The federal government is concerned as problems surface with a $4 billion offshore patrol boat project

Significant problems are emerging at Australia’s $4 billion offshore patrol vessels (OPVs) project as a new government analysis reveals numerous other program delays that are putting increasing cost pressures on the defense budget.

The ABC can reveal that the Albanian government is increasingly concerned about progress on German-designed OPVs, including doubts as to whether they will be adequately armed for the increasingly contested region in which they will operate.

OPVs are just the latest shipbuilding program to experience schedule delays. This month’s budget details how defense spending is expected to exceed March forecasts of $80 billion a year, or 2.2 percent of GDP, by 2032.

In 2017 Turnbull Government selected Lürssen to design and build 12 OPVs, with construction shared between South Australia’s Osborne shipyard and Henderson in Western Australia.

For the first time since the decision, the OPV project has been included in a list of at least 28 major defense projects believed to be running 97 years late overall.

Other projects facing schedule delays include the Hunter-class frigates, Battlefield Airlifters, Evolved Cape Class patrol boats, P-8A Poseidon aircraft, the Battlefield Command System and a number of defense satellite communications projects.

Labor claims the previous government instructed Lürssen to find a way for the losing bidder and WA-based shipbuilder Austal to be included as subcontractors in the OPV project, causing significant delays over a deadlock.

COVID shutdowns exacerbate problems

The ABC has learned that concerns about the “seaworthiness” of the first completed Arafura-class patrol vessel have arisen due to problems meeting civilian safety standards, although the government believes other factors contributed more to the program’s overall delays.

“It’s the Austal problem, compounded by labor sourcing due to COVID border closures and competition in the mining industry,” a senior government official told ABC.

The Evolved Cape Class patrol boats are another project now facing schedule delays. (delivered)

There are concerns within the defense that Lürssen’s lightly armed OPV may not be sufficient for the Indo-Pacific region, where the military environment is increasingly competitive, including the increasing presence of Chinese naval militia.

“It’s late, has next to no armament, a helicopter platform that isn’t strong enough for helicopters, it’s not seaworthy and there are problems with safety standards,” a person familiar with the Defense Department’s deliberations told Opposite ABC.

The government has yet to comment publicly on the timing delays and issues encountered with the OPV project, which could be reduced as part of the defense strategy review due in March.

Alternatively, the government could be faced with the insidious choice of slinging more weapons onto the small OPV platform, or buying a more appropriate and larger Corvette design, meaning existing OPVs would be transferred from the Navy to the Australia Border Force.

The Albanian government makes “quality of spending” a priority

On Monday, the government will outline budgetary pressures within the defense portfolio and key problem areas in major military projects.

The Defense Secretary, Treasurer and Defense Industry Secretary will outline steps to strengthen the process for defense projects of concern through the establishment of an independent project and portfolio management office within the defense sector.

Anthony Albanese watches Jim Chalmers in Parliament.
The government will announce key concerns and costs within the defense portfolio. (ABC News: Matt Roberts)

In March, the Budget projected that defense spending as a share of GDP would rise from 2.0 percent in 2021-22 to 2.2 percent over the decade, with defense spending exceeding $80 billion a year by 2032 would rise.

Labor says defense costs do not include future requirements unfunded by the previous government, including AUKUS and an increase in ADF staff numbers.

“Our administration faces severe budgetary pressures in critical areas like national security and defense, compounded by botched projects and exploding costs that the previous administration didn’t budget for,” Treasurer Jim Chalmers said.

A new analysis released by the Albanian government shows at least 28 major defense projects are running a total of 97 years late, including 18 over budget, with deviations of at least $6.5 billion from approved cost levels .

“The former coalition government’s investment in defense has meant that key defense projects have been both costly and time consuming, flushing money down the toilet and all the while rejoicing at how much they are spending on defense,” Defense Secretary said Richard Marles.

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