A defence department official says the government doesn’t know the precise cost of terminating the submarine contract with France’s Naval Group.
Australia had contracts with Naval Group and with another defence contractor Lockheed Martin as part of the now abandoned attack class submarine project (which is being replaced with nuclear-propelled submarines to be built in partnership with the US and the UK).
Greg Sammut, general manager of submarines at the defence department, tells a Senate committee there is “no break fee, but there will be costs associated with termination”.
The terms are being negotiated, he says, adding: “That’s different to what we will have to do under termination for convenience to settle costs for the decision to cancel the program.”
Sammut acknowledges he is making a “fine” distinction, but notes there has been a lot of reporting about “break fees”. He says:
Break payment fees were not payable until a later point of the program.
So how does he characterise the current negotiations? He says Australia is currently working to “transition out of the contracts” and “settle the costs” as per contracts.
The Labor senator
Kimberley Kitching asks whether he can estimate the costs that are likely to be incurred. Sammut replies:
No I can’t give you an estimate at this stage.
Sammut says the cost of ending the contract with Lockheed Martin is likely to be known by early 2022, and the costs for France’s Naval Group cancellation are likely to be known by mid-2022.
He is asked about a 2019 ABC report that said a 250m euro (A$391m) payment would apply if the French delivered a detailed submarine design and Australia then chose to go no further. Sammut won’t confirm the figure outlined in the contract, but adds:
We have not reached a point in the contract where a break payment fee would apply.
Source : https://www.theguardian.com/australia-news/live/2021/oct/15/australia-covid-news-live-freedom-day-victorias-essential-workers-vaccine-corona-perrottet-andrews-canberra-morrison-lockdown-?page=with:block-616901658f08a7f186b28c6e437