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Tuesday, 28 April 1987
Page: 2132


Mr ALDRED(10.16) —On this occasion I wish to address the matter of the submarine replacement project. I will take up a number of matters of concern in this House as I have on a number of previous occasions. As the House is aware, the original estimated cost of this project was $2.6 billion. According to naval sources, this has now blown out to $4.5 billion. Furthermore, Press reports of 15 April this year indicate that the final bill could be as high as $5.6 billion. As I said in this House on 2 April, there is now a very real possibility that if this project continues on its current course the costs will blow out to such a degree that they may seriously jeopardise future defence budgets and overall Federal Budgets.

I wish now to turn to the specific matter of collusion in this project. It is quite evident that in the very early days of the new submarine construction project the project team had become very interested in the German HDW-IKL type 2000. Direct discussions are believed to have taken place between the project team and HDW-IKL in Germany and Australia well before the request for tender document was issued. It is interesting to note that Rear-Admiral Rourke, the Chief of Naval Materiel and the direct superior of the project team leader, Captain Graham White, had visited Germany. It is also interesting to note that following the technical and design evaluation of the six original contenders for the project definition study the following order of preference was decided on: VSEL 2400a first, HDW-IKL 2000 second, RDM Walrus third and the Thyssen TR 1700 fourth. The document relating to this order of preference was signed by Mr Harry Dalrymple, Director-General of Naval Design.

However, in the Defence Force development committee recommendation announced by the Minister for Defence on 21 May 1985 HDW-IKL and Kockums were awarded the project definition study. It is also interesting to note that HDW-IKL was placed second on the original order of preference and Kockums did not appear at all. Prior to the Minister's announcement on 21 May 1985, the Australian Labor Party Caucus committee met to hear information from all potential contractors. The committee asked a number of previously drafted questions of each potential contractor. It is now certain that the questions were leaked to HDW-IKL by the project team prior to the committee hearings.

The subsequent investigation of these events is also very interesting. In October 1985 the Commonwealth Ombudsman began inquiries into the selection of contractors for the project definition study, including the probably collusion aspect. The Ombudsman concluded in his report:

It is an almost inescapable conclusion that there was prior knowledge-

and-

There clearly was a leak.

As a result of the inquiries, the Office of the Commonwealth Solicitor-General interviewed members of the project team. Two officers were moved off the project team-the project leader, Captain Graham White, and his Deputy, Commander Rod Fayle. A more senior officer, Rear-Admiral Oscar Hughes, was placed in control of the project. Captain White subsequently resigned from the Royal Australian Navy and is now a member of the section in the Department of Industry, Technology and Commerce whose interest is the submarine project. Commander Fayle was last heard of in some naval backwater.

The irregularities that occurred in the whole selection process are of great concern. The fact that HDW-IKL in all probability has been involved in collusion with the project team should, in the light of recent international events, not be too surprising. Recent Press reports indicate that HDW-IKL is involved in other irregularities in regard to selling its submarines, this time in India. Mr V. P. Singh, recently resigned Indian Defence Minister, had ordered an investigation into reports that HDW-IKL, or its agents, had paid huge bribes to the tune of $A33m to Indian officials to secure a contract for four HDW-IKL submarines. We are now in a situation where, because of these collusive aspects of the project, HDW could be knocked out of the tendering process leaving the straw man, Kockums, to get up by default. That really highlights the fact that this whole project, being in the mess that it is in, needs to go back to the drawing board immediately. We are looking at one of the major defence projects of this country and for such a major project to be turned into a debacle would be a very sorry mistake indeed. I hope that the Government will look seriously at deferring this entire project in view of the mess that it is in.