AWD Project goes from bad to worse

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AWD Project goes from bad to worse

Postby MikeJames » 15 Aug 2014 18:35

From News.com.au

Defence’s Air Warfare Destroyer delayed project $500M over budget

THE nation’s most troubled defence project — the $8 billion Air Warfare Destroyer — is now running $500 million over budget and will be delivered at least two years late.

It is understood that the latest cost increase — estimated at $150 million — has only just been revealed by the alliance building the three warships — Adelaide-based government owned shipbuilder ASC, US giant Raytheon and Federal Government’s Defence Materiel Organisation (DMO).
The incredibly complex build for the Hobart-class Air Warfare Destroyer has been dogged by delays caused by poor work standards, incorrect drawings and lack of coordination between the Spanish designed Navantia and the Air Warfare Destroyer Alliance.

Image
Planning started in 2000 ... The Hobart-class Air Warship Destroyer being built at Port Adelaide. Picture: Supplied. Source: Supplied

The government will soon announce a third attempt to fix it and that British based conglomerate BAE Systems will be brought in to oversee the taxpayer-funded repair job.

Speaking to News Corp Australia on board a RAAF KC-30A tanker plane high over the outback an angry Defence Minister David Johnston said the program was in “deep, deep trouble”.
“That is a disgraceful mess of a program,” Senator Johnston said. “The AWD will be one or two years late if we are lucky and several hundred millions over budget.” He said he was still uncovering budgetary issues nine months after coming to office.

“People are not wanting to be frank about how bad this project is,” Senator Johnston said. “This is a bit of skunk.”

Image
Computer generated image ... The Hobart-class Air Warfare Destroyer (AWD) for the Royal Australian Navy ( RAN). Picture: Defence Department Source: Supplied

In better news for Adelaide and Australian industry the minister said the 2015 Defence White Paper would include plans to preserve shipbuilding.
He said ASC was doing a good job on submarine sustainment and that business would continue regardless of who built the navy’s new submarines.
The government is closely studying Japanese and German designs as it seeks to avoid extending the life of the Collins Class fleet.

“Were we able to seamlessly trade out of Collins there would be a considerable saving. We haven’t built a submarine for 20 years and all those skills have evaporated,” Senator Johnston said. “In terms of sustainment we are back in business.”

He said the White Paper may not include exact costings for the new boats and it would definitely not give a final number.

ENDS

My comment Basically Australia's shipbuilding industry is shooting itself in the foot, no wonder Johnston didn't give local builders a shot at the tankers.

At this rate, the Anzac replacements should be sourced from overseas, if only because Australia cannot afford this level of incompetence. We really, really should have gone with the Arleigh Burkes when they were on offer. The cost over run on the AWDs alone would have paid for half of a Burke, fully delivered.

Mike
Last edited by MikeJames on 15 Aug 2014 18:40, edited 1 time in total.
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Re: AWD Project goes from bad to worse

Postby MikeJames » 15 Aug 2014 18:40

And proving the useless bastards running our shipbuilding industry have absolutely no shame, especially given the article above...

Shipbuilding companies lobby Government for a fourth Air Warfare Destroyer

Despite navy opposition, a two-year delay and an estimated $500 million cost blowout, the defence industry has stepped up its campaign to sell the Abbott Government a fourth Air Warfare Destroyer (AWD) for the Navy.

An alliance, led by Adelaide based shipbuilder ASC, US giant Raytheon and the Defence Materiel Organisation (DMO), is building three Spanish designed destroyers at the ASC shipyard in Adelaide's Port River under an $8 billion contract.

Blocks for the highly capable warships are being built at Forgacs in Newcastle and at the BAE Systems dockyard at Williamstown in Melbourne.

A fourth vessel has always been a possibility, but Navy Chief Vice-Admiral Ray Griggs has opposed the $2 billion ship due to potential manning problems and expensive technical challenges, including future combat systems upgrades.

Defence Minister David Johnston this week called for two fresh briefing papers on the project as he plots a way forward to avoid the so-called navy shipbuilding "valley of death'' when work runs out between 2015 and 2020.

The risk is a loss of skills and capability on the eve of a shipbuilding boom from 2020 when new fleets of surface warships and submarines will be constructed.

Industry leaders have been furiously lobbying the government and Navy brass on behalf of a fourth AWD. AWD alliance boss Rod Equid appealed for understanding about the complex problems faced by a project based on a foreign design with blocks built in two separate yards and assembled in a third.

Mr Equid said the problems with the first ever such alliance project were well known and understood, but what was less well known were its successes such as the strong alliance culture and the building of capability and skills.

"There is a dedicated, highly skilled and professional team working in a range of fields including production, combat systems, engineering, sustainment and project management," he said.

Mr Equid joined a chorus of industry leaders warning the government about the risk from losing skills when the AWD project ends.

"The AWD Alliance has already let some experienced and skilled people go and they will continue to leave the program at a rate of around 200 people each year through to 2018," he said. Mr Equid said the AWD Alliance would have to begin planning work soon to keep the option of a fourth AWD viable.

ASC executive Sean Costello called for the establishment of a Ship Integrator (SI) to manage all future naval shipbuilding.

"The SI is the guardian of the complete value chain - the 'single point of truth' accountable for integrating all systems and data on a warship or submarine," Mr Costello said. He also announced that ASC would build two replenishment ships at its yard in South Korea if it won the contract.

ASC Ltd, formerly the Australian Submarine Corporation, will bid for a tender to replace the supply ships, HMAS Success and HMAS Sirius.

"Our Korean shipyard has a shorter schedule than the Australian shipyard - they can build it more quickly," he told AAP. He said that local builders would need to work with international partners to deliver ships to the navy.
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Re: AWD Project goes from bad to worse

Postby MikeJames » 23 Sep 2014 08:34

Shipbuilders from Spanish firm Navantia called in to salvage destroyer program
THE AUSTRALIAN SEPTEMBER 23, 2014 12:00AM

THE Abbott government will install a senior team of shipbuilders from Spanish firm Navantia to work on the Air Warfare Destroyers as it attempts to salvage the troubled $8.5 billion project.

The move is one of the first steps in the government’s recovery plan for what Defence Minister David Johnston has described as a “disgraceful mess of a project” and a “skunk” that has been plagued with cost overruns of more than $500 million and delays of up to two years.

Senator Johnston has said the reform strategy for the AWD project will be a “test case” for the Australian defence industry that will have a bearing on future procurement decisions. Sources close to Adelaide-based shipbuilder ASC said a team of up to 15 senior Navantia personnel would be charged with overseeing the integration and testing phase of the first of the Hobart-class destroyers ahead of delivery, due in October 2016.

Additional personnel from systems contractor Raytheon are also expected to be embedded into the workforce. Navantia, which was excluded from the original AWD Alliance consortium and blamed for many of the project’s initial design flaws, will provide direction for the workforce alongside ASC.

The move comes after a government review by former US secretary of navy Don Winter and Australian shipbuilder John White reportedly recommended installing BAE Industries to take control of the project.

Government sources say the move is a small step in a “long, tortuous and complex” process that may yet see BAE take on a greater role. “There is a lot of gaming, positioning and uncertainty on the project; everyone wants it to end, but we have to get out of trouble first,” a government source said.

Navantia and BAE are jockeying for work on the Future Frigate program to replace the navy’s eight Anzac-class frigates. BAE is understood to be reluctant to take over the AWD project without a guarantee of work on the Future Frigate program for which it wants to build its Type-26 global combat ship. Navantia wants to build a Future Frigate based on the AWD hull — an option the government has allocated $78m to explore.

Finance Minister Mathias Cormann said the government reform process involved working with a number of companies, including Navantia, “to understand their ­capacity to assist in the successful delivery of Air Warfare Destroyer reform”. But he said a decision on the final participants of the reform process had not been made.
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Re: AWD Project goes from bad to worse

Postby MikeJames » 09 Dec 2014 12:58

Piss ups and breweries come to mind when it comes to ASC. Given the latest announced delays, I believe it would be criminal to even consider awarding submarine construction, let alone design, to ASC.


Defence team given seven months to save air warfare destroyers
THE AUSTRALIAN DECEMBER 09, 2014 9:37AM

Sarah Martin
Political Reporter
Canberra

AN expert defence team has until July next year to reverse the fortunes of the beleaguered air warfare destroyers, as the government reveals the $8.5 billion construction project is running three years behind schedule.

As revealed in The Australian today, the government has released its long-awaited rescue plan for the air warfare destroyer project, following eight months of negotiation with defence contractors.

But exposing the challenge to salvage the nation’s largest ever defence project, Finance Minister Mathias Cormann revealed that the first and second ships are now running 30 months behind schedule, and the final ship’s delivery date is now three years delayed until 2020. This is a further 15 month delay since the project was last “rebaselined” in 2012.

Senator Cormann said the group of up to 40 defence experts from Raytheon, Navantia and BAE to be deployed to the ASC shipyard in Adelaide would be contracted to help manage the project until July next year.

“The government has been working and is committed to ensuring that this important defence project is put back on track,” Senator Cormann said.

“We are committed to stop the growing schedule and cost overruns which we inherited from our predecessors.”

He said that the most recent advice was that the project was at least $600m over budget, but the new team would. investigate the extent of the blowout..

“The work that is to be done over the interim period between now and the end of July 2015 will focus on really putting a final number on the actual cost overruns,” he said.

A shipbuilding source said all participants had been convinced by the government to cooperate, in recognition that future shipbuilding contracts — including Australia’s role in the future submarine project — would be jeopardised if the AWD project could not be salvaged.

“The government has clearly said the future of naval shipbuilding in Australia starts and finishes with turning the AWD around,” the source said.

“There is no prospect of *additional work for anyone in the industry unless we fix up the AWD program.”

The move comes after Defence Minister David Johnston last week said ASC could not be trusted to build a canoe, and following attacks on the project as a “disgraceful mess” and a “skunk”.

Senator Johnston said today that fixing the air warfare destroyer project was critical for proving the country had a viable shipbuilding future.
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Re: AWD Project goes from bad to worse

Postby MikeJames » 09 Dec 2014 12:59

More on this, outlining the delays and costs... Oh my god.

Rescue plan for AWD project

Sarah Martin
Political Reporter
Canberra

UP to 40 defence experts will be deployed to the government-owned ASC shipyard to rescue the nation’s largest naval project, the $8.5 billion air warfare destroyers.

The bid to reverse the troubled project’s fortunes — more than $600 million over budget and 21 months delayed — will decide the fate of the nation’s shipbuilding industry, as the government is insisting *future naval projects depend on salvaging the AWD project.

After more than eight months of negotiation with the country’s largest defence contractors, the government will today announce the first step in its long-awaited AWD reform strategy. The Australian can reveal the rescue plan will keep the AWD Alliance structure in place, but hand management of key elements of the project to systems engineer Raytheon, bolstered by expertise from Spanish designer Navantia and BAE Systems.

New contracts for the rescue plan were finalised late yesterday and will be announced by Defence Minister David Johnston and Finance Minister *Mathias Cormann today.

The AWD Alliance comprises the Defence Materiel Organisation, Raytheon Australia and ASC. Subcontractors to the *alliance include Navantia for the ship design. BAE Systems in Victoria and Forgacs Engineering in Newcastle are contracted to build some of the ship’s modules. Navantia, excluded from the original consortium, will now help manage the completion of the first ship for its 2016 delivery date. But in a slight to BAE, the government has maintained ASC as lead shipbuilder, dashing the Williamstown contractor’s hopes of taking over the project and the ASC workforce.

The move comes after Senator Johnston last week said ASC could not be trusted to build a canoe, and following attacks on the project as a “disgraceful mess” and a “skunk”.

Sources say today’s plan will reveal 11 Navantia experts will be installed at the Osborne shipyard near Port Adelaide and that BAE will allocate eight experts from Williamstown and its overseas operations. Raytheon is expected to embed up to 20 more senior staff on site.

Senator Johnston said the ongoing roles of ASC and Ray*theon as lead contractors under the AWD Alliance structure demonstrated the government’s faith in the shipyard. “This interim period marks a turning point in the performance of ASC and its partners on this important project and will renew confidence in the future of Australia’s shipbuilding industry,” he said.

Maintaining ASC in the lead role is at odds with a key recommendation of the unreleased White-Winter review, written by former US Navy secretary Don Winter and Australian shipbuilder John White. As revealed in The Australian, the review said installing BAE as shipyard manager was critical to reversing the fortunes of the AWD program.

Sources say BAE was denied the opportunity to take over the management role as it was seen by the Department of Finance as privatisation of ASC by stealth, denying any financial return to the government for effectively selling off ASC.

Senator Cormann said the appointment of the new expert management team would drive improvements in shipbuilding performance and productivity.

A shipbuilding source said all participants had been convinced by the government to cooperate, in recognition that future shipbuilding contracts — including Australia’s role in the future submarine project — would be jeopardised if the AWD project could not be salvaged.

“The government has clearly said the future of naval shipbuilding in Australia starts and finishes with turning the AWD around,” the source said.

“There is no prospect of *additional work for anyone in the industry unless we fix up the AWD program.”

Senator Johnston has said the reform strategy for the AWD project will be a test case for the industry that will have a bearing on future procurement decisions. Last week he revealed the second AWD ship had recorded a 30 per cent lift in productivity compared with ship one, offering hopes of “green shoots”.

Senator Johnston will today announce a three-point plan for the naval shipbuilding industry, which includes fixing the AWD program, building a sovereign submarine industry and maintaining naval shipbuilding jobs. He will say the government will commit to a fleet of future frigates providing industry productivity continues to improve.
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Re: AWD Project goes from bad to worse

Postby MikeJames » 10 Dec 2014 12:07

I thought the worst was behind us on this, apparently not.

Shipbuilder’s crunch time

THE AUSTRALIAN DECEMBER 10, 2014 12:00AM
Cameron Stewart
Associate Editor
Melbourne

THE success or failure of the seven-month rescue plan unveiled for the country’s largest defence project is likely to determine whether warships continue to be built in Australia.

If this latest plan does not get the $8.5 billion Air Warfare Destroyer project back on track by July, there will be little political appetite to construct the next generation of frigates here, spelling the end of this strategically important industry and the jobs of up to 6000 workers. The government said as much yesterday when it declared: “The outcomes of this interim period will also inform the government’s considerations on the Australian naval shipbuilding industry in the context of the 2015 defence white paper.”

These are high stakes and ones that require firm leadership, unity and a clear vision to ensure the survival of the troubled industry.

Yet the government’s promise yesterday that these new “major steps” would mark a “turning point” for the AWD project and “renew confidence in the future of Australia’s shipbuilding industry” gloss over a darker reality.

The AWD project and naval shipbuilding is bedevilled by a lack of political will, indecision and infighting. When leadership is needed, Defence Minister David Johnston is being rendered impotent by the perception among his colleagues that he is not up to the job and the expectation that he will be replaced in a ministerial reshuffle early next year.

Even without a winged Defence Minister, the Abbott government finds itself caught in an ideological no-man’s land on naval shipbuilding. Politically, it can’t afford to let the industry die no matter how inefficient it is because it would mean the abandonment of Adelaide as the hub of the defence industry — a mantra that all sides of politics have invested in for 25 years.

Witness the sharp political backlash in South Australia when Johnston said he wouldn’t trust the Adelaide-based government shipbuilder ASC, which employs 2600 people, to build a canoe.

The government was already on the nose in South Australia for backtracking earlier this year from its promise to construct 12 new submarines in Adelaide — as well as the shutdown of Holden — and Johnston’s canoe comment was blamed for contributing to the surprise large swing to Labor in the Adelaide seat of Fisher by-election at the weekend.

Yet the government also ref*uses to pick favourites to save naval shipbuilding. Rather than view the industry as a national security asset that requires a degree of government protection, it has applied the same free market philosophy that doomed the local car industry.

As such, the government has muddled away for more than a year without a clear vision for how it intends to save the industry and its flagship project to build three AWDs, the largest and most sophisticated warships constructed for the Royal Australian Navy.

Until now, the government has been able to take political refuge behind the failures of Labor, which oversaw the blowout in the AWD project, made no headway in planning for future submarines and then slashed the Defence budget before being voted out.

The Rudd-Gillard governments also left office without a plan to avoid the so-called Valley of Death in which thousands of shipyard workers lose their jobs between large projects because naval ship orders are so uneven.

Yet in the 14 months since gaining office, Johnston has also been unable to solve the Valley of Death issue and the AWD project has gone from bad to worse.

The AWDs will provide theatre missile defence to protect large convoys of troops embarking on the two new Landing Helicopter Dock ships, which at 27,000 *tonnes are the largest ships in the navy. The two LHDs, the first of which was commissioned into the navy this month, were built in Spain and fitted out in Melbourne in a project that is on budget.

The future frigate project will seek to replace the navy’s fleet of four ageing Adelaide-class frigates and eight Anzac-class frigates.

The new submarine project will seek to buy anywhere between six and 12 new submarines to replace the fleet of six Collins-class submarines.

Finance Minister Mathias Cormann revealed yesterday that AWD ships one and two are 30 months late (up from 21 months), while ship three is three years late. The project is believed to be about $600 million over budget already with total cost blowouts expected to eventually reach $1 billion — a worse outcome than the famously troubled Collins-class submarine build.

To fix the AWD project, Johnston and Cormann this year commissioned an independent report to suggest a way forward.

Written by former US Navy secretary Don Winter and Australian shipbuilder John White, the report found that the AWD project was flawed from the start. A leaked draft copy of the yet-to-be-released report obtained by The Australian was highly critical of all parties, including the lead shipbuilder, the ASC; the architect of the project, the Defence Materiel Organisation; the Spanish designer, Navantia; and the block-building subcontractors, BAE Systems and Forgacs.

It said that each of these parties had failed in their own way due to a lack of co-ordination, accountability and shipbuilding experience.

In particular, it implied that the project was doomed from the start because DMO had insisted that the AWD project would be managed by a multi-headed entity called the AWD Alliance which included ASC, DMO and Raytheon. It was unwieldy, unaccountable and unworkable.

“It is difficult to know how the alliance can operate as a ‘virtual organisation’, particularly in the event of serious disagreements and even debate on critical issues,” the Winter report said.

It contrasted this messy management structure with previous naval projects such as the Anzac frigates, which had a sole contractor accountable for schedule and costs. The Anzacs were delivered on time and on budget.

The Winter report said the solution to the AWD project was simple: install a single experienced shipbuilder to manage the project and to be accountable for its turnaround. The report said BAE was the most experienced shipbuilder operating in Australia and should therefore be chosen as the “sole source selection of AWD management functions”.

Johnston liked the idea and held a press conference in June to say the government would accept the Winter report’s findings. But then the original rescue plan unravelled behind closed doors.

Cormann and his Finance Department backed away from the report’s key findings that a single experienced shipbuilder needed to take charge of the AWD project.

Finance feared that installing BAE as the project manager would amount to a takeover by stealth of the government-owned ASC, which would reduce its eventual sale price.

But as things stand, ASC’s reputation is so bad it would be virtually worthless as an asset. “Until such time as there is a turnaround in the AWD project, you would struggle to find a buyer,” Australian Strategic Policy Institute analyst Mark Thomson said this week.

Defence, DMO and Johnston wanted to install BAE as the sole manager, but Cormann and Finance, which owns ASC, refused.

Cormann was always going to prevail in this tussle against a weakened Johnston.

These arguments, combined with complex contractual obstacles, meant that the rescue package took eight months to formulate when the Winter report warned that the plan needed to be enacted within three to six months to prevent further delays and cost blowouts. In the end, a compromise solution was reached where ASC would continue to manage the project but would be assisted by a small team of experts from each of Navantia, BAE and Raytheon. Raytheon will embed 20 experts in ASC while Navantia will provide 11 and BAE will be permitted to provide only eight.

Yet these companies see the other as international competitors, so they are loath to assist each other in ways that reveal trade secrets. They are also privately wary of the plan to strengthen ASC to the point where it may one day compete with them for future *projects.

The government brazenly claimed yesterday it “was implementing the reform strategy” recommended by the Winter report despite ignoring the report’s central call for a single manager for the AWD project.

“The whole point of the Winter report was that it called for a sole manager for the AWD project rather than the dog’s breakfast of companies which collectively mismanaged it before,” one defence source says. “Now they have just created a new dog’s breakfast in order to rescue the project.”

The irony is that the three-year delay to the AWD project may help the government to address the Valley of Death because it will reduce the gaps between the AWD project and the frigates project.

The government wants the new frigates to be built in Adelaide using the same hulls as those of the AWD, leading to a rolling build that would sustain shipbuilding in Australia for many years. It has already committed $78m to explore design options for the new frigates and would like to bring the project forward.

But to justify such a massive new program, it must first fix the AWDs.

If the AWD project shows improvement then the government is likely, as early as March, to award the future frigate project to ASC, guaranteeing the future of shipbuilding in Adelaide.

Sources say the AWD project has recently posted the first long-overdue improvements in productivity, although it was premature for Cormann to declare yesterday that “the good news is we have turned a corner”.

The government has made no decision about the future management of the AWD project after this interim rescue ends in July next year.

“The announcement of the federal government’s plan to salvage the flawed Air Warfare Destroyer project may improve the AWD situation but should only be the first step in a bigger rescue strategy,” Australian Industry Group chief executive Innes Willox says.

A commitment to build new frigates in Adelaide after the AWD also would help offset the political anger generated in South Australia by the government reneging on its election promise to build 12 submarines in Adelaide.

Johnston says all options remain open with new submarines but privately the government is looking to buy submarines from overseas because they are cheaper, less risky and could be introduced before the Collins-class boats are retired from the mid-2020s. Japan remains the favoured option to provide the new boats, with other contenders being Germany, France and Sweden.

A DMO team is in France to discuss whether its submarine maker DCNS can build a large conventional version of its Barracuda-class nuclear submarine for the Australian navy.

The government yesterday promised that as part of its naval shipbuilding plan it would “create a sovereign submarine industry”.

The term “sovereign submarine industry” led some to wonder whether the government was reconsidering building new submarines in Australia and the government declined to elaborate.

“In the near future there will be further announcements as to exactly the nuts and bolts and mechanics of precisely what we intend for that,” Johnston said.

But this so-called sovereign industry will almost certainly be limited to using Adelaide as the base to modify, repair and sustain the new submarines, rather than to build them there. The government argues, correctly, that this will still create several thousand jobs in Adelaide, but fewer jobs than if the submarines were constructed in Australia.

The new rescue package for the AWDs is only the first step to saving and then securing the future of naval shipbuilding in Australia, including submarines.

There may be no second chances if it doesn't work.
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Re: AWD Project goes from bad to worse

Postby MikeJames » 22 May 2015 07:25

Just when you think this fiasco couldn't get any worse... And these fools claim they're ready to build new submarines. Johnson was right, ASC are unfit to build canoes. WTF didn't we buy Burkes when we had the opportunity? At the price the US offerred them, we could have had half a dozen for less than the cost of three AWD.

Warships cost blows out to $9bn
THE AUSTRALIAN MAY 22, 2015 12:00AM

Greg Sheridan

Foreign Editor
Melbourne

Image
Air Warfare Destroyer New Ship Hobart

The Air Warfare Destroyer program will run about $2 billion over budget and be nearly three years late, according to a forensic audit to be released today.

The total cost to build the three missile destroyers will exceed $9bn, meaning each ship will cost approximately $3bn. Comparable ships built by Navantia in Spain cost about $1bn.

If Australia had bought the ships ready-built in Spain, it could have had nine for the price of three, or saved $6bn.

The Abbott government’s forensic audit establishes a new baseline of costing and timing for the deeply troubled project.

The government will also today announce a limited tender seeking to inject either a new managing contractor into the government’s Adelaide-based shipbuilder, ASC, for the remainder of the AWD building phase, or, if that is not practical, a new management partnering arrangement to enhance ASC’s capability. The government hopes this tender process will be completed within a few months.

The forensic audit reveals that the minimum cost overrun in the AWD project is $1.2bn. However, the long delay, of more than 30 months for each boat, means the Australian navy will incur substantial additional costs because of the necessity to keep ageing FFG destroyers in service beyond the dates that they were planned to be scrapped.

The first of the AWDs, New Ship Hobart, will be floated off tomorrow. However, it will not be delivered until June 2017 at the earliest because there is still substantial fit-out and systems integration work to be done. Even then, it will be some time after it is delivered before it is formally ­commissioned.

The Hobart was originally scheduled to be delivered last December. The second ship was originally scheduled for delivery in March next year but is not now scheduled to be delivered until September 2018. The third ship was originally due for delivery in June 2017 but is not now scheduled for delivery until March 2020.

The revelation that the cost of building each ship in Australia is approximately three times the cost of building it in Spain has profound implications for the Australian naval shipbuilding industry.

The Abbott government has said it is committed to sustaining a naval shipbuilding industry but believes significant reforms to the industry are necessary for this to be practical. These reforms focus on improving productivity, reducing modifications on established military designs that are unique to Australia, enhancing the integration between the designer and the manufacturer, and tightening government oversight of financial and management matters.

The AWD is being built under a unique alliance structure that ­involves the government, ASC and defence contractor Raytheon.

According to a highly placed source, the Abbott government found the project in “a shocking state” when it took office.

It has established a series of interim reviews to try to get the project back on track. The most important was a review into the AWD program conducted by Don­ald Winter and John White.

The Winter report, which has never been released publicly, found a series of basic flaws in the AWD project. The initial plan was unrealistic in both cost and timing estimates and the alliance structure was unable to provide effective management.

The report found two causes that reflect very poorly on the management of the project under the Gillard and Rudd governments. The first was that government oversight had been ineffective and the second was that the government had not developed a coherent long-term shipbuilding plan.

The government has taken a number of interim measures to try to get the AWD program back on track, including installing an interim chief executive in Mark Lamarre. It has also brought over 17 skilled personnel from Navantia to work with the Australian shipbuilders. It has added skilled personnel from BAE, and Ray­theon has taken on increased management responsibility.

Since these changes were made, productivity has increased according to a number of measures. Shift plan adherence has increased from 10 per cent in June last year to 40 per cent now, and direct labour utilisation has increased from 25 per cent in June last year to 60 per cent now.

The lack of intimate involvement by sufficient Navantia personnel in the building phase of the AWD is considered by many observers to be one of the fundamental problems in the execution of the contract.

Senior government figures are believed to accept there will ­always be a cost premium to building naval ships in Australia and that this is a reasonable cost to pay for securing technology transfer, creating jobs and enhancing maintenance capability.

The government believes the cost premium involved in the AWD project is completely unreasonable, however.

The government is believed still to have a broad intention to build the navy’s replacement frigates in Australia but will require substantial industry reform to make this decision.

The government also plans to finalise a choice by the end of the year between German, French and Japanese options for a submarine to replace the Collins-class boats, which are due to start retiring by the middle of the next decade. All up, the design, build and through life support for the new submarines is costed at about $50bn, making them the biggest single contract entered into by an Australian government.

The French and Germans have said they can offer options involving a substantial amount of ­building in Australia, while it is as yet unclear how much direct Australian work the Japanese option will offer.
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Re: AWD Project goes from bad to worse

Postby rritchie71 » 22 May 2015 11:35

It's in the ABC news aswell.

Leaving the politics out of it of who stuffed up what and what previous and current governments did and didn't do, as much as I'd love Australian made, that's just not sustainable.
Yes we'd pay a premium to build here, but at 3 times the cost to produce the same ship in Spain, you cannot justify spending the money of Australian tax payers in this industry, that 6Billion dollars wasted could have helped a lot of other Australians who will now have to miss out on services or work.

It should be noted that USS George Bush (Nimitz class) cost 6.2Billion to build and that even the new class, USS Gerald R Ford which as had big blowout's by U.S. standards is coming in around 12Billion, so for what we would pay for four AWD's (total 28,000tonnes), the U.S. can produce a nuclear powered 110,000 tonne ship. That really puts it into perspective.


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Re: AWD Project goes from bad to worse

Postby RussF172 » 26 May 2015 18:32

The current government seems to forget that the Howard Government where the ones that cut the tendering process short on these ships and announced that we would build the Navantia design at ASC even before the other company had a chance to submit it's final presentation from the US based Gibbs & Cox and BIW. They also knocked back the US offer of Arleigh Burkes out of their current build line (also from BIW) which would have meant we would have all three (possibly 4 ships) in service by now at about half the cost of the current build with substantially enhanced cababilities with twin hanger (2 aircraft) and 64 cell missile launcher (HOBART has only 48) which were actually the baseline criteria for the design which was "overlooked", much to the bewilderment of the RAN, when the design was chosen. CN handed his resignation in after the decission was announced on TV and it was rejected by the Defence Minister and PM saying he was thowing a tantrum because he wasn't getting what he wanted.
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Re: AWD Project goes from bad to worse

Postby BsHvyCgn9 » 28 May 2015 21:08

It would have made more sense to buy a couple of US built Burke's (It only take em 3 years from keel laying to commissioning...) while the shipyard was being setup here to build two more, then build the ANZAC replacements...similar to how the Adelaide class FFG's were done.

We have discussed the ASCs troubles amongest us here and I say you can compare the shipbuilding industry to the car industry....It took Holden and Ford here in Oz 40 odd years to get to World class car building standards (then 6 mths for the Libs to kill em'off) It would IMO take at least 20 years to get a shipyard (started from ground up) to a technical and production level equivalent to say Gibbs&Cox.

The US has had an ongoing Naval shipbuilding industry (albeit much reduced from Cold war days), our Naval shipbuilding capacity had been reduced to producing dodgy patrol boats....

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Re: AWD Project goes from bad to worse

Postby SlatsSSN » 30 May 2015 13:10

MikeJames wrote:Just when you think this fiasco couldn't get any worse... And these fools claim they're ready to build new submarines. Johnson was right, ASC are unfit to build canoes. WTF didn't we buy Burkes when we had the opportunity? At the price the US offerred them, we could have had half a dozen for less than the cost of three AWD.


Russ and Mike make excellent points about how we got this juncture. It seems odd that the RAN specifications were seemingly ignored and the tender process truncated by strange political interference. But here is something to think about as to why we didn't go with the Burkes.

Why not the Burkes off the shelf?

Simple - because Economists like me would argue that multplier effects to economy of such a purchase is zero at best or negative at worst, even if the raw dollar cost to the taxpayer is lower.

Unlike a car industry that is driven by consumer demand in a market place, defence procurement is different. Mums and Dads buying a Kia over a Falcondore very different to a Nation weighing up its Destroyer needs.
The flow on affect to the Economy of such a large purchase versus building an industry that employs local people and stimulates other sectors and businesses is significant.

Now that is not to say that purchasing is more technically efficient over the inevitable waste that occurs in start up, design, and getting things going. But it is to say that when boffins look to defence purchasing that they consider both dynamic and allocative efficiency to the whole economy, alongside the capability purpose for how the defence item needs to be used.

I have seen credible modelling that indicates that the Collins project and its blow outs in cost, nonetheless contributed $3 worth of extra economic growth (measured as national income) for every $1 spent on the project. That is Collins had a multiplier effect of 3. Its the goal of most Governments to help grow the economy. Home grown defence procurement, done correctly, can be a golden goose. But it is, as Collins and the AWD's proving, a big risk.

Politicians and media love bastardising economics. So to find media like the Australian and the current Liberal Govt focusing purely on cost for cost sake is not surprising. Its an easy sell - focus only on the Defence need - say that its costing more, blame the other side for maladministration, capitalse on the fact that most of the punters won't reaslise who decided what and when, and above all only sound bite the economics that supports your argument. As Russ points out its rich for the Liberals to criticise this when it was Howard Govt's call. They need to own this.

Obviously, not all countries can or should develop defence industries, and economies of scale can occur for certain items. And another factor like Bruce correctly pointed out is that a startup industry comparison to established ones will always be a hard comparison. However, SA does have a large manufacturing skill base of workforce capability, components, and heavy industry; facts not lost on the decision makers in the process to best exploit the multiplier effects. However, if the real costs are consistently too high and over budget, this can be a good test to see if the industry has any prospect for gaining sustainable legs. To me the problem I see with Collins was not so much the cost blowout, but rather it is hard to see how the project beyond Collins contributed to an ongoing industry capability. In fact the AWD in my view was gifted to ASC to try and give the industry a continuance. i.e. Would ASC still exist without the AWD?

On a personal note - I happen to love my AWD. Its coming along nicely, and its so much better looking IMHO than a Burke.
All that said I don't want to paint it Sepo Grey.

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Re: AWD Project goes from bad to worse

Postby MikeJames » 16 Oct 2015 08:37

Industry Confirms Australia’s Hobart Class Destroyers $870 Million Over Budget, Lead Ship 30 Months Late

By: Mike Yeo

October 14, 2015 12:14 PM

SYDNEY, AUSTRALIA — The consortium building three air warfare destroyers (AWDs) for the Royal Australian Navy has provided an update on the construction of the ships, as well as an overview on the lessons learned from the delays and cost overruns that have plagued the program.

Speaking at a conference on the sidelines of the Pacific 2015 International Maritime Exposition in Sydney, Australia, Rod Equid, chief executive officer of the AWD Alliance, also touted steady progress on the remaining two ships even as the lead ship, HMAS Hobart nears completion.

The ships were ordered as part of Australia’s SEA 4000 program for a new class of AWDs to replace the Royal Australian Navy’s Adelaide-class (Oliver Hazard Perry) frigates and its stopgap air warfare capability with the Raytheon SM-2 surface-to-air missile as part of requirements outlined in the 2000 Australian Defense White Paper.

Australia’s Hobart-class AWDs are based on a Spanish Navantia F100 frigate hull modified to Australian requirements, chief of which is a Lockheed-Martin Aegis combat system. Navantia’s design won selection as the hull-form for the AWD in 2007, despite U.S naval company Gibbs and Cox having previously been considered the favorite with an offer of an evolved design based on scaled-down variant of the Arleigh-Burke Flight II-class design.

The AWD Alliance is a contract arrangement between the Commonwealth of Australia represented by the Capabilities and Sustainment Group (formerly the Defense Matériel Organization) as owner-participant, ASC and Raytheon Australia. Navantia, for its part, declined to be part of the alliance, instead opting to sign a platform system design contract with the Alliance.

Soon after construction on the AWDs began in 2010 with the fabrication of pre-fabricated hull blocks at three widely-distributed locations in Australia, reports began emerging of challenges facing the process. These reportedly were primarily related to workforce inexperience with Equid estimating that 95 percent of the workforce was new hires who needed to be trained in the specialized roles they were working in, but also because of issues with drawings available for the alliance to work with.

These resulted in construction delays from the block subcontractors at an early stage of the construction phase, which were exacerbated by the typical “Ship One” issues and the high level of concurrency, which had the effect delivering changes to production throughout construction. The level of engineering effort was underestimated from the start, with project schedules turning out to be too optimistic.

Overall, it was estimated that the construction schedule for the lead AWD, Hobart, has slipped by approximately 30 months, with Equid confirming that costs had overrun to the tune of $870 million. He also touted improvements as the alliance gains experience from ship to ship, citing a 30 percent improvement in second AWD (Brisbane) over the first, with a further 20 percent improvement seen in the construction in the third ship, Sydney.

The schedule was now more realistic and on plan, with the Hobart now in the water since May 2015 with the ship then 76 percent complete. Hobart will commence sea trials in Sept 2016, with delivery to the RAN scheduled for July 2017. Brisbane is now 68 percent complete and close to achieving the construction milestone of completing hull integration with a planned delivery date of September 2018.

Moving on to lessons learned, Equid cited the age-old points of having a realistic plan that matched the complexity of the undertaking and the need to better manage concurrency of design-design maturity issues. The problems with having a transactional relationship with Navantia, where the Spanish shipyard opted out of the alliance and instead signed a relatively low-value contract providing services was cited, but deemed “unavoidable” by Equid.

A 2014 Australian National Audit Office report explained this situation, saying that “there was limited incentive for Navantia to put its own profit share at risk by entering an alliance agreement with a new shipbuilder, and taking part in a pain-share gain-share regime it imposed on (its) potential profit,” with the result of this was that it detracted the ability of the alliance to collectively and collaboratively manage risk.

A recent plan to advance the schedule for building frigates and offshore patrol vessels under Projects SEA 5000 and SEA 1180 respectively and to emphasize domestic production effectively commits the government to a permanent naval shipbuilding industry in Australia, and would hopefully see the skilled labor issues that bedevilled the early construction stages of the AWD program not be repeated in future Australian naval shipbuilding programs.

However, although that decision was made before Australia’s recent prime ministerial changes, with current Prime Minister Malcolm Turnbull not having committed to the continuous-build plan since taking office in September.
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Re: AWD Project goes from bad to worse

Postby MikeJames » 10 Dec 2015 11:13

It's got to the point that even ASC couldn't deny they needed help.

Air Warfare Destroyer – A Clear Way Forward

(Source: Australian Departments of Finance and Defence; issued Dec 08, 2015)

The Government is putting in place long term arrangements to ensure the future success of the Air Warfare Destroyer project and address the legacy of unresolved issues inherited from the previous Labor government.

Following a limited tender process, Navantia SA has been selected to bring an experienced shipbuilding management team into ASC Pty Ltd (ASC) to maximise program performance through to the end of the three ships’ construction. Navantia will also locate a design team in the Osborne shipyard.

This latest step is the culmination of a number of reforms we have made to address budget and schedule overruns and bring the project back on track. These reforms included improvements to the senior management at ASC Shipbuilding and inserted additional shipbuilding and related capability from Navantia, BAE Systems and Raytheon Australia.

These initiatives have seen a marked turnaround in the project’s performance. Productivity has improved by around 35 per cent and delivery of the second and third Air Warfare Destroyers is now expected up to three months earlier than the timeframes estimated by a forensic audit in May this year.

The Government recognises the significant value to our nation of a skilled naval shipbuilding workforce. The Government is prepared to invest in the skills and knowledge base of the Australian naval ship building industry, and is prepared to commit to a long-term investment to make sure this important industry enjoys a future in Australia and these critical skills are maintained.

(ends)

AWD Reform Builds On Shipbuilding Productivity Improvements

(Source: ASC; issued December 8, 2015)

Adelaide-based shipbuilder ASC welcomes the Federal Government’s announcement regarding the long term reform arrangements for the AWD Program.

ASC Shipbuilding Interim CEO Mark Lamarre says the insertion of additional shipbuilding capability into the program builds on the program advances and productivity improvements ASC has made over the last 12-18 months.

“We are a learning organisation and we are applying the lessons learnt from the first ship to the second and third,” Mr Lamarre said.

“Since the commencement of the AWD Reform Strategy ASC has implemented a Five Point Strategy to improve program performance:
-- Increasing shipbuilding experience;
-- Actively reducing the cost base;
-- Removing road blocks to the efficient and timely conduct of work;
-- Controlling and driving discipline into program execution; and
-- Accelerating learning.

“There’s been a 39 percent improvement on Ship 02 and a further 14 percent on Ship 03 and we are getting better every day,” he said.

“We launched the first ship Hobart in May this year at 78% percent complete – the highest rate of completion at launch for the F100 platform. Last week combat systems activation commenced on Hobart and the keel was laid for the third ship Sydney.

“Yesterday we saw the installation of a fully-outfitted mast on the second ship Brisbane – an effort that has taken 10,000 fewer hours than it did on the first ship; a 50 percent cost saving.

“The introduction of Navantia to lead a realigned Shipbuilding Integrated Product Team within the AWD Alliance will help us to efficiently complete the test, activation and trial stages of the ships,” Mr Lamarre said.

“This is an opportunity to further build our shipbuilding expertise and knowledge so that we can more effectively conduct our role as shipbuilder on the AWD Project,” he said.

“ASC already has a very good working relationship with Navantia and we look forward to continuing our close collaboration with them.”

(ends)

Spanish Shipbuilding Firm Navantia to Take Management Control of Air Warfare Destroyer Project from Osborne’s ASC (excerpt)

(Source: Adelaide Advertiser; published December 7, 2015)

Spanish shipbuilder Navantia will take over control of Adelaide’s $10 billion air warfare destroyer project and put a design team into ASC’s Osborne shipyard.

The latest move to rein in cost blowouts in the project to build three of Australia’s most powerful warships is likely to anger sections of the Osborne workforce.

Problems interpreting Navantia’s Spanish technical documents have been partly blamed for cost and schedule delays, which have resulted in the almost $8 billion project blowing out to almost $10 billion.

Finance Minister Mathias Corman and Defence Minister Marise Payne today will announce Navantia has been selected to bring an experienced shipbuilding management team into Government-owned ASC “to maximise program performance” until the three ships are finished.

“This latest step is the culmination of a number of reforms we have made to address budget and schedule overruns and bring the project back on track,” the ministers say in a joint statement.

“These reforms included improvements to the senior management at ASC Shipbuilding and inserted additional shipbuilding and related capability from Navantia, BAE Systems and Raytheon Australia.” (end of excerpt)

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