Japan loses Australia submarine tender, as French DCNS is picked

2016-04-26

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Japanese sailors are seen on the deck of the Maritime Self-Defense Force Asagiri-class destroyer Umigiri docked at Sydney's Naval base during a media tour on April 19. Australia has reportedly told Japan that it did not select Japan as the winner of a contract to jointly develop and bulid its fleet of next-generation submarines. | AFP-JIJI — Japanese sailors are seen on the deck of the Maritime Self-Defense Force Asagiri-class destroyer Umigiri docked at Sydney’s Naval base during a media tour on April 19. Australia has reportedly told Japan that it did not select Japan as the winner of a contract to jointly develop and bulid its fleet of next-generation submarines. | AFP-JIJI

In a stunning reversal of fortunes, Japan — the onetime front-runner in the multibillion dollar tender to build Australia’s next-generation of submarines — failed in its bid to build the vessels, Australian Prime Minister Malcolm Turnbull announced Tuesday morning.

Turnbull said the submarines would be built in Australia by France’s state-controlled naval contractor DCNS.

“Defense department experts were unequivocal — the French offer best offered the capabilities needed to meet Australian needs,” Turnbull said at a news conference in the Australian shipbuilding hub of Adelaide.

“We’ve received offers from TKS and the government of Japan, and I want to thank the countries of Japan and Germany for offers which were of very high quality,” he added. TKS is a reference to ThyssenKrupp AG of Germany.

Japan had fallen behind DCNS and TKS in recent weeks, analysts said. Turnbull confirmed that, noting that the Defence Department had given him an “unambiguous” choice for the bid.

The vessels will replace Australia’s ageing diesel-electric Collins Class submarines. DCNS’s proposal involves a 4,500-ton conventional-powered version of its 4,700-ton Barracuda, to be named Shortfin Barracuda.

Despite Japan’s defeat, Turnbull said ties with Japan and the United States will remain strong.

“Both Prime Minister (Shinzo) Abe and I . . . are thoroughly committed to the special strategic partnership between Australia and Japan, which gets stronger all the time,” Turnbull told reporters.

He added: “We are committed, too, to our strong trilateral strategic engagement between Japan, Australia and the United States.”

Had Japan been selected, the contract would have been a huge boon for Tokyo as it pushes for joint defense development with other countries under new guidelines for the transfer of defense equipment and technology.

News reports earlier said Japan had been “all but dismissed” during a meeting of top Australian Cabinet officials. Tokyo’s bid was viewed as having “considerable risk.”

Concerns had apparently been festering since at least the time of Australian former Prime Minister Tony Abbott, who was ousted in a party coup last September.

Chief among these concerns, the Australian Broadcasting Corp. said, were reservations among Australian Defence Department officials about the early stages of the Japanese offer, and how it had initially emerged as an “understanding struck between Abbott and Japanese Prime Minister Shinzo Abe.”

Australian media had reported that Abbott and Abe, who had close personal ties, privately agreed in 2014 that Japan would get the contract. Both sides denied the existence of such a secret deal.

But economics also appeared to play a role in the decision, with Turnbull and Defence Minister Marisa Payne repeating a mantra of “Australian jobs and Australian steel” during Tuesday’s news conference.

“These submarines will be most sophisticated naval vessels in the world and they will be built here in Australia, with Australian jobs, and Australian steel,” Turnbull said.

http://www.japantimes.co.jp/news/2016/04/26/national/politics-diplomacy/australia-rules-awarding-japan-contract-next-generation-submarines-sources/#.Vx8TBUizASY