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The Commonwealth will shortly release a restricted tender to Lockheed Martin and Raytheon to determine who should be the lead system integrator ^[2] of the combat system in Australia’s future submarine. The task of the winning bidder will be to integrate a range of yet-to-be-selected sensors (i.e. sonar, ESM, electro-optical and communications systems) and weapons (i.e. torpedoes, missiles and mines) into the heart of the system, the AN/BYG-1 (BYG) Command and Control (C2) System.

The tender will signal the final transition of the BYG from the future submarine’s ‘reference C2 system ^[3]’ to ‘preferred C2 system ^[4]’ to ‘selected C2 system’; the latter two designations occurring without so much as a sniff of competition or any objective form of baselining, and indeed without any understanding of the cost ^[5].

Noting the price of a combat system, which becomes all the more expensive when the Commonwealth takes on responsibility for its integration, such a selection is at best cavalier with respect to the taxpayer and at worst in contravention of S5 of the PGPA Act ^[6]. Its sole source selection is troublesome on three counts: there are doubts with respect to its capability advantage, significant issues associated with its cost and a history of poor performance with respect to promised Australian Industry Involvement (AII). This blog deals with the latter two. Part 2 will address capability concerns.

With repect to cost, the BYG system has cost at least twice what it should have. The original Rockwell equivalent of the BYG C2 system and weapon control system was the TDHS, which cost $152 million to develop from scratch. The writer was employed by the company that developed the successful ISUS 90 Combat System and is aware its C2 component development-from-scratch cost was a reasonable margin less than the TDHS cost. And yet, to date, Defence’s spending with respect to BYG is at least $360 million (excluding ASC’s installation costs); $360 million for a purported off-the-shelf system in contrast to a comparable system developed from scratch costing in the range $100–$150 million.

Of the $360 million spent, $166 million of this has been on Australian unique upgrade work. Defence’s answers to Senate questions on notice indicate that no unique capability requests have been made with respect to BYG, other than to deal with the system’s high power consumption. One might easily have reasonable cause for concern over a $166 million spend on ‘unique nothingness’.

With respect to AII, many of the very successful submarine combat system companies in Australia were encouraged about possible involvement in the BYG program after it was selected on strategic grounds (after losing to a less expensive German ISUS-90 system in a 2001 competive evaluation). USN officials, in company with Australian officials, conducted industry workshops in 2003 and stated:

‘We value our partnership with the Commonwealth of Australia and look forward to the full participation of Australian Industry and the Royal Australian Navy in the Combat System Modernization Process.’

14 years on however, when tested against those statements, the program can reasonably be characterised as an AII failure.

In May 2011 Warren King advised the Senate that no Australian company had made it past the first step of a four step process into the US program. Again in 2012 Defence confirmed the situation remained the same. Defence agreed it wasn’t doing well on the AII front and that priority with respect to it needed adjustment. Industry hope was regenerated after Defence advised Senator Johnston in October, ‘a plan to increase Australian industry competitiveness in the AN/BYG-1 development program is expected to be completed in early 2013’.

The plan hasn’t been published but Defence funded two Australian entities, Cirrus Real Time Processing Systems and Thales, to the tune of $230,000 and $155,000 respectively, to participate in the latest BYG upgrade round. It’s recently emerged that both companies were successful in their presentation at concept evaluation step of the upgrade program, but that neither were engaged for any further US work.

A recently disclosed internal Defence document ^[7] on the Future Submarine discussed giving regards to ‘the Commonwealth’s imperative to exercise sovereign control over its submarine capability and the consequent need to exercise independence and self reliance in submarine sustainment’. In contrast to this call, Australia’s combat system industry has been locked out of its own submarine platform; sovereign control and self reliance has been abandoned in favour of the US alliance.

To be clear, this piece doesn’t suggest that the BYG shouldn’t be on the future submarine. Its simply asks the reader, ‘on what basis would Defence not run a Combat System competition?’ If BYG is the best capability, if it does have the best indigenous input regime, if its integration into the submarine presents the least risk, if its through-life support and improvement model is a clear winner, and if its price is best then no-one should fear a competition. If it’s the best overall package, BYG will win.