Who Doesn't Want A$20Billion?

Background

This is an update to my article " Japan's Soryu Class : Collins Replacement Prime Contender ". A quick recap : Australia has a fleet of 6 Collins Class conventional diesel-electric guided missile submarines that needs to be replaced starting from the year 2025. These boats were designed by the Swedish ship builder Kockums AB and built in Australia by a newly formed joint venture the Australian Submarine Corporation. The entire Collins project was riddled with delays and huge cost overruns. Even to this day the submarines still suffer from multiple defects and have serious availability issues.




Digital Image of what Australia's future submarine might look like, as seen on ship builder ASC Pty Ltd's website.



The Royal Australian Navy is looking to replace them with 10 to 12 new submarines by the year 2030 to 2040, at an initially estimated cost of between A$36 to A$44 billion. The ruling Liberal Party came to power promising domestic construction of these future submarines but until recently looks likely to break that promise by buying direct from Japan. That development had prompted German, Swedish and French boat builders to come up with their own unsolicited offers, initiating a submarine bidding war down under, making the Soryu deal less of a certainty.

What's At Stake for Australia

The future of Australia's shipbuilding industry is at stake, as Australia might lose her capability to construct submarines and warships should the contract go to a foreign shipyard there by forcing ship builder ASC to retrench skilled labour or worse, go into receivership. It would be difficult and time consuming to rebuild a new team of professional workers once the existing ones have found work elsewhere.

Jobs could be at stake, as domestic construction at ASC's Adelaide facility could generate and support 3 to 4 thousand jobs.

At least A$20 billion or more is at stake for the winner. This is by far the single most costly defense related procurement by Australia, ever. Even the follow on order of 58 F-35A Joint Strike Fighter announced in April 2014 would "only" cost A$11.5 billion. The Australian Dollar has depreciated significantly in the past 2 or 3 years but is still worth USD0.77 as of today.

Prime Minister Tony Abbott's reputation could be at stake if he reneges on pre-election promises to have the submarines built in Australia, though adept politicians always have ways to wriggle themselves out of such situations.

Gimme Twenty Billion

AUD$20 billion is the magic figure quoted by all the potential submarine makers. Of course everybody wants A$20 billion, who doesn't? SAAB Kockums of Sweden, TKMS of Germany and DCNS of France have all come up with proposals and have indicated their willingness to work with Australia's ASC, giving Japan Inc. a run for their money.

 

SAAB Kockums : The Come Back Kid

Kockums AB of Malmo, Sweden was the original designer of the Collins Class submarines and the Stirling air-independent propulsion engine used in the Soryu Class boats. It was acquired by its German rival Howaldtswerke-Deutsche Werft (HDW) in 1999. Then HDW was itself bought by the German conglomerate Thyssen Krupp in 2005 and they all became a big dysfunctional family known as ThyssenKrupp Marine Systems ( TKMS ).

While all these mergers and acquisitions was happening, Kockums was working on the next generation submarine for the Swedish Navy with several innovative and advanced features, the A-26 Class with air-independent propulsion. However, the development of the A-26 was derailed by TKMS due to long standing conflict of interests. The Swedes believed that they have a great design on hand and wanted it developed not just for the Royal Swedish Navy but for worldwide export as well. The German masters of Kockums on the other hand are worried about cost escalation on a risky new project and cannot come into agreement with the Swedish Defense Ministry on how such additional costs should be managed between the two parties. Although 2 boats have been approved the Swedish by Parliament in 2010 for completion by 2020, long drawn contract negotiations between the Defense Ministry and TKMS came to nothing before failing completely in Apr 2014. Without any contracts to build Sweden's ( or anybody's ) next generation submarines, Kockums looked likely to have to lay off marine architects, engineers and technicians. And as Kockums go under,  the Swedish Kingdom looked set to lose its sovereign capability of building submarines and warships.



Kockums A-26. Source : SAAB

Added to this mess is the uncertainty as to who actually owns the intellectual property rights to the Collins design, is it Kockums / TKMS or is it the Swedish State ( through the Swedish Defense Materiels Administration or FMV ). This has resulted in Kockums being overlooked by Australia in its initial search for suitable supplier for the Collins replacement project.

The loss of the deal to supply the Republic of Singapore Navy with 2 new submarines in late 2013 and the Russian annexation of the Crimean Peninsula earlier last year was a rude wake-up call to the Swedes who realized that they had do something fast to reclaim their ship building industry and to safeguard the defense of their Kingdom.

Negotiations to buy Kockums back began between the Swedish defense conglomerate SAAB and TKMS. Things did not move until Sweden seemingly deployed strong arm tactics, including the FMV's raiding of the Kockums / TKMS office with armed military personnel to forcefully remove highly sensitive materials pertaining to the A-26 and Stirling air-independent propulsion engine designs, taking back what rightfully belonged to the Swedish State. SAAB also embarked on a widely publicised exercise that poached the entire technical management team at Kockums including the manager for the submarine division and more than 200 of Kockums' existing pool of engineers, effectively removing its core workforce. Facing such hostile acts, it is not surprising that TKMS threw in the towel shortly after and agreed to sell Kockums to SAAB.

SAAB has since completed the acquisition of Kockums on 2nd Jul 2014 and the new entity is called SAAB Kockums. This paved the way for the stalled and severely delayed A-26 project to move forward and for SAAB to offer a 4000 tonne version to Australia as the Collins replacement submarine. In the words of the CEO Håkan Bushke " ... the Swedish Kingdom now controls the intellectual property for Australia's currently-serving Collins class submarines. If there is an open competition, SAAB Kockums will be in it."

SAAB Kockums in its last minute declaration of interest on the Collins replacement project has also offered to take Australia's shipbuilder ASC and Royal Australian Navy engineers and technicians to work on the Swedish Navy's 3000 tonne A-26 of which five were to be built, with the first boat due to be operational by the year 2023. CEO Bushke said that SAAB's solution will be affordable and will be able to match the $20 billion price tag of its Japanese and German rivals.

Kockum's resurrection from a moribund subsidiary of ThyssenKrupp Marine Systems to becoming part of the Swedish defense giant SAAB within the span of a few months is nothing short of spectacular. It would be even more incredible if they could win this submarine bidding war and become the supplier of Australia's future submarines. Being a completely new design, the A-26 offer carried with it unknown risks of cost escalation and timeline slippages. Add to that volatile mix the uncertainty of ASC's competency as a ship builder and the RAN could end up in a very dangerous situation, third time in a row.

ThyssenKrupp Marine Systems : The Old Favourite



TKMS Logo. Source : Wikipedia

TKMS was until Jul 2014 the parent company of Kockums. It used to be the front runner for an evolved-Collins submarine that will see TKMS build on the strengths of the existing Collins Class and rectify known short comings and defects, since the Collins boats were designed with the help of Kockums in the first place.

The main stumbling block for the evolved Collins Class was that the ownership of the intellectual property rights for the Collins submarine as well as the Stirling AIP engine that will be installed in the future submarines, was in dispute as the spat between the Swedish government and TKMS escalated. Australia understandably have no wish to be caught in the crossfires of a patent ownership war and have ultimately looked towards Japan which has a fleet of the world's most advanced non-nuclear submarines, incidentally also using Kockums / TKMS's Stirling air-independent propulsion system.




TKMS Operational Headquarters, Essen, Germany. Wikipedia.

Another deep seated issue was that TKMS has been constantly stifling Kockums all these years after the merger, intending for kockums only to produce small submarines while its German subsidiary HDW will get to build the big submarines for export. It probably was never quite keen for an evolved Collins boat, preferring rather to have a German solution for the Australians. In fact TKMS already had a Collins replacement concept in existence for sometime. It is the HDW Type 216 diesel-electric submarine with air-independent propulsion. Its design is based on the smaller Type 212A and Type 214 submarines current in service with the German and Italian navies, using HDW's proprietary fuel cell AIP system.




HDW's Fuel Cell Air-Independent Propulsion System. Source : TKMS

Now that Kockums had been sold to SAAB, TKMS can no longer be involved in any evolved Collins design. Nonetheless TKMS has still indicated that it can help Australia build her fleet of 10 to 12 next generation submarines domestically and within the budget of A$20 billion, presumably with the HDW Type 216 design.




HDW Type-216 SSK. Source TKMS

The Type 216 looks good on paper, but is again a yet to be built design and with so much uncertainties, nobody, not even TKMS can guarantee that the entire project could be on time and on budget, especially in the hands of an inept shipbuilder like ASC.

DCNS : Non-nuclear SSN?!

The latest to join the fray is the French ship builder DCNS with its SMX-Ocean diesel-electric submarine with air-independent propulsion. First revealed at the Euronaval 2014 exhibition in Paris in October, it is essentially a non-nuclear version of the Barracuda class SSN which DCNS is building for the French Navy. Although DCNS did not officially state that the SMX-Ocean concept was specifically created for the SEA1000 Collins replacement project, we all know what its purpose is. Incidentally DCNS opened a new subsidiary in Australia on 19th Nov 2014, DCNS Australia Pty Ltd, which just shows how badly they wanted a slice of the multi-billion dollar pie.




DCNS's SMX Ocean SSK ( Top ) and Barracuda SSN ( Bottom )

The SMX-Ocean is a huge boat at 4750 tonnes and 100m long. It is powered by conventional diesel-electric power-plants and a second generation air-independent propulsion system. It can carry a load of 34 weapons including torpedoes, mines, cruise missiles, anti-ship missiles and anti-air missiles. It will incorporate vertical launchers, a UUV Dock, SDV, dry dock shelter and lock-out chamber for up to 8 divers.

Its maximum diving depth is 350m. Its new generation fuel cell will enable a underwater endurance of 21 days. Maximum submerged speed is 20 knots while its usual transit speed will be 14 knots. Endurance at sea is up to 90 days with a maximum range of 18000 nautical miles ( 29000Km ) at 10 knots.

If Australia is going to buy into this mad French scheme, she might as well request the US to convert their Virginia-class SSN into SSKs, just pluck out the General Electric S9G reactor and replace it with the Stirling AIP engine and you can have the frequently craved for 100% compatibility in operations with the USN. No?

Kawasaki / Mitsubishi : Caveat Emptor?

Although the option of a modified Soryu Class built in Japan looks like the safest bet for Australia's Collins replacement project so far, skeptics have plenty of arguments against taking such an option.

First, Japan's war time past has come back to haunt her as pointed out that as recent as 70 years ago Japan and Australia were enemies at war with each other. The Japanese have even bombed Darwin in 1942, ahead of a land invasion which fortunately never materialized. And Australia had lost more than 300 ships to the Imperial Japanese Navy during World War II. To me that is at best a weak case against the Japanese because, well, times have changed. Australian skiers form the largest foreign groups at the Japanese ski resorts of Niseko in Hokkaido and Hakuba in Nagano every winter. Try convincing these Aussies to ski elsewhere. If one does not buy Japanese, then the Germans should also be excluded in the deal because they were part of the Axis powers with Japan and Italy during WWII!

Skeptics are also concerned if Japan will remain a staunch American ally throughout the projected life of the future submarines, and whether Japan's constitution will again be changed to prohibit arms export in the future.

Australia's opposition Labour Party has pre-emptively said that they would cancel any deal with the Japanese should they come into power after the next election.

In response to the flurry of unsolicited offers from the European boat builders, the Japanese have indicated that they too are willing to co-operate with the Australians to help the Aussies develop the special steel required for submarine construction. Assembly will still be done in Japan.

ASC Pty Ltd : Can't Be Trusted To Build A Canoe!!

ASC screwed up the entire Collins project. They then went on to mismanage the upgrade and maintenance programme of the Collins boats. Now the same story is repeating itself with the Hobart-class air warfare destroyers.

Late last year Australia's ex-Defence Minister David Johnston was censured by the Senate after saying he wouldn’t trust would-be contender for Australia’s new submarines, the government-owned ASC, to build a canoe. He later expressed regret that his remarks could have offended anyone, that he had expressed frustration over ASC's past performance in what PM Abbott had described as a rhetoric flourish. He further said that he was directing his remarks at a legacy of issues and not at the workers in ASC, whom he considered world class, eventually putting all blame on the former Labour government for mismanaging the troubled Air Warfare Destroyer programme.

Having barely survived a no-confident vote and in a move to save his own career as the Prime Minister, Tony Abbott had given in to political pressure and had promised that the procurement of the future submarines would be subjected to a "competitive evaluation process" and ASC would be allowed to bid for it. It will not be an open tender, meaning not everybody is welcome to bid, certainly not Dear Leader Kim, or Bloodymir Pootin, or Xi Jinping for that matter. So the Japanese are now not guaranteed to win the Collins replacement deal and they are extremely confused and worried at the moment about Australia's sudden change of heart.

What A$20 Billion Can Buy

Should Australia be spending A$20 billion on a dozen super-sized conventionally powered submarines with air-independent propulsion? Would she be better off buying a larger fleet of smaller submarines while at the same time constructing more submarine bases? Something like the HDW Type-218SG SSK might cost "only" 500 million Euros each. Buying fifteen of these smaller SSKs instead of the Soryu-class or similar to populate five submarine bases will probably save Australia enough money to construct the new submarine bases along the eastern, northern and western coastlines. Tony Abbott can then also sort of keep his electoral promise of local construction. You couldn't pre-fabricate submarine pens in Japan and then ship it over to Australia for assembly, or could you?

Update 26th April 2016

The Race is over. DCNS won the A$50 billion contract with its Shortfin Barracuda, aka SMX Ocean.

Singapore Navy's New Submarines - HDW Type 218SG

*** Please read the latest on the Type 218SG here. ***

RSN's Silent Service

The Republic of Singapore Navy (RSN) had been operating conventional diesel-electric submarines since 1995. Initially, as it was a completely new capability for a small navy, the RSN opted to purchase 5 decommissioned / used submarines from Sweden. These were the A-11 Sjöormen class submarines first commissioned in the late 1960s. Four of these boats were re-commissioned as the Challenger class and the fifth was to be salvaged for parts. They were extensively refurbished and upgraded by Kockums for use in tropical climate and came with personnel training agreements with the Royal Swedish Navy. They form the 171 Squadron based at Changi Naval Base.

The Challenger class submarines enabled the RSN to learn the trade of undersea warfare in an accelerated timeframe but they had one glaring shortcoming - they were not equipped with air-independent propulsion (AIP). AIP is simply an advanced underwater propulsion system in a non-nuclear submarine that did not involve access to atmospheric oxygen, eliminating the periodic need to surface or snorkel to recharge the batteries. ( see my previous blog AIP submarines for RSN )

In 2005 an opportunity to buy another 2 decommissioned submarines from Sweden came in the form of  two A-17 Vastergotland class boats. These were a generation newer than the Challenger class boats, having been launched in 1986 and 1987. They were extensively modified  and had their hulls sliced and lengthened to accommodate a proprietary Stirling AIP engine. They were eventually commissioned as the RSS Archer and RSS Swordsman.


 

RSS Archer during her launching ceremony in Sweden in June 2009. Source : Peter Nilsson Kockums AB.

 

 

The Stirling Conversion : From Vastergotland to Archer. Kockums picture

 

Submarine Shopping

Now that the submariners have honed their skills with AIP, it is time for the RSN to consider buying more potent and newer platforms. On 2nd Dec 2013 MINDEF made public the acquisition of 2 customized AIP capable submarines from ThyssenKrupp Marine System GmBH (TKMS). From the MINDEF press release " These submarines, together with the Archer class submarines, will replace the ageing Challenger class submarines. The Challenger class submarines were built in the 1960s and will be progressively retired from service. The replacement submarines will have significantly improved capabilities and be equipped with Air Independent Propulsion systems." With some background information, it would not be of too much a surprise that this time it would no longer be a Swedish design.

Boat Supplying Nations

There are not many countries that have the capability to design and build submarines. The United States have not looked back on conventional diesel-electrics ever since they commissioned the world's first operational nuclear submarine the USS Nautilus (SSN-571) in 1954. The Royal Navy similarly disposed off their Upholder class SSKs and are and all-nuclear force. What's left will be Germany, with their U-209s and U-214s, probably the largest exporter of conventional submarines in the free world, France, the supplier of Scorpenes, Spain, exporting their S-80 Scorpene variant, Sweden, with their ill-fated Collins-class project but enjoying better domestic success and in exporting to Singapore, and finally Russia, with the Project 636 improved Kilo class. Japan is just beginning to come online as a potential supplier, after ditching their post WWII pacifist Constitution. South Korea builds U-209s and U-214s under licence and exported a couple to Indonesia, and China builds but hardly exports. All said, if you are buying U-boats ( presumably non-nuclear ), your options are somewhat limited. If you are sourcing for nuke boats then your choice is simple, go to Uncle Putin, but be warned, you can get badly mauled like India did with its yet to be delivered INS Vikramaditya ( ex-Admiral Gorshkov ) carrier.

The Boote Yards

Kockums AB's Karlskrona shipyard has been producing first rate submarines for Sweden since the 1912. Apart from the A-11 Sjöormen class and the A-17 Vastergotland class SSKs already mentioned above, they also constructed three A-19 Gotland class submarines with air-independent propulsion for the Swedish Navy in 1990. Their next generation offering is the A-26 submarine, originally scheduled to replace the Vastergotlands as they are retired in 2020.

In a series of miscalculations by the Swedish government, the fortunes of Kockums began to change around the turn of the century (1999 to be precise) where, in a complicated web of industrial merger and acquisition, Celsius AB sold its subsidiary Kockums AB to German ship builder Howaldtswerke-Deutsche Werft GmBH (HDW) in an all-share swap for 25% of HDW, with an option to exit the business with a lump sum. The following year, SAAB bought over most of Celsius AB and opted to be paid and exited. And so Kockums become a part of HDW and then HDW was itself acquired by ThyssenKrupp Marine System GmBH (TKMS) in 2005.

HDW is of course most famous for submarines - their U-205, U-206 and U-209 series conventional diesel-electric submarines are in active service in many navies all around the globe, not to mention the Dolphin Class variant for the Israeli Navy. Their latest offering is the U-212A and its export version the U-214.

TKMS is a huge German conglomerate and in addition to Kockums which it acquired through HDW, owns several other shipyards in Germany and Greece. It now has two competing lines of submarines to sell in a limited post-cold war global market and the number of submarine exports are just not enough to keep the yards busy. It does not help when many customers also insist on local construction and technology transfer. It just not possible to maintain both the German HDW and Swedish Kockums to compete against its rivals like DCNS of France and Rubin Design Bureau of Russia. Understandably TKMS would favour its German shipyards over the other foreign ones.

So when the time came for Singapore to replace her Challenger class submarines, Kockums, the exclusive supplier of submarines to the Republic of Singapore Navy for the past 18 years saw its monopoly broken and was prevented from submitting a bid by its parent company. Instead, TKMS offered HDW's U-218SG, to be built in its Kiel shipyard in northern Germany.

On a separate note, TKMS had also successfully stalled Kockum's next-gen A-26 AIP offering to the Swedish government which industrial insiders believe is delayed by contract negotiations between Kockums and Sweden's Defence Materiel Administration. The two parties simply cannot come to a price agreement.

Fortunately, this impasse may be about to change as Singapore's HDW purchase had finally whipped the Swedes into action to ( forcefully? ) buy back Kockums and regain control of their submarine building capability and put the A-26 acquisition back on tract. In what has come a full circle, on 29th Jun 2014 SAAB announced that it will buy Kockums back from ThyssenKrupp for SEK 340 million ( about USD 50.5 million) in a deal that is probably subsidized by the Swedish government. Still, the U-218SG purchase is a done deal and the A-26, severely undermined by ThyssenKrupp, will never be ready by 2020 even for its domestic client, the RSwN.





The Kockums next generation submarine the A-26 AIP that the RSN
was never meant to have in a computer generated image showing
 special forces deploy through the Multi-Mission Portal. Source : SAAB Kockums

 

 

The Mysterious U-218SG

All that we know about this submarine is that it is a customized design for Singapore. It is a conventional diesel-electric hunter-killer submarine with air-independent propulsion based on HDW's current designs, due for delivery in 2020. No other information is available in the public domain about this new boat. Unless you have insider information, right now everything is speculation.

Still, there is nothing to stop anyone from making an intelligent guess as to what this new submarine would turn out to be. A good start will be to understand Singapore's operational requirements and the currently available HDW U-boats designs.

The U-218SG will likely be involved in the following :

Anti-surface and anti-submarine operations

Special forces deployment

Unmanned vehicle deployment ( UUV and UAV )

Land attack missions with cruise missiles

Intelligence, surveillance, target acquisition and reconnaissance ( ISTAR )

Carrier battle group ( CVBG ) escort - future Endurance-160 type large helicopter / F-35B carrier

Singapore's existing Challenger and Archer class SSKs are in the 1200 to 1400 ton range and are really too small to cope with all of the above functions. Even the existing HDW options, the Type 212A built for the Deutsche Marine ( German Navy ) and the Marina Militare ( Italian Navy ), as well as the export version the Type 214 are all in the 1500 to 1700 ton range.

Unlike European navies who operate in the relatively smaller and shallower Baltic Sea, the Mediterranean Sea, North Atlantic Ocean and the North Sea, those in the Indo-Pacific region including Japan, South Korea, India and Australia would probably require bigger submarines with much longer range. The main role of the U-218SG will surely not be to play cat and mouse with the RMN in the narrow Straits of Malacca. It might have a bigger role in maintaining the SLOC open in the South China Sea and beyond, given the aggressive behavior of China in recent years. So it has to be bigger with a longer range and endurance. It also has to be faster, at least as fast as the carrier task group that it is supposed to protect. A bigger submarine will also have more space for more comfortable crew accommodation.

Fortunately HDW has exactly such a design concept in the form of the Type 216 AIP weighing in at 4000 ton. This is a double hulled two decked ocean-going monster was designed to fulfill the requirements for the Australian SEA 1000 Collins replacement project. However, it would be too big for the RSN if the design is adopted at face value. It would never safely transit the congested waters of the Straits of Singapore without being observed ( or bumped into )! So perhaps 2500 to 3000 tons would be a good compromise. A scaled down U-216 while retaining all the original bells and whistles. There is precedence in the Project Delta frigates - the Formidable class being an improved but smaller version of the La Fayette class stealth frigate.






The HDW U-216 SSK Source : ThyssenKrupp Marine Systems

 

 

This is the original U-216 technical specifications :

Length : approximately 90m

Pressure Hull Diameter : approximately 8.1m

Surface Displacement : about 4000 tons

HDW Fuel-cell Air-Independent Propulsion System

Lithium-Ion Polymer Battery Technology

HABETaS rescue system for personal rescue / free ascent at 300m

Endurance : 80 days at sea. 4 weeks without surfacing.

Range : 10000 nautical miles

Compliment : 33 officers and ratings. Extra capacity for divers and attached personnel

IDAS fibre-optic guided missile system for defense and attack against aerial targets ( ASW helos included )

Weapon Tubes : 6 x 533mm ( torpedoes, anti-ship missiles, mines, UUV? )

Vertical Launch System : Vertical Multi-Purpose Lock for launching cruise missiles

Torpedo Countermeasure System

Special Forces Swimmer Delivery Vehicle ( SDV )

In other words - the works. All that anybody could ask for in a submarine short of SLBM launch capability.

The innovative Interactive Defence and Attack System for Submarines (IDAS) is a

lightweight fibre-optic guided missile for submarines against aerial threats.
Photo : ThyssenKrupp Marine Syatems

                                

 

 

The MdCN ( Missile de Croisiere Naval ) or naval cruise missile can be

launched from the torpedo tubes of a submarine. Source : MBDA

 

 

The MdCN, aka naval SCALP, can also be launched from the
A70 Sylver vertical launch system of France's FREMM frigates. Source : MBDA

 

Whatever the final specs are, it will be a huge step forward for the RSN. Retirement of the Challenger class submarines will transform RSN's silent service into an all-AIP force, just like the Swedes and the Germans. No ship lasts forever. If all goes well, tranche one will be followed with a subsequent order to eventually replace the Archer class possibly by the year 2025 - 2028. This article may be updated as more information is forthcoming.