by Peter Yule
T H E C O L L I N S C L A S S S U B M A R I N E S T O R Y
Many believe that the real source of the problems the navy had
in dealing with the submarine project was the anti-submarine feel-
ings common among surface sailors. There is a strong conviction
among submariners, ASC staff and members of the project office
that there was a strong faction in the navy opposed to the sub-
marine project and determined to make sure that the government
would never approve the construction of two more submarines.20
They believe that many of the critical media stories were based on
leaks from within the navy. One long-time project member says
that:
The thing that really got me in 1998 was that hardly a day
went by without the project getting a hammering in the press.
We did not deny that there were issues, but in most cases we
knew the solutions and were working towards them . . . The
stuff in the press was beyond belief. Journalists didn’t want to
know that what they were publishing was a load of nonsense.
I couldn’t understand why we had such a problem at the
time but I did find out years later why and that’s because of
where it was coming from. Now that’s one thing I won’t tell
you but suffice to say it was coming from a very senior
credible naval source who was doing it for his own political
reasons which were really to try to scuttle the submarine
project to get money to spend the money on surface ships.21
While the surface sailors see views like this as pure paranoia and
deny strenuously that they sabotaged the submarine project, the
fact that such views grew up and persisted is symptomatic of the
divisions and suspicions that bedevilled the project from the mid-
1990s.
In 1997 Don Chalmers followed Rod Taylor as chief of the
navy, and in February 1998 Paul Barratt succeeded Tony Ayers
as secretary of the Department of Defence. Barratt thought the
submarine project looked like many disparate projects with peo-
ple working hard but often at cross purposes, and he decided
that one of his priorities must be to draw it all together. Working
closely with Don Chalmers, Garry Jones of the Defence Acqui-
sition Organisation, and Richard Brabin-Smith, the chief defence
scientist, agreement was reached on the steps to take, most notably
that the US navy should be asked to help.22
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When Don Chalmers took over as chief of the navy he found
that the role had changed greatly as a result of the defence effi-
ciency review, and he had far fewer staff and less power within the
defence establishment than his predecessor. His chief staff officer,
Paddy Hodgman, observes that Chalmers saw one of his main
tasks as being to tackle what he viewed as a crisis with the sub-
marine project, to ensure that the navy received a capable sub-
marine force in time to replace the Oberons. The submarine
project quickly moved from something that was being observed
and documented at a distance to being a central concern of navy
headquarters.
This was the situation when Chalmers visited America early in
1998:
Whenever I was there they’d ask how the submarine was
going and I’d give a fairly non-committal answer. But we
came to the stage where we really weren’t getting anywhere
with this noise and we clearly needed some help. There were
some navy to navy talks and I made the decision – and I didn’t
discuss it with the CDF [chief of the defence force] or the
secretary (as a matter of fact I didn’t even tell my deputy) –
that I would talk with the deputy chief of the US navy about
the issues that we had with the submarine. We met on a
Monday morning . . . and I said: ‘We’ve got a noise problem
with the submarines and the combat system doesn’t work.’
Within two days I got a message back from the CNO [chief
of naval operations] that he would provide any help they
could and asked if he could send out his expert, Admiral Phil
Davis. So there was immediate help on the way and Phil was
here by the following week.23
A former commander of two nuclear attack submarines, from
1996 Phil Davis was in charge of all American submarine devel-
opment and construction. He recalls that immediately following
Chalmers’ request for help, the chief of the navy told him and
Admiral Dick Riddell to go to Australia to look at the submarines
and advise what could be done, with authority to offer any and
all assistance.24
The two specific issues the Americans were asked about were
the noise problems and the combat system. After talks with the
navy, DSTO and ASC, Davis agreed with the navy’s view that ‘the
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boats’ radiated noise while submerged in various modes was not at
the level they thought they asked for’. Davis felt there was enough
data to show that there was a noise issue with the submarines
sufficient ‘to make them not worthy for combat’. To Davis the
acoustic data showed that hull form and fluid flow was the main
cause of noise, with the propeller and shafting contributing to the
overall noise signature, and he offered to analyse the noise at the
Carderock naval testing centre, with a view to suggesting design
changes and modifications to both the hull form and the propeller
design.
When the Americans looked at the combat system, they saw
it was not functional to the design specifications – the ships were
safe to operate but they could not carry out missions or perform
to their full capability. Davis thought the architecture was not
fundamentally flawed but the technology was lacking to achieve
the requirements and he concluded that short of a major redesign
he could not offer a ready fix to make it work. Nonetheless, Davis
directed Dr John Short, a leading defence scientist, to ‘drop what
he was doing and go to Australia to do a dedicated investigation of
the Australian combat system’. Short verified Davis’s assessment
that ‘the manufacturer was not going to get the system fixed ever’.
However, in America’s own submarine program they had made a
series of improvements to a combat system by adding on ‘black
boxes’ to improve the capability without building a whole new
combat system. Short looked at these with the idea of giving the
Australian system enough improvements so the submarines could
function adequately, while acknowledging that this was purely a
short-term fix. This was the basis of the augmentation program
that was installed on Dechaineux and Sheean during 2000.
While there had been requests from the Australian navy to the
American navy for help and advice on technical issues for many
years, before the 1996 election these tended to be informal and
the response was mixed. In contrast, the approach from Admi-
ral Chalmers was strongly endorsed at a political level and me
t
with a prompt and enthusiastic response from the Americans. The
submarine project had been seen as epitomising the ideology of
the Hawke and Keating Labor governments, which in economic
policy were committed to building up a high-technology manu-
facturing sector, in foreign policy to developing closer ties to Asia
and reducing dependence on the United States, and in military
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271
policy emphasising the defence of Australia. The change of gov-
ernment in 1996 led to significant changes: the government effec-
tively abandoned any industry policy; foreign policy returned to its
traditional focus on the bilateral relationship with America, with
the enthusiastic adoption of the role as America’s ‘deputy sheriff’
in the region; and the strategic focus of the armed forces shifted
from the defence of Australia to ‘forward defence’, a euphemism
for enthusiastic participation in American foreign policy adven-
tures. One of many consequences of the new political situation
was that the government would far prefer to look to America
than to Europe for help with the submarine project.
The Americans ascribe their willingness to help to the strength
of the alliance and the close relationships between Don Chalmers
and senior American naval officers – ‘We just wanted to help
you Aussies’.25 However, many observers think that the changing
global strategic situation following the end of the Cold War led
the Americans to become far more interested in conventional sub-
marines. During the Cold War America’s focus was entirely on the
‘blue water’ threat of Russia’s nuclear submarines, but as it shifted
towards regional instability and terrorism in the 1990s, Australia’s
submarine force with its expertise in shallow water surveillance
became more relevant.26 Further, there have been regular sugges-
tions that the Americans might be interested in the Collins class
with the idea of providing conventional submarines for Taiwan.27
With help on the way from America and confidence that Aus-
tralian and Swedish ‘fixes’ were under way for the other problems,
the leading players in 1997 and 1998 – chief of the navy, Don
Chalmers, Secretary for Defence, Paul Barratt, head of the Defence
Acquisition Organisation, Garry Jones, and project director, Eoin
Asker – believed that they had charted a viable way forward for
the submarine project. They were confident that the problems had
been identified and the solutions were in place. For example, Garry
Jones said in evidence to the Joint Committee on Public Accounts
and Audit on 5 March 1999: ‘We have got a few problems to
work our way through, but already a very clear outcome can be
agreed.’28
However, the resolution was not to be so straightforward. The
issue which provoked the next crisis was the refusal to accept the
third submarine, HMAS Waller, into naval service.29 Collins and Farncomb had already been provisionally accepted, with a large
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number of defects later becoming the subject of dispute between
ASC and the navy. Don Chalmers says it was hard to see that any
progress was being made with overcoming these defects and he
felt it was critical to force ASC to act. Consequently:
Very soon after I became chief of navy we accepted the
second submarine but at that stage I made it clear to Hans
Ohff that I would not be accepting the third submarine
unless there was significant progress on the issues.
Showing a far greater level of involvement in the project than his
predecessors, Chalmers set up monthly meetings with Ohff ‘to
discuss progress’, and on 22 April 1998 he laid down the navy’s
minimum requirements for the acceptance of Waller. 30 Through-
out 1998 ASC worked to meet these requirements, with the pro-
jected delivery date being regularly put back.
Eventually ASC believed that it had met all the requirements
and formally delivered Waller to the Defence Acquisition Organ-
isation, but the navy refused to accept the submarine from the
DAO. Hans Ohff’s version of the episode is that:
Among other things Chalmers demanded 50 hours
uninterrupted performance by the diesels before he would
accept Waller. ASC met that and everything else he had asked
for but he still did not accept it. I took the attitude that ASC
had done all it was meant to and that the submarine was now
DAO’s [Defence Acquisition Organisation] responsibility – so
I wrote them a letter saying they were in breach of contract
and that I would charge them $100 000 a day. There was no
response so I sent them bills and they were furious.
An engineering admiral had to sign off before Garry Jones
[head of DAO] would accept the submarines. I went to see
Jones and said the bill for the submarine is now $7.5 million.
Jones understood the contract and knew I was in the right so
he organised a meeting where it was agreed that the
conditions were all met and he said he’d accept the
submarines. The Commonwealth eventually paid about half
the bill we had sent them.
I would never have behaved like that with a normal
client – it was a vindictive move that I only did because I was
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273
totally disgusted with the political games that were being
played with the project.
Lawyers Paul Armarego and Wal Jurkiewicz, who later reviewed
the issue when advising the Commonwealth, considered that:
The late acceptance claim with Waller was amazing. There
was no way the ASC could meet the original date because
there were so many defects so the date kept getting pushed
back. When the date finally came there were still a large
number of defects so the Commonwealth did not accept it
and tried to negotiate to have the defects fixed. ASC then hit
the Commonwealth with a late acceptance claim. The
Commonwealth did not take advice on this. ASC had no legal
claim at all but the Commonwealth still paid them . . . The
Commonwealth snatched defeat from the jaws of victory.
There are two diametrically opposed views on the consequences
of the refusal to accept Waller. Peter Briggs contends that ‘The
fixing process all started with Chalmers saying “No!” and Paddy
Hodgman thinks ‘the refusal to accept Waller really made a dif-
ference because they got some seriously hard work toward what
might be a minimal level of acceptability for the combat system
to allow the vessel to be used’. In contrast, Terry Roach believes
that ‘it was a very bad move to refuse to accept delivery of the
submarine as it gave credence to all the stories of their inadequa-
cies’. This view is shared by Hugh White, a deputy secretary in
the Defence Department at the time, who says the declaration that
the submarine was unacceptable moved the project almost directly
from ‘suffering difficulties’ to being ‘in a crisis’. In his view it was
almost as if the navy itself had declared the project ‘in crisis’ and
he saw this as stemming from the fact that the navy did not feel
that it owned the submarines.
Ian McLachlan retired as Defence Minister at the 1998 fed-
eral election. His successor, John Moore, took seriously the navy’s
declaration that the project was in crisis and acted on it, with dra-
matic consequences for many careers. Of all the leading characters
in the Collins story, only Hans Ohff attracts more strongly held
opinions – both for and against – than John Moore.
C H A P T E R 23
‘Bayoneting the wounded’: the
McIntosh-Prescott report
John Moore was a successful stockbroker, long-time strong man of
the Queensland Liberal Party and Minister for Industry in the first
Howard government from 1996 to 1998. The submarine project
was not then in his bailiwick, but he thought ‘it had all the signs
of a project that was out of control’. After the federal election of
October 1998 he became Minister for Defence, expecting that this
would be his last portfolio before he retired from politics. He was
appalled by what he saw as the unbusinesslike management of the
Defence Ministry and soon came to the conclusion that ‘no finan-
cial figures from defence are correct’. In his first year the books
were not within $700 million and he asked a senior official what
he should do. ‘Just write it off’, he was told. Every defence project
was over time and over budget and he was given lists of overruns
to approve as a matter of routine. He was continually asked to
allocate more money and told that it would not affect the budget.
The department had three different accounting systems running
more than 60 computer programs, with innumerable consultants
working on them. He was disappointed with the management
abilities of senior military leaders and felt that the policy of short
rotations meant that few of them had a firm grasp on their jobs.
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The military seemed to have the attitude that the minister’s role
was to get money from the parliament and then leave them to
spend it free of supervision or control. The navy in particular, he
