Senate Foreign Affairs, Defence and Trade Legislation Committee [Part 2], , 1:11:28 to 1:26:26
A detailed debate occurs regarding the projected build rates of Virginia-class submarines and meeting AUKUS requirements.
Topics: Manufacturing, National security
Speakers: Senator David Shoebridge, Senator Fatima Payman, Unknown Speaker, Interjection
Admiral Made um it was confirmed in the middle of this year by a senior Pentagon official that the production rates for Virginia class submarines were still at 1.2 a year in the middle of this year. Admittedly, that's an increase from 1.1. Is that the Is that the 10% increase you were referring to?
>> Um I do not believe so. Um Um I think the 10% is on top of that and the Enterprise hours uh as I said is on place for a 30% improvement. What the tangible What the tangible sort of outcomes of this is is that over the past 3 years we've seen the US now being able to produce two submarines this year and two submarines early next year.
>> Um well, you said Admiral Made, the only reason that's happening is because they've been producing about 1.1 or 1.2 a year and that 0.1 or 0.2 has now accrued so that they've managed to launch two in this year, but it doesn't reflect the capacity to to a to build the equivalent of two ships in a given year. It's just simply the a fluxion of time with that incremental part of a ship having been built each annual year up to this point. It it it in no way reflects a capacity to produce two ships a year. Does it?
>> What we're seeing is um those ships being produced which increases the force flow of the US Navy but we're also seeing an actual increase as I said 10% increase in the Virginia class submarine build rate this year. Enterprise hours increased by 30% this year and they're expecting the same in 2027.
>> Well, that at best a 10% increase which only commences at some point this year, would raise the production rate from 1.2 to 1.32.
>> Yes.
>> Um the and I have not seen any independent data that if you've got independent data that provides that, can you provide it to the committee? Have you got any Have you got a document or some um evidence from um the United States?
>> I do have evidence from the United States. >> Where does it come from? >> reporting portfolio manager submarines who answers directly to the Deputy Secretary of War. It was a new position established uh approximately 18 months ago to review revitalize and reinvigorate the US submarine industrial base.
>> And um when do you say that Does the Is there a name and a title attached to this person to make it
>> Admiral Robert Gaucher.
>> All right. And when did Are you saying that Admiral Gaucher um advised you um that the US Virginia class submarine production rate has increased to 1.32 per year?
>> He said the build rate had is increasing 10% this year. And the Enterprise arrows are on pace for a 30% improvement by the end of '26.
>> Increasing 10% this year. That means over the course of this finan- this this is it this calendar year or this
>> Calendar year.
>> Um and is he saying it's So it What did he say to you that over 2026 >> Correct. >> it will be increasing 10%?
>> Yes. >> By the end of '26.
>> By the end of 2026. You say um Admiral made the requirement to meet the US's needs and the additional um Orcus three for Orcus has meant that the US has had to be producing 2.33 Virginia class submarines a year, um, since 2022/2023.
>> That's not entirely correct, Senator.
>> Uh, well, you said when did that Well, how how is it wrong?
>> So, so 2.33 is not a figure that the US uses. It's the president has not used the figure of 2.33. Secretary Hicks has not used the figure of 2.33. Uh, Chief of Naval Operations has not used the figure of 2.33. Uh, Director of Naval Reactors has not used the figure of 2.33.
>> The Congressional Research Service, who's had a look at the, um, the US Navy's, um, intended production schedule and intended service fleet numbers for the Virginia class submarines, um, has independently and repeatedly verified the 2.33 figure being to meet the, um, projected and budgeted numbers of Virginia class submarines for the United States Navy as set out in their long-term planning, um, as well as to provide the surplus three Virginia class submarines, uh, for Australia. They have set the figure at 2.33.
>> They have, and that's the
>> disagree with it?
>> No, I don't I don't disagree with the analysis that the Congressional Research Center has done. What I'm saying, Senator, is that it is a figure that the US Department of War is not using to determine the requirement for the transfer of the Virginias to Australia.
>> Well, um, given it is um, based upon the authors, the combined authors, multiple decades of experience, given it's based upon the, um, identified [clears throat] published, um, projections that have been adopted by the US Navy, and given it's based upon the the known production rates in the the two shipyards that produce Virginia class submarines, it is the single authoritative figure in terms of the requirements in for the United States to meet its discretionary obligations under the AUKUS agreement. Are you able to point to a different figure?
>> So no, I see I think we we're talking across paths here. I understand what the Congressional Research Service is does and produces publications and has come up with a with a theoretical figure. What I'm saying to you, Senator, is that that is not a figure used by officials or politicians in the US system. We've never been told I have never been by the US that we need to get to a figure of 2.33.
>> Yeah. Well, you see I I think probably going forward that's true because having not met that figure, in fact have only been meeting half of that figure from '23, '24, '25, and '26, that actually means now going forward to meet the projected requirements for the US Navy as well as the AUKUS requirements, the figure would no longer be 2.33. The figure would be closer to three a year, wouldn't it, on the same maths because there's been a significant shortfall for the last 4 years.
>> So what what I what I can tell you, Senator, is I'm working with the US on a daily basis at a very senior level. We've had the president who said it's full steam The US is committed to transferring Virginia class submarines to Australia in the 2030s once we are sovereign ready.
>> I've heard this. Um, you see Admiral Meade, the difficulty that you you have in the Australian submarine agency has is that each year the production rates for the Virginia class submarine don't even come close to meeting the US's own domestic needs, which is a minimum of two per year. Each year the gap grows and even on your more positive assumption that there's been a 10% um increase this year, that only brings it to 1.32. Even assuming you get another 10% and and the gap grows again this year. Even assuming you get another 10% increase next year, you'll get up to about 1.45. The gap will grow next year. If you get another 10% the year after, the gap will grow again. >> the the difficulty is compounded by the evidence in the Navy readiness report from the Government Accountability Office, which is their audit report, which says um not only cuz you'll not only have the shortfall in production of new new um Virginia class submarines, but the US Navy, because of the way they're cannibalizing their existing fleet, they've got the maintenance shortfalls, they'll even have even less boats in the water.
>> So, the real issue here is
>> That's this combined problem that you're facing, isn't it? It's not all of your makings, but it's it's the problem you're facing.
>> So, the real issue is here what does the US need? What are they looking for here? And what was in the NDAA, essentially, is they want boats in the water. There are two ways to get boats in the water. One is production, we've just spoken about that at length, and I'm talking about um increased production rates of 10% per year. The second aspect is maintenance. And it's aspects like Surfwest where that we will be generating significant availability days for the US Navy and for US Virginia class submarines because of the maintenance we are doing in a separate facility, separate to Pearl Harbor, separate to Guam, which will then allow those workforces to focus on other submarines.
>> Um
>> You join >> production >> with the sustainment and you end up with boats in the water.
>> Admiral Mead, the most recent report from just August of this year, not August of next year, I accept, but August of this year, from the US Government Accountability Office, says that this problem of maintenance is getting worse for the Virginia class fleet. And that that it's now actually a a non-virtuous circle. That that it means that the the that the boats that are in the water that have been able to be maintained and in the water are doing longer hours, longer tours, longer and working harder. They are being worked at a harder rate and requiring more maintenance, and they're coming offline more, and this non-virtuous cycle in the maintenance thing in the US Virginia fleet is meaning there is less and less availability for the United States of the Virginia class fleet. You can add that you add that problem to the repeated historical and on all projections future shortfall in production capacity, and the ability of the United States to have any kind of surplus or capacity to provide Virginia class uh submarines to the Austra- to Australia in the early to mid 2030s is close to zero because of that combined impact.
>> Well, so I'm looking at it from a different angle here. I'm looking at increased production of 10% a year. I'm looking at in 2027, the Surfwest facilities will be up and running, and that will provide the US Navy Virginia class submarines with an alternative additional shipyard to do maintenance. That assists the US Navy in getting more boats in the water.
>> It It's It is if you read the August 2027 report, that would make a marginal difference. The maintenance thing is a lack of skilled workers, critical lack of key key parts, and the lack of key parts for the maintenance is meaning they're literally They're They're They are sabotaging, pulling apart one Virginia class submarine that's been waiting in maintenance in order to put the parts on another one. Opening SRF with a marginal maintenance capacity is not going to come close to dealing with the maintenance problem.
>> No, I disagree there, Senator. And we just spoke before the very beginning. What is What is the requirements of requirements of Surf West? It is to have a skilled workforce. We will have 500 ASC trained workers there by 2030. We already have approximately 300 trained ASC workers that will be ready to conduct maintenance on US Virginia class submarines. We are investing heavily in approximately 140 companies in Australia to be able to feed into the US supply chain. All of that will take pressure off the maintenance of of um the Virginia class submarines in the other shipyards in the submarine industrial base. Surf West is an additive to getting boats in the water.
>> Uh Admiral Mead, I'm not arguing that's not an additive. My point is it's incredibly marginal given the fundamental industrial workplace um and production um shortfalls that is evidenced in that August 2026 report. And um, you might disagree with me, but I'm putting that proposition to you. Do you agree with that?
>> No.
>> All right. Uh, Admiral Meade, I I asked you questions previously about the um, whether it was the de- the the ASA's understanding that the National Defense Authorization Act um, for fiscal year 2024 put the President of the United States in personal control of money Australia contributes to the US industrial base for the purpose of AUKUS.