French submarine builders have Australia bent over barrel

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Naval Shipbuilding Advisory Board member Ron Finlay has told a Senate estimates committee that the Coalition should have considered an alternative bidder for the $80bn contract to build a new fleet of submarines. Finlay said the NSAB advised the Coalition to consider dropping Naval Group when negotiations stalled in 2018, but the lack of a ‘Plan B’ meant it was effectively locked into using the France-based contractor:

Mr Finlay said the government’s naming of DCNS — which later became Naval Group — as the successful bidder without any alternatives had left it in a difficult position.

“In my experience, many decades of negotiating major contracts, if you do not have an alternative of either going to ­bidder ‘B’ or cancelling the project, yes, you are captured in a negotiation with few options,” he said. “That does increase the number of issues that can become a block to concluding the negotiations”…

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.