Aussie wrangle over naval contracts

South Australia and Western Australia joined forces yesterday in the race for $8 billion in navy shipbuilding contracts to be awarded in the next two years. Under the Australia-first deal, Perth will not compete against Adelaide in its bid to secure the $6 billion contract for the navy’s three air warfare destroyers while Adelaide has promised not to bid for the $2 billion contract that Perth wants to build two amphibious landing ships.

However, the deal may be dissolved if South Australia does not win the destroyers contract to be decided next year, with Adelaide reserving the right to bid against Perth for the landing ships contract to be awarded in 2006. Under the deal signed in Perth yesterday, the two states will co-operate in providing infrastructure, training and maintenance of the ships to make their respective bids more competitive than those of NSW and Victoria.

“There is no doubt they will be squealing in the eastern states because they know what we are doing will make a big difference,” West Australian Premier Geoff Gallop said yesterday. South Australian Premier Mike Rann will take proposals to cabinet for more than $70 million in infrastructure spending on a new ship lift capable of carrying the more 7,000-tonne air warfare destroyer. Rann said money would also be provided to deepen the sea channel to the proposed shipbuilding site in Port Adelaide. “I can’t say how much we will spend because we don’t want Victoria to know,” he said.

The memorandum of understanding signed yesterday narrows the two bidding contests to a handful of Australian companies, tied to ports in Sydney, Melbourne, Adelaide and Fremantle. ASC-Shipbuilding in Adelaide and Tenix in Melbourne will race for the destroyer contract, and Austal of Perth will fight against ADI at Garden Island on Sydney Harbour for the landing ships.