Australia's troubled future frigate program is facing a significant blow-out, with the auditor-general slamming Defence's handling of the $45 billion project.
A long-awaited Australian National Audit Office (ANAO) report has found the Hunter-class program is "experiencing an 18-month delay and additional costs due in large part to design immaturity".
Defence has also been criticised for failing to keep key documents and failing to properly consider whether taxpayers were getting value for money during the tender process.
"At January 2023 the project was forecast to exceed the whole of project budget approved by government by a significant amount," the ANAO concludes in a document tabled in parliament on Wednesday.
The ANAO report has also found the scheduled delivery of the first Hunter-class frigate in early 2031 is facing a fresh delay of around 16 months, meaning it is likely to now happen in mid 2032.
In 2018 the Turnbull government announced British company BAE Systems had beaten rival bids from Spain and Italy to build nine high-tech, anti-submarine future frigates in a project then valued at $35 billion.
According to the ANAO, Defence records have revealed the department's initial assessment concluded the Italian FREMM and Spanish F-100 were better options for Australia than the British Type 26 design.
"The meeting records indicated that the Italian FREMM (Fincantieri) and Modified F-100 (Navantia) were considered the two most viable designs and that either the Type 26 or the French FREMM should be progressed as a third option."
"Defence did not conduct an effective limited tender process for the ship design. The value for money of the three competing designs was not assessed by officials, as the Tender Evaluation Plan (TEP) proposed that government would do so."
The damning ANAO findings have heightened speculation the Albanese government may reduce the number of planned Hunter frigates from nine, as part of a snap review of Navy's surface fleet announced in the Defence Strategic Review.
Greens Senator David Shoebridge has described the ANAO's findings as "extraordinary" and questioned whether the Defence Department can handle the more complex and costly AUKUS submarine project.
"Something is deeply wrong in the parliament and the broader government that allows a $45 billion project to be rammed through Defence without anyone even asking if taxpayers are getting value for money?
"The response from the Department of Defence is appallingly inadequate, refusing to even engage with its failure to seek value for money on the project."
A BAE spokesperson declined to respond directly to the ANAO's findings but insisted the Hunter program "continues to make strong progress".
"We have begun building the first schedule protection block – which will be used in the first ship. We remain committed to building nine anti-submarine warfare frigates for the Royal Australian Navy."
"The program is the cornerstone to delivering continuous naval shipbuilding in Australia and developing a competitive and cost-effective naval shipbuilding and sustainment industry over the coming decades."
