Likely submarine decision in late 2016. Japan, TKMS, DCNS battle it out.

1. Likely decision will only be publicised in late 2016.

The Australian Government in December 2015 said it will make a decision “in the first half” of 2016 on who wins the Australian future submarine competition.

Pete’s Comment: Given the deep domestic political implications for the Turnbull of making a submarine decision I think it likely that Turnbull will make that decision after the next Federal Election. Too many election sensitive interest groups will be unhappy about "what it means to their local shipyard, dockyard, jobs, city, State and Electorate". If a normal Australian Federal Election is held the earliest possible date for a simultaneous House/half-Senate Federal election is 6 August 2016.^[1]

However the most popular months for Turnbull to time the Election are after August - ie. in September or October 2016. Therefore a submarine decision is most likely after the election ie. late 2016.

2. Japanese determination to have a lower upfront price than TKMS and DCNS.

In Comments in early January 2016 “S” provided three main sets of information. The following is the main politican one. The battery and budget sets will follow later this week:

The Japanese government is “extremely serious” in wanting to win a submarine bid.

The Japanese government has therefore asked MHI and KHI, the joint makers of the Soryu, not to place priority on profitability in the bidding war. As a result, they could possibly have an edge over the German and French companies (informed sources said).

Meanwhile, German Chancellor Angela Merkel [on behalf of German TKMS’s bid] has reportedly warned the Australian side that Canberra’s relations with China could deteriorate if it awards the submarine contract to Japan, whose ties with an increasingly assertive China have recently been strained. [Pete notes I have seen no major statements from China that supports Chancellor Merkel’s contention. If there are major Chinese statements grateful if the TKMS sales team, Adelaide, can provide them.]

Japanese Ambassador to Australia, Sumio Kusaka

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3. Japanese Ambassador to Australia and the big picture.

In Brendan Nicholson's article in The Australian, January 4, 2016 http://www.theaustralian.com.au/news/inquirer/japan-plays-for-the-submarine-prize/news-story/dc65e959e418395e91795412fb44bc6f (subscription) here are short parts of a long interview of Japanese Ambassador to Australia, Sumio Kusaka. Kusaka "scoffs at suggestions that language and cultural differences could make it difficult for Japan to build Australia’s" [new submarines].

[Kusaka continued]...“Which brings us to the submarines, Australia’s biggest defence project. Depending on whether the government opts for eight vessels or more, the submarines will cost ­between about $12 billion and $20bn to build, and it will take ­another $30bn to sustain them through their lives.”

...“It is an Australia-first policy they have in mind. A very trustworthy commitment,” the ambassador says, adding that Japan is the only country in the world to have constructed and operated a 4000-tonne conventional submarine."

“In contrast, France’s plan for a conventionally-powered “short-fin” Barracuda submarine based on its nuclear-powered Barracuda-class subs would be a huge challenge, Kusaka says. “In our case there is minimal engineering risk. We have proven reliability. That is very important."

…"The region’s peace and prosperity are so important to the US, Australia and Japan that it is only natural for the three nations to co-operate." [Pete's Comment - a reminder that the US is providing one third of the submarine - in the shape of the Combat System/Weapons]. See WHOLE ARTICLE in The Australian.

Pete