Australia’s most senior defence official was poised to inform the Morrison government of “good progress” on the now-dumped French submarine project, after receiving advice that the proposed next phase of work was “affordable and acceptable”.
Documents obtained by Guardian Australia under freedom of information laws reveal Australia’s defence leadership received positive advice about the project, just weeks before it was scrapped in favour of the Aukus pact with the US and the UK.
The defence department secretary, Greg Moriarty, promised in an email to colleagues on 30 August to “ensure that the good progress to date is part of the advice we take to government” and said it would also be expressed in a meeting between Australian and French ministers the same day.
The Australian government’s announcement two weeks later that it was turning to the US and the UK for help to acquire at least eight nuclear-powered submarines sparked a serious diplomatic rift with France, which complained it had been “stabbed in the back” and “betrayed”.
The newly released paper trail shows Gregory Sammut, the general manager of submarines at the defence department, told his superiors that France’s Naval Group had made an updated offer for the next phase of work on 23 August.
“Notwithstanding the due diligence we are exercising in reviewing the offer, it is affordable and acceptable, and compliant with contractual terms and conditions, and the statement of work,” Sammut wrote on 27 August.
Sammut also said “a sound integrated master schedule” had been established, with the first of the conventional diesel-electric Attack-class submarines forecast to be delivered “within the window August 2033 to February 2035”.
Prime minister, Scott Morrison, said in September the first of the nuclear-powered submarines should be in the water by about 2040 - although all of the key details are still subject to an 18-month joint study with the US and the UK.
While some of Sammut’s 27 August email was redacted on the basis that it would reveal a cabinet deliberation or decision, it ends with a comment that Naval Group had worked “collaboratively with Defence since then to achieve substantial progress, and there are no extreme program strategic risks”.
His email was addressed to Moriarty, the defence secretary, who had helped oversee a parallel review into Australia’s submarine capability needs, and the message was copied to others including the chief of navy, Vice-Admiral Michael Noonan.
Moriarty replied on 31 August to thank Sammut “for this comprehensive update” and to acknowledge “that this has not been an easy period for any of you”.
Moriarty wrote that the fact the department had “a high confidence” schedule, a “credible” cost estimate, and an “affordable” offer for the next stage reflected well on the team’s leadership and its good working relationship with Naval Group.
“I will ensure that the good progress to date is part of the advice we take to Government, and you will hear that message repeated in the 2+2 with France and in other engagements,” Moriarty told Sammut.
This 2+2 meeting between the French and Australian defence and foreign ministers would later be at the heart of French accusations they were blindsided by the ultimate decision to scrap the project in favour of the Aukus pact.
The documents released by the defence department on Monday also show Sammut briefed a key Defence panel – known as the Naval Shipbuilding Coordination Group – about progress at least twice in August 2021.
Notes prepared for the meeting on 10 August say that Naval Group had been “formally advised that Government will need to consider the revised offer for the next phase before Defence is permitted to fund that work under contract”.
According to notes prepared for a meeting of the same panel on 31 August, Defence’s work to establish “a sound integrated master schedule, a credible program cost estimate and an affordable and acceptable offer for the next phase of work” had been completed “with the collaborative support of Naval Group”.
There is a table listing a number of “current risks and challenges” as either “medium” or “high” – but the specifics are redacted on the cabinet confidentiality clause.
Sammut’s email to defence leadership on 27 August estimates the updated total cost of the French submarine program as $46.4bn in 2016 constant dollars – a way of describing the cost that assumes a dollar has the same buying power over time.
He wrote that this figure “remains within the original acquisition cost estimate of $50 billion in 2016 constant dollars announced at the outset of the Attack class submarine program in April 2016”.
Defence officials have said the total estimated cost of the French submarine program was $88bn in “out-turned dollars” – another measure that takes into account inflation and foreign exchange rate variations. This larger “out-turned” figure has been more widely quoted in media reporting.
Moriarty told Senate estimates in October the public discussion about the French submarines had been “largely inaccurate” and “there was no cost blowout”.
He said the project had been terminated “because our requirements have changed, not because of the poor performance” by either Naval Group or the combat system contractor Lockheed Martin Australia.
Previously released documents show the defence department wrote to Naval Group a week before the contract was cancelled, acknowledging the successful completion of at least one requirement for moving to the next stage.
Hours before the announcement, the department cautioned Naval Group that its achievement of a key contractual milestone did “not provide any authorisation to continue work”.
The diplomatic rift over the matter deepened in November when the French president, Emmanuel Macron, directly accused Morrison of lying to him.
