February 11, 2015

"Open tender" versus "Competitive evaluation process" makes little difference

The removal of "open tender", promised by Prime Minister Abbott on February 8-9, 2015, and its replacement on February 10, 2015 with "competitive evaluation proces" underlines that Australia's selection of a future submarine:

- involves political considerations at the level of Prime Minister that are paramount

- therefore decisions are being made at the level of Prime Minister, his subordinate Prime Minister's Office and his subordinate Department of Prime Minister & Cabinet. These (mostly) men have already drawn advice from many Departments including Defence

- put another way the hundreds of technical considerations that would have been considered important in a tender are less important or have already been decided on

- there is no room left for submarine experts in the Navy, DMO or broader Defence Department to imagine that the now obsolete term "tender" could contradict the decision of the Prime Minister

- the Prime Minister level decision probably has been made with Japanese Prime Minister Abe - that Australia will buy the Soryu. Abbott probably made a Captain's Pick of the Soryu

- the Soryu decision is made for political, economic and strategic reasons. Those reasons include:

  : the US wants Japan to supply the submarine for US reasons (economic, alliance dynamics, political, technical etc). Those reasons include the US preference that Japan's submarine sale serves as a source of income and encouragement for an expanded Japanese defence budget and to help Japan build an alliance system. The US is also selective as to which nations it will supply the its highly sensitive submarine combat system

  : the Soryu involves less technical and economic risk compared to the unbuilt competing bids (HDW 216, DCNS SMX Ocean and Saab-Kockums 4,000 ton Type 61)

  : a deal with Japan is because Japan (not Germany, Sweden and France) is an important Australian  regional ally that can offer many future benefits in strategic support, information sharing and broader trade areas.

  : buying the 3,000 ton (surfaced) Soryu should involve lower price and shorter lead-times than
buying the competing 4,000 ton (surfaced) drawing board only competitors.

Basically, whether the selection is called "open tender" or "competitive evaluation", the same person, Prime Minister Tony Abbott, is making the same decision for the same reasons. Due to US (and to a lesser extent Japanese) preferences those reasons would apply to any Coalition Prime Minister that might replace Tony Abbott.

A Labor Prime Minister may or may not be swayed by some Build in Australia (union, ideological, electoral) reasons. As Labor Opposition Leader Shorten completely supported Australia following the US back into Iraq it is very likely that Shorten would also adhere to the US policy on Austrralia choosing the Soryu.

It is unknown whether Japan (including Mitsubishi and Kawasaki) would be prepared to resolve many Australia public misgivings, by agreeing to do much of the Soryu build in Australia. I already take is as given that the major Australian industrial input will be ASC doing some work on the evolved AN/BYG-1 combat system - also Australia making some of the submarine steel.

I would say the only way to defeat the Soryu "bid" would be to appreciate Australia's budget crisis. This is to respond by offering a submarine at vastly lower price. That could not be achieved with a 4,000 ton (surfaced) design. Only modifications of existing submarines (around 2,000+ tons) have a chance of beating the existing Soryu submarine.



Anonymous said...

Reuters Japan (Nov 19,2014) reported that the life cycle cost (15 years service) of LIB Soryu would be lower than current cost (100B yen=ca.Aus$1.1B) according to JDSM (Japan Maritime Self-Defense Force)related person.

Peter Coates said...

Hi Anonymous

Thanks for passing on the advice. Do you have a hyperlink to the Nov 19, 2014 article? (even in Japanese would be OK).

Naturally different countries operate weapons systems at different prices. As Australia has far less knowledge and infrastructure built around the Soryu (and the similar preeceding Oyashio class) Australia will incur higher costs in operating the Soryu. We will have a steep learning curve.

The JMSDF assumption of only 15 years service is at variance with the Australian norm of 30 years service. Would Australia need to replace all the moving parts - especially the engine and motor after 15 years?



Peter Coates said...

"LIB" of course mean Lithium-ion batteries - reputedly lighter (than traditional lead acid batteries), carry more charge, take less time to recharge, so less indiscretion time of the submarine in snorting-snorkeling mode is needed.

Main drawbacks may be LIB are more prone to catch fire, perhaps be more vulnerable to things like severe shaking (all part of battle damage).

Lead acid batteries have a record of over a century of use (hence their characteristics are more predictable) while LIB probably have no operational use. Replacement cycle for LIBs are hard to predict this side of 10 years.


Anonymous said...

A hyperlink to the article is http://jp.reuters.com/article/companyNews/idJPKCN0J22HD20141118 (10th paragraph). Reuter Japan (Aug 29, 2014, http://jp.reuters.com/article/topNews/idJPKBN0GT06220140829, 4th paragraph) also repoted that the life cycle cost included building and maimtenance costs.

Peter Coates said...

Hi Anonymous (of February 12, 2015)

Thank you for those two links. I can easily translate Japanese articles to English by right-clicking my mouse.

The information is useful. It is now available to the public and reduces their worries about the expensive submarine purchase from Japan.

I am using this technical information in my next article - http://gentleseas.blogspot.com.au/2015/02/possible-technical-issues-with-soryu.html .

Life-cycle costs are very difficult to estimate. Australia will have different costs compared to Japan. Also I think use of Lithium-ion battery life cycle costs (for submarines) will not be certain until about 2030. See the discussion at http://gentleseas.blogspot.com.au/2015/02/possible-technical-issues-with-soryu.html .



Joakim Wohlfeil said...

Hi Pete, as I know you sometimes follow European submarine events. In January the first major New alliance was formed after SAAB,s takeower of Kockums. In the pretext of the "turmoil" leading to SAAB taking over Kockums it was also reported that the Dutch submarine builder Damen Schelde Naval Shipbuilding indicated intrest to take over Kockums, however at that time HDW was not interested to sell to a possible competitor with ambition to use Kockums full capacity on the market.
However, January 20, 2015 SAAB and Damen Naval group announced an alliance for offering the Walrus-class replacement. It is not decided where the new coalition will physically build their submarines but both parties say they are open for alternatives. The political comments has been positive about the alliance as both the Sweden and Netherlands traditionally have shared the ambition to operate highly advanced submarines but with a strategy to have in country control over the construction and building. Sweden's government that owns most od SAAB/Kockums technology has declared that NL is a likely country to cooperate with and suitable for sharing technology. http://www.nyteknik.se/nyheter/fordon_motor/fartyg/article3877397.ece

Peter Coates said...

Hi Joakim Wohlfeil

Thanks for the update on the Swedish-Dutch submarine building group.

Thanks also for http://www.nyteknik.se/nyheter/fordon_motor/fartyg/article3877397.ece . When the mouse is right clicked I've translated it into English.

Saab-Kockums could strengthen its bid to build Australia's new submarine if Saab can provide a certain schedule as to when will Saab be building the A26s (2 or 5 A26s?). What is the tonnage, range and other key measures of the A26?
What would be the measures if an A26 without AIP were selected?
Will the A26 be built with Lithium-ion batteries?

The Dutch Walrus class submarine http://en.wikipedia.org/wiki/Walrus-class_submarine looks very interesting with tonnage 2,350 (surfaced) and range 18,500 km. That may be close to what Australia may want.

The Walrus' evolution from the US's last conventional subs http://en.wikipedia.org/wiki/Barbel-class_submarine is obvious.

The Walrus uses US weapons (Mk 48 torpedos and Harpoon missiles). From that I would say it could be developed with a US combat system.

The Walrus may even be closer to what Australia wants than in-production HDW subs like the HDW Dolphin 2.

I will write next about the Walrus so more information on the Dutch-Swedish plans would be interesting.



Anonymous said...

According to range weapons load the Walrus class could be replaced by Type 214 submarines. Big difference is completement 50 to 27 crew men between Walrus and Type 214 (Soryu 65!).

I guess the Netherlands are looking for a different type of submarine today.


Peter Coates said...

Hi MHalblaub

In my article of Feb 18, 2015 I'll discuss the Walrus replacement and A26. Yes the 214 is ahead in range. The 214 carries 20 torpedos?

Yes one would expect crew savings due to automation in all new subs - including the Soryu. Perhaps the Soryu has more bunks free (but not always used) for intelligence intercept officers or divers? The Soryu can carry 30 torpedos which implies the torpedo department might need some extra crew as well?

There are inbuilt inefficiencies in submarine contruction - reinventing the wheel. Hence Sweden building A26s instead of buying 214s or 210mod.