FxWirePro: Bullion OTC Bids Indicate Further Upside Risks And Uphold Long Hedges Via Options Strategy
Why the French submarine won the bid to replace the Collins-class
France will be awarded the contract to partner with Australia to build the next generation of submarines to replace the Collins-class, Prime Minister Malcolm Turnbull announced today.
But what was at stake in this A$50 billion program? What were the real technological differences between the submarines on offer?
In early 2015, the Department of Defence issued invitations to Thyssenkrupp Marine Systems (TKMS) of Germany, Direction des Constructions Navales Services (DCNS) of France, and the Japanese government – represented through Mitsubishi Heavy Industries (MHI) and Kawasaki Heavy Industries (KHI) – to submit concepts for a submarine design by November 30, 2015.
The proposal was also to address the construction and managing of Australia’s most complex defence project ever undertaken. Sidestepping competitive tendering, the government opted for a competitive evaluation process (CEP) to determine its overseas partner(s) for the future submarine program (FSP) project SEA1000.
Headed by Rear Admiral Gregory John Sammut, the Commonwealth’s CEP evaluation team was scheduled to submit its recommendation to an expert advisory panel by early June 2016.
This process has been brought forward in order for the government to announce the overseas submarine design house and, importantly, where FSP will be built before the Senate and the House of Representatives are dissolved for a double-dissolution election.
The French option
DCNS’s Shortfin Barracuda Block 1A, a derivative of its Barracuda nuclear-powered attack submarine currently under construction in France, has turned out to be the winner.
Because of the endurance and long range stipulated by the Royal Australian Navy (RAN), the French have selected the Barracuda as their design reference. The Shortfin Barracuda will be equipped with four diesel alternators to generate electricity, a >7 megawatt permanent magnet motor and ample battery storage.
These should allow it to meet or exceed the RAN’s requirements of range, endurance and indiscretion rate, which is the time the submarine spends exposed while recharging its batteries.
A video by DCNS profiling the Shortfin Barracuda Block 1A.
The aftcontrol surfaces on a single propeller submarine are likely to disturb the water flowing into the rotating blades. This, according to DCNS, will generate cavitation, which is best mitigated by the introduction of a propulsor where the rotor and stator are shrouded.
DCNS also claims it has incorporated the most sensitive passive sonar ever offered with a conventional submarine. Matched to the US AN/BYG-1 combat system requirements and equipped with sophisticated above-water sensors, the French claim that the Shortfin Barracuda will offer operational capability beyond the RAN’s requirements..
The Japanese option
Buttressed by a handshake between then-prime minister Tony Abbott and Japanese Prime Minister Shinzō Abe, the Japanese were sure that MHI/KHI would secure Australia’s largest-ever defence contract. The companies began to work on their evolved Sōryū-class submarine for the RAN, called the Goryu-class, or “Australian Dragon”.
The agreement signed on July 8, 2014, by the governments of Australia and Japan for the joint development of submarine technology, and more specifically the Marine Hydrodynamics Project, provided the Japanese with the requisite peace of mind to work on an optimal Australian submarine submission.
The introduction of the CEP in early 2015 did not unsettle the Abe government unduly as long as Abbott was in charge in Canberra. However, the ousting of Abbott and the appointment of a new defence minister, Marise Payne, meant Japan could no longer be assured of automatic selection. The CEP for the FSP became thoroughly and hotly contested.
The Japanese Soryu-class submarine Hakuryu was to be adapted for Australian use. United States Navy
Caught by surprise when Germany and France were invited to compete for the coveted submarine contract, the Japanese government countered by agreeing to build all 12 submarines in Australia and use the construction facilities in Adelaide as a future base for a major innovation centre.
In a further move, it indicated its preparedness to share its most secret submarine stealth technology with the RAN. And to demonstrate the unique capabilities of the Sōryū-class, the Japanese Maritime Self Defence Force was sending the JS Hakuryu to take part in Exercise Nichi Gou Trident with the RAN and RAAF off the Sydney coast.
Not to be distracted by this move, the opponents of the Japanese option let it be known that the RAN would not attain regional superiority even with the evolved Sōryū-class.
Critics asserted that the lack of Japanese submarine technology and know-how meant that the Sōryū offered less capability than the existing Collins-class. It was a deficiency so fundamental, they claimed, that the lengthening of the Sōryū by six-to-eight metres for improved crew habitability and increased range made little difference to the Goryu-class when matched against the submarine designs of the French and the Germans.
The Japanese had planned to install proven high-tech lithium-ion battery technology in numbers 11 and 12 of their current class, and claim that their submarines are quieter and dive deeper than any other conventional submarine in service.
The German option
Arguably the German Navy’s submarines are among the world’s stealthiest underwater platforms. Aside from their traditional combat roles, they are employed as “vehicles of position” that gather intelligence, perform surveillance and reconnaissance at maritime choke points, shipping lanes and harbours.
The design philosophy of “as small as possible and as large as necessary” has so dictated the Type 212A submarines of the German and Italian navies. It also uses air-independent propulsion, which is quieter in operation than conventional diesel-electric.
The latest submarine of the world’s most prolific submarine builder remains small at 1,660 tonnes submerged displacement. Yet the new class is more than three times larger than its predecessor, the Type 206A.
The compact German Type 212A submarine. United States Navy
With this successful upsizing, TKMS answered the sceptics who claimed that the Germans would have found it difficult to evolve their existing submarines designs to the >3,810 tonnes Type 216 Australian variant.
In conjunction with Siemens, TKMS also offered the integrated 3D Digital Shipyard. The application of simulation software was to ensure issues that could affect construction were identified before the first steel is cut. They claimed it is a risk mitigator in the evolution and up-scaling of an existing design.
In this regard, the Germans were countering DCNS’ propulsor with Siemens’ Permasyn propulsion motor and MTU’s proven submarine diesels. While the drive train on the Type 216 required up-scaling of the main motor to over 6MW, Siemens believed that this would have been accomplished without undue difficulty.
All three companies have proven track records in submarine design and construction. Building overseas would have seen the Japanese leave their comfort zone. However, they brought defence and geostrategic advantages to the negotiation table. Offering the RAN supply and repair bases in Japan was one of their most persuasive arguments.
The Germans pushed their vast submarine design and building experience – more than 160 submarines delivered to 20 navies over the past 50 years. This experience, TKMS claimed, would have put the FSP in a “safe pair of hands”.
The French Navy operates submarines across the five oceans. DCNS argued that the experience and propulsion technology they transferred from their conventional and nuclear submarines made them the preferred candidate for the FSP. And they turned out to be right.
Hans J. Ohff is the former CEO of ASC.
Hans J. Ohff, Visiting Fellow, University of Adelaide