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Dr Mark Thomson from the Australian Strategic Policy Institute has authored a paper on The Strategist, analysing the recently released RAND report titled ‘Australia’s Naval Shipbuilding Enterprise – Preparing for the 21st Century.’ This memo provides RAND’s response to his analysis, as well as addresses some of the concerns raised by Dr Thomson.

When given the opportunity to offer feedback to Dr Thomson’s analysis a few days prior to publication, RAND provided him an extensive and detailed response highlighting several mischaracterisations and errors in his previous draft. However, we were not given the opportunity to comment on the final, published paper, which continued to include a number of these mischaracterisations and errors and also introduced additional issues.

For example we would like to point out:

• Under the two-year drumbeat option, there is no replication of the ‘gap’ following the Future Frigate program since the first of the follow on AWDs will have to be started some six or seven years before delivery. (Note: Drumbeat refers to the pace of ship construction starts, with a drumbeat of one meaning one start a year, a drumbeat of two meaning a start every second year, a drumbeat of three meaning a start every third year, etc)
• In his analysis, Mr Thomson uses the RAND labour data for the construction of an OPV, and then uses the cost of a UK OPV to project the cost of an Australian OPV without making adjustments for local conditions.
• Thomson’s characterisation of the shipyard model and how labour levels are simulated are oversimplified. For example, the model does not assume labour is ‘instantaneously available.’
• The dates for ANZAC and Frigate are misrepresented. One would not deliver the initial Future Frigate hulls without some extended spacing. This spacing is typical of naval ship production and is used to work through initial design changes and establish production procedures and processes before full-rate production begins.
• Having a full commercial, competitive environment around shipbuilding in Australia, as Dr Thomson suggests, is both unrealistic and countered by the experience of other countries.

Secondly, it is important to emphasise that the RAND report does not make recommendations on the preferred way ahead for Australia’s Naval Shipbuilding Community. Rather, the RAND analysis explored a range of acquisition strategies and their consequences—some at the request of Government—in an effort to help inform key decision makers.

The modeling and methodology RAND used to conduct the analysis of the Australian Shipbuilding Industrial base is proven and has been successfully used many times before.

Additionally, this analysis was carefully researched, included collaboration with many other experts in both government and industry, and went through a rigorous peer review process by a former US Navy Admiral who held the position of Program Executive Officer Ships and a senior RAND researcher who has decades of shipyard/shipbuilding experience. As a result, we are confident in the results of our analysis, and we firmly stand by the findings in this report.