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Australia axes submarine rescue system contract after series of delays

Australian LR5 submarine rescue system
Illustration: Royal Australian Navy file photo of the LR5 system currently in service

The Australian defense ministry has terminated a contract with Phoenix International Australia for the delivery of a deployable submarine rescue system after a series of delays.

The company was selected as the preferred bidder to provide the submarine rescue system for use with both the Collins and Attack-class submarines in April 2018.

However, following a series of delays in 2019 and 2020, the defense department initiated an independent review of the project in August 2020.

The government has now agreed to terminate the contract by mutual agreement with the company. It also directed the defense department to undertake an investigation to inform lessons learnt into procurement practices and relevant accountabilities which is underway.

The original contract was worth AU$297 million. While the exact sum remained undisclosed, the Australian government could be expected to incur considerable costs related to exiting the agreement.

The government noted it was now working with Phoenix to reach a settlement, which will include addressing arrangements with Phoenix and its subcontractors.

Until a new submarine system is bought, the Royal Australian Navy will continue using the LR5 submarine rescue system that was originally built by James Fisher Defence for the Royal Navy. The defense ministry said this system could be sustained into the late 2020s, affording the government time to consider the acquisition of a replacement system.