Thursday, March 6, 2014

AWD difficulties

I've just been reading the summary of the ANAO report on the Air Warfare Destroyer (AWD) project, along with Cameron Stewart's comments on the report in today's 'The Australian' (7 march 2014).

I agree with Cameron that adverse perceptions of the AWD project and of Australian industry's capabilities could impact severely on the Future Submarine project, Sea 1000. But I don't resile from the central thrust of my previous post (see below): the new submarine will be a developmental project and should be treated as such in a contractual sense. It shouldn't be compared with, and crtainly not treated like, the AWD project.

From what I have read so far in the ANAO report on the AWD project, this became a bit of a developmental project as well, at least so far as design variations to suit Australian standards and design rules are concerned. That sort of thing doesn't help, particularly when the contracting methodology is based on a fixed-price contract.

Furthermore, the process of transferring production technology and know-how from Navantia to the Australian shipyards contracted to build the hull and superstructure blocks seems to have embodied the same difficulties that Vickers Supermarine encountered in the 1930s when outsourcing the manufacture of wings for the Spitfire (see my post from last year). These difficulties weren't hard to predict if you knew something about shipbuilding and understood the subtle but quite significant detail design changes required to suit RAN requirements.

If we as a nation want to sustain and grow a naval construction industry, there is no substitute for actually building ships and submarines to build the technical and management skills required for the industry to prosper.

Oh, by the way: Andrew Davies from ASPI posted a blog recently on ASPI's 'The Strategist' about COTS versus developmental naval projects and I have half a mind to respond to it directly. His basic argument, that the ADF is better off buying an off the shelf solution than if it buys a 'bespoke' design, works if you accept a linear relationship between expenditure and effective capability. Unfortunately, this isn't necessarily the case: choosing to spend 20% less on your submarines, for example, by acquiring an off the shelf design won't necessarily give you 20% less capability. Capability isn't a commodity - you don't buy it by the yard or pound. If you consider the user requirement to be met when you arrive at a certain pre-defined threshold of operational capability, then anything below that threshold is by definition 'incapable' and therefore useless. Paying 80% of the price of a fully capable submarine is no saving if the submarine you get instead is not capable. In fact, it represents a waste of money. You're better off either paying the price for the capability you need (and managing a highly complex developmental project, with all the challenges that involves), or not spending the money at all. (Of course, it helps if the user requirement is properly thought out.)

Discussions on cost and capability need to acknowledge this fundamental truth before they can lead anywhere useful.