The Government has grown so frustrated with the French company selected to build Australia’s next fleet of submarines that Defence Minister Christopher Pyne refused to meet top officials visiting the country this week.
Naval Group was selected in 2016 to build 12 submarines for the Australian Navy, in the country’s largest-ever defence contract worth $50 billion. The ABC understands Mr Pyne will only meet the chief executive of the majority French state-owned company once a crucial document, the strategic partnering agreement (SPA), has been signed.
Negotiations on that document have stalled and it is feared they may not be resolved before next year’s federal election. Defence and industry figures have told the ABC that France and Australia will not be ready before 2019 to sign the document, which is needed before detailed design contracts can be finalised, and submarine construction begins.
Sources familiar with the process say a goal to sign the vital SPA during a visit to Adelaide this week by French Minister Florence Parly has slipped off course, with fundamental differences that may not be reconciled before early next year. Concerns over warranties and technology transfer are believed to be the main sticking points in the tough negotiations between the Australian Commonwealth and French-owned Naval Group.
The knock-on effects of delay on the SPA, which covers the guiding terms and conditions that govern the submarine program, and the likelihood of a federal election being called in the first quarter of next year threatens to create a “perfect storm” of uncertainty, with some risk that it could ultimately sink the French project entirely.
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