The first of Australia’s new submarines could arrive late and cost substantially more than expected as Defence attempts to finalise the terms of the $50 billion project.

Senior sources confirmed the “unprecedented” offer to allow an extra two years and 25 per cent cost increase was initially rejected by the French owned shipbuilder, Naval Group.

It instead wanted a three-year schedule delay and for an allowance of a 30 per cent increase in delivery costs, but the company later backed down.
The ABC can also reveal that negotiations between Defence officials and Naval Group became so tense that a former senior bureaucrat was hired in a bid to help resolve protracted disagreements.

Former prime minister Malcolm Turnbull announced Naval Group, then known as DCNS, had been selected for the lucrative project in 2016.

The French bid was successful in a competitive evaluation process (CEP), beating rival offers from Germany’s TKMS and the Japanese Government.

Unlike a regular military tender process, the CEP did not involve detailed commercial contracts being submitted to the Defence Department.

Lees verder op Abc.net.au