Naval Group and Australia formalise agreement on local content for Future Submarine programme

French shipbuilder Naval Group and Canberra have formally agreed that at least 60% of the contract value for the Royal Australian Navy’s (RAN’s) Future Submarine programme will be spent in Australia, Acting Defence Minister Marise Payne announced on 23 March.

Amendments to the overarching Strategic Partnering Agreement underpinning the AUD90 billion (USD69 billion) project ensure that Naval Group’s commitment is now a contractual obligation over the life of the programme, said Payne in a statement.

“Beyond maximising opportunities for engagement with Australian industry, this will also ensure that the government’s requirement for a sovereign Future Submarine capability is met,” noted the minister.

A Department of Defence (DoD) spokesperson confirmed to Janes that the amendments were signed by both parties on 23 March, but did not disclose by whom.

The amendments complement existing contractual requirements for Naval Group to establish procurement organisations in Australia, and the need to approach the Australian market in the first instance for the majority of equipment.

Following reports that Canberra was considering walking away from the contract – under which Naval Group is to design and build 12 Attack-class conventionally powered submarines for the RAN – a breakthrough in the tense negotiations was achieved during a visit to Australia in February by the French company’s global chief executive, Pierre Eric Pommellet.

A minimum percentage of Australian content would be agreed for each phase of work, the DoD spokesperson confirmed. Should this fall below the agreed band in any phase, Naval Group would be liable for penalties. Should the level of Australian work exceed the agreed band, Naval Group would qualify for incentives.