PARIS --- Australia’s announcement that it has selected BAE Systems as the preferred tenderer to supply nine Hunter-class “Future Frigates” under the SEA 5000 program has generated great enthusiasm – and great hyperbole– in Britain, most of it based on wrong assumptions.
The first wrong assumption, that the contract is worth A$35 billion to BAE, was encouraged by UK Prime Minister Theresa May, who “hailed a shipbuilding contract worth up to £20 billion between BAE Systems and the Australian government as the biggest Naval defence contract for a decade.”
Not only is it not the biggest naval defense contract for a decade – that distinction belongs to the A$50 billion contract signed in April 2016 with France’s Naval Group to supply submarines – but it also overstates the British company’s role.
Furthermore, the deal is not done yet. As BAE noted in its own statement, “The company will soon commence negotiations with Australia’s Department of Defence on the initial design part of the contract, which is expected to be in place by the year-end, with production expected to commence in 2020.” Australia’s Parliament will also be required to approve the program, and the related expenditure, over the course of 2019.
Although awarded to BAE Systems, the Type 26 frigate selected by Australia will, in fact, be built by ASC Shipbuilding “in Australia, by Australians, using Australian steel,” as the official June 29 statement by Australian Prime Minister Malcolm Turnbull makes clear.
Hands-on management – and liability
To ensure BAE has hands-on control of the entire project, avoiding the problems encountered during the construction of the three Air Warfare Destroyers, Australia has come up with a novel plan.
“ASC Shipbuilding, currently wholly owned by the Commonwealth, will become a subsidiary of BAE Systems during the build. This ensures BAE Systems is fully responsible and accountable for the delivery of the frigates and ensures the work will be carried out by Australian workers and create Australian jobs.
“The Commonwealth of Australia will retain a sovereign share in ASC Shipbuilding while BAE manages the program. At the end of the program the Commonwealth will resume complete ownership of ASC Shipbuilding, thereby ensuring the retention in Australia of intellectual property, a highly skilled workforce and the associated equipment.”
The idea is that, when the time comes for Australia to recover ownership of ASC Shipbuilding, BAE’s investment, training and transfer of technology will have turned it into “a strategic national asset capable of independently designing, developing and leading the construction of complex, large naval warships.”
The nine ships will be built in three batches, the Royal Australian Navy said in a June 29 statement. The first batch of three will be named HMA Ships Flinders (II) after the SA region named for explorer Captain Matthew Flinders, who completed the first circumnavigation of Australia and identified it as a continent; Hunter (after the NSW region named for Vice-Admiral John Hunter – first fleet Captain and 2nd Governor of NSW); and Tasman, after Dutch explorer Abel Tasman, the first known European explorer to reach Tasmania, New Zealand and Fiji.
No information was provided as to the build rate, but the first Hunter-class ship is to be commissioned in the late 2020s. The Anzac-class frigates they are to replace will remain in service until the late 2040s, which implies that deliveries will stretch out over 20 years, implying a rate of one ship every two or three years.
Most components not UK-sourced
It is worth noting that, although designated as frigates, the new ships will actually displace 8,800 tonnes, making them closer to destroyers than frigates -- the US Navy’s DDG-51 Aegis destroyers have about the same displacement, while Australia’s own Hobart-class destroyers displace just 7,000 tonnes.
This extra displacement will come in handy when integrating all the sensors, weapons and other equipment, because while they are being ostensibly bought for anti-submarine warfare, the Hunter-class frigates will have air warfare capabilities comparable to those of the Hobart class ships.
Although BAE is the project’s design authority, the Australian government has already made a number of decisions regarding the Hunter-class frigates’ equipment, which BAE will now have to work into its Type 26 design.
The ships’ combat system, for example, will be the Lockheed Martin Aegis Combat System, which Australia is buying under a $185 million deal approved by the US State Dept. on June 26.
BAE will integrate the Australian CEA FAR 2 Phased Array Radar into Aegis, which will be fitted with a tactical interface developed locally by Saab Australia and based on Saab’s 9LV Combat Management System. Saab Australia “has taken on an additional 70 staff over the past six months, and the Future Frigate project will lead to another 200 jobs over the next two years,” it said in a June 29 statement.
BAE will also have to integrate the other sensors and weapons that Australia has already selected for the new frigates. These include S2150 hull-mounted sonar, S2087 towed array and variable depth sonar, both made by Ultra Electronics Australia; MU90 torpedoes, supplied by the France-based Eurotorp joint venture; Raytheon SM2 and ESSM missiles using the US-made Mk 41 vertical launch system, and the Australian-made Nulka decoy system.
The ships’ helicopter will be the Sikorsky MH-60Rs, operating alongside an as-yet unspecified unmanned system.
It is also likely, for reasons of commonality, spares support and training, that the new ships will be powered by General Electric LM2500 gas turbines, as are the RAN’s Hobart-class air warfare destroyers, but this has not yet been confirmed.
BAE’s revenue will be limited
As reported by The Australian, “the government said the Australian component of the contract would be 65-70 per cent,” and that “at the end of the delivery scheduled for 2042, ASC would retain intellectual property, a skilled workforce and associated equipment.”
Consequently, the ships’ British content will be limited, especially as far as major components and subsystems are concerned, and so will generate comparatively little revenue for either BAE Systems and the British economy.
As the steel used for the ships will be Australian, as will the 4-5,000 jobs generated by their construction, the revenue flow to BAE Systems will be far removed from the £20 billion headline sum trumpeted by British politicians.
Click here for an analysis of the program on the ASPI Strategist blog.