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Three Bidders. Nine Ships. Thirty-Five Billion Dollars.

The $35 billion contract to build nine Anti-Submarine frigates in South Australia is set to be the State’s most important defence announcement for 2018. With no formal date declared, it is expected that the winning bidder will be selected by the end of June.

The contenders are Fincantieri of Italy, Navantia of Spain and BAE from the UK. While each design is in equal running for the contract, Fincantieri is the only one which has an example of their proposed design in the water, whereas Navantia has submitted a redesigned F100 and BAE have put forward their new Type 26 Global Combat Ship.

Fincantieri’s FREMM (European Multi-Mission Frigate) Bergamini class is a result of Franco-Italian collaboration and seven vessels have already been constructed and delivered to the Italian Navy since 2013, with a further three to be delivered to complete the contract. There are General Purpose and Anti-Submarine Warfare versions of the FREMM with the latter being proposed to Australia.

Navantia has supplied the designs for three Hobart class Anti-Warfare Destroyers, one of which has recently entered into service with the Royal Australian Navy, the second is currently undergoing sea trials and the final vessel is due to leave the Adelaide shipyard shortly. Their argument is that by choosing their design there will be better homogeneity across the fleet. This is analogous to Airbus, which produces a standard cockpit right across the fleet of different models of aircraft. This has proved highly popular with airlines and pilots alike as it vastly reduces training time when crews change aircraft. Maintenance repair and overhaul of the aircraft is also logistically much easier.

BAE has a strong contender in their latest Type 26 design, the first of which is currently under construction for the Royal Navy in Scotland. BAE has a very strong presence in Australia across the defence spectrum and have already built a range of ships in Australia, including ten Anzac class frigates and two Navantia designed 27,000 tonne amphibious ships. BAE argue that the Type 26 will be the most up to date and technologically advanced model available to Australia and that their existing Australian competence will be available to build it.

To encourage the Australian Government to select their design, all three companies are negotiating public deals with universities and suppliers. They are working to show the advantages of choosing their vessel by highlighting the benefits to communities and local economies.

Navantia has opened a new Design and Engineering centre in Melbourne and signed MoUs with a range of Australian companies for supply of goods and services.

Fincantieri has awarded supply of transverse tunnel thrusters to a Perth based engineering company for its cruise liner construction activities, signed MoUs with key Australian unions and with the Australian Welding Institute to create a centre of excellence in welding techniques for the future workforce.

BAE has given a provisional order for more than 48,000 tonnes of Australian steel in the event of their success. They have signed partnerships with Thales and Ultra, promising Australia decades of Technology Transfer with the Type 26 and are actively seeking Australian suppliers to provide components for the Type 26 programme in the UK.

There will be many opportunities for European suppliers and London’s Office of the Agent General for South Australia is geared up to help those chosen take part in this nation building exercise. This can include setting up from scratch, negotiating a Joint Venture with a local partner, choosing a local company for Technology Transfer or even open negotiations for equity participation or swaps. The London team offers a spectrum of support to new and seasoned investors in Australia, including a PartnerMatch program to identify the best local companies to team up with.

Get in touch with John Rees, Trade and Investment Director in the OAG at john.rees@south-aus.eu or call him on 0207 520 9102. Check out our defence page for more information.