Australia - Sanctions threat for sub builder

Australian Submarine Corporation CEO Steve Ludlam

 

EMBATTLED Adelaide-based ASC will be placed on a performance-based contract which threatens sanctions if its output is not up to scratch.

More than 800 South Australian jobs are potentially at risk if ASC, which was heavily criticised in a recent report by UK submarine expert John Coles, fails to meet yet to be fully determined benchmarks.

While refusing to comment on the performance indicators, ASC managing director Steve Ludlam has told a finance Senate estimates committee it expects to be bound by the contract from July.

"It is important to get the exact terms of the performance base correct since we are driving the business to greater operational availability," he said.

ASC, which maintains the Collins-class submarines, is currently negotiating the contract with the Federal Government's Defence Materiel Organisation.

The demanding contract comes at a crucial time as the Government decides whether 12 new navy submarines will be designed and built or adapted and built by ASC - or imported from overseas.

Disturbingly for ASC, the Coles report presents a damning picture of a complex, inefficient and ultimately flawed $440 million annual maintenance and sustainment program at the same time it is trying to convince the Government it is capable of handling the project.

Opposition spokesman for Defence Senator David Johnston also asked Mr Ludlam to explain why the dividend paid to the Government by ASC had dipped from $15 million in 2008-09 to $2 million in 2009-10.