AIR 9000 Phase 8 October 2011

It was at the poetically beautiful Boyd Education centre overlooking the Shoalhaven river 16 kiolmetres from Nowra that local companies had to swallow the bitter pill that there will be almost no work for them flowing from the decision to purchase 24 MH-60R ‘Romeo’ helicopters – at least not in the short term. During the tender evaluate phase ‘Team Romeo’ made considerable efforts to match the Australian Industry Content package of rival bidder Eurocopter and have signed up to obligations amounting to $1.5 billion, which sounds impressive. However, it is already becoming difficult to see how this substantial target will be met.

28th Sep 2011


AIR 9000 Phase 8

Seahawk replacement: limited local opportunities

Kym Bergmann / Nowra


It was at the poetically beautiful Boyd Education centre overlooking the Shoalhaven river 16 kiolmetres from Nowra that local companies had to swallow the bitter pill that there will be almost no work for them flowing from the decision to purchase 24 MH-60R ‘Romeo’ helicopters – at least not in the short term. During the tender evaluate phase ‘Team Romeo’ made considerable efforts to match the Australian Industry Content package of rival bidder Eurocopter and have signed up to obligations amounting to $1.5 billion, which sounds impressive. However, it is already becoming difficult to see how this substantial target will be met.

At a briefing organized by the Shoalhaven Defence Industry Group on September 16 a succession of speakers went into details about the helicopter and support arrangements for it. The selection of the ‘Romeo’ in June came as no particular surprise, especially given the ongoing problems that Eurocopter subsidiary Australian Aerospace is having in supporting the helicopters they have already supplied to Defence, combined with the minimal risk culture of that organisation. The ‘Romeo’ will constitute the backbone of the United States Navy’s rotary wing anti-submarine warfare and anti-surface warfare capability for decades to come and was in the final analysis a comfortable choice for Australia. What has come as a surprise is the sheer totality of the US package.

The price for the helicopters is $3 billion – a figure that includes all of the weapons and support. According to a recent article in a DMO newsletter, this is 25% less than what the figure would have been for a sole source purchase, which had been the original preference of Defence. The deal is in the form of 2 contracts with the USN via the Foreign Military Sales (FMS) system – the first for the helicopters themselves and the second for the support of the platforms. It is this second contract that represents the problem for small local companies, because support for the USN’s ‘Romeo’ is already locked in with a variety of US suppliers. Put simply, the only way that Australian companies have a way in, is to become part of the existing global supply chain supporting the helicopters that are already in service. According to Shoalhaven companies, this looks to be very difficult – despite the commitment of ‘Team Romeo’ members Lockheed Martin, Sikorsky, CAE and GE (Raytheon were absent) to help them do so.

Support for the USN’s helicopters has been contracted to the Maritime Helicopter Support Company (MHSCo), which is jointly owned by Lockheed Martin and Sikorsky. Australia will have no direct contractual relationship with MHSCo, with support activities the responsibility of the USN. The relationship between the USN and MHSCo is well established, with 100 ‘Romeos’ now in service out of a total of 300 on order. One of the speakers helpfully suggested that the best way of viewing the situation is that the RAN is forming the USN’s 21st ‘Romeo’ helicopter squadron.

In other signs of a minimal risk approach, the few Australian-specific software changes (to be certified by the USN) will not be made until after 2018 when all 24 RAN helicopters have been delivered – meaning they will not achieve full operational capability until 2023. The desire to have the first helicopter delivered as soon as practicable in 2014 means that, according to Sikorsky, discussions between the Commonwealth and ‘Team Romeo’ about their AIC plans have been shelved until some future point.

Defence companies in the Nowra area were hit hard by the 2008 decision to terminate the Super Seasprite contract, with some representatives estimating the total direct job losses to be around 250 people. For example logistic support and training company SMA went from 50 employees down to five. The decision to get rid of the Super Seasprites still arouses feelings of bitterness, with locals pointing out that there have been well-publicized problems with Tigers and MRHs, but that neither of those contracts has been cancelled despite years of difficulties.

It is certainly the case that the ‘Romeo’ will require additional facilities at Nowra’s HMAS Albatross. Sikorsky spoke of needing 2,500 square metres of warehousing – a very big space – and having up to 140 employees. At least one local representative described this figure as “improbably large”, especially in circumstances where it seems that such a small amount of work will be carried out in Australia. Simulation company CAE will have up to ten people on site. But when it comes to small Shoalhaven businesses, one wit remarked that unless they could supply security guards for the front gate they would probably miss out.

Nevertheless, representatives from ‘Team Romeo’ and the Commonwealth stressed on several occasions the importance of meeting the $1.5 billion AIC figure – pointing out that in a historical first this offer has been made in conjunction with an FMS case. Time will tell – but it might be a very long wait. If in ten years time the Australian industry target has not been achieved, who is going to notice? Or care?


 

 

 

 

 

APDR at a glance