by Peter Yule
was built up by the Germans in an attempt to discredit Kockums,
as part of a campaign in Australia.9 However, the political oppo-
sition to the project in Australia was generally pro-British and
wanted to discredit both short-listed companies, as shown by
attention drawn to security lapses of the West German govern-
ment and the allegations that IKL/HDW had used bribery to win
the Indian submarine contest.10
While the ‘Swedish spy’ story had little substance or signifi-
cance, another controversy with even less substance had serious
repercussions. The day before the announcement of the companies
selected for the project definition study, the project team was to
brief the ALP Caucus. This was a formal courtesy largely intended
to assist government back-benchers defend the decision in public
discussions, and had no influence on deciding the winners. The
Caucus was not familiar with the details of the program and asked
the project team to prepare a list of questions that would ensure
the briefing covered its most important aspects. The meeting was
also to be briefed by the submarine design tenderers.
The IKL/HDW team was unsure of the nature of the event and
asked Graham White what matters the politicians were likely to
pursue. White recalls that he told them the project had been so
extensively covered that a search of the newspapers would garner a
good idea of potential questions. The Germans took this seriously
and, combined with Juergen Ritterhoff’s deep knowledge of his
design, answered questions so easily they appeared to have had
advance knowledge of the questions.
Others, however, still maintain that the list of questions pre-
pared for Caucus was passed to the Germans. Whether this was
so or the Germans were exceedingly diligent, the smoothness of
their presentation did not pass unnoticed, especially by Graham
Campbell, the maverick Labor member for Kalgoorlie and a
prominent supporter of the British bid. Campbell later instigated
an Ombudsman’s investigation into whether assistance to the
German team constituted improper dealing in the selection of the
definition study participants.
The German team was oblivious to the commotion. They
always prepared carefully for meetings with the help of Peter
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Bowler, an ex-RAN officer, and before the Caucus meeting Rit-
terhoff was warned by Bowler to expect hostile questions from
Campbell. Ritterhoff remembers that most of the questions were
predictable but Campbell was ‘ferocious’. Ritterhoff thought he
was pursuing a genuine, if isolated, view of Australian interests,
although he was startled when Campbell jumped the table and
shouted questions at him while firmly gripping his tie.
Kockums’ representatives had not asked the project office for
assistance in facing the Caucus and were not surprised by most of
the discussion. However, there were some startling questions, not
normally of the sort that would fall within a politician’s knowl-
edge – the Swedes, for instance, were pressed on the company’s
design preference for flat pressure bulkheads when the convention
was to make them dome-shaped. Some suggest that supporters of
the British bid were responsible for feeding technical questions to
willing politicians.11
Later there was a navy inquiry into the Germans’ possession
of the Caucus document. It concluded that the questions had
originated from within the submarine project office. The inci-
dent had only a marginal connection to the selection processes
and was noteworthy mainly for the commotion it generated, but
the inquiry considered that it demonstrated a failure of judgment.
Fred Bennett recommended that Graham White be removed from
the project because he felt White appeared far too close to the
Germans and was concerned that they had better access than was
given to the others. Now that the project was entering the crucial
phase of selecting suppliers, nothing in the conduct of the defini-
tion study should suggest the navy was predisposed to favour any
particular company.12
In the autumn of 1984, during the tender evaluation phase,
Admiral Bill Rourke as chief of navy matériel had changed the
project’s chain of command by having Graham White report to
him through Commodore Oscar Hughes, the director general of
naval production. On 5 August 1985 Hughes took over respon-
sibility for the project as the director general new submarine, a
position he held until after the launch of the first submarine in
1993.
Oscar Hughes features prominently in the gallery of larger
than life characters whose actions shaped the submarine project.
His personal staff officer, Andy Millar, sees similarities with the
S P I E S , L E A K S A N D S A C K I N G S
85
legendary Admiral Rickover, whose drive, ruthlessness and con-
summate political skills shaped the American nuclear submarine
force.
Hughes studied engineering at university, was posted to Britain
and then to the Australian fleet air arm in 1962. He was involved
in the formation of 817 squadron, flying Wessex helicopters, and
spent time in the United States looking at new aircraft and in
Britain on the Wessex modernisation program. In 1981 he became
director of the aircraft carrier replacement project. By that time
the new carrier had become a contest between the Americans and
the Spanish, but the navy’s ambitions were driving the cost out of
control. Then the British offered HMS Invincible at a much lower
price than that of a new carrier. The government approved and
Hughes spent time working on the contract and other arrange-
ments, before the Falklands War led Malcolm Fraser to offer the
British the chance to pull out of the deal.
Hughes learnt many lessons from the carrier project: that con-
trol must be taken of costs from the start; that the project team
must be self-sufficient and not rely on others for expertise; and
that changes to the specifications must be avoided. But those who
worked with him on the submarine project are convinced that the
overriding resolve he brought from the carrier project was a deter-
mination not to be involved with another failure. He would knock
down every door in Canberra, shout at mild-mannered Swedish
engineers, or weld submarine hulls with his bare hands to ensure
the project succeeded.
As director general of naval production, Hughes was involved
in the construction of the Fremantle class patrol boats by Aus-
tralia’s most modern and innovative shipbuilder, North Queens-
land Engineers and Agents in Cairns. The first two boats were built
in Britain and Hughes recalls that there were ‘enormous problems
in getting the UK shipbuilder/designer’s attention for the trans-
fer of technology to support the Australian build program’ and
this had an impact on ‘the whole eq
uipment supply and support
chain involving hundreds of subcontractors’. As a result, Hughes
‘decided that we [the navy] would never again undertake or repeat
a similar acquisition strategy’.13
Hughes also saw that the navy’s experience with the construc-
tion of HMAS Tobruk (a British design) and HMAS Success
(a French design) revealed ‘the challenges of transferring
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technology to Australia where the overseas designer had little
if any responsibility for achieving such transfer’. Consequently,
Hughes was determined that all six submarines would be built in
Australia.
Initially Hughes’ firm commitment to the submarine project
and the importance of building in Australia was not recognised
by the project team or the wider submarine community. They
feared that, like many in the surface navy, Hughes would be anti-
submarine and that the appointment represented an attempt by
the naval hierarchy to curtail the buccaneering style of Graham
White’s team. White’s removal was seen as revenge for his direct
access to Kim Beazley. There was talk of mass resignations and
several of the original team did leave, but the submarine com-
munity quickly saw that Hughes was an effective advocate for
the project and had his own strain of buccaneering spirit. Hughes
considered that it was an advantage that he was not a submariner,
because he was able to be more objective than the submariners,
who he believed let emotion cloud their judgments.
Andy Millar recalls submariners urging him to keep an eye on
Hughes and not let him undermine the project, but after a year he
was convinced that Hughes was fully committed to the project.
Rod Fayle recalls that Hughes always listened to him and never
once overrode him on operational requirements.
Graham White stayed with the project after Hughes’ appoint-
ment, but the two men were never able to work together and White
was given another post in May 1986. Shortly after, he resigned
from the navy for a job in John Button’s Industry Ministry,
although he returned to the submarine project in 1993 to work
for ASC.
While the evaluation was grinding through Canberra’s bureau-
cracy, the states were engaged in a bitter battle to be chosen as
the location where the submarines would be built. The official
policy of the project team was to be neutral between the states,
and allow the winning consortium to choose the construction site.
Consequently the prospective submarine builders were courted by
state governments espousing the advantages of their state. Ross
Milton recalls that the intensity of the lobbying prompted ASC
to hold a briefing for all the states on ASC’s plans. The lunch-
time briefing was held at the Manly Pacific Hotel in Sydney and
Graeme Ching decided neutrality demanded ASC offer wine from
S P I E S , L E A K S A N D S A C K I N G S
87
Chateau Hornsby of Alice Springs rather than from the Hunter or
Barossa. As the slide show drew to a close, he said: ‘I’m now going
to show you where we will build the submarines.’ The state rep-
resentatives stiffened expectantly while the next slide appeared –
a picture of Ayers Rock (Uluru) with a shipyard on top.
The Labor Party came to power in South Australia in Novem-
ber 1982 with the state’s manufacturing sector collapsing and
company headquarters moving east. The new Premier, John
Bannon, saw the submarines as a great engineering and manu-
facturing opportunity and realised the state’s biggest advantage
would be with a greenfields site. Additionally, he promoted the
national opportunities, pointing to benefits flowing to all states
through the use of modern modular construction methods.
The South Australians promoted Port Adelaide to all con-
tenders, but decided that Kockums and HDW were the most likely
to win and concentrated their efforts on those companies. They
also nurtured Eglo Engineering and its construction activities at
Port Adelaide. Thus, by the time of the project definition stud-
ies, South Australia was the preferred site for both submarine
contenders.
However, while the builders had a big influence on the final
decision, politics also played a part. All the states lobbied the
federal government to be given the project and it became the sub-
ject of tense battles within the Labor Party, which was in power
federally and in all the states that were serious contenders. At
one meeting with John Bannon, Prime Minister Bob Hawke said,
‘Everyone wants this submarine. What should I do?’ to which
Bannon replied, ‘Promise it to everyone but give it to us!’14
All the states sent delegations to Canberra to state their claims.
Geoff Rose sat in on their presentations and recalls some of the
highlights:
The Queensland guys . . . said, ‘It’s going to here on the
Brisbane River’ and the chairman said ‘What about the
environmental impact statement? ‘Oh there doesn’t need to
be one.’ ‘Why? It’s on the Brisbane River. It’s just
downstream from Brisbane.’ ‘Oh Mr. Bjelke-Petersen said
there is not one required.’
The Tasmanian guys, they turned up in Canberra in shirt
sleeves on a lovely hot day and I said ‘Gee, you guys are
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really on the ball – you’ve actually worked out . . . the
weather . . . and you’ve worn your shirtsleeves. How clever is
that?’ ‘Well, actually no, we locked our coats in the hire car
at the airport and we couldn’t get them out,’ and I thought,
‘Goodness me, they’re going to run a pretty tight project!’
The Victorians with their proposal down in Corio Bay,
that was a very slick thing too and then the team from New
South Wales were even slicker . . . And then there was Jim
Duncan and the young lady who came with him and Jim
Duncan was just so far more professional than all of the rest
of them and he’d thought through so many things.
There was never any chance that a Queensland bid could succeed
with Labor in power federally, and Tasmania and Western Aus-
tralia were seen as lacking the necessary industrial base. Victoria’s
bid never gathered momentum and none of the builders liked its
proposed site north of Geelong. The New South Wales campaign
lacked focus in the early years, with Cockatoo Island, the Newcas-
tle state dockyard and even Jervis Bay fighting to be the preferred
site.
A year before the decision the New South Wales Labor gov-
ernment gave an open chequebook to the Newcastle bid, which
had formidable support from the right-wing of the state ALP. One
senior faction member allegedly told Geoff Davis of ASC: ‘You’ve
got to understand about the ALP right – we make people or
we break them. Do you want to be made or broken?’ However,
the N
ewcastle bid was not helped by some bizarre campaigning.
Barry Unsworth, who became premier in 1986, argued that the
submarines should be built in Newcastle to scare the Russians. Jim
Duncan retorted that the balance sheet of the hopelessly insolvent
state dockyard would scare them more.
Consequently, the South Australian campaign had sufficient
momentum and economic logic to retain its lead and, in spite of
some last minute scares, both submarine builders and the federal
government supported Adelaide as the preferred site.15
C H A P T E R 9
The project definition study 1985–86
Looking back on his lengthy involvement with the new submarine
project, Oscar Hughes reflects:
I think that the Government decisions in late May 1985 that
led into the PDS [project definition studies] were significant
and far reaching. Firstly, the Government accepted (albeit
implicitly) the departure from the earlier strategy of basing
the design of the new submarine on an ‘existing design’ and
secondly, agreed that all submarines would be built in
Australia. In my view these decisions sent a very clear
message to both the German and the Swedish companies as
well as Australian industry that the Navy was utterly serious
in developing a new submarine for the mid-1990s and
beyond. . . . The efforts of Graham White, John White, John
Halfpenny and many others with Australian industry
involvement had really paid off and also importantly it
would not be a ‘build to print’ exercise . . . but one that
offered the prospect of innovation, development, new design,
new technology and the opportunity for Australian industry
to work with overseas companies who were world leaders in
their field. A great deal of the credit goes to Kim Beazley.1
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With Oscar Hughes in charge of the project office and the con-
sortia in place, the new submarine project entered one of its most
crucial and controversial periods. Most people with a background
understanding of submarine design and development expected
that IKL/HDW would be one of the participants in the project
definition study; the inclusion of Kockums was startling. The
promising but untested German design was not without risks and