FFG 05-06 Australian Frigate Project (AFP)
The Adelaide Class frigates are based on the US Navy Oliver Hazard Perry design. The first four ships were built in the USA with subsequent modifications undertaken in Australia. The last two were constructed in Australia with all modifications incorporated. The Australian Frigate Project (AFP) was the mechanism by which from the mid 1970s, successive Federal Governments sought to re-establish a major warship construction capability in Australia. This capability was eventually established by the construction of two guided missile Frigates (FFGs), HMAS Melbourne (FFG 05) and HMAS Newcastle (FFG 06) by Transfield Defence Systems (formerly AMECON and before that, Williamstown Naval Dockyard [WND]).
The decision to build the ships at WND was courageous, particularly as WND’s record of industrial dispute and low productivity was a major factor in the Whitlam Government’s 1972 decision to reject local construction and acquire four FFGs, HMA Ships Adelaide, Canberra, Sydney and Darwin, from Todd Pacific Shipyards in the United States under Foreign Military Sales (FMS) arrangements.
In the early years, the AFP was known as the Follow On Destroyer (FOD) Project. In May 1978, the Defence Naval Destroyer Group (DNDG)2 was established to examine and resolve a range of complex FOD force requirements and acquisition issues. In July 1979 the DNDG recommended that two ships be short listed, the United States FFG-7, and the Netherlands M-Class. Although both ships would have met the capability sought by Australia, the FFG was preferred because it offered a relatively straightforward program and could move early to local construction.
Based on the Group's report, the FFG-7 Class Frigate was selected for local construction given it served 'the strategic need to regain shipbuilding skills' and offered a flexible design to maximise local technological input. In 1980, the Coalition government made a commitment to build two FFG-7 frigates at Williamstown, conditional on the dockyard demonstrating its capacity to build the ships to the RAN's requirements. In 1981, the government selected HMAS Darwin (FFG 04) as the baseline for the build.
A new Labor government came to office in March 1983 arguing that Australia should have the capacity to build warships in-country. Its commitment to self-reliance furthered the Coalition government's approach, and was significant given the previous Labor government's cancellation of the DDL project in favour of an offshore build.
However, the government was also committed to fiscal restraint in the defence portfolio and recognised the need to reform highly inefficient, government-owned shipyards. Mr Derek Woolner, a Visiting Fellow at the Strategic and Defence Studies Centre, has noted that the government: " showed that defence construction projects would no longer be used for job creation when it resisted union demands to build a second tanker at Cockatoo Island, ultimately condemning the yard to extinction."
These decisions were integral to the government's broader program of microeconomic reform. The challenge was to build a competitive domestic defence industry through rationalising defence factories and dockyards, while offering the private sector opportunities for long-term investment. The government maintained that through better management, a significant program of defence procurement could take place without continuous real growth in defence appropriations.
The Labor government's strategy was to use the Williamstown dockyard to demonstrate its commitment to commercialising defence shipbuilding projects. The selection of Williamstown for the FFG build was conditional on the resolution of productivity issues at the dockyard. The Defence Minister, the Hon. Gordon Scholes, described the FFG 05–06 project as 'a chance for the dockyard to prove that it can…maintain price and production schedules', and emphasised the importance of prerequisite agreements on work practice issues and construction specifications."
When the Hawke Government approved the AFP in 1983, the industrial situation at WND had not improved much beyond that of the 1970s and contributed to the Government’s decision to offer the dockyard for sale in 1987. The sale process delayed ship construction by several months, but resulted in significant work place reforms and efficiency gains.
The government announced on 12 October 1983 that the project would cost an estimated A$830 million (in December 1982 prices). The size of the local cost premium paid for the build is unclear. However, a review of the project by the Joint Committee of Public Accounts in February 1986 estimated the 'cost premium of local production to be in the order of 30 per cent'. The contract for the build was signed in November 1983 between the Department of Defence and the Department of Defence Support. The first frigate (FFG 05) was to be delivered between the middle of 1990 and 1992 and the second (FFG 06) between the middle of 1992 and 1994. The project contract was designed specifically to maximise Australian industry involvement in the areas of expertise and capability that would increase Australia's self reliance and military preparedness. Materials sourced from the U.S. were supplied only if they could be delivered within project design and schedule and allowing for the Australian cost premium.
The defining moment of the frigate project came on 1 April 1987 when the Defence Minister, the Hon. Kim Beazley, announced the government's decision to sell the Williamstown Naval Dockyard. In December 1987, the dockyard was sold to the Australian Marine Engineering Corporation (AMEC) for $100 million and a contract was signed with the company extending the delivery date for the FFG 05 by three months. In the event, an increased rate of work at the dockyard led to the launch of HMAS Melbourne (FFG 05) ahead of schedule on 5 May 1989. Although AMEC's efforts to launch the FFG 05 put the FFG 06 behind schedule, the second ship was delivered in October 1993, a month ahead of the original 1983 contract date.
The frigate project succeeded in its prime objective of re-establishing a major warship capability in Australia: 90 per cent of AMEC's costs and 75 per cent of the overall project costs were sourced locally. The final project cost in real terms was similar to the 1983 contract schedule, with the only period of real cost increase associated with the privatisation process.
Moreover, the AFP established the Labor government's commitment to self-reliance and a competitive defence industry. In March 1987, the government released a Defence White Paper which emphasised the need to develop Australia's indigenous defence industry capability and improve its competitiveness. Upon presenting the White Paper to parliament, the Defence Minister the Hon. Kim Beazley warned that in the event of an attack on Australia: " [m]ajor maritime forces would…be needed, involving large numbers of high capability ships and aircraft. These forces do not now exist in this region and could not be rapidly or secretly developed."
In this context of the need for self-reliance, the Minister's commitment to the development of Australia's defence industry was twofold. The first was to create a 'more efficient defence', ensuring that government-owned defence factories and dockyards 'perform to the standards of competitive private industry'. The Williamstown decision was integral to this direction, and others would soon follow. Mr Beazley's second commitment was to invest significantly in a competitive local industry.
Delivery of both FFGs was achieved within (although at the extremes of) the bands established between Navy and WND some 10 years earlier. The final AMECON FFG product was also very similar to HMAS Darwin, but there were differences. In addition to the Australian designed and manufactured Mulloka sonar, other departures from the Darwin configuration base-line were the replacement of the Motor Whaleboat with a rigid inflatable boat, modified corrosion protection and paint scheme, increased limiting displacement, and a later base-line Close-In Weapon System and Fire Control System. The RAN is very pleased with the overall perfomance of both HMAS Melbourne and Newcastle, and consider these ships to perform better than those acquired from the US. The only real initial concern was non-AMECON specific, the US supplied Phalanx Close-In Weapon System. Although it met capability performance requirements, the levels of maintenance and “down time” were unacceptable. The problem has since been remedied. The FFG-7 ship was selected by Defence for two main reasons; military effectiveness, and to reestablish a major warship building capability in Australia. HMAS Melbourne and Newcastle met Navy performance requirements and provide a more effective military capability than those Frigates purchased from the United States. This outcome was achieved however, at a cost. A premium in the order of 20 to 30 per cent for local construction was necessary, the low level of productivity at WND threatened the AFP and other major projects, and delayed ship delivery.
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