Austal slips closer to contract

Austal slips closer to contract

AUSTAL Limited is one step closer to being part of the winning team on a $US14 billion project to build Littoral Combat Ships for the US Navy, with the US Department of Defence announcing it has awarded a $US78 million final design contract to Austal’s team mate, Bath IronWorks.

While the ships will have to be built in the US – an American legal requirement – the design work will be done at Austal’s Henderson facility. It has assembled a team of more than 50 naval architects, engineers and other designers for the final design phase.

The Western Australian-based shipbuilder has made no secret of its defence aspirations and has secured a number of other defence contracts.

A recent reshuffle of Australian defence shipbuilding contracts could provide further opportunities.

Austal is the vessel designer and builder for the team – which is one of two consortiums selected for the final LCS design phase.

The contract includes options to complete detail design and construction of a lead ship of this new high-speed surface ship class.

If successful, Austal will build the lead and follow-up ships at its shipyard in Mobile, Alabama, with construction of the first vessel pencilled in for late 2005 or early 2006.

That timeframe fits with Austal’s plans for staged development of its US facilities and workforce.

Austal executive chairman John Rothwell said pursuit of the LCS contract was a key plank in the company’s defence push.

"The company’s important role in the LCS program substantially raises our international profile in military circles and we are also examining other opportunities for further development of our defence business," he said.

Mr Rothwell said that could involve designing and building larger naval ships in Australia, including LCS-type vessels, for international navies.

Besides the LCS, Austal has also won, along with Defence Marine Systems, the $550 million contract to build 12 Armidale Class patrol boats for the Royal Australian Navy.

Those vessels are designed to replace the Fremantle Class boats.

It also has a $100 million order to build 10 patrol boats for Yemen and recently finished a three-vessel patrol boat contract for Kuwait.

In the non-defence sphere Austal recently won a $US5 million contract for a 37.7 metre research vessel for a private owner and received an order for a fifth fast ferry from Greece’s largest domestic ferry operator Hellas Flying Dolphins.

The US Navy has nominated the LCS project as its number one priority and identified a need for 60 vessels, with a total value of around $US14 billion over a 15-year period.

In Australia the Department of Defence has made a number of decisions relating to the future of the country’s naval shipbuilding and repair sector.

The $4.5 billion to $6 billion Air Warfare Destroyers contract has been brought forward and will be let before the $1.5 billion to $2 billion amphibious vessels contract.

Tenders for the AWDs are expected to be called later this year, with a preferred tenderer to be identified in early 2005.

Austal already has a chance of at least picking up part of the AWD contract but this has perhaps been enhanced with the Federal Government’s announcement that its sale of Australian Submarine Corporation will be delayed until after the AWD and amphibious contracts are concluded.

While ASC will be allowed to bid for those contracts, it will have to do so on an "arm’s length" basis from Government.

Defence Minister Robert Hill said this meant establishing ASC as a government business enterprise, which would require it to operate efficiently, earn at least a commercial rate of return and observe a more standardised and transparent reporting framework.