August 29, 2003

DMS/Austal preferred tenderer for RAN patrol boats
Australia is a step closer to buying a new fleet of bigger, faster and more capable patrol boats to increase surveillance and better protect Australia's coastline.

Australian Defence Minister Senator Robert Hill said a partnership between Defence Maritime Services and Austal has been selected as the preferred tenderer to build and support the Navy's replacement patrol boats.

Senator Hill said the new aluminum boats will operate out of Cairns and Darwin and will be armed with the Rafael 25 mm Typhoon stabilized cannon and equipped with state of the art communications systems.

The new boats will be able to operate in a greater range of sea conditions and will improve Navy's capability to intercept and apprehend vessels suspected of illegal fisheries, quarantine, customs or immigration offences.

"The fleet of 12 new boats will also carry two smaller sea boats to allow Navy crews to conduct boarding and surveillance missions," Senator Hill said.

"The Navy will be able to operate the new Armidale Class boats for 3,000 days per year, plus have the capacity of an additional 600 days for short notice tasks. This compares to an average 2,700 operational days per year currently undertaken by the existing Fremantle boats."

The boats are expected to be built at Austal's Henderson yard near Fremantle, Western Australia, and have a range of 3,000 nautical miles, which is a 25 percent increase over the existing boats.

Senator Hill said the staged tender process has been an intense battle between the three shortlisted companies, which included ADI and Tenix, which has highlighted how competitive Australia's small vessel shipbuilding industry is.

"The current fleet of Patrol Boats has served the Navy and Australia well but the boats are aging and are costly to maintain," he said.

"The DMS/Austal offer was evaluated ahead of Tenix by a tender evaluation group on the basis that it offered the best value for money in meeting Defence's patrol boat requirements in line with the criteria in the request for tender."

DMS/Austal will have an obligation for through life maintenance and support for the 15-year life of the boats. Subject to final negotiations, the total cost will be about A$550 million (about US $352 million). The cost of the build is within the Department's funding allocation.

DMS is a joint venture between Serco and P&O Maritime Services that provides port services wherever the Navy has bases in Australia, including refueling ships, the provision of alongside services, tugs, water taxis, lighters and general harbour services. Austal is a successful Australian builder and exporter of fast passenger ferries, luxury yachts, patrol craft, and other commercial vessels.

"Both Cairns and Darwin should benefit from the through life logistics support activities that will take place there," Senator Hill said.

"Other regions will also benefit as individual systems and equipment fitted to the boats are likely to be sourced and supported from Australian companies.

"The decision to acquire and support the new Patrol Boats underlines the Government's commitment to improve the capabilities of the Australian Defence Force and deliver real security outcomes for all Australians."

The tender evaluation group that recommended the selection of DMS/Austal as preferred tenderer was chaired by a senior Defence officer and included probity advice from the Australian Government Solicitor and a legal adviser from Clayton Utz. The Defence delegate subsequently accepted this recommendation.

DMS/Austal has undertaken to meet the targets set out in the request for tender for Australian Industry Involvement percentages of 90 percent in the support phase and 65 percent in the build phase.

Defence will enter contract negotiations with DMS/Austal to resolve outstanding issues with a view to entering into a contract in November 2003.

The project is on schedule with the first Armidale Class Patrol Boat to enter service in the first half of 2005, consistent with the Government's 2000 Defence White Paper commitments.

Austal's Managing Director, Bob McKinnon, said the DML/Austal team had worked tremendously hard on the project and the tender partners were now looking forward to negotiating final contractual arrangements with the Department of Defence.

"The selection of Austal/DMS recognizes the team's ability to provide the RAN (royal Australian Navy) with economical, high-performance ships and cost-effective through-life support to ensure Australia's patrol boat capability is delivered in the best possible manner," McKinnon said.

"We congratulate those involved in the selection progress for making a decision that is clearly based on the merits of the bids," he said.

Once a contract is in place, Austal Ships will begin building the first of twelve 56 m patrol boats which will be delivered to the Royal Australian Navy over a 42 month period.

"Importantly, this will provide Austal with a steady base load of work for three-and-a-half years," said McKinnon. "At the same time, our production capacity enables us to simultaneously build ferries and other vessels, and we will continue to vigorously pursue new contracts in these markets."

The announcement of Austal/DMS as the preferred tenderer for the RAN project is expected to add momentum to Austal's push into the international patrol and military vessel markets, where it has already had considerable success including securing an order in June for 10 high-speed patrol boats for the Middle East.

"Even being short-listed for the RAN project has been a boost to our credibility in the international market for defense vessels, and it certainly contributed to our ability to secure the order from the Middle East," McKinnon said.

"The selection of our 56 m monohull as the RAN's preferred option provides an important boost to our efforts to promote Austal's patrol boat capabilities to the global marketplace and confirms our belief that we have developed another world-class design."

Tendering for the RAN contract has also provided Austal with valuable insights into a number of technical and other issues that will be beneficial in developing future proposals for a wide range of vessel types and sizes.

"Our capability to pursue projects involving the preparation of large, multi-faceted tender proposals has certainly been enhanced and this will be an extremely valuable asset when pursuing future projects, particularly military vessel orders," McKinnon said.

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