Partnership

Shining brilliantly in Rolls-Royce's online media room is the two-week-old press kit for a great story that didn't even make it to Google News, let alone into Australian print. It's how Cheney's Men and Rolls Royce have signed a A$50 million deal with the Australian Navy to service and maintain the amphibious ships HMAS Success, Tobruk, Manoora and Kanimbla (links courtesy of RR)

In the thoughtful "notes to editors" it explains how the contract is formally titled Amphibious and Afloat Support Integrated Materiel Support (AAS IMS), and that the RR/KBR team will be based at DoD premises at Garden Island and Defence Plaza in Sydney.

In the main text of the release we learn..

The Rolls-Royce and KBR team will reduce DoD ship costs through improved logistics management, total ship maintenance, faster response to day-to-day engineering issues and managing equipment obsolescence.

Pat Marolda, Rolls-Royce President – Naval, said: “The Rolls-Royce and KBR team look forward to creating an effective partnership with the Department of Defence. Rolls-Royce is committed to providing long-term support to navies worldwide, helping them manage costs and allowing them to concentrate on operating their ships at sea. The DoD is a forward-looking organisation which is leading the way in forming partnerships between private industry and government.”

Rob Hawketts, Director of KBR Government and Infrastructure Asia Pacific, said: “KBR and Rolls-Royce have the breadth of capabilities and teaming experience to deliver the world-leading integrated material support demanded by the RAN.

“We are proud to support the RAN and look forward to working with Rolls-Royce to help the DoD reduce the logistic cost of ownership for these ships.”

It turns out, going back through defence media releases that a year after requests for tenders were announced in 2002 KBR and Rolls Royce were two of the three companies short-listed for the job three years ago. You have to ask why the contract took so long to announce. You could guess that the negotiation process may have become interesting.

KBR also has a 51% ownership of the Devonport naval dockyards in England, UK pollies were questioning the yard's refitting for Trident submarines when their future was known. That was befoe UK PM Tony Blair's announcement last week of committing Britain to using the Trident nuclear deterrent plan into the middle of the 21st century.

In 2005 Halliburton's former Global Vice-President for Infrastructure was given the reins of the Warship Precinct

In Adelaide KBR have an unusually close link to naval construction. Their former Global Vice President for Infrastructure is in charge of the Naval Precinct. He runs Techport Australia, which in turn is owned by the Port Adelaide Maritime Corporation, which in turn runs thePrecinct. Fletcher told the Adelaide Advertiser in January that one of his aims was to "deliver a sustainable long-term defence industry base here at Osborne". State Treasurer Kevin Foley said at the time that the site would be suitable for companies involved in"civil or military shipbuilding, ship repair and maintenance, metal fabrication and module construction, paint and blast, warehousing and component manufacturers and suppliers".

I hope these smaller operators aren't trying the same rort that they used in the US. There the likes of Raytheon, BAE, Northrop Grunman and Carlyle were exposed as disguising themselves as little firms to get the kind of jobs that the former Halliburton VP now presides over.

Similarly the Australian end of the Joint Strike Fighter Project is fraught with nepotism. In this case Lockheed Martin, Northrop Grunman and BAE were allowed to select Australian companies to do the jobs. They chose, Halliburton Australia, Raytheon Australia, Tenix Australia, BAE Austral and some other maybe genuinely Australian companies, and subcontracted KBR Australia to gather the parts.

As a template to how small business participation in the Adelaide Naval precinct might be structured, such a scenario suggests that contract work for the Adelaide warships and submarines should be scrutinised closely. In the US. where 23% of defence contracts are legally required to go to small to medium enterprises, the Small Business Administration discovered contracts going to such little companies as Raytheon Co., BAE Systems, Northrop Grumann Corp., Carlyle Group, Electronic Data Systems Corp. I don't know what protection we have for the avoidance of such scams, but I'll bet a blind eye was turned by the Howard Cabinet "in order to get the jobs."

In the same government (Trades and Industry 2002) press release that I obtained most of the Australian "small business" info, I learned how Rolls Royce were expressing "a desire to develop Technical Assistance Agreements with some 25 Australian businesses " I'm guessing that the partnership in the amphibious ship deal was the product of such an agreement. If such is the case then KBR and Rolls Royce have, in just this one deal, rorted the Australian defence contract procurement system (as set up according to a report by Halliburton Australia architect Malcom Kinnaird) for work to the value of over 50 million dollars.

Is this why the story hasn't been printed in Australia? Are journalists digging through defence contracts having trouble differentiating between the KBRs of Australia and the rest of the world? Obviously the reason for such corporate renationalising is only to meet Australian government requirements... we all know that. However the reality, at the end of several years of defence contract signing, is that we're dealing with international corporations that only envisage Australian defence as a commodity for monetising. In this particular case there is no sense of either company being "Australian" in announcing the deal to the world. Get used to it.

The sad thing is that after falling for the sales pitch, Australia doesn't get to see what's displayed on the London Rolls Royce show room floor.