Submarines for Australia March 2020 Australia’s Future Submarine Do we need a Plan B? ! A USTRALIA’ S F UTURE S UBMARINE: D O W E N EED A P LAN 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 ! i! A USTRALIA’ S F UTURE S UBMARINE: D O W E N EED A P LAN B? 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 ! A USTRALIA’ S F UTURE S UBMARINE: D O W E N EED A P LAN B? 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 4! ! A USTRALIA’ S F UTURE S UBMARINE: D O W E N EED A P LAN B? 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.