"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.

Pete

Abbott's "Open Tender" Future Submarine Call Doesn't Go Far Enough

Prime Minister Abbott seems to be the main advocate for "Buy Soryu and Built it in Japan" however his hold on the position of Prime Minister (PM) is still threatened. Yesterday (February 8, 2015) PM Abbott appeared to say that the future submarine issue should go to open tender.  But Abbott was not definite in stating what he meant. He did not say "Build the submarines in Adelaide". It was unclear whether the government owned Australian Submarine Corporations (ASC) would be ordered to ally itself with the Japanese Soryu (KHI and MHI) "bid". It remains likely the Soryus would mostly be built in Japan but as is already anticipated the US-Australian developed combat system might be mostly fitted in Adelaide by ASC.
- The extract in that article "It is understood that France, Germany, Sweden and Japan were to be named in a selective tender process that would allow Australia to solicit bids from other governments, rather than just corporations."  is ambiguous. It may be aimed at the US Government providing the combat system. It may also suggest there will be much weight given in choosing the winning "bid" on what bidding governments have to offer. This would favor Japan in the context of the Japan-Australia free trade agreement . The Japan-Australia strategic alliance issue I wrote about in my previous article would also favor Japan. The other contenders (Germany, France, Sweden) do not bring such economic and strategic benefits to the table.

On February 8, rather than making a serious effort to plan the future submarine build Abbott appeared to be just securing votes from Federal Liberal Party politicians from South Australia to support him in a No-confidence meeting on February 9, 2015.

Although Abbott won enough votes (at the 9am February 9, 2015 meeting in Canberra) from his Liberal Party to stay PM Abbott's survival as PM remains unresolved. This is because there was a split vote, 61 votes he should stay on and a substantial minority of 39 votes that he should stand down. This reflects continuing unhappiness at Abbott's non-consultative leadership style. More no-confidence votes are likely in the months to come.

Now that the immediatte threat to Abbott's PM job is over continuing submarine discontent of politicians in Adelaide is being heard. This more recent article (February 9, 2015) from Australia's ABC indicates: The South Australia State Defence Minister, Martin Hamilton-Smith, believes the newly promised shift to an open tender process for future submarines falls short of the Federal Government's promise that ASC would build the submarines in Adelaide. He believed the open tender process could still result in the ships being built overseas. So he believes that Build 12 submarines in Adelaide should be a definite condition of the tender.

- Independent Federal Senator Nick Xenophon said he was also deeply sceptical about Mr Abbott's new promise for an open tender process. Mr Xenophon said the PM should have announced that the tender process would lead to the subs being built in Australia.

- Federal Defence Minister Kevin Andrews urges caution and patience

Overall Abbott needs to be more explicit that he now supports a truly open tender with most of the build in Adelaide - not a rigged tender that favors a build in Japan. If Abbott remains vague, without Prime Ministerial OR Defence Ministerial Media Releases, Abbott may easily renege-backtrack as his 2014 broken promise of "Build in South Australia". 

In terms of what submarines should be built I think the cost of a totally new or heavily modified 3,000-4,000 ton (surfaced) submarines would be too expensive and involve overly long lead-times. Also since the end of Australia's mining boom, 2 years ago, Australia doesn't have the $20-$25 Billions for 10 to 12 large, possibly orphan, subs. More money towards other voter-popular causes (health, education, welfare) would keep Abbott in his job as PM and the Coalition in power.

Large, heavily modified submarines, built in Australia or overseas, are such a tough choice I think Abbott would describe it as a lose-lose decision. 

If I had my way I'd just buy 6 medium size (Scorpene, HDW 214, Dolphin 2, or Kockums A26) from France, Germany or Sweden for $5 Billion TOTAL price (ie. just over A$800 million per submarine).

Odds on Abbott makes no major decision till 2017 - that is AFTER the next election. - even if the US is applying pressure. Regarding US pressure, note this timely scholarly comment of MIT’s Jonathan D. Caverley “The thumb on the scales that has Australia leaning towards Japan for its submarines has an American fingerprint.” (page 19 of Running Faster to Stay in Place: U.S. Defence Exports in 2030 within RSIS’s  http://www.rsis.edu.sg/rsis-publication/idss/the-global-arms-industry-in-2030-and-beyond/#.VNhLU_mUen8 )

Pete