Last year the US Navy’s Ghost Fleet visited Australia. This squadron consists of uncrewed surface vessels that are capable of long-range autonomous operations, a capability the Royal Australian Navy doesn’t yet have. But Australia does have its own ghost fleet: the Arafura-class offshore patrol vessels, a $4.7 billion program that has mysteriously disappeared from view.

The OPV program was approved by the previous Government in 2017. At a time when it was preoccupied with unauthorised arrivals by sea, an improved maritime constabulary capability that could operate in the conditions that were pounding and breaking the Navy’s Armidale-class patrol boats was a high priority.

Like the future frigate program that was making its way through Defence’s labyrinthine process map at the same time, SEA 1180, the OPV project, was meant to pick a mature, in service design that would minimise risk and be quickly built. Unlike the future frigate program, Defence did in fact select a mature, in service OPV design—the German company Luerssen’s OPV80 that was already in service with the Bruneian navy as the Darussalam class. Luerssen optimistically saw SEA 1180 as a key first step into the growing Indo-Pacific market.

With a budget of $4,689 million, SEA 1180 was to build 12 of the 1640 tonne vessels to be named the Arafura class in Australian service. And with an experienced designer and shipbuilder as the prime contractor and a mature design, what could go wrong?

There were a few wrinkles at the start. For example, the Government was equally preoccupied with the optics of a shipbuilding ‘valley of death’ at Osborne in Adelaide and so directed the first two of the 12 ship class be built in there to bridge the ‘gap’ between the end of the Hobart destroyer program and the start of frigate construction. The remaining 10 were to be built at Henderson in Western Australia by Luerssen’s partner, Civmec, a company with deep experience in complex manufacturing for the resource sector, but little in shipbuilding.

Nevertheless, things started well. The construction of the first ship commenced on schedule and even ahead of schedule on the first one in Western Australia. In October 2020 the ANAO release a performance audit of the project. Compared to the ANAO’s dismal assessment of most Defence projects, SEA 1180 received an almost glowing review. Things were going so well that the previous Government announced in January 2021 that a new class of mine warfare vessels would be based on the Arafura design (whether it was an appropriate design for that role is a separate issue).

Yet in time-tested fashion, Defence has managed to snatch defeat from the jaws of victory. First there was the gun. Defence had selected the OTO Marlin 40mm gun for the Arafura rather than the Bofors 57mm gun in the original design, but ultimately admitted it couldn’t integrate it into the vessel. Instead it would use recycled 25mm canons from the Armidales. Since the Navy had already removed the anti-ship missiles from the original design in Bruneian service, and the Arafura couldn’t embark a combat helicopter, the new vessel would have no more firepower than a patrol boat one-fifth its size. Its lack of warfighting capability would come back to haunt it.

Then came delays. Initial Materiel Release (i.e. delivery of the first vessel) was originally planned for December 2021. This was moved to January 2024 but does not appear to have happened yet. Initial Operational Capability (i.e., first vessel able to conduct operations) was originally planned for December 2022. This was moved to August 2024 but has not been achieved either (Defence has not responded to our requests for confirmation of IMR and IOC dates).

Ultimately the Government placed SEA 1180 on the projects of concern on 20 October 2023, the naughty corner for Defence’s most underachieving projects, but didn’t publicly state why or what needed to be done to remediate the project (which reminds me, where’s that other ghost project on the projects of concern list, the Civil Military Air Traffic Management System?).

How did the Arafura end up there? Some delays are attributed to Covid-19, but the ANAO MPR states that ‘in 2022, Defence identified that changes were required to improve the structural fire protection of the ship and other safety design changes, prior to conducting sea acceptance trials.’ It’s one of the iron laws of shipbuilding that the later in a project that design changes are introduced, the greater the cost and schedule implications will be. Since construction of the first ship has been completed, the flow-on effects of design changes will be very significant.

But one can only wonder how Defence selected a mature, in-service design that has such significant fire safety issues that it can’t be brought into service. Did no one examine the ship’s fire protection when candidate vessels were being considered? Or did the Navy identify it as an issue at the time but simply assume it could certify the ship anyway because it’s, well, the Navy? Or has it changed its seaworthiness standards or risk appetite since the original selection? Certainly adequate fire protection at sea is essential, as the sad case of the HMNZS Manawanui reminds us. Whatever happened, the philosophy of delivering a mature, in-service design does not appear to have resulted in success.

The big blow, however, came in the recommendations of the 2024 Enhanced Lethality Surface Fleet Review that followed the 2023 Defence Strategic Review. The Surface Fleet Review assessed that, ‘The OPV is an inefficient use of resources for civil maritime security operations and does not possess the survivability and self-defence systems to contribute to a surface combatant mission. Therefore the number of OPVs to be acquired should be reduced from 12 to six….’ Essentially the review concluded what should have always been apparent, namely that in an age of great power tensions, a medium-sized navy couldn’t afford the luxury of spending nearly $4.7 billion on 12 1640-tonne constabulary vessels that have no warfighting capability.

The Government accepted that recommendation and the program has been curtailed to six vessels, essentially those already under construction. But it’s doubtful whether there will be significant savings; at the start of this financial year, the project had already spent $2,144 million of its budget before any vessels had been delivered to Defence.

This is not the only cost. The Arafuras were meant to replace the Armidale-class patrol boats, removing the need for another class of patrol boats in the Navy. Due to the delays in SEA 1180 and the Armidales running out of life, the Navy has acquired a new fleet of Cape-class patrol boats anyway (although it’s not entirely clear how much of this was driven by capability requirements and how much to ensure a flow of work to Austal, the West Australian shipbuilder who wasn’t selected for the OPV project).

Meanwhile, hopes of the OPV forming the basis of a new class of mine warfare vessels have evaporated, with the capability being removed from Defence’s Integrated Investment Plan and mine warfare in general in disarray.

With its Indo-Pacific dreams also in disarray, Luerssen recently announced it was selling its subsidiary Luerssen Australia to Civmec, essentially admitting they’d had enough of dealing with the Australian Department of Defence and joining the long list of companies who were burned by their engagement with such a fickle customer. Despite its prior lack of shipbuilding experience, Civmec expressed its confidence in its ability to complete the project.

So what’s the way forward for the Arafura? The Surface Fleet Review suggested the reduced fleet of six Arafuras should have a role ‘focused on civil maritime security operations and enhanced regional engagement in the Southwest Pacific and maritime Southeast Asia.’ It also stated that ‘further investigation should be undertaken to determine how the OPVs could contribute to other mission sets. So far Defence has not revealed what those mission sets could be. But even before the curtailment of the program, we had previously suggested militarily-useful roles for the Arafura including as a mothership for autonomous vessels, employing its flight deck, rear slipway and space for shipping containers.

The good news is that sea trials of the first ship have finally begun, but without any fanfare or even a media release from a Government generally anxious to announce an intent to acquire a new photocopier sometime before the end of the decade. Naval News noted that ‘personal imagery and comments by officials, industry representatives at builder Luerssen Australia and local shipspotters on various social media platforms exclusively make up all information on this notable step for a major, if troubled defence procurement.’ But there’s no word on whether Defence is now willing to accept the ships into service or on potential missions sets. Overall, it appears that the Arafura-class is still the Navy’s unloved orphan child with no clear pathway to a fruitful adulthood.

But the taxpayer should expect better. Numerous commentators have expressed concern at how little value Australia gets from its $55.7 billion defence budget. Failed projects such as the Attack-class submarine which ultimately spent close to $4 billion and delivered no capability are (only) one reason for this. Australia simply can’t afford to blow another multi-billion shipbuilding program. We have to find a meaningful return on investment for the taxpayers who ultimately have footed the bill for this depressing tale.

And then there is the issue of lessons learned for the Government’s massive, planned shipbuilding program. Defence is currently embarking on another shipbuilding project that is meant to select a mature, in-service design, namely the general purpose frigate program. That’s the one that is meant to stop the RAN from becoming a navy without any warships. There’s no room for error as the Anzac frigates, already overmatched in our region, start to age out. But with Defence managing to botch the OPV program, we have little confidence in its ability to deliver the GPF.

As always, transparency is the best remedy, both to learn what went wrong in the OPV project and to prevent it occurring again in the GPF project. As always, Defence is doing its utmost to ensure that there is no transparency or scrutiny of its performance. Ensuring its failures remain ghosts are what it is best at.