They are far and away the most expensive and complex surface warships Australia has ever owned, sleek and lethal greyhounds of the ocean, able to defend against air, and perhaps eventually, ballistic missile attack.
The first of three new Hobart-class air warfare destroyers (AWDs), HMAS Hobart, was officially commissioned on September 23, a proud occasion when the white ensign flew from the ship for the first time and she officially became Navy property.
A bit like the long-awaited touchdown of the first Lockheed Martin F-35 Joint Strike Fighter in Australia in March, the new AWDs were a long time coming but are here, the abundant trials and tribulations of the program now well in the past. Hobart’s inaugural commanding officer, Captain John Stavridis, said his new ship was outstanding – a sentiment he said was shared by his 185 crewmen and women.
“The more time we spend operating the platform and understanding Aegis, the more we realise how capable this ship is,” he said. “It is an outstanding ship; that’s not to talk down our current surface combatants but rather a reflection of what this new capability brings.” HMAS Hobart, which achieves initial operational release (IOR) on commissioning, still has much work ahead to achieve initial operating capability (IOC) and then operational deployment.
Stavridis said Navy Operational Test and Evaluation (NOTE) trials were next, covering first of class platform trials, integration of the MH-60R Seahawk Romeo helicopter, gunnery and more. That culminates with the big one, the US Navy combat system ship qualification trials (CSSQT, pronounced sea-squat) conducted on the instrumented range off the US west coast.
“We will deploy to the US to facilitate system grooming and conduct further training in order to prove every aspect of the Aegis weapon system,” he said. “It will put us and our ship to the test. We will of course conduct a significant amount of team training well before that period. In fact that’s already started.”
“When we pass those serials and prove ourselves and Aegis, our Chief will be able to recommend IOC to government. That is the milestone which means Hobart is ready for operations.” Final operational capability (FOC) only arrives when all three ships are ready for operations.
The Navy no longer refers to them as AWDs, a term more associated with the program. They are now officially DDGs (for guided-missile destroyers). The AWD program was launched in the mid-2000s, though as far back as the early 1990s the need for modern air defence warships was recognised. At one time it was even considered building an extra six Anzacs configured for air warfare but that never happened as they were simply too small.
The 2000 Defence White Paper said the Navy needed a long-range air defence capability which had diminished with the retirement of the last of the Perth class DDGs and was not adequately replaced by the Adelaide class guided-missile frigates (FFGs) and the new Anzac frigates (FFHs). It said the FFGs would be replaced by at least three larger and more capable air defence ships, preferably built in Australia.
As planning proceeded, the Navy concluded there was only one possible combat system for the new vessels, the US Aegis system. In mid-2007, the government announced the winner was Spanish shipbuilder Navantia with its Alvaro de Bazan-class F-100 frigate, deemed substantially cheaper and likely to arrive years sooner than the new and larger US design the Navy preferred. Well before this stage, the government had settled on novel arrangements for construction of the new vessels, an alliance of the Defence Materiel Organisation (DMO), ASC Shipbuilding, a subsidiary of government owned ASC, previously the Australian Submarine Corporation (ASC), and US defence company Raytheon as systems integrator.
Ship designer Navantia wasn’t represented on the AWD Alliance and there was no prime with overall responsibility. Many see this as the genesis of much that came later and it’s unlikely to be repeated. This was the era when governments were enamoured of various public-private partnership arrangements for doing big infrastructure projects. Problems weren’t long in coming and these have been extensively dissected by the Australian National Audit Office and others. The vessels were to be built in modules, 31 in all, constructed at ASC Shipbuilding, at Osborne, on the Port River in northern Adelaide, at BAE Systems in Melbourne and at Forgacs at Newcastle. Consolidation was performed at Osborne by ASC Shipbuilding.
Some didn’t fit and there were different levels of productivity at different yards, with regular re-allocation of block work. Numerous early design changes, a cumbersome process to action these changes with ship designer Navantia, plus purchase of design drawings that lacked the detail required for production, all contributed to the program’s problems. The end result is that HMAS Hobart is 30 months later than originally planned, with the whole program now costing $9.12 billion, a blowout of around $1.2 billion.
As problems accumulated, DMO hired UK consultancy First Marine International (FMI) to assess shipyard performance against international standards. FMI put the global benchmark for warship production at 60 manhours per compensated ship tonne. It was always expected Australia would pay more for domestic construction of a complex Aegis class warship and DMO set a target of 80 manhours per tonne for AWD. FMI found productivity at a jawdropping 150 manhours per tonne on ship number one. It has since much improved.
In fairness, vessel number one did require very considerable non-recurring design ‘Australianisation’, on one estimate a million manhours adapting everything from ladder and hatch layouts to cabling, pipe runs and paint to meet Australian standards. In June 2014, the government added SEA 4000 to the Projects of Concern list, where it remains.
Frustration with the program bubbled over in November 2014 when then Defence Minister Sentaor David Johnston stood in the Senate and, in response to Labor goading, imprudently declared: “You wonder why I’m worried about ASC and what they’re delivering to the Australian taxpayer? You wonder why I wouldn’t trust them to build a canoe?”
He speedily recanted, although not before Labor demanded his head and then Prime Minister Tony Abbott issued a statement expressing confidence in ASC. In an interview with the ABC in mid-September, Johnston said ASC Shipbuilding was now doing world-class work and he found it curious that the company was not yet being considered to participate in construction of the Future Frigates.
ASC Shipbuilding chief executive officer Mark Lamarre said the minister’s “canoe” comment unfortunately singled out ASC Shipbuilding. He welcomed Johnston’s recognition of ASC Shipbuilding’s expertise and capability.
The government commissioned former US Navy Secretary Don Winter and former head of the Anzac ships project John White to examine where the AWD program was going wrong. Their report has never been released but it led to the AWD Reform Strategy in 2015, injection of some additional shipbuilding management expertise from Spanish shipbuilder Navantia into the alliance and re-baselining of the delivery schedule – ship one to arrive in June 2017, ship two in July 2018 and ship three in December 2019.
The AWD experience certainly offers profound lessons for the next big shipbuilding project, construction of the nine Future Frigates under SEA 5000. Former DMO head Warren King said a fundamental AWD problem was that everyone, himself included, underestimated how rundown shipbuilders had become between launch of the last Anzac frigate in March 2004 and start of construction of HMAS Hobart in September 2012. “It is a very strong message about how quickly key skills can drop off,” he told a Senate committee hearing when he was with DMO. He’s now Chairman of Navantia Australia.
AWD program manager Commodore Craig Bourke said part of the problem was that at the end of the Anzac project, the skilled workforce scattered with the resources boom. “It was a combination of establishing a new workforce, building a new shipyard with a new design, with a new contracting mechanism, with new commercial arrangements. All those new items just conspired to mean it was less than good,” he told Australian Defence Business Review.
Bourke said it had been a long time coming but they were now building and delivering ships, with productivity trending towards good. “Whilst we are probably not in the top quartile, we are certainly reasonably productive. There is nothing we can do about the sunk non-productive period early in the program,” he said.
CDRE Bourke said talk of low productivity suggested this was a blue collar problem, which it never was. “Productivity was a white collar problem in that we had a blue collar workforce with the skills. We didn’t have the white collar workforce with the knowledge and understanding of building ships to effectively turn that blue collar workforce loose in a productive way. We set them up to fail unfortunately.” CDRE Bourke said improved productivity didn’t come from whipping the workers harder. “It means we are planning and executing much better so our blue collar workforce is able to be productive,” he said.
Since the reform program was implemented in 2015, with Navantia playing a greater role and Lamarre leading internal reforms at ASC Shipbuilding, it has very much turned around, with Hobart sailing through its various trials, culminating in builder sea trials with engineers observing closely for any issues. At the end of the first day, just six defects were reported, one a seal oozing a drop of seawater every couple of minutes.
“It was almost anti-climactic. We had a whole bunch of highly charged engineers super excited about the next very complex problem they were going to have to solve,” he said. “Really, for a ship that had gone to sea for the first time, it was remarkable.” Curiously, long delays in the project contributed to that absence of problems. “What the extensive schedule slippage has done is meant people have become very well informed about their systems and how they should work.
“Prior to sailing we understood the systems much better than in a program that maybe had been done much quicker,” CDRE Bourke said. HMAS Hobart is Australia’s most complex and capable warship, fundamentally because of the Aegis combat system and SPY-1D(V) radar. Traditionally, Australian defence projects have run into strife in integrating complex electronics systems but on Hobart this just wasn’t an issue.
Bourke said the full combat system comprised Aegis and nine other systems. A representation combat system was built on land and then fully tested for functionality before it was installed on the ship. “So by the time we sailed, we knew the electronic boxes would talk to one another and we knew that the wiring was basically right,” he said. “When we got to sea we could turn it on to its full operational state to test that it functioned to the performance levels we expected and it did. I won’t tell you we didn’t find any issues. “When you have tens of thousands of electrical connections, you can sometimes get an electrical connection or two that hadn’t been made particularly well.”
Bourke said that pre-testing plus past experience on other projects all helped reduce the risk and that was one of the overlooked achievements of this program. “The one thing we did have to fall back on was combat system integration experience from the FFG7 upgrade, the LHD program and the ASMD program in Anzac. We had seen in other programs the benefits of doing the shore integration testing,” he said. “Deploying the lesson learned from those programs burned down a lot of risk.”
Bourke said all this had laid the path for the next shipbuilding projects. “Across the entire skill-set for complex ship construction for highly technical high density warships, this program has seeded the sort of skills and knowledge necessary for any future program,” he said. “The issue will be making sure those future programs are in place and going so the skills don’t dry up or redeploy.”
While HMAS Hobart is Australia’s most advanced warship ever, she could be even better. Defence has already planned an upgrade under Project SEA 4000 Phase 6, which the Defence Integrated Investment Program says will be run over the period 2017-28 at a cost of $4-5 billion. That would involve upgrading Aegis to the latest Baseline 9 configuration, which would give Australian vessels a ballistic missile defence capability, should the government choose to head down that path. With North Korea’s recent missile and nuclear weapons testing, that’s looking increasingly likely.
Currently the ships are fitted with the Aegis Baseline 7.1 Refresh 2, ordered back at the start of the AWD program, well before Baseline 9 was developed. On Australian ships Aegis, with the SPY-1D(V) radar and SPQ-9B horizon search radar, it’s actually closer to the US Baseline 8. With the end of the AWD program approaching, ASC Shipbuilding is now looking for work in the upcoming Offshore Patrol Vessel and (OPV), Future Frigate and Future Submarine programs.
From the bad old days, the company can point to a very dramatic turnaround in performance and it now compares very favourably with overseas yards. Lamarre, who joined ASC Shipbuilding in January 2015 after 24 years with General Dynamics’ Bath Iron Works in the US, said ship two was 40 per cent less expensive than ship one and ship three would be a further 36 per cent improvement on ship two, for ASC Shipbuilding’s scope of work.
Indeed ASC has just completed VLS (vertical launch system) installation on ship three, with a 60 per cent improvement in productivity compared to the same process for ship two. “This is my fifth lead ship now for a new program and it’s the best I have seen in terms of learning. The workforce has put their shoulder into this job and the expertise we’ve developed here is the nation’s leading shipbuilding capability,” Lamarre said. “That resulted from us bringing in some expertise to help us do better planning and better goal setting and better communications with the workforce and better provision of what they needed.” Lamarre said AWD problems were well documented and scarcely unique.
Plenty of other nations experienced problems with lead ships. “It happens around the world. ASC being a brand new shipyard played its part. We didn’t get on top of some things that we should have early on,” he said. “Probably our biggest issue was how management was doing at providing our workmen and women what they needed in the right configuration at the right time. That was a central focus area for us and that is one of the major underpinnings of our improvements,” he said.
Also contributing were the new alliance framework, the distributed build and working with a design which required numerous changes. Lamarre said he fundamentally disagreed with the notion of a 40 per cent cost premium for construction in Australia, a figure cited in the 2014 RAND Corporation report on ship construction in Australia. It blamed that on the stop-start approach to major projects.
“That’s no longer true with the learning that we are seeing,” he said. To assess just how they were performing, ASC commissioned consultants Booz Allen Hamilton to conduct a detailed assessment of their cost structures and management in a like-for-like comparison with other Aegis shipyards. That was performed over eight months in 2016. “That for me is the fundamental benchmark for us. When we arrive at our budget on ship three we will be as competitive as other Aegis shipbuilders,” he said. That includes yards in the US, Spain and Japan. Australia’s advantages were its modern facilities and committed, flexible workforce and growing shipbuilding capability.
“Our performance is a result of broadening ASC Shipbuilding’s expertise, where we brought in value stream experts to pinpoint improvements on our scope, for instance, in installing the Vertical Launch System on Ship 03, completed mid-year, which is demonstrating our international competitiveness,” he said. Lamarre said the yard at Osborne gave a huge advantage over some older shipyards, such as Navantia at Ferrol, Spain where ships were still constructed on and launched off an inclined way.
The Bath Iron Works yard featured very strict union agreements and rules. “We simply don’t have that here. We have a union workforce that has been very resilient through a tough time and has been very flexible and cooperative,” he said. ASC Shipbuilding, a separate entity from ASC which is responsible for Collins submarine sustainment, is seeking work on the OPV and Future Frigate programs, though none is guaranteed. In June, ASC Shipbuilding and WA shipbuilder Austal announced they had teamed up, offering to build ships for whichever of the three contenders – Navantia, BAE Systems or Fincantieri – was chosen to build the nine Future Frigates.
Lamarre said the OPV tender specified Australian industry involvement but the Future Frigate tender did not, and the winning bidder can make whatever commercial arrangements it thinks appropriate for construction of the new vessels, though they will still be built in SA. “It is a 25-years $35 billion program, very interesting to foreign designers. Leaving that door open to carry out shipbuilding here is an area of concern if we are to retain a truly sovereign shipbuilding capability in coming years,” he said.
Lamarre said it would be better to build on the experience of the sovereign shipbuilders, rather take a risk on going backwards. “Between us and Austal, we have 80 per cent of the vision of what the government wants to achieve which is ultimately to be able to export complex surface combatants,” he said. “We are building some of the most complex surface combatants in the world. Austal exports ships, designs ships and is building ships for the US Navy.
“The only thing missing now is to work with a foreign designer to understand the nuances of designing a surface combatant. Let’s work together to get the last 20 per cent, versus risking the 80. “We have arrived at a place where we can be competitive with anybody in the world in terms of constructing complex surface combatants.”
This article appeared in the September-October 2017 edition of the Australian Defence Business Review.