Monday, 17 September 2018
Future Submarine Project; Order for the Production of Documents
I set out the government's position on behalf of the then Minister for Defence Industry in relation to the documents sought in order 862 in my letter to the President of the Senate of 25 June 2018. The final cost estimate template that DCNS, now Naval Group, submitted in response to the Future Submarine Competitive Evaluation Process, the CEP, is of a commercially sensitive nature. The release of the pricing details would severely undermine Naval Group's ability to do business, to tender for further submarine work and to maintain a competitive edge in a commercial marketplace. The offer which was made by Naval Group had the support and the backing of the government of France. Releasing these details would not only undermine Naval Group's competitive position in the marketplace but has the potential to damage our international relationship with France.
I note that the movers of the motion also sought access to this information under FOI and that the decision-maker denied access to the information under sections 47C and 47G of the FOI Act. This information remains sensitive and not for public disclosure. The documents that are sought in order 862 contain material commercially confidential to Naval Group. It includes fee and price details. It includes special terms unique to the Future Submarine program. I also note that sensitive commercial negotiations are still underway between the Australian government and Naval Group, and those negotiations go directly to the documents sought in order 862. Those negotiations are still underway. The release of these documents at this time has the potential to prejudice those ongoing negotiations and to prejudice the Commonwealth's commercial position in this important program. For that reason, and for those other reasons I've already mentioned, I am advised by the Minister for Defence Industry that the government maintains its public interest immunity claim.
It is also important to note that the acquisition costs of the Future Submarine program included more than the design and construction of the Future Submarine. As is stated on page 89 of the 2016 Defence integrated investment program, the acquisition cost of the Future Submarine capability is estimated at greater than $50 billion out turned, which includes: the cost of designing and constructing the fleet of 12 submarines; the cost of designing and integrating the combat system in each of the 12 submarines; the investment in science and technology that will be required; the delivery of logistics support, including documentation and initial sparing; and the design and construction of the submarine yard and other land-based test facilities—for example, wharves, the training centres, crew facilities and so on.
The initial estimate of the sustainment costs of the Future Submarines is approximately $50 billion, constant over the life of the Future Submarine fleet, which will extend to around 2080. Both the acquisition and sustainment cost estimates for the program will continue to be refined as design of the Future Submarine continues. Estimates are developing over time, and with more information they'll become more accurate and will be available after critical design review, which is scheduled to take place in 2022.
As a senator and a minister in this place I absolutely understand and appreciate the concerns, views and perspectives which those opposite, who moved the motion, bring to this discussion. It's not the first time we have engaged in these exchanges—it's most certainly not the first time in this chamber and we also have significant engagements in the estimates process.
I do think it is important to note that we are at a very sensitive point in time. The commercial negotiations are still underway. The material which is being sought is of a commercially sensitive nature. As I said in my earlier remarks, the release of the pricing details would ultimately severely undermine the Naval Group's ability to tender for further submarine work and its ability to maintain a competitive edge in a commercial marketplace.
Most of all, I don't understand the approach which would see the position of the Commonwealth government compromised in the process of commercially sensitive negotiations, which is the position the government is concerned the release of these documents would leave us in, given the timing. I'm advised, as I said, by the Minister for Defence Industry, who I represent in this place, that the government maintains its public interest immunity claim.