A long-awaited contract for the $50 billion Future Submarine program will be signed in Canberra on Monday by France and Australia, following months of tough negotiations and the recruitment of a high-powered lobbyist.
The ABC revealed one of Prime Minister Scott Morrison’s key political confidants was recently hired by the French state-owned shipbuilder Naval Group to help improve a rocky relationship with the Defence department, and to secure a crucial Strategic Partnering Agreement (SPA).
“ECG Advisory Solutions”, a lobbying firm founded by former Liberal party candidate David Gazard, has been advising Naval Group since last year on how to handle the difficult SPA negotiations with Australia.
Mr Gazard, who was chief of staff to former New South Wales Liberal leader John Brogden, began his friendship with Mr Morrison when he was the Liberal Party’s State Director for the 2003 election.
In a statement, Naval Group confirmed the arrangement but did not disclose how much Mr Gazard’s company was being paid for its lobbying services.
“As an integral part of our commitment to the Future Submarine Program, Naval Group is committed to building effective partnerships with the Commonwealth of Australia and Australian industry,” a company spokesperson told the ABC.
“For that purpose we are seeking external advice.”
Mr Morrison discussed progress on the SPA with French President Emmanuel Macron at the G20 summit in late November, and told reporters they had agreed to elevate it “back up to leader-level to ensure it’s finalised in the near term”.
It is understood Mr Gazard has since helped the French broker a deal with the Australian government, although ECG Advisory Solutions declined to comment on its role.
French industry groups have described the $50 billion dollar submarine deal with Australia as the “contract of the century” and the country’s Defence Minister Florence Parly is flying to Canberra to sign the crucial document.
In 2016 former prime minister Malcolm Turnbull announced Naval Group, then known as DCNS, had beaten rival bids from Germany and Japan to build 12 new submarines for the Royal Australian Navy.
The first of the conventionally powered submarines, to be known as the “Attack Class”, is scheduled to begin operational service in the mid-2030s.
However last year the ABC revealed that Defence Minister Christopher Pyne had grown so frustrated with the French company over its handling of commercial negotiations, he cancelled meetings with some of its visiting top officials.
In December, Mr Pyne rejected another ABC report revealing that Defence had offered a two-year extension to Naval Group as it tried to lock in the Strategic Partnering Agreement.
Australia will pay France millions if submarine deal collapses
In line with other major defence contracts, Australia will be forced to pay millions of dollars in compensation to France if the future submarine program is terminated, according to the confidential SPA to be signed today.
The ABC has seen a section of the SPA document, prepared last year, detailing at which point certain “break payments” will be invoked if Australia decides to walk away from the massive contract.
The Defence Department has confirmed the SPA includes “provisions to manage termination on a fair and equitable basis, depending on the circumstances leading to termination”.
A defence spokesperson told the ABC it would be “inappropriate to discuss the details of commercial arrangements agreed with Naval Group”.
Australian Strategic Policy Institute analyst, and former defence official, Michael Shoebridge says break payments are an essential part of large defence contracts.
“Payments in major defence contracts are usual when one of the parties wants to end and not continue the contract,” Mr Shoebridge said.
“It’s usual for major defence contracts to have damages for non-performance.”