A Japanese consortium eyeing a A$50 billion (US$35.68 billion) contract to build submarines for Australia irked local suppliers by failing to share key information about its proposal or discuss specific collaboration possibilities during a visit last week, executives at Australian firms said.
The apparent missteps underscore Japan’s inexperience in bidding for global defense deals after Japanese Prime Minister Shinzo Abe ended a decades-old ban on weapons exports last year as part of his more muscular security agenda.
Japanese defense officials and executives from Mitsubishi Heavy Industries and Kawasaki Heavy Industries visited Adelaide, an Australian ship-building hub, to lobby for one of the world’s most lucrative defense contracts.
The consortium’s unwillingness during the trip to commit to building the 12 submarines in Australia, where manufacturing jobs are a hot-button political issue, was criticized by local politicians and labor unions.
Adding to the view among experts that Japan has lost ground to European rivals after once being seen as the frontrunner for the deal was the delegation’s refusal to discuss the process by which local suppliers could propose collaboration on the project.
At a briefing open to the media on Wednesday last week for scores of manufacturers Australian defense expert Rex Patrick asked the delegation how potential suppliers could engage with the delegation privately to explore cooperation opportunities, a practice experts told reporters was common and expected.
The Japanese delegation responded by saying that discussing such “teaming” arrangements before the contract was awarded was not allowed under the bidding process.
However, Rear Admiral Greg Sammut, head of the Future Submarine Program at the Australian Department of Defense, said that while bidders were not allowed to sign exclusive deals with suppliers during bidding, specific talks about future collaboration were fine.
“This does not prevent any of the participants from engaging with industry and talking to industry about their capability and how they might be able to collaborate in the future,” Sammut said by telephone from Canberra.
Three Australian defense contractors who attended the briefing said that talks on specific collaboration were essential, adding that they were rebuffed when they sought one-on-one meetings.
The Japanese presentation also lacked key details, they said.
In particular, the delegation had not shared information on which submarine components might be open to Australian manufacturers to supply, they added.
The executives, from companies that make precision pumps for advanced surveillance and weapons systems, declined to be identified for fear of jeopardizing their chances in winning work on the project.
By comparison, ThyssenKrupp Marine Systems (TKMS) of Germany and France’s state-controlled naval contractor DCNS have said they would build the submarines entirely in Australia. They have also courted the Australian defense industry and said their bids would detail local supply chain involvement.
“I do not think [the Japanese] have any idea how to engage. TKMS and DCNS have done this in ... lots of places [around the world],” said the director of one local defense contractor who attended the briefing.
Japan has declined to commit to an Australian build, citing rules requiring each of the bidders to provide three estimates: one for construction overseas, one for a partial assembly in Australia and one for a full build in an Australian shipyard.
Time is running out for Japan, with an expert advisory council expected to deliver its recommendation on the bids to the Australian government in November.
Members of the Japanese delegation said the visit went well.
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