Australia, France Sign $35.5 Billion Submarine Contract


After a two-year delay, Australia has signed a production contract with a French shipbuilder for 12 new submarines.

The Australian government and French state-owned submarine builder Naval Group signed a strategic partnership agreement (SPA) on February 11 for the production of 12 Shortfin Barracuda Block 1A submarines, christened Attack-class, a diesel-electric derivative of the Barracuda-class nuclear attack submarine (SSN), under the Royal Australian Navy’s SEA 1000 Future Submarine Program (FSM).

The production contract was signed in Canberra today by Australian Prime Minister Scott Morrison, the Defense Minister Christopher Pyne, and the French Minister for the Armed Forces of France, Madame Florence Parly.

“The $50-billion Attack-class program will deliver submarines that will meet our Navy’s capability requirements, will be at the forefront of Australia’s defense strategy and will help protect Australia’s security and prosperity for decades to come,” Vice Admiral Michael Noonan, the chief of the Royal Australian Navy, said in a statement. “With their inherent stealth, long-range endurance, and formidable striking power, the Attack-class are a key part of our Navy’s future,” he added.

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Australia and France concluded an intergovernmental agreement (IGA) for the construction of 12 Attack-class boats in December 2016. Long thought to be the frontrunner for the contract, Japan’s Mitsubishi Heavy Industries failed in its bid to build the future Attack-class. An offer by Germany’s ThyssenKrupp AG was also rejected.

Up until now, Naval Group has been working under a $361 million 2016 design and mobilization contract while SPA negotiations were ongoing. “Some work on the future submarines has already taken place under a design and mobilization contract and this will continue uninterrupted under today’s agreement,” the Royal Australian Navy said in a statement today. “The formalization of the [SPA] represents the contractual basis for the program.”

As I noted in December 2018:

Under the IGA, the 12 subs, save for some specialized parts, will be built in Adelaide in South Australia, home to the Australian Submarine Corporation (ASC). Initial design work for the new submarine class is currently taking place in Adelaide and Naval Group’s headquarters in Cherbourg, France. A detailed design contract, however, can only be concluded after the signing of the SPA. Construction of the first submarine is expected to begin in 2022 with the first boat delivered to the Royal Australian Navy by the early 2030s.

Australia and France will now move on to swiftly conclude the design contract.

The conclusion of the SPA was preceded by a two-year wrangle over contract details. Negotiations for the SPA kicked off in 2017 and were expected to be concluded by September 2018. However, various disagreements over intellectual property and warranty periods for defects, as well as possible production delays, caused the SPA signing date to be repeatedly pushed back. The Australian Department of Defense also voiced concerns over a future sale of Naval Group, which is majority owned by the French state, to a private entity and its possible negative impact on Australian-French collaboration on the sub building project.



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