Australian documents showed French submarine project had been under threat for years

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SYDNEY – France should not have been surprised that Australia canceled a submarine contract, as major concerns about delays, cost overruns and adequacy had been formally and publicly expressed for years, Australian politicians said.

Paris recalled its ambassadors from Canberra and Washington, saying it was caught off guard by Canberra’s decision to build nuclear submarines with the United States and Britain rather than stick to its contract for French diesel submarines.

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Yet as early as September 2018, an independent watchdog led by former US Secretary of the Navy Donald Winter advised Australia to look into alternatives and questioned whether the project was in the national interest, a 2020 public report from the country’s auditor. General shows.

Australian parliamentary hearings and reports on the project, initially valued at $ 40 billion and more recently at $ 60 billion, even before construction began, have also shown problems emerging. In June, the defense secretary told parliament that “contingency planning” for the program was underway.

“They should close their eyes not to realize the danger they are facing,” said Rex Patrick, independent senator from South Australia, referring to France.

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Government ministers said this week that Canberra had been “outspoken” with Paris about the problems.

A French lawmaker also questioned parliament in June about Australian concerns about the delays and whether Australia could consider underwater alternatives, according to French parliamentary records.

“We chose not to go through a door in a contract,” Prime Minister Scott Morrison told reporters upon his arrival in New York on Monday. “The contract was drawn up that way, and we chose not to go through it because we believed it would ultimately not be in Australia’s best interests.”

French officials did not dispute that there were difficulties, as there could be with any big contract, but said Canberra never suggested it wanted nuclear propulsion, even when Paris brought up the subject. Foreign Minister Jean-Yves Le Drian described the cancellation last week as “a stab in the back”.

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“On the same day as the #AUKUS announcement, the Australians wrote to France to say they were satisfied with the achievable performance of the submarine and the progress of the program. In short: looking forward to launching the next phase of the contract, ”the spokesperson for the French Ministry of the Armed Forces, Hervé Grandjean, said on Twitter on Tuesday.

An official at the French embassy in Canberra told Reuters on Tuesday that an intergovernmental agreement should have allowed for confidential discussions between ministers on changes in political or strategic circumstances.

“No warning, no proposal for a discussion has been offered,” the official said, speaking on condition of anonymity due to the sensitivity of the matter.

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EXCLUDING RAILS AND DOORS

The deal was first announced in 2016. A pre-design review was delayed in 2018 because “the work provided to Defense by Naval Group did not meet Defense requirements,” the Australian audit, citing lack of design details, operational requirements and 63 studies. not completed.

The contract between Australia and Naval Group, majority owned by the French state, was signed 16 months late in February 2019.

It included contractual exit ramps into which Australia could pay to exit the project, and established “control gates” through which Naval Group must meet criteria before moving on to the next phase. The Defense Department took these “stopping points” into account when assessing the risk of the project, the auditor general said.

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In September 2019, with A $ 446 million ($ 325 million) already spent in France, the Department of Defense told the auditor that it had considered extending the life of the sub-fleet. Australian sailors of the Collins class “and the time it would take to develop a new acquisition strategy.” “

The 2020 Auditor General’s report examining the submarine deal – the largest ever by the Department of Defense – found the department had been “frank and timely” in communicating its concerns to Naval Group .

Naval Group said in a statement to Reuters that it was aware of the public debate, but that official statements supported the submarine program. He said Morrison was “very clear that the decision was not the result of difficulties with the Future Submarine Program or the Naval Group”.

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“Naval Group has kept its commitments to the Commonwealth of Australia, as acknowledged in the ‘convenience’ termination letter we received,” the statement said.

REVIEW GROUP

According to the Auditor General’s report, the last major milestone of the French contract – a preliminary design review – dates back to January 2021.

An industry source with direct knowledge of the case told Reuters that Naval Group Australia provided Defense equipment “at the end of January or February”, but Australia did not consider it to meet the requirements. .

Morrison’s office created an expert panel in January to advise a select circle of his cabinet on how to proceed with the program, as contract notices and parliamentary files show.

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In June, senators, including Patrick, asked panel chairman William Hilarides, a former US Navy vice-admiral, if he had advised the government to cancel the French contract.

Hilarides, who had overseen the construction of ships and submarines for the US Navy, said the panel’s advice was confidential.

Former BAE Systems Submarines chief Murray Easton, who had overturned a delayed UK nuclear submarine program, joined the panel in February, according to contract notices.

It met by videoconference 10 times in June, including confidential briefings for its American members at the Australian embassy in Washington, the parliament was told.

Easton and Hilarides did not respond to requests for comment. ($ 1 = A $ 1.3755) (Reporting by Kirsty Needham; Additional reporting by John Irish in Paris; Editing by Gerry Doyle and Alison Williams)