Minister for Defence Stephen Smith, Minister for Finance and Deregulation Penny Wong and Minister for Defence Materiel Jason Clare today announced that a new maintenance and support contract for the Collins Class Submarines had been signed.

The In-Service Support Contract (ISSC) has been signed following negotiations between the Defence Materiel Organisation (DMO) and ASC Pty Ltd.

The new contract has been put in place to deliver more efficient and effective sustainment services that will improve the availability and reliability of the Collins Submarine fleet.  

Phase 1 of the Coles Review into Submarine Sustainment, conducted by Mr John Coles and released by the Government last year, emphasised the importance of entering into the ISSC.  Mr Coles described it as a “game changer” for Collins sustainment. 

Mr Coles found there was a strong perception “that the ASC was operating inefficiently on a forward funded cost-plus contract for sustainment”.  The ISSC sets out to provide a mechanism for performance-based contracting.

The new ISSC is a rolling five year contract with options to be exercised subject to satisfactory performance. It will start from 1 July this year.

The contract will replace the Through Life Support Agreement (TLSA) entered into in 2003 which failed to deliver the required operational outcomes for Navy. 

The sustainment of the submarine fleet is vital to Australia’s national security. It is a complex task that has proven challenging for Defence and for ASC, the prime contractor, for a lengthy period of time. 

Sustainment of the Collins Class submarines is at the top of the Government’s Projects of Concern list and the Government has undertaken a number of measures to address the availability and reliability of the submarine fleet.

Last year the Government established the Review of the Sustainment of Australia’s Collins Class submarines led by Mr Coles. The Coles Review is designed to evaluate the current sustainment arrangements, benchmark against other submarine sustainment programs and make recommendations to improve the support of our Collins submarines. 

In December 2011, the Government released the report of Phase 1 of the Coles Review, which made a number of interim recommendations about how to address some of these issues. 

Mr Coles’ interim recommendations are:

• Resources should be directed to the provision of spares leading directly to increased availability;
  Any decision to reduce the agreed Materiel Ready Days in a year should only be taken by the Collins Class Program Manager.
•  The In-Service Support Contact (ISSC) between the Defence Materiel Organisation and ASC, currently under discussion, should be placed as planned;
• The classification of Priority 1 Urgent Defects by the submarine commander should be moderated by Commander SUBFOR to avoid over classification purely to increase priority of spares; and
• As part of the crew training program, Commanding Officers, Marine Engineering Officers and Weapons Electrical Engineering Officers should undertake a pre-joining course at ASC and Pacific Marine Batteries (and other key suppliers) to gain a better insight into some of the intrinsic submarine design and equipment characteristics.

 Implementation of these recommendations is well underway.

In May, the Government announced that it had agreed to the recommendation of the Secretary of the Department of Defence, Duncan Lewis, that a senior Defence position be dedicated to focusing exclusively on the oversight of all existing and future materiel-related submarine activities in the Department of Defence. 

Mr David Gould was appointed as the General Manager of Submarines and will take responsibility for all materiel-related aspects of submarine support across Defence. Mr Gould will start work next week and will report to Mr Warren King, Chief Executive Officer of the Defence Materiel Organisation.

In May, the Government also approved $214 million to go towards further detailed studies and analysis, which builds on work already undertaken, to inform the Government’s decision on the design of Australia’s next submarine. Lessons learnt from Defence’s experience with the Collins Class submarines along with the outcomes of the Coles Review will inform development of the Future Submarine project

In May, the Government allocated an additional $700 million for Collins Class submarine sustainment as part of the 2012-13 Defence Budget.

Media Contact:

Mr Smith’s Office: Sacha Fenton (02) 6277 7800 or 0467 784 528
Minister Wong's Office: Evelyn Ek (02) 6277 7400 or 0412 887 853
Defence Media Operations: (02) 6127 1999