^[1]This week’s Sea State looks at some of the key ideas that emerged from ASPI’s Future Surface Fleet ^[2] conference, held last week in Canberra. The two-day event brought together a high-powered line-up of local and international specialists for a discussion that included the political aspects of the build, weapons capabilities, international experience, criticisms of both previous and current acquisitions, and the lessons they bear for future projects.

The conference opened with Defence Minister Kevin Andrews and Shadow Assistant Minister for Defence David Feeney; both explored the idea of a continuous build for the Future Surface Fleet. A continuous build was posited as a way to support the Australian shipbuilding industry by giving employees a continuous deal flow ^[3], thus a guarantee of ongoing work. As the government’s representative, Andrews maintained that such an approach was being considered as part of a plan to provide for the long-term future of the domestic shipbuilding industry. In order for this strategy to be effective, it would:

‘…require Defence to carefully manage its acquisition processes and keep the future frigates operational for relatively less time than has been the norm to date. By adopting such an approach, the industry would no longer be characterised by a stop-start approach to naval shipbuilding.’

However, Andrews cited lack of productivity, lack of management experience, and the fact that the Australian shipbuilding industry isn’t ‘internationally competitive’ as reasons why maintaining a domestic industry isn’t sustainable. With a comparatively significant price premium—standing at least 30–40% higher than US benchmarks—Andrews ultimately conceded the premium to be ‘too high’, rendering a continuous build strategy unfeasible. Feeney disagreed, warning that the numbers of Australians employed in the local shipbuilding industry would, as soon as 2016, fall dramatically if a continuous build strategy was not pursued. Read more about Andrews’ and Feeney’s speeches here ^[4].

The ‘Valley of Death’ motif was prominent in the speeches from Andrews and Feeney, as well as in that of DMO’s Colin Thorne on day two.  The term ‘Valley of Death’ has previously been used by politicians and journalists to describe the loss of jobs and skills ^[5] in the Australian ship-building industry when it’s in between projects. The rhetoric of all three suggested the Valley to be ‘unavoidable’ and ‘unstoppable’, as would be an abundance of finger-pointing. ASPI’s Executive Director Peter Jennings touched on this point in his concluding remarks, arguing that resolving  the future ownership of  government-owned-ASC may be the most successful way of dealing with the Valley.

At the conference dinner at the Australian War Memorial, Admiral Harry B. Harris—commander of the US Pacific Fleet—focused on China’s assertive maritime claims in the South China Sea. Harris urged all states to respect international rules and norms in the maritime domain, and made known his assessment that China was building ‘a great wall of sand’ in the South China Sea. ASPI’s Natalie Sambhi and David Lang analysed the potential reception of Harris’ speech here ^[6] on The Strategist, recognising that the Admiral’s comments will ‘likely be well received in both Australia and in the broader Asia–Pacific, though less so in China’.

The announcement of the First Principles Review on the second day of the conference brought an interesting rhetorical change to the Hyatt Hotel Canberra. As reflected in the day’s opening session with Colin Thorne of the newly-reabsorbed DMO through to concluding remarks from Peter Jennings, the findings of the Review and the implementation of its organisational shakeup will have a substantial impact on upcoming decisions related to the Future Surface Fleet. (For more information on the results and implications of the Review, be sure to look at Andrew Davies and Allan Behm’s articles for The Strategist,  here ^[7], here ^[8] and here ^[9].)

Thorne’s speech (summarised here ^[10] on The Strategist) was a frank reflection of the shortcomings of the $8 billion Air Warfare Destroyer (AWD) project, and a discussion of why an alliance between the public and private industry specialists will be ‘unlikely’ for future projects.

A session on capability choices and options, Lieutenant General John Caligari (the newly-former head of the Army’s Capability Development group) relayed his concerns about the mismanagement of projects, as well as their poor integration; Caligari stated that Australian shipbuilders have a poor understanding of the notion of ‘integration’. In order to achieve it, Caligari listed four main priorities: force design must be integral, all capabilities must be a join effort, project managers are essential, and innovation is indispensable (though not at the cost of investment).

In his concluding remarks, Peter Jennings noted that the timing of the Review will render key decisions on the future submarines and frigate fleets a more difficult task. Jennings highlighted SEA 5000 to be a ‘critical test’ of whether we’re able to sustain a successful and productive bipartisan relationship between the private sector and the government. He agreed with Caligari’s assessment that successful integration of war-fighting systems will be essential for the Australian services. On the question of interoperability with other navies , Jennings also noted that the ADF faces ‘a future where there’ll be smaller navies with fewer ships,’ meaning there will be few options besides allied cooperation down the line.

The announcement of the First Principles Review and the delayed release of the 2015 Defence White Paper could slow debate on the key questions  surrounding the Future Surface Fleet. The conference made for interesting and instructive discussion on build location and design options for the Future Surface Fleet as well as an unusually frank discussion of the errors of the AWD program. Be sure to have a look at some of the contributions we’ve hosted on The Strategist (here ^[11], here ^[12] and here ^[13]).