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15 Jan 20. Surge in defence export limits supports growth of Aussie defence industry. The Australian Defence Export Controls (DEC) has revealed figures showing an explosion in Australian defence exports, reaching a record of nearly $5bn for the 2018-19 fiscal year.
The recently published DEC statistics reveal that approved defence export permits during FY2018-19 was far more than in previous years, representing a mandated requirement – from 1 January 2018 – for exporters to provide the expected value of their sales in export permit documentation.
DEC is responsible to the Minister for Defence for regulating the export of defence and strategic goods and technologies.
These goods and technologies include:
- Military items designed or adapted for military purposes or those that are inherently lethal, incapacitating or destructive; and
- Commercial items and technologies that may be used or adapted for use in a military program or contribute to the development and production of chemical, biological or nuclear weapons systems.
Australia’s export control policies are in place to enable the export of defence and strategic goods where it is consistent with Australia’s national interests and international obligations.
The statistics reveal the value of approved defence export permits for the FY2018-19 was worth $4.91bn – additionally, the statistics revealed permits approved in FY2016-17 and 2017-18 had a value of $1.12bn and $1.57bn, respectively.
DEC’s mission is to enable the responsible export of defence and strategic goods and technologies by:
- Providing early advice to producers and developers on the control status and exportability of their good, service and technology;
- Issuing permits and licences for controlled exports;
- Delivering outreach programs to enable exporters to meet their obligations under relevant Australian regulations and legislation;
- Contributing to Australia’s international efforts to prevent the proliferation of weapons of mass destruction through participation in multilateral non-proliferation and export control regimes;
- Authorising end-user and non-transfer certificates for the import of controlled defence and strategic goods; and
- Providing assistance with re-transfer approvals for foreign-sourced defence items.
DEC statistics reveal that in FY2018-19 a total of 93 per cent of permits included a declared value, while 72 per cent and 83 per cent of the permits included declared values in FY2016-17 and FY2017-18.
Additionally, the DEC reveals that in FY2018-19 the majority of approved permits – 22 per cent – were linked to exports to North America. End-user requirements within Australia for ‘returns and repairs’ on foreign systems accounted for 20 per cent, as did permits for Asia.
The majority of the remainder were for end-users in Europe (18 per cent) and New Zealand (17 per cent). Permits approved for fiscal years 2016-17 and 2017-18 show a similar trend for geographical locations.
Finally, the DEC stated it received a total of 3,973 defence export applications in FY2018-19, a 4 per cent increase over the 3,826 applications received the previous year.
A total of 89 per cent of defence export applications received in 2018/19 were deemed by the DEC as “non-sensitive”, while the remainder were regarded as ‘sensitive or complex’.
Further information about the Defence Export Controls, including reference materials, information and forms, is available here |
https://www.defence.gov.au/ExportControls/AboutUs.asp (Source: Defence Connect)
15 Jan 20. $80bn future submarine program runs aground, again. The Australian National Audit Office (ANAO) has released a scathing review into the nation’s largest defence program – the $80bn Attack Class submarine program – revealing myriad challenges to delivering the program, with serious concerns about the viability of the contract and Australia’s future submarine capability.
It is the largest defence acquisition project in the history of the nation, but the apparently $50bn project to replace the ageing Collins Class submarines with 12 regionally-superior submarines is in deep water.
Concerns about cost, capability and delivery time frame are again making headlines following the release of a troubling report from the Australian National Audit Office (ANAO) titled Future Submarine – Transition to design, building on the fallout from a fiery exchange at Senate estimates in late-2019.
Future Submarine Program manager Rear Admiral Greg Sammut explained to the Senate estimates hearing that the ‘out-turned’ cost of Australia’s future fleet of submarines was estimated to be around $80bn – a figure frequently cited but subsequently rubbished by former defence minister Christopher Pyne and other Defence officials.
Further compounding the costs associated with the acquisition is the continuing concerns about the capability of the proposed vessels, with many expressing, often vocally, concerns about the obsolescence of lead-acid batteries and the conventional power plant expected to power the vessels out to the 2080s.
When then prime minister Malcolm Turnbull announced the DCNS, now Naval Group, conventionally-powered Shortfin Barracuda, now the Attack Class, as the successful design for the hotly contested SEA 1000 Future Submarine program in April 2016, it seemed as if the disastrous procurement of the Collins Class would be put aside.
Now, the ANAO presents a different, yet concerning picture of Australia’s largest defence project and while it isn’t all bad news for the Attack Class program, pointed questions still need to be asked about the tactical and strategic viability and value-for-money of the conventionally-powered submarines into the future.
Don’t be too harsh, Defence got some things right
Before rushing to judgement, it is critical to identify that the ANAO does recognise that Defence effectively designed the competitive evaluation process for the selection of the future submarine partner – further to this, the ANAO report accepts that “Defence designed a fit-for-purpose process to evaluate and select an international partner for Australia’s Future Submarine program”.
As is well documented, ANAO analysis concluded:
“Defence determined that the Future Submarine would be designed and built by a proven submarine designer with recent experience in designing and building diesel-electric submarines. Defence analysis concluded that Direction de Constructions Navales Services (DCNS) of France (now Naval Group), ThyssenKrupp Marine Systems GmbH (TKMS) of Germany and the government of Japan were the only viable potential international partners to meet this requirement, and which could proceed to the competitive evaluation process.”
Of note is that Defence actively considered engaging ship builders in the US and UK, respectively – however the prospective partners were unable to participate as a result of their own respective submarine build programs.
The ANAO also states that Defence designed an effective and ‘fit-for-purpose’ framework for evaluating the competing designs and the capacity of the respective partners to support the Commonwealth on the Future Submarine program.
This CEP framework focused on five key criteria that would inform Defence’s decision as to the successful partner, which ANAO considered covering “a broad and appropriate range of issues” including:
- Delivery schedule;
- Program implementation (including sustainment and Australian industry involvement); and
As part of this, ANAO recognises that “Defence effectively implemented the competitive evaluation process to select an international partner for the Future Submarine program”.
Building on this, ANAO revealed that the entire CEP process and the final conclusion in selecting DCNS was reviewed by a third party to ensure the integrity of the process – this review was conducted by two former senior US submarine program managers, who also served as chief engineers in the US Navy.
This review concluded, “The work of the competitive evaluation process is competent, diligent, expert and consistent. It is sufficiently disciplined to withstand scrutiny and is well documented. The competitive evaluation process to identify the right international partner will be successful in finding the right answer.”
But! There were some mistakes
Despite Defence achieving some success throughout the CEP process, there were some blunders throughout the CEP – namely: “The competitive evaluation process was not aimed at eliciting and assessing a full design for the Future Submarine, or identifying firm cost and schedule data. These processes will be
undertaken with the successful international partner subsequent to the competitive evaluation.”
One thing this does reveal, albeit without specifically stating it, is that the time frame for capability definition through to the CEP phase is too slow, results in a rush to ‘cut steel’ once the probity phase of the program is complete – this also exposes the entire project to risk beyond the standard risk management profile for similarly sized programs.
This is reinforced by Centre Alliance senator Rex Patrick who told Defence Connect, “Defence started this project years late. When it did start there was significant delay in negotiating the strategic partnering agreement with Naval Group. They then re-scheduled critical milestone dates in the contract and have not met them.
“I support the ANAO’s view that the project risk is high to extreme. Historically, Defence projects that have become projects of concern have done so because Defence had not fully appreciated the risk or had approached it too optimistically. Defence has not met its obligations to mitigate that clear risk. They need to have a fall back plan.
“The fact that the plan for the key issue of detailed design work being done in Australia hasn’t been delivered is a major concern. There was a commitment from government to have the design work transitioned to Australia. This commitment must be met.”
Another bump in the road – cost increases and delayed construction
As part of the Senate estimates hearing, RADM Sammut revealed that the total cost for the turned out vessels was now estimated to be $145bn, bringing the total SEA 1000 program cost to around $225bn by the time of the vessel’s planned retirement some time in the 2080s.
“It is only an estimate of the sustainment of the fleet, we are designing the sub today,” RADM Sammut explained at the time.
This cost explosion is further exacerbated by an apparent ‘slip’ in the planned commencement date for construction of the lead boat, HMAS Attack, which was widely publicised as 2022-23 and has now subsequently been pushed back to the 2024 time frame – further exposing Australia’s ageing Collins Class vessels to potential adversary over match.
RADM Sammut was quick to explain this away, like a skilled operator, informing Senate estimates that the slated time frame was referencing the standing up of construction personnel, tools, infrastructure, processes and equipment to commence the construction of HMAS Attack’s pressure hull in 2024.
These bombshells come following a revelation earlier in the year that the cancellation fees associated with the SEA 1000 program amounted to $404m – which seems like a steal when measured against the ballooning costs associated with the program.
Additionally, it has been revealed that while the design phase was behind schedule, to the tune of nine months, ANAO stated:
“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 A$396m on design of the Future Submarine has been fully effective in achieving the program’s two major design milestones to date. Defence expenditure on design represents some 47 per cent of all program expenditure to 30 September 2019.”
Additionally, ANAO states, rather concerningly: “Defence’s overall assessment of risk for the Future Submarine Program is ‘high’ and Defence has adopted relevant risk mitigation strategies, including the long-term partnership with Naval Group. This key relationship is at a relatively early stage and the parties’ active management of both specific issues and the partnership is essential for effective risk management and program success.”
This was reinforced by opposition defence spokesman Richard Marles, who stated in The Australian that “on all three measures of this program — on time of delivery, on the cost of the project, and on the amount of the Australian content — the numbers are all going the wrong way”.
The time for plug and play construction?
To contrast the costs associated with Australia’s future Attack Class submarines of between $4.2 and $6bn per unit (including infrastructure development, research and development costs).
This is compared with the unit cost of the French Barracudas of approximately US$1.4bn ($2bn) per unit (based on 2013 prices), which raises questions about the validity and cost-benefit analysis conducted on doubling down with early-20th century technology.
Contemporary submarine construction, like contemporary naval and civilian shipbuilding, is done predominantly in a modular, ‘block build’ fashion, enabling an easier integration for technology development and enhancements throughout the build phase – what this means is a stark difference between the broader capabilities and technology in vessels over the life of the build phase.
The long lead-time prior to the commencement of the construction process provides a number of additional opportunities, particularly for Australia’s Attack Class submarines.
In particular, to avoid the costly and time consuming redesign and conversion phase, purchase the standard Barracuda Class design and make the necessary modifications to incorporate the US-designed weapons systems and combat systems without reinventing the wheel.
Doing so builds on the technological and industrial lessons learned by Naval Group throughout the same process getting Suffren to the launch stage – it wouldn’t serve to hinder the build process for Australian industry but could conceivably serve to reduce risk for Australia as a result of minimal complex design changes.
Alternatively, Australia could engage Naval Group to build the initial vessel or first block, while embedding Australian industry in Cherbourg, while giving the local industry the time to stand up the necessary capability to support and block build all but the reactor module insertion.
Additionally, it would provide the opportunity for Australian industry to bring the phase forward by using Australian workers to build the full submarines while drawing on French nuclear propulsion expertise to serve as “technology insert” experts to install the nuclear reactors for the Australian submarines.
The long lead-time for this development would also provide an opportunity for Australia to embed both civilian and military nuclear experts and submariners in the nuclear industries and nuclear-powered submarine fleets of key allies, including France, the US and UK, to develop the expertise and skills required to safely, efficiently and effectively operate nuclear-powered submarines.
This stubborn insistence on consistently reinventing the wheel and calling it progress will serve to challenge the long-term capability of Australia’s submarine fleet while also cementing a 20th century focused industrial capacity.
However, it doesn’t have to be this way, as Australia’s recently initiated design clarification process, long lead-time for construction and international partnerships provide the opportunity to reset the paradigm.
Questions to be asked
As an island nation, Australia is defined by its relationship and access to the ocean, with strategic sea-lines-of-communication supporting over 90 per cent of global trade, a result of the cost effective and reliable nature of sea transport.
Indo-Pacific Asia is at the epicentre of the global maritime trade, with about US$5trn worth of trade flowing through the South China Sea and the strategic waterways and choke points of south-east Asia annually.
While the Indian Ocean and its critical global sea-lines-of-communication are responsible for more than 80 per cent of the world’s seaborne trade in critical energy supplies, namely oil and natural gas, which serve as the lifeblood of any advanced economy.
Submarines are critical to the nation’s ability to protect these strategically vital waterways and key naval assets, as well as providing a viable tactical and strategic deterrent and ensure the nation’s enduring national and economic security – recognising this, the previously posed questions will serve as conversation starting points.
However, given the geographic area of responsibility Australia will become increasingly responsible for and dependent on, is the RAN and the recapitalisation and conventionally-focused modernisation program for Australia’s submarine fleet enough for Australia to maintain its qualitative and quantitative lead over regional peers?
Traditionally, Australia has focused on a platform-for-platform acquisition program – focused on replacing, modernising or upgrading key capabilities on a like-for-like basis without a guiding policy, doctrine or strategy, limiting the overall effectiveness, survivability and capability of the RAN. (Source: Defence Connect)
14 Jan 20. European powers step up pressure on Iran over nuclear deal. UK, France and Germany trigger dispute mechanism after Tehran abandons enrichment limits. UK, France and Germany have triggered a dispute mechanism in the 2015 nuclear agreement with Iran, their most robust response yet to Tehran’s decision to abandon the uranium enrichment limits set in the accord. The European move pushes the agreement closer to collapse and comes amid escalating diplomatic tensions between the west and the Islamic republic. The three countries, known as the E3, said in a joint statement they had been “left with no choice, given Iran’s actions” but to trigger the dispute mechanism. The move could ultimately lead to the reimposition of UN sanctions on the republic. European diplomats say they are not yet at that stage and insist they are still working to save the deal, which is deemed critical to restricting Tehran’s ability to develop the capacity to build nuclear weapons.
“We do this in good faith with the overarching objective of preserving the JCPOA [nuclear accord] and in the sincere hope of finding a way forward to resolve the impasse through constructive diplomatic dialogue,” the E3’s foreign ministers said. “In doing so, our three countries are not joining a campaign to implement maximum pressure against Iran.” But they also want to register their concern over Iran’s announcement this month that it would end limits on the number of centrifuges used for enrichment. Tehran took the decision — which means it no longer abides by any of its commitments on uranium enrichment — days after a US drone strike killed Qassem Soleimani, Iran’s most powerful military commander. The nuclear accord’s signatories — which also include China and Russia — will now meet within 15 days to discuss their concerns. Diplomats describe the mechanism’s process as “flexible” and “extendable” and it could drag on for months. France, the UK and Germany have been battling to save the deal since Donald Trump unilaterally withdrew the US from the accord in 2018 and imposed crippling economic sanctions on Iran. The decision to trigger the dispute mechanism comes as Tehran is threatening to kick out the UK ambassador, alleging the British diplomat participated in an illegal anti-government gathering in the Iranian capital. Iran has been increasing its nuclear activity in stages since May as it complains that it is no longer receiving the economic dividend it was promised when it signed up to the deal. Under the accord, the Islamic regime agreed to curb its atomic activity in return for many western sanctions being lifted, but Washington’s punitive measures have strangled its ability to export oil and driven the republic into its worst recession for decades. The Trump administration’s “maximum pressure” policy has heightened tensions across the region, with Washington accusing Tehran of conducting attacks on Saudi Arabia’s oil infrastructure and tankers in the Gulf. The E3 share the US’s concerns about Iran’s support for regional militant groups and the development of its ballistic missile programme. But they believe the nuclear deal is vital to avoiding a regional arms race and maintaining diplomatic channels with the republic.
Josep Borrell, EU foreign policy chief and co-ordinator of the Iran nuclear deal, said he expected all parties to make “intensive efforts in good faith” now the dispute mechanism had been triggered. “The JCPOA is a significant achievement of sustained multilateral diplomacy following years of negotiations,” he said. “In light of the ongoing dangerous escalations in the Middle East, the preservation of the JCPOA is now more important than ever.” The US sanctions have, however, stymied European efforts to keep open finance and trade lines with Iran to ease the economic pressure on the regime. Iran says it is still committed to the accord, and has continued to allow the International Atomic Energy Agency, the watchdog, to monitor its nuclear activity. It says that all the steps it has taken, including increasing its stockpile of enriched uranium and ramping up its nuclear research and development, are reversible if the republic receives the economic benefits it expects. After the European announcement, Mohammad Javad Zarif, Iran’s foreign minister, accused the E3 of jeopardising the deal by bending to American pressure. “For 20 months, the E3 — following UK appeasement policy — has bowed to US diktat. That hasn’t gotten it anywhere — and it never will,” he said on Twitter. “E3 can save JCPOA but not by appeasing the bully & pressuring the complying party. Rather it should muster the courage to fulfil its own obligations.” Mr Zarif’s statement came after Boris Johnson, the UK prime minister, repeated a call he made last year for a new US deal on Iran. “Let’s replace it and let’s replace it with the Trump deal. That’s what we need to see,” Mr Johnson told the BBC. Tehran’s main concern is its ability to sell its oil, the lifeline of the economy, as US sanctions have reduced its exports from about 2.8m barrels a day in May to less than 500,000 bpd. Robert Malley, president of the International Crisis Group, branded the European decision a “mistake” that could have the “unintended consequence” of strengthening hardliners in Iran who wanted to junk the deal. “It’s a mistake because it doesn’t really gain them anything,” he said. “The more they go down that road, the more they risk losing Iran and the more they risk pushing Iran in a completely different direction.” Mr Malley, who helped negotiate the nuclear deal as an Obama administration official, said the Europeans now needed to use the process “smartly” to create space for talks with Iran running up to and even beyond the US presidential election in November. But he warned: “Once you invoke this, a clock starts ticking and the message to Iran is ‘you are moving away from us.’” (Source: FT.com)
12 Jan 20. Indian Navy hits a major milestone with a home-grown experimental jet. The Indian Navy hit a major milestone in its quest for a home-grown carrier-based fighter aircraft, the military’s research and development wing announced Saturday. A prototype of a naval version of India’s Tejas light combat aircraft performed an arrested landing on board the carrier Vikramaditya in the Arabian Sea, the Indian Defence Research and Development Organisation announced on Twitter.
“After completing extensive trials on the Shore Based Test Facility (SBTF), Naval version of Light Combat Aircraft (LCA) did a successful arrested landing onboard INS Vikramaditya at 1002 hrs today,” DRDO said in a press release.
India’s defense minister took to Twitter to hail the step forward in India’s goal of developing more of its fighter technology in country.
“Extremely happy to learn of the maiden landing of DRDO developed LCA Navy on INS Vikramaditya,” Rajnath Singh tweeted. “This successful landing is a great event in the history of Indian Fighter aircraft development programme.”
While the Tejas is a single-engine fighter, the Navy is looking to develop a twin-egine carrier-based fighter to field in the 2030s.
The Indian Navy has an ongoing competition for 57 carrier-based fighters, with Boeing’s F/A-18 Block III Super Hornet being among the competitors. The Indian Navy operates the MiG-29K Fulcrum, but has been generally unhappy with its ability to stand up to the rigors of carrier-based aviation, Defense News reported in 2017.
“We (Indian Navy) want the MiG-29K aircraft to be ruggedized to carry out operations because landing on the deck of the aircraft carrier is almost like a hard landing and the fighter aircraft needs frequent maintenance,” a Navy official told Defense News.
“There are frequent structural defects due to deck landing,” the official added.
However, Anastasia Kravchenkov, a representative of Russian Aircraft Corporation MiG, said in official correspondence: “Neither we, nor our partners have received any official claims about operational problems with the Russian MiG aircrafts.”
The Indian Navy has made subsequent statements that it has worked out its maintenance and spare parts issues.
The MiG-29K is among the competitors for the ongoing competition, along with Saab, which is pitching joint development of a Sea Gripen. Dassault is reportedly offering its Rafale M fighter. (Source: Defense News Early Bird/Defense News)
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