intensity of the
covert ISR missions they are then tasked to undertake.
A significant indiscretion ratio, and the associated need to snort, has two important
implications in terms of Australian submarines’ operational and tactical effectiveness.
First of all, if engaged in an intelligence gathering operation, a conventional submarine
submarine may have to abandon the mission in order to find a safe place to snort. This
clearly reduces its effectiveness.
The second implication of a high indiscretion ratio is that the submarine becomes much
more liable to be detected and, in wartime at least, attacked. When snorting, the
substantially greater noise signature of diesel generators relative to the main motor
means that the submarine becomes more exposed to detection from seabed hydrophone
sensors and sonar employed by surface ships, other submarines, sonobuoys dropped
from MPA and helicopters. The snort mast is also liable to be detected by radar
deployed on MPAs, surface ships and helicopters. All these detection technologies have
improved significantly in recent years. The same can be said for magnetic anomaly
detection, undertaken mainly by MPA, a technology that is more effective when the
adversary’s submarine is operating close to the surface. Finally, wave anomaly detection
is also a contemporary ASW technology deployed by satellites that is becoming more
effective, again particularly when a submarine is snorting close to the surface. While all
these significant threats are occurring, a submarine also loses much of its ability to
detect an attacker because its own sonar becomes less effective due to self-noise
generation.
With operations in the South China Sea becoming increasingly intense, a rapidly
developing ASW capability on the part of the PLA Navy will make life much more
difficult for allied submarines, particularly those with limited dived endurance and a
significant indiscretion ratio. It is difficult to see how the weakness of Australian
conventional submarines on patrol in the South China Sea – their requirement to snort
in a restricted and highly contested battle space – can be countered by the support of
the US Navy. Although a RAN submarine will have access to available intelligence on
the whereabouts of the adversary’s naval platforms when they snort, they could be
detected by a MPA, helicopter or seabed sonar array and would then be effectively on
their own.
It could well be argued that operational conditions in the South China Sea have already
reached a level of intensity that make it more challenging to continue to deploy Collins
class submarines in their principal AO. It is notable that even in 2008 the Submarines
Institute of Australia (SIA) was becoming concerned about the survivability of RAN
submarines operating up threat without AIP:
There is a rising risk from deploying Collins, without Air Independent Propulsion,
into high threat, sensitive areas as regional ASW capabilities rise. Given the lead-
time required to overcome this shortcoming, urgent resolution is required to
assess when this risk becomes unacceptable and to determine the best option for
avoiding the resultant capability gap.56
Twelve years later, not only has the perceived ‘shortcoming’ not been resolved, urgently
or otherwise, but the intensity of operations in the South China Sea has increased
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
56!Submarine!Institute!of!Australia!(2008),!Submission!to!Defence!White!Paper!Community!Consultation!Panel,!
Australia’s&Strategic&Sting,!(August),!
http://www.defence.gov.au/whitepaper/2009/submissions/14_Various/SIA.pdf,!page!5.!
46!
!
considerably while the PLA has developed a much more sophisticated counterforce
ASW capability deployed on many more platforms. Yet in the mid-2030s, when the
Attack class enter service, we must assume that the intensity of operations in their
principal AO will only have increased much further and the risk of attrition will be
greater still. As presently specified, the Attack class will have neither AIP nor modern,
energy-intense batteries that provide superior dived endurance. They will also have an
inefficient pump-jet propulsion system, employed for stealth reasons on power-rich
nuclear submarines but not used on any other operational SSK. Their indiscretion ratio
will likely be unacceptably high, both in terms of their operational effectiveness and
their survivability.
Problem 2: Low sustainable speed
The second problem, not only with Australian submarines but with SSKs in general, is
their limited sustainable speed. While they may be able to achieve a maximum burst
dived speed of around 20 knots, even with modern, energy dense batteries, this cannot
be maintained for very long without running down the battery and needing to snort.
Indeed, a SSK’s motor will only run at its highest power setting for a limited time,
usually about an hour, after which, if unabated, it may suffer catastrophic failure.
Although submarines using AIP can have a lengthy dived endurance of up to three
weeks (shorter in the warm tropical waters in which RAN boats operate), their
maximum speed when running only on AIP is around five knots. Of course they can go
much faster, but this depletes the main battery very quickly.
There are two broad reasons, one offensive and one defensive, why a submarine
undertaking ASW and ISR missions in a high intensity environment like the South
China Sea requires a high sustainable speed. In offensive terms, by the time the Attack
class becomes available, many of the PLA Navy’s submarines will be nuclear-powered. A
conventional submarine such as a Collins or Attack class submarine would be
ineffective in trailing a nuclear submarine because of its low sustainable speed, as well
as its need to snort. The SSK would also be unsuitable for pursuing high value surface
targets, because of its inability to keep up. In addition, navies that operate SSNs
increasingly allocate one or two to a task force or battle group. An SSK cannot operate
effectively with a battle group based on surface units with a much higher SOA.
Turning to the defensive scenario, while passive sensors (sonar and hydrophones)
positioned on the seabed or embodied in military assets provide the ever-present
system designed to detect submarines, they do not provide an exact location. But ASW
submarines, ships or aircraft can follow-up the detection of a submarine on passive
sensors by using their active sonars to provide an exact fix, thereby allowing them to
deploy their weapons so as to destroy the submarine. The difficulty is that if located by
active sonar, the crew of the submarine will be aware of this immediately as a result of
the sound of a ‘ping’ against its hull. In defensive terms, the ability to break contact
when detected and exit the area at sustained high speed means that a fast submarine,
which effectively means a nuclear powered boat, would have a greater chance when
detected of escaping. A submarine leaving the danger zone at a speed exceeding 30
knots, despite also making a lot more noise, would also have a greater chance of evading
torpedoes or other missiles launched against it. Other things being equal, the bottom
line is that in these circumstances of high intensity operations a nuclear powered
47!
!
submarine, as well as being more effective, would offer a higher level of survivability
than a conventional submarine when detected and attacked.
3.5 Would the Attack class be suitable for a different role?
A major risk for the Attack class is that if it is being designed for a specific purpose,
namely coalition operations up threat in the South China Sea, what would happen if
that purpose were no longer relevant and the submarines were required to take on a
different role?
When Attack class submarines join the fleet in 15 years time, Australia’s strategic
circumstances may be very different from how they look today. In his latest book,
Professor Hugh White states that in the future “Australia would be very unwise to
assume that America will play the role in stabilising Asia and defending Australia that
our defence policy still assumes it will”.57 Many Australian strategic analysts agree with
him, while others do not.
In looking at the future role of the Attack class we do not need to take sides in this
debate, but Defence planning needs to take account of the possibility that White may
well be correct in his judgement. In that case, what are the implications for the Attack
class were the US to withdraw its military forces east of Hawaii?
The first implication is that without the benefit of the US multi-layered ASW networks,
including the extensive range of assets, the C3I system and water space management
regime, Australian submarines would be unable to operate effectively up threat in the
South China Sea. Indeed, absent the support of US forces in the theatre, the
survivability of a lone Australian submarine would be in very serious doubt. This means
that even if the bare bones of the network remained in place, confronted with a far
stronger opposing force, a lone Australian conventional submarine could not
responsibly be deployed to that theatre.
The other implication of an effective US withdrawal is that even if we forged new
alliances and ententes in the region, Australia would need to become more self-reliant
in its own defence. The main strategy would likely be to seek to deter an attack on
Australia by enforcing A2/AD in the air-sea gap to our north. Would a force of 12 Attack
class submarines be effective in helping to prosecute this strategy?
In operational terms, the short answer to this is “No”. Contemporary doctrine among
the major naval powers has nuclear-powered attack submarines operating with surface
task forces and battle groups, although generally well removed in terms of distance. Any
SSK such as the Attack class would be too slow for this role as they could not keep up
with warships for any length of time. In addition, were RAN submarines to be tasked
with interdicting and destroying an adversary’s fleet attacking Australia via a choke
point strategy, there would also be significant problems. First, with a force of perhaps
three or four submarines on station, the available force would be insufficient to cover
the large number of chokepoints available to a marauding fleet. Secondly, the Attack
class would again be too slow to be able to respond to evolving and developing threats –
perhaps a sudden change of course by an attacking force – or to be able to pursue high
value targets such as nuclear powered submarines or aircraft carriers. Tactically, SSKs
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
57!White,!Hugh!(2019),!How&to&defend&Australia,&La!Trobe!University!Press,!July,!page!15.!
48!
!
like Attack would also be vulnerable to an adversary’s SSN loitering silently around a
choke point waiting for a RAN submarine to snort.
In order to prosecute such a strategy, the RAN would either need a force of much faster
submarines, namely SSNs, or a lot more (24 to 36) SSKs. The latter solution would be
very difficult in terms of shipbuilding, maintenance and crewing, while there would still
be significant questions around operational and tactical effectiveness as well as
survivability if detected..
3.6 Will the Attack class be cost-effective?
The whole-of-life cost of acquiring and operating 12 Attack class submarines is

estimated to be $225 billion in out-turned dollars. In return for this, in peacetime the
Navy will be able to deploy one diesel-electric submarine at all times to operate in
coalition with the US Navy in the South China Sea. In strategic terms it is very difficult
to see how deploying this capability can be cost-effective, either in terms of providing a
deterrent in its own right or in the weight of its contribution to American operations up
threat. The opportunity cost of this capability, in terms of alternative means of power
projection, such as long-range stealth bombers like the B-21 Raider, merits detailed
consideration.
The Attack class’s effectiveness in absolute terms in high intensity AOs will be limited
because it will be operating in what is already a highly contested and congested space.
By the late-2030s, HMAS Attack will be one of three hundred submarines (even if only
half of them are available for operations) expected to be in the Asian theatre, many of
them deployed by the PLA Navy and many of them nuclear powered. Within fifteen
years, it is also likely that UUVs will be playing a major role, not only in anti-submarine
warfare but also in force projection more generally. Developments in ASW suggest that
all manned submarines will be more vulnerable to destruction in 20 years time than
they are now and at much greater risk when operating in congested spaces subject to
numerous, sophisticated arrays of sensors. Conventional submarines will be at greater
risk because of their periodic need to snort and their low sustainable speed when they
need to break contact with an adversary. By the time the Attack class comes on stream,
the majority of conventional submarines operating in the South China Sea will embody
modern energy dense batteries and/or AIP. Most or all of their operations in heavily
contested waters will be undertaken dived throughout.
On the basis of its current design, the Attack class will not deploy AIP or modern
batteries. While a very large conventional platform, it is not being designed with the
redundancy necessary to operate as a hub for new generation autonomous vehicles
except small and relatively ineffective UUVs. With a large footprint, a significant
indiscretion ratio and a low sustainable speed, it will be significantly less effective than
nuclear powered submarines, with a lower level of survivability and consequently a
heightened risk of attrition.
3.7 Conclusion
Australia is the only nation operating conventionally powered submarines that sends its
submarines across oceans to get to the operating area. All other countries that face that
challenge deploy nuclear attack submarines (SSNs). There are serious questions over
whether a diesel-electric submarine relying on lead-acid battery technology (at least at
49!
!
the beginning), will be fit for purpose in terms of effectiveness and survivability against
the assets deployed by the potential adversaries Australia will face when it is delivered.
This needs urgent and detailed examination. The decisions taken so far on such things
as battery technology are not the issue. The question is more whether any conventional
submarine, regardless of technology, will have sufficient utility for Australia, including
the issue of survivability as well as effectiveness, to make the massive planned
investment worthwhile at all.
Dr Andrew Davies of ASPI has been a persistent critic of the Navy’s future submarine
program. His recent conclusion should give us pause for thought:
All of the technological trends are against us, as is our unique operational requirement
of having to negotiate choke points and transit long distances across open oceans to
reach far-flung mission areas. We are investing many billions of dollars to get small,
incremental improvements in stealth, range and endurance while the counter
technologies are on the cusp of massive, and potentially relatively cheap, increases in
performance. Based on all that, I’m betting now that the Attack program sees major
changes or comes to a premature end long before the planned delivery of boat 12 in
2050.58
That aside and even if Australia continues down the current path, there is no evidence
of any process either in place or yet contemplated for introducing new technology into
the Attack design during the decades-long build. This is a critical component for the
success of a continuous build program. Without such a process, including detailed
planning to introduce selected new technology and capabilities, we are exposed to a risk
of equipment and capability obsolescence as the build program progresses. This risk
will increase over time and grow very quickly in some technologies. The review in the
late 2020s of submarine technology mentioned in the 2016 Defence White Paper should
be started immediately. Such a review also needs to factor in the Collins LOTE.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
58!Davies!(2019),!op.&cit.&
50!
!
Chapter 4
The way forward: a risk mitigation strategy
The analysis presented in this report has identified some very substantial risks around
the SEA 1000 future submarine acquisition program
• The main problems with the Attack class program are that delivery will be far
too late, perhaps leading to a major capability gap, and that it will be much too
expensive, leading to significant pressures on the Defence budget. But a number
of other problems are emerging, such as the lack of Australian industry content,
which cannot be easily resolved in the ongoing absence of competition.
• Not only will the proposed Attack class fail to satisfy the value for money test in
terms of cost-effectiveness test, but by the 2030s it may not be fit for purpose in
the role for which it is being designed.
We propose two studies that should begin urgently:
• A preliminary design study for an evolved Collins class submarine
• A review of future technology requirements for Australian submarines.
In combination, we believe these studies would help clarify options to mitigate the risks
with the current program.
4.1 Collins 2.0 preliminary design study
This proposed study would re-introduce competition that would help bring issues with
the Attack program to a head. These include cost, schedule, local content and rights to
IP. It would also seek to exploit the full breadth of the nation’s hard-won experience
with the Collins class submarines, which in our view was abandoned prematurely. It
takes account of important facts:
• The service lives of all six Collins boats must be extended by a full operating
cycle of ten years, at least, to avoid a capability gap.
• These submarines and the Australian industry supporting them are performing
well after a troubled start. Australia has learned a great deal from that
experience, lessons we now face learning again with a supplier with whom we
have no experience apart from a rocky beginning, which does not augur well.
• The Swedish designer of the Collins class, Kockums, with whom we have long
experience, is now in a healthy state. It has undertaken complex life extension
work, including inserting new hull extension sections into the older submarines
in Sweden’s own Navy and is building the first of a new class of submarines for
Sweden. It is also offering an evolution of the Collins design in competition with
French and German bids to replace the current Dutch submarine force of four
Walrus class submarines, which itself was a contender for the Collins
acquisition.
• Importantly, after a long period of German ownership, Kockums is now owned
by Swedish company Saab, with whom Australia has developed a very sound and
51!
!
productive long-term relationship and with whom we are contractually engaged

for major future naval acquisitions stretching decades into the future.
Evolving Collins – Collins 2.0

Creating a new submarine design by evolving the existing, in-service platform, thereby
building on the lessons learned from building, operating, sustaining, and modifying it,
is the approach followed by all countries that are successful in building submarines for
their own use. Overall, it is an approach that involves lower risk and cost. This may
sound like what Australia has done with the Attack class, but it is not. The design is an
evolution of France’s submarine design expertise, not their experience with operating a
SSK (the Marine National only deploys nuclear-powered submarines) or ours with an
existing design. Because France exports but does not operate conventional submarines,
the Attack class will incorporate France’s lessons predominantly from its export
customers. It will not incorporate Australia’s, except to the extent that Australia has
specified the performance requirements.
There is evidence and analysis to suggest that a design evolved from Collins (Collins
2.0) and building on the additional experience that will be gained from the Collins
LOTE would provide a comparable capability to Attack but could be delivered years
earlier at lower cost than Attack and with much higher local content from the outset.
There would also be significant and valuable synergies between Collins LOTE and
Collins 2.0 in such areas as submarine and logistics systems and component
commonality that would benefit both industry and Navy.
The proposed study
We propose that without interrupting or occasioning any delays to the Attack class
program, the government should commission a parallel preliminary design of a Collins
2.0 option. We estimate the cost would less than $100m or around 0.2 per cent of the
future submarine budget. This could be recovered many times over even if only by the
introduction of competition to the current unpalatable reality. The government could
then choose between the Attack class and Collins 2.0 in 2022-23. In addition to
capability, the decision should be based on fixed price tenders for the first six
submarines, including firm proposals for delivery, local content and intellectual
property rights as well.
The viability of this proposal necessarily depends on Saab Kockums having the capacity
to devote the necessary capability to the task. Our assessment is that there is a window
of opportunity now but there is little spare capacity in the global submarine business at
present and other commercial realities may intrude. The window may be short-lived,
particularly if Saab Kockums win the Dutch submarine program.
Why Collins 2.0?
Given that it was designed specifically for the RAN, the Collins class is the only existing
conventionally powered submarine design that comes close to satisfying Australia’s
operational requirements, which are driven mostly by geography. Most importantly
perhaps, after many years sorting out problems, it is now accepted that the Collins class
is most assuredly not a “Dud Sub”. It is a highly advanced, blue water conventional
submarine.
52!
!
Early in the Future Submarine Program, Australia was encouraged by the US and others
to build on the experience gained from 30 years of the Collins program. Overseas
practice reflects this approach because an evolutionary program is cheaper, less risky
and more quickly achieved than ‘starting from scratch’, as we have effectively chosen to
do with SEA 1000. Nations that are long-term parents of their own submarine
capability run their programs in this way, evolving what came before. With the Collins
program and our unique submarine, Australia took on these parental obligations
whether it understood that at the time or not.
Undertaking a Collins 2.0 preliminary design would necessarily involve Saab Kockums.
The synergies that could be achieved with Collins LOTE as a result are significant.
As Defence Minister, Christopher Pyne stated that evolving the Collins design was
considered and dismissed by Defence some years ago, but this is not the whole story.
Defence did indeed study updating the Collins design but this was done prior to the
competitive evaluation process (CEP) that Australia used to select between France,
Germany and Japan as the designer of its new submarines. Sweden was not invited to
submit a proposal during the CEP. The publicly stated reasons for this decision may
have been relevant then (although arguably they were not) but there is plenty of
evidence showing the situation is very different now.
Importantly too, agreement on intellectual property (IP) rights was negotiated with
Sweden before any work started on investigating an evolved Collins design. This
agreement is presumably still valid and even if it is not, it provides a very sound basis
for a new agreement.
Collins 2.0 is a good Plan B, if we are to get as close as possible to meeting the capability
requirement. We would argue it’s the only viable option.
• German and Japanese designs were evaluated during the CEP and rejected; there is
no reason to revisit them
• Government has ruled out ‘off the shelf’ conventional submarine designs offered in
the market (by France, Germany and Sweden, plus Spain and South Korea if their
designs were to be available commercially) because they are much less able than
Collins to meet the capability requirements.
• With nuclear powered submarines not being considered, there are no alternatives
available from the UK or USA.
Other government policy objectives, such as a high level of Australian industry
involvement as an enabler of greater sovereign control over the capability and control
over through life costs, are of fundamental importance and underpin the analysis
contained in this proposal. Building on over two decades of experience in sustaining the
Collins class, with a local industry content of over 90 per cent being achieved today,
Australia and the existing national supply chain brings with it a deep understanding of
those submarines, as well as operating and supporting them. This knowledge is a
valuable sovereign asset, the benefits of which are maximised by the approach proposed
here. They should not be abandoned lightly although we are at risk of doing just that.
Early experience with France is showing just how hard it will be to rebuild all that from
a zero base with a country very different culturally from us and with whom we have no
experience working on submarines.
53!
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There are other reasons for examining Collins 2.0. Defence has done a worthwhile body
of work on it already, having engaged Kockums in 2013 to investigate Collins 2.0
through contracts valued at just under $10m. This was in addition to work Kockums
undertook to evaluate extending the Collins class service life. The products and the
collaboration are reported to have been good.
The close integration that would be possible between Collins LOTE and Collins 2.0 in a
single program approach with a single design partner could reasonably be expected to
be simpler and therefore lower risk than the current arrangements because it would
entail much less commercial complexity (and therefore risk and cost) than exists now.
Cost should be lower overall and a quicker delivery schedule should be achievable.
Greater Australian industry involvement would be achieved sooner and there would be
greater commonality between the old and new submarines plus substantially greater
opportunities to ‘carry over’ systems and lessons from the Collins LOTE to Collins 2.0,
again reducing costs. LOTE could also be used to test systems intended for the new
submarines, thereby further reducing future risk.
This is in contrast to the current situation that will inevitably create tension between
two separate submarine designers and builders involved in upgrading and sustaining
Collins on the one hand, and building the Attack class on the other. Both will be
competing for the same pool of manpower and resources but with very little ability to
‘cross-level’ those resources.
In addition to the benefits we foresee, the challenges and costs for Navy that are
associated with transition between classes, particularly logistics and training system
requirements, would be reduced. Lower sustainment costs would also be achievable
from necessarily less complex supply chains. The longer-term result would be reduced
total cost of ownership. We should not forget that acquisition cost (already an eye-
watering amount) accounts for only around 30% of the total capability cost through life.
The preliminary design study (PDS) we propose would put competitive pressure on
Naval Group for a better outcome, in Australia’s interests, whichever choice government
was ultimately to make. We should have no concerns about doing so, given our
experience to date. Furthermore, Naval Group should have no grounds for concern
about the re-introduction of competition if their submarine truly offers Australia the
best capability for the price – value for money.
This proposal
This proposal is for a study. We do not propose that the government should make a
decision now on the future of the Attack program, quite the contrary. The preliminary
design study (PDS) proposed is a low-cost, risk mitigation activity. The objective is to
test whether what we believe is the only viable alternative to the Attack class is
competitive and deliverable and if so, how attractive it may be, so that when the
government must commit to the massive investment involved in a construction contract
it can do so on the basis of much better information and therefore with greater
confidence than it could have today. This would be greatly reinforced were the
government to require both Naval Group and Saab Kockums/ASC to provide fixed price
tenders for the first flight of submarines covering cost, schedule, Australian industry
content and IP protocols.
With the existing situation, there will be three choices available when deciding whether
or not to proceed to a construction contract: take the French design, modify it, or leave
54!
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it. Leaving it would delay replacing the Collins boats for a long time and probably mean
the end of Australia’s submarine capability, because even if Collins LOTE was delivered
successfully and as soon as possible, in all likelihood those submarines could not be
sustained cost effectively for long enough to allow another new submarine program to
be executed. Modifying Naval Group’s proposal would necessarily involve more delay
and possibly also cost and/or capability trade-offs. Taking it as it is at that time would
only be viable if it’s the right overall package, to be delivered cost-effectively on an
acceptable schedule with a high level of Australian industry content.
In order to implement this proposal, we suggest the following actions:
• Establish immediately a small team to oversee conduct of a PDS by Saab Kockums
and ASC for a Collins 2.0 designed to meet the original CEP capability
requirements. The primary objective of the PDS would be to understand the
capability such a submarine would provide, when delivery could begin and at what
rate, and the average price we might expect to pay per submarine based, in the first
instance, on a six-boat build. Other selected Australian companies in the existing
Collins supply chain should be involved, to ensure the lessons of long experience
from building, operating and supporting the Collins class are fed back into the
design. This is a valuable way to keep manufacture, assembly and through life
support costs down.
• ASC engage Saab Kockums to assist with planning and executing the Collins LOTE
and to maximise the potential for carry over between the two activities. An
additional objective would be to understand in greater detail the benefits and
challenges of running Collins LOTE and a new build program of Swedish design
origin in parallel.
Defence’s comments at Senate Estimates suggest that they do not have the skilled
workforce to run more than one design development program. In any case, we consider
that the urgency, size and importance of this program are such that diverting resources
from current Defence submarine activities or causing any delay or distraction to
industry or Defence should be avoided.
We consider the proposed PDS needs only a small team, between 15 and 20 FTE, to set
up and manage the necessary contracts. A few APS administrative support people would
be required but the required specialist submarine skills could be contracted from among
experienced Australians who are no longer working in Navy, CASG, Naval Group or
ASC. One or two overseas experts may also be needed. This team should be separate
and not draw people from any current submarine activity, in order to avoid any impact
on them. Given that Defence is now heavily embedded in the design of the Attack class,
evaluation of the output of the PDS and comparison of the two tender proposals would
also need to be managed very carefully to avoid conflict of interest and bias, conscious
or unconscious.
We are confident that the cost of the PDS would be under A$100m, or about 0.2 per
cent of the budgeted cost for Attack acquisition. If started very soon an interim report
could be expected in 2021-22, potentially to coincide with the preliminary design review
for the Attack class. A final report in 2022-23 would be available before Government
faces the critical decision point of committing to a construction contract on the Attack
class.
55!
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4.2 Review of submarine technology requirements
In the 2016 Defence White Paper, the government flagged a review of future submarine
technologies in the late 2020s. We believe there is a pressing need to start this review
now.
No nation that faces our geostrategic situation uses conventionally powered submarines
for the missions that Australian submarines undertake. It is true that some regional
nations in similar circumstances to ours have conventional submarines in service, but
those nations also operate SSNs. For the missions that we undertake, they would use
their SSNs first. Those nations with only conventional submarines all operate relatively
close to home because their geography means that’s all they need to do, while still
operating offensively.
Only SSNs have limitless dived endurance on patrol and can transit to the operating
area at much higher sustained speed than a diesel boat. This capacity for high-speed
transit without the need to charge batteries dramatically reduces the risk of detection
and would translate for Australia into an ability to put more submarines on station –
perhaps three times as many as with a diesel boat during a period demanding a surge in
operations. Their endurance and capacity for sustained high speed also offers major
advantages in survivability and operational effectiveness once on station. There is no
other technology today or in prospect that can come close to delivering these
performance characteristics. Exotic batteries and air independent propulsion cannot
now and never will come close, either singly or in combination.
As analysed at length in Chapter 3, the overriding problem with the Attack class is that
it is being designed to undertake a role for which it not only fails the cost-effectiveness
test but for which it may not be fit for purpose.
It is not cost-effective because at a whole of life cost of $225 billion in out-turned
dollars, the long transits to its principal AO means that the RAN will only have one
submarine on station at any time. There are two main reasons why it is not fit for
purpose. First, operating in a theatre where the intensity of the undersea contest is now
greater than anywhere else in the world, the Attack class’s high indiscretion ratio will be
an increasing problem. It means not only that it will be relatively ineffective in certain
missions when it needs to break contact to snort, but at a time when advanced ASW
technologies are developing and being deployed at a rapid rate, it will be more
vulnerable to detection, reducing the level of survivability and increasing likely attrition,
perhaps to an unacceptable level. Secondly, with a low sustainable speed, the Attack
class will not be able to work with task forces/battle groups or track and pursue faster,
high value targets. Its survivability will also be compromised because it will also have a
much lower ability than a nuclear powered submarine to break contact when detected
and escape to fight another day.
In light of these findings, there is a stark choice. If the government wants a submarine
force that can operate effectively in the high intensity environment of the South China
Sea in the 2030s and beyond it needs to evaluate the acquisition of nuclear powered
submarines, increasingly complemented by AUVs. The alternative is to accept that the
Submarine Force can no longer operate in high intensity environments. This would lead
either to a change in the role of RAN submarines or, conceivably, a view that a powerful
submarine force would no longer be cost-effective, and that in order to retain a credible
56!
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power projection capability, Australia needs to acquire alternative assets, such as long
range strike aircraft and missiles.
In terms of the first option, were the RAN to acquire twelve SSNs, the productivity and
strategic effectiveness of the Submarine Force would be transformed. With transit times
more than halved, there would be at least a 50 per cent increase in the number of
submarines that could be on station ‘up threat’ in the South China Sea at any time. A
force of that size could provide a significant deterrent, with the potential to create havoc
around an adversary’s naval bases, not just by attacking hostile submarines, including
SSNs, but surface ships as well. Also, the deterrent effect of twelve SSNs compared to
twelve SSKs would be far greater than is implied by the larger number of submarines
deployed on station, because of their much greater operational effectiveness conferred
by their high speed and unlimited dived endurance in any operation.
In the context of the strategic contest between the US and China for hegemony in the
Asia-Pacific region, as Hugh White and others have suggested, there is a material
possibility that in the next two decades the US may withdraw from the regional contest
and focus on sustaining its strategic position globally. If that were the case, Australia
may be required to focus on a self-reliant strategy that would involve, inter alia,
pursuing an anti-access and area denial (A2/AD) policy in the extensive waters to our
north. The Attack class would be sub-optimal in this role because of the submarines’
limited sustainable speed that reduces its flexibility and removes its ability to operate
with a task force. In order successfully to pursue high value targets and be able to
interdict a seaborne attack on Australia by a fleet that may feint its advance in one
direction and then change course to another, a fleet of SSNs would be required because
their much higher speed.
A fleet of SSNs would constitute a far more powerful force than a similar sized fleet of
SSKs. Given Australia’s deteriorating strategic circumstances and the long transits to
and from our submarines’ AOs, there is a clear strategic need for a powerful force of fast
submarines, which effectively means a requirement for SSNs. We need to be able to put
a greater submarine capability on station for a substantially greater length of time.
There is also a strong operational requirement for a submarine that can undertake
missions in high intensity tactical environments without having to expose itself to
detection by snorting and with the speed not only to be more effective in offensive
missions but also with a better ability to disengage when required and withdraw in good
order. Finally, the issues around survivability and a reduced risk of attrition are of
critical importance. These operational imperatives also point to a requirement for SSNs.
Yet acquiring nuclear-powered submarines would not be easy. Even if we started the
process now, it would take between 15 and 20 years to see the first SSN in the water. We
would need to acquire a minimum of six new SSKs first to build the Submarine Force up
to 12 boats including six life-extended Collins. Twelve nuclear submarines may seem
excessive, but expert analysis suggests that a minimum of 10-12 is required to develop
the necessary critical mass. The number of personnel in the Submarine Force would
need to grow by a factor of at least three, possibly four. The recruitment and training
task would be prodigious, with all submarine personnel needing to be nuclear qualified
to a greater or lesser degree. In addition, the through life support of nuclear submarines
in Australia, which would be essential if a sovereign submarine capability was to be
sustained, would require a whole new infrastructure designed to ensure nuclear
57!
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engineering of the highest order supported by world class safety protocols. Australia’s
engineering capability is often underrated, but very substantial enhancements in the
area of nuclear engineering and nuclear science and safety would be required.
Australia’s lack of a nuclear industry is sometimes cited as a reason why we cannot
acquire nuclear powered submarines. But this can be exaggerated. Australia does have a
nuclear industry, if small and underdeveloped. As we have seen, Australia is a major
exporter of uranium. The Australian government owns and operates a small
experimental nuclear reactor in the leafy southern Sydney suburb of Lucas Heights. It
seems to be well accepted by the local community and is now moving into a new
commercial market, namely the production of medical isotopes for domestic and export
markets. Australia is one of only 11 countries in the world that produce the isotopes that
are vital components of certain medical processes. In addition, Australia’s nuclear
regulator ARPANSA is well credentialed and provides a solid base for future
development.
EXHIBIT 4.1: UK ASTUTE CLASS SUBMARINE, AUDACIOUS, UNDER CONSTRUCTION
Licence: Alamy
The issue of whether Australia should acquire nuclear powered submarines is fraught.
Apart from political and foreign policy challenges, there are issues of cost and
implications for the force structure, which could be distorted if a large investment was
made in SSNs. We would have by some distance the smallest economy of any countries
that currently operate nuclear powered submarines. It would be very unlikely that the
US Navy would agree to supply Australia with nuclear submarines and in any case the
Virginia class and its likely successor are too big for Australian requirements. The
French Suffren is a good size for the RAN and, unlike other SSNs, uses low enriched
uranium for its fuel, making it an easier acquisition for the RAN under the terms of the
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Nuclear Non-Proliferation Treaty (NPT). The French government has offered in the past
to supply Australia with SSNs.
If the government decided to cancel the Attack class, it would be tempting to minimise
contractual break clauses by moving the design contract to an Australianised version of
the follow-on class to the Suffren class, which is the reference design for the Attack
class. As we have seen with the unhappy experiences with SEA 1000, however, the
benefits of competition are very compelling and may well dwarf any cost savings derived
from switching the current design contract from Attack to the next version of the
Suffren. We would therefore need to consider at least two designs.
In the next few years, Britain will be considering the successor to its current Astute class
SSN. Under the 1958 US–UK Mutual Defence Agreement, the US has the right to block
the sale of submarine nuclear reactors by the United Kingdom to any third party. Yet
this right was waived by President Reagan in the 1980s when Canada was considering
acquiring Trafalgar class SSNs, although the end of the Cold War overtook this
aspiration. Under the current strategic circumstances, this right might very well be
waived again to Australia’s benefit. In commercial terms, another customer for British
SSNs with an order book quite possibly larger than the Royal Navy’s would be attractive
and would allow Australia to have some influence over the design. In the context of
Brexit and the UK’s desire to deepen trade links with Australia, this could also be an
attractive proposition from the political and industrial perspective.
While it may not be appropriate or even possible for Australia to acquire SSNs, the issue
needs to be evaluated in detail before the nation expends a vast amount of money
acquiring a submarine that may not be able to discharge its primary functions
effectively. In the context of the current examination of force structure that the Minister
has stated is occurring, the review of future submarine technologies announced in the
2016 DWP should be brought forward by ten years and undertaken now. The
justification for this is the:
• Deterioration in Australia’s strategic circumstances that has occurred in the last
three years
• Substantial increase in the intensity of the contest and the congestion in our
submarines’ principal area of operations
• Increase in investment in ASW activities on the part of the PLAN and the roll out
of advanced anti-submarine technologies
The backdrop to all this is the rapid growth in submarine activity generally in the Indo
Pacific, with perhaps 150 submarines available for deployment in the theatre when the
first Attack boat is due to enter service in 15 years time.59 These will include many
nuclear-powered boats, perhaps with substantially better stealth capabilities to current
designs, and conventional boats with AIP and/or modern batteries. Not only will the
Attack class face a serious challenge with the numbers ranged against it, but also the
quality of many of the other submarines may well pose a significant challenge to the
Attack class’s claim of ‘regional superiority’.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
59!Although!it!is!regularly!stated!that!300!submarines!will!be!operating!in!the!Indo!Pacific!by!the!midG2030s,!we!
assume!this!refers!to!the!total!number!in!service.!If!that!is!the!case,!regular!maintenance!schedules!mean!that!
only!around!half!of!them!will!be!available!for!deployment.!!
59!

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Australia’s Future Submarine

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© Insight Economics 2020

Glossary of acronyms iii !

Proposed risk mitigation strategy: Plan B

Operations ‘up threat’ in an offensive, power projection role using conventional

1.1 Elimination of competition

1.2 Ambitious capability requirement

1.3 Structure of the report

The remainder of the report is structured as follows:

2.1 Excessive cost of design and construction

Currently, approved expenditure on SEA 1000 is $5,959 million, including outlays to

estimates of a global western benchmark cost for a conventional submarine. 8 Despite

2.2 Collins class life of type extension

EXHIBIT 2.1: POTENTIAL GAP IN SUBMARINE CAPABILITY

Number of Collins Class submarines in service

12 Number of Attack Class submarines in service

Number of Collins Class submarines in service with LOTE of 10 years

5 year delay in Attack Class submarines

Source: Insight Economics

2.3 Sovereign capability – local content and access to IP

Australian industry content and the Naval Shipbuilding Plan

EXHIBIT 2.2: NAVAL SHIPBUILDING – EMPLOYMENT IN MID TO LATE 2020’S

As background to the discussion on AIC as well as intellectual property rights

Australian industry seeking protection but rather to be allowed to compete on a level

EXHIBIT 2.3: WHAT DO AUSTRALIAN COMPANIES IN THE SUPPLY CHAIN WANT?

Source: Dr John White, communication to Insight Economics.

These local firms operate in a global industry corrupted in terms of conventional

Access to intellectual property

Although flagged as a ‘regionally superior’ submarine, even compared to other

Despite numerous examples in Senate committee hearings of ongoing support by

3.1 What do Australian submarines do?

3.2 Submarine operations ‘up threat’ in the Indo Pacific

In pursuing these objectives, the Submarine Force will:

EXHIBIT 3.1: PROJECTED FLEET OF US NAVY ATTACK SUBMARINES

The scheduled decline in US submarine numbers is significant. From a high point of 98

3.3 Strategic capability requirement for the Attack class

3.4 Operational and tactical capability requirements

As discussed above, technological advances in ASW will make operations in contested

Davies concluded that future submarines will need to:

manned submarines. Fully autonomous unmanned underwater and surface

Problem 1: Inferior indiscretion ratio

Problem 2: Low sustainable speed

3.5 Would the Attack class be suitable for a different role?

3.6 Will the Attack class be cost-effective?

The whole-of-life cost of acquiring and operating 12 Attack class submarines is

4.1 Collins 2.0 preliminary design study

productive long-term relationship and with whom we are contractually engaged

Evolving Collins – Collins 2.0

4.2 Review of submarine technology requirements

EXHIBIT 4.1: UK ASTUTE CLASS SUBMARINE, AUDACIOUS, UNDER CONSTRUCTION

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