https://www.babcock.com.au/?utm_source=Asia+Pacific+Defence+Reporter&utm_campaign=66b9ebf6a6-RSS_News+BuEMAIL_CAMPAIGN&utm_medium=email&utm_term=0_513319f9bb-66b9ebf6a6-52449029One of the most consequential Defence projects – JP9102 – has been suddenly accelerated with the selection of Lockheed Martin as the preferred bidder.  The decision, announced on April 3, advances the schedule by about two years by skipping the shortlist phase and going straight to a winner.

This surprise development has good and bad points.  Lockheed Martin – always in a strong position – will be delighted.  It is probably no coincidence that of all five bidders they were the most proactive with an effective media and public information campaign that positioned the company as the obvious, uncontroversial choice.

Without doubt this helped Defence short-circuit their initial acquisition strategy – after all, if there is one company so far ahead of the others then why not save everyone time and money and announce the obvious choice.  Lockheed Martin are a leading supplier of advanced military satellites, and their approach was to tailor their technical solution for Australia’s future needs and to back that up with a powerful program of technology transfer and local industry engagement.

Perhaps wary of a negative reaction from the other four bidders, the decision was not announced by either Defence Minister Richard Marles or Defence Industry Minister Pat Conroy but instead the news was conveyed by a media release from the department.  This is a multi-billion dollar contract that is a major boost for Australia’s space sector and APDR cannot recall a previous decision of such significance that has not involved a great deal of Ministerial razzle-dazzle with politicians falling over themselves claiming credit for the choice.

However, with any selection there are also losers, and one has to feel sympathy for the thousands of people working for the other four bidders who after years of dedication have been informed that their efforts have been in vain.  The flip side of the euphoria that Lockheed Martin will be experiencing is deep disappointment for Airbus, Boeing, Northrop Grumman and Optus.

This means that teams will be disbanded, people will be reassigned or in worst-case scenarios will face redundancy, subcontractors will have to be notified – and the soul-searching to explain the loss will begin.  At a human level, there is nothing pleasant about this process.  A slight consolation is that the space sector is booming – and many of the skills learned working on a huge, complex process such as the bid for JP9102 are applicable to many other activities.

APDR has not seen any of the formal proposals submitted to Defence, but we have received numerous briefings and presentations from all the bidders – to varying degrees.  There was unanimity among journalists and analysts that the rankings were Lockheed Martin clearly in first place with a tie for second between Airbus and Boeing.  The debate centred around which of these final two would make it onto the shortlist.

Boeing had the advantage of incumbency, being the prime contractor for JP2008 and one of the world’s best-known manufacturers of military and commercial satellites.  Their offer was based on the newest version of their 702 series of communications platforms that form the backbone of the existing WGS geostationary military network.  They had pulled together a strong Australian industry team.

Airbus will be very disappointed having structured their offer around the U.K.’s Skynet 6A satellite, fine tuned for Australia’s needs.  This is currently being constructed and in terms of technology seemed to hit the sweet spot of being both under development and relatively low risk.  The company worked hard with an emphasis on helping Australia develop both a sovereign military communications satellite capability and further enhance commercial opportunities in the space domain.

It is pure speculation, but the company’s image has been tarnished by being unfairly kicked to death for the last decade regarding the availability of Tiger and Taipan helicopters.  As regular readers are aware, APDR has had quite a bit to say about this with the Australian Army now spending $10 billion on older generation helicopters from the U.S.  The reputation of Airbus has been so battered in the military domain that in the eyes of many their name is now synonymous with unreliability.

On March 13 the U.K. High Commissioner Vicki Treadell spoke at the National Press Club.  APDR asked a question – in part – whether she was concerned that the Airbus bid for JP9102 from the British part of the company was in danger of being overlooked because of all the attention being devoted to nuclear-powered submarines.  Rather than using the opportunity to say positive things, she declined to say anything at all.  This seemed strange at the time, but perhaps the explanation is the U.K. government had already picked up the vibe that they were on the outer.

If the tender evaluation team in Defence had shortlisted Lockheed Martin and Boeing it would have been difficult to exclude the latter.  However, if Airbus had made it through, then one can see why at a higher level in the Defence system a decision could have been taken to drop them.

There is no connection between European helicopters and U.K. satellites, but once a company has been damaged in the court of public opinion there is a reluctance among politicians to be identified with that solution.  This leads to a wariness on the part of the Department to recommend a course of action that they anticipate will be politically unpopular. Such is human nature and bureaucratic politics.

Of the remaining bidders, Northrop Grumman seemed to be a late entry and despite a huge amount of satellite expertise in U.S. programs they never really developed much momentum in Australia.  Their technical solution was far more opaque than that of either Airbus or Boeing – and even Lockheed Martin, which closely held most performance details, was able to provide a far more convincing palette of reference programs.

Optus were probably damaged by the September 2022 data breach – or rather their initial insouciance to it – and being ultimately owned by the Government of Singapore might not have been to their advantage in trying to offer a sovereign Australian capability.  Also, from what little was known of their bid they were offering satellites built in and launched from Japan, which seems a bit outside mainstream risk-averse Defence thinking.

The art of winning a major Defence tender – speaking from personal experience – is to make the bid as easy as possible for everyone to accept.  One has to work hard to minimise the negatives and accentuate the positives, which is easier said than done on large very complex bids.  No one ever lost a contract by giving the customer a technical solution as close to their requirements as possible. One can still lose for other reasons – price; reputational damage; insufficient attention to AIC; – but coming up with a product (or in this case a methodology) that pleases Defence is a good way to start.

Now the hard work for Lockheed Martin really begins.  This win probably strengthens their position for another mega-project: the AIR 6500 series, with a decision on the first phase expected later this year.


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Kym Bergmann is the editor for Asia Pacific Defence Reporter (APDR) and Defence Review Asia (DRA). He has more than 25 years of experience in journalism and the defence industry. After graduating with honours from the Australian National University, he joined Capital 7 television, holding several positions including foreign news editor and chief political correspondent. During that time he also wrote for Business Review Weekly, undertaking analysis of various defence matters.After two years on the staff of a federal minister, he moved to the defence industry and held senior positions in several companies, including Blohm+Voss, Thales, Celsius and Saab. In 1997 he was one of two Australians selected for the Thomson CSF 'Preparation for Senior Management' MBA course. He has also worked as a consultant for a number of companies including Raytheon, Tenix and others. He has served on the boards of Thomson Sintra Pacific and Saab Pacific.

2 COMMENTS

  1. Would anyone care to comment that this new Australian Government initiatives, should anything occur in the interim, might be considered too little and too late to support Taiwan in the event of an expected take over by China?

    • I’m happy to comment – as far as I can tell, none of the announced measures will make the slightest bit of difference in the next 5 years, if that. What seems to be overlooked is that all of these FMS purchases of missiles are medium term events, at best. It’s the U.S. that decides on priorities for deliveries of anything, not Australia.

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