No Payment for Faulty Jet Sold to Australia by US as Submarine Fleet Faces Cost Blowout

A new Australian submarine fleet is estimated to cost taxpayers A$225 billion, officials also said
November 30, 2019 Updated: December 1, 2019

The United States will not be paying Australia compensation for a U.S.-made warplane that had burst into flames soon after Australia had acquired it, a Senate Estimates committee was told Friday at a parliamentary hearing in Canberra.

The $85 million (A$125 million) EA-18G Growler fighter jet of the Royal Australian Air Force (RAAF) had attempted a take-off during a training exercise at a U.S. military base in Nevada in January 2018. But it instead caught fire following an engine malfunction.

The Department of Defence later scrapped the damaged jet from service, leaving the RAAF with 11 aircraft remaining in its EA-18G Growler fleet.

Australian defense officials have said that the Growler aircraft was purchased through the United States Navy, and the contract didn’t allow for compensation.

Air Vice-Marshal Greg Hoffman, who leads the Aerospace Systems Division of the Australian Defence Department, indicated that the costs would fall on Australian taxpayers.

“The U.S. Navy has formally written to us and advised that, unfortunately, and it is very unfortunate—that we can’t get compensated for this, but the position is—there is no compensation,” he told Senate Estimates.

Defence Minister Linda Reynolds said the contract was signed in May 2013 by a previous government, but “we and Defence have taken responsibility for the terms and conditions of that contract.”

Hoffman also said: “When we lost the Growler, we were not aware of the detailed commercial arrangements.

“Part of our due diligence was to ask the U.S. government ‘is there an option to get some form of compensation in light of a loss of this aircraft?’ It was really part of our due diligence to ensure that we thoroughly investigated that option.

“It has been a period of time, and there has been some complexity around the legal and contractual arrangement of that, and there has been a lot of agencies involved.

“The upshot of it all is, in the aircraft industry, there is a lot of self-insurance that goes on,” he added. “So the owner and operator holds the liability for the aeroplanes. And what we found out is, in this case—the United States’ Navy, should they have lost this aeroplane, they similarly would not have been compensated for it [by] the contractor.”

Australian defense official Tony Fraser says the incident over the Growler jet was a “difficult lesson,” and the department was reviewing its contracts.

New Submarine Fleet to Cost A$225 Billion

Officials also said at the hearing that Australia’s largest defense project, the Future Submarine program, is projected to cost taxpayers $152 billion (A$225 billion) to build and maintain.

Rear Admiral Greg Sammut told the Senate estimates hearing that the submarine program, encompassing 12 new attack submarines, is now expected to have a $54 billion (A$80 billion) cost to build. The submarines are being built in a contract with a French submarine company called Naval Group.

The cost will also cover other infrastructure related to the submarines, including maintaining and upgrading the wharves they are set to dock.

Also, there would be an estimated $98 billion (A$145 billion) cost, adjusted for inflation, to maintain and upgrade the attack submarines until 2080.

“It is only an estimate of the sustainment of the fleet. We are designing the sub today,” Sammut said.

The Australian Associated Press contributed to this report.

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