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Tuesday, 12 May 1970

Note: Details of classified operational and technical data have been excluded.

1.   This Minute recognises the spirit and intention of the discussions between the United States Secretary of Defense, Melvin R. Laird, and Australian Minister for Defence, Malcolm Fraser, and further acknowledges that the purpose of the discussions was to ensure that the Government of Australia was fully aware of the technical and operational status of the Fill project as seen by the U.S Department of Defense to enable the Government of Australia to determine issues relating to the acquisition of the F111C aircraft and to explore possible alternatives.

2.   It is further acknowledged and recognised that the special Australian position in relation to defence within the South East Asian region calls for a strike aircraft, capable of satisfying the operational and technical criteria of the RAAF.

3.   It is further recognised that the distance from major contractor and maintenance facilities creates a special situation for Australia and that as a result the current test and rectification programme associated with the Fill series could preclude delivery of the aircraft to Australia until certain agreed to objectives are achieved.

4.   The Australian Minister for Defence confirms that certain operational and technical criteria which were mutually agreed to are fundamental requirements for the Australian strike aircraft and that an F111C that meets those requirements will be suitable for operational use.

5.   In the event such operational or technical criteria or any mutually agreed modification thereof are not achieved, providing Fill series aircraft are being employed in the active USAF inventory, the Department of Defense agrees, subject to authorisation by the Congress, to accept the aircraft and associated support for adaption to its own use and to credit the Government of Australia with an equitable reimbursement. The U.S. Department of Defense agrees that should the Government of Australia elect within 3 months hereof to terminate its interest in the Fill programme a similar reimbursement will be made upon return of the F111C assets. In either event, the U.S. Department of Defense will offer a suitable production aircraft to the Government of Australia.

6.   In determining the amount of the proposed reimbursement, the U.S. Department of Defense has indicated its willingness to repurchase the aircraft, spare engines, spares, training equipment, etc., already acquired by the Government of Australia. The amount of reimbursement for all oi the above items is subject to further refinement and negotiation but is currently estimated by the USAF to be in the range of SI 30 to $150m.

7.   Because of the long standing concern of the Government of Australia that there would bc a gap in its strike capability while awaiting delivery of Fl 11 C and having regard to the unforeseen delays that have occurred in delivery, the U.S. Department of Defense agreed to explore the availability of interim aircraft for the period elapsing before the F111C are delivered or any alternative permanent arrangement might be made.

8.   The U.S. Department of Defense agreed to propose interim or alternative arrangements which would assist the Government of Australia to meet its defence commitments, until successful accomplishment of the technical and operational objectives. These arrangements contemplate the lease and possible eventual sale of F-4E aircraft. Subject to such governmental clearance as may be appropriate for each of the parties hereto, the terms and conditions of the lease/option-purchase arrangements would be negotiated at the earliest mutually acceptable date.

9.   The following alternatives were proposed by the U.S. Department of Defense for the consideration of the Government of Australia.

ALTERNATIVE 1. Store the F-111Cs until Australian technical and operational objectives are achieved, presently planned for mid-1972, and lease up to 24 F-4E Aircraft for the interim period, starting as early as mid-1970. In the event such operational and technical criteria or any mutually agreed modification thereof are not achieved and F-111 aircraft are in the USAF inventory as described in paragraph 5, the Government of Australia can cancel under conditions no less favourable than paragraphs 5 and 6.

ALTERNATIVE 2. Procure F-111Fs instead of F-111Cs and lease up to 24 F-4Es until the F-111Fs can be made available. The U.S. would provide an equitable reimbursement for F-111C assets in accordance with paragraph 6 of this Minute.

ALTERNATIVE 3. Cancel the F-111C programme and replace the F-111Cs with F-4Es on a permanent basis. Equitable reimbursemen would be made for F-111C assets in acordance with the terms of paragraph 6 of this Minute.

10.   It is recognized that the Government of Australia may decide not to pursue any of these alternative arrangements as regards interim or alternate aircraft but elect to wait for the achievement of the operational and technical criteria as agreed. If such criteria are not achieved and cancellation is invoked under circumstances set forth in paragraphs 5 and 6 of this Minute, reimbursement to Australia will be made in accordance with the terms and conditions of such paragraphs.

11.   In connection with the F-4E alternatives indicated above, the U.S. Department of Defense advised that tankers could be procured directly from United States contractors and the USAF would provide refueling training on the basis of the letter dated 10 April 1970 from General Ryan to Air Marshal Hannah. It is further agreed that, subject to its own overriding requirements, the USAF will provide further tanker support for the RAAF if an urgent need arises consistent with international agreements involving our two countries existing at the time.

12.   The U.S. Department of Defense agrees to supply additional F-111C aircraft if requested by Australia for attrition and/or reconnaissance purposes in accordance with the average price and terms and conditions as provided for in the technical arrangement.

13.   The Government of Australia may elect to send a team of specialists to the United States in the near future to further definitize these alternatives and to assist in making arrangements for appropriate approval by each Government.

14.   The Australian Minister for Defence notes with appreciation the extensive efforts of the U.S. Department of Defense to make the F-lll basic aircraft operationally useful to the USAF and the RAAF.

15.   The parties discussed their respective rights and obligations in the event the F-lll programme fails to satisfy the requirements of both Governments, but did not arrive at a conclusion of this issue.

16.   It is understood that the Australian Minister for Defence will be reporting these matters to the Australian Government. (Signed) Malcolm Fraser (Signed) Melvin R. Laird

I present the following papers:

Royal Australian Air Force - Procurement of strike bomber capability -

Ministerial Statement, 12 May 1970.

Agreed minute between United States Secretary of Defense and the Australian Minister for Defence, dated 14 April 1970.

Motion (by Mr Snedden) proposed:

That the House take note of the papers.

Suspension of Standing Orders

Motion (by Mr Snedden) - by leave - agreed to:

That so much of the Standing Orders be suspended as would prevent the Deputy Leader of the Opposition speaking without limitation of time.

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