Evaluating the Alternatives

Paradoxically perhaps, the anti-nuclear policy of the Labour Government provided the greatest opportunity in many years for the purchase of new ships for the RNZN. The commitment to maintaining a blue-water navy and to ongoing cooperation with Australia, that was to be spelt out in the 1987 Defence Review, ensured that the New Zealand Government took seriously the opportunity to purchase ships jointly with the Australians. Whilst the South Pacific was intended to be the major focus for Defence, the Government did not wish to see New Zealand distanced from its closest ally. A Defence Review Officials Committee had been exploring the possibilities for surface combat ship replacements throughout 1986, and published their report in November of that year. They noted that, as a consequence of ongoing close liaison between the navies of each country, it was found that ‘the independently desired ship characteristics for the RAN new Surface Combatants and the RNZN Replacement Combat Ship are virtually identical’.[24] (See Appendix 2, Ship Characteristics.) The Review Committee indicated that significant operational and logistical advantages would be possible if New Zealand and Australia were to select a common design. They went on to say that, in collaboration with the RAN, two options had been identified. The first was to pursue a joint program based on building all of the ships in Australia. The second option was to pursue a cooperative program where New Zealand would have ships built to the same design, but in the country of origin. To pursue the first option, they advised, it would be necessary to sign a Memorandum of Understanding by mid-1987. The Memorandum of Understanding was subsequently signed on 6 March 1987, noting that the Australian Government was seeking eight new Surface Combatants, and that New Zealand would have an option to purchase two, with the possibility of a further two at a later stage.[25]

The Review Committee had noted that the cost of the vessels was likely to be up to 30 per cent more if they were built in Australian yards, yet felt that the net benefit to Australia was such that the Australians could be expected to offset the cost penalty to New Zealand. Notwithstanding this observation, the Committee also noted that it was likely that potential European shipbuilders might offer a package that was more fiscally attractive, and that therefore building the ships in their country of origin was the most likely option. Nevertheless, they recommended proceeding with the first option in the interests of closer relationships with Australia, and to provide the maximum opportunity for New Zealand industry involvement. The Memorandum of Understanding recognised this dilemma, and was crafted in such a way that it allowed for New Zealand participation up to the stage of selecting the design and shipbuilder evaluations. At that point New Zealand could choose whether it wished to proceed with the acquisition of the ships. This allowed for significant opportunities for New Zealand to be involved in the choice of design and for potential New Zealand industry involvement. It also allowed the opportunity for a significant period of public debate about the acquisition itself. These two elements developed alongside each other in an unparalleled fashion which was to impact significantly on the decision-making process. At stake were political futures; the nature of the trans-Tasman relationship; developments for New Zealand industry; and the future shape of the RNZN. The ‘Frigate Debate’, as it became known, was of such significance that it shall be examined separately in a following section.

The Review Committee’s observations

In developing its report, the Review Committee took the opportunity to look broadly at what ships or designs were available at the time which might meet the need of the RNZN to fulfil the tasks required of it. It reviewed a range of vessels which would give an indication of a cost/capability balance, looking at vessels which ranged from 1000–4000 tonnes, from Offshore Patrol Vessels (OPVs) to Destroyers. It commented on a UK Ministry of Defence review which examined an initial 13 OPV proposals, and narrowed that down to three—the Skeandu, 84 metres; VT (Vosper Thornycroft) Mk19, 78 metres; and Yarrow OPV at 95 metres. It noted that all three could be offered as ‘stretched’ versions at 90 and 91 metres for the first two, with the Yarrow OPV being available at 101, 105 and 115 metres. On the grounds of inadequate capability (having made the observation that the minimum length to allow sufficient space for a hangar for helicopter maintenance as well as adequate space for weapons and sensor separation was approximately 110 metres), the Review team rejected the notion of all of the OPVs with the exception of the Yarrow 115 metre OPV III. This ship it considered alongside those falling into the Corvette/Light Frigate category.

The ships in the Corvette/Light Frigate category which they examined were the Yarrow 115 metre OPV III; Vosper Thornycroft Mk 18; ‘M’ Type (Netherlands); and F2000 (France). From this group of four, they noted that there would be no compatibility of weapons systems on the French ship with those in service with the RAN, and that, as the Yarrow OPV had been designed to merchant ship standards, the vessel would not have the same survivability as a conventional warship, yet would cost as much. The Review Committee also looked at two larger vessels—the Yarrow Type 23 Frigate and the Vosper Thornycroft Type 21, but felt that both vessels exceeded the capability requirements of the RNZN, and were too costly.

Proposals to the Joint Project Management Team

Following the signing of the Memorandum of Understanding, a Joint Project Management Team was set up in the Australian Department of Defence. Twelve proposals were initially received by the team, including three which had been reviewed by the RNZN. These 12 designs were the ‘M’ Type (Netherlands); Meko 200P (Germany); F2000 (France); the Italian Maestrale; Type 23, (Yarrow and Swan Hunter); Type 122 (Germany); City-class frigate (Canada); a modernised Leander (Vosper Thornycroft); Nordkapp ‘coast guard frigate’ (Norway); Ulsan-class frigate (Korea); and an airship proposal from Airship Industries. A reduced Type 122; Light Patrol Frigate, (Yarrow); Light Frigate, (Hall and Russell); and FFG-7, (Unysis Corporation) were also proposed.

In September a supplement to the original Memorandum of Understanding was signed, spelling out in greater detail the Collaborative Project Management Arrangements.[26] (That same month the New Zealand Labour Party’s Annual Conference voted for withdrawal from the frigate project.) By October three designers had been selected to develop their designs further; these were Royal Schelde of Holland for the ‘M’ Type; Yarrows Shipbuilding for the Type 23; and Blohm and Voss for the Meko 200P. It was indicated by the respective Ministers of Defence that the three had been chosen from a total of 19 who had responded to the request for proposals, and that two of the three would be chosen to join consortia to bid for the tendering of the ships by March 1988. Later that month the Ministers announced that the 13 groups who had registered in the project would be invited to reconsider their original plans; and that from the final proposals two consortia would be invited to tender for the ships to be built in Australia.

By the end of 1987 the designs had been narrowed to two—the Type ‘M’ and the Meko 200. Blohm and Voss had not only paired with Australian Marine Engineering Corp (Amecon), based at Williamstown in Victoria, to build the Meko 200, they had purchased a 25 per cent shareholding. Royal Schelde meanwhile had paired with Australian Warship Systems (AWS), based at Newcastle in New South Wales. Both consortia presented their tenders to the Department of Defence on 19 January 1989, with an expectation that the successful bidder would be announced in August. New Zealand would at that time make its decision on whether or not to proceed with the project.

[24] RNZN Replacement Surface Combat Ships, Report of the Defence Review Officials Committee, Wellington, 18 November 1986, p. 4.

[25] Memorandum of Understanding between the Government of Australia and the Government of New Zealand Concerning the Collaboration in Acquisition of New Surface Combatants, 6 March 1987.

[26] Supplement to the Memorandum of Understanding between the Government of Australia and the Government of New Zealand Concerning the Collaboration in Acquisition of New Surface Combatants, 9 September 1987.