US SSN(X) decision reveals a more optimal SSN pathway for Australia
SSN AUKUS eating cash

Feeding the ailing UK submarine sector billions of Aussie dollars is no longer the 'optimal pathway' for AUKUS, given US decisions on its future submarine.

Written by

Marcus Hellyer

There’s been a lot of focus on nuclear-powered attack submarines (SSNs) in Australia in the last week or so. First there was the firestorm in response to the United States Navy reducing its planned procurement of Virginia-class nuclear-powered attack submarines (SSNs) from two boats to one in FY 2025 in President Biden’s proposed defence budget. Since the ‘optimal pathway’ to Australia’s SSN capability relies on the US Navy having enough surplus submarines to transfer between three and five Virginias to Australia, the implications of that development have been hotly debated by the supporters and opponents of Australia’s nuclear submarine aspirations.

Then there was the Australian Government’s announcement that Australia would contribute $4.6 billion to the United Kingdom for design work on SSN-AUKUS—Australia and the UK’s shared future nuclear submarine—and to increase production capacity at the Rolls-Royce plant that builds reactors for the UK’s nuclear submarine programs.

That’s a timely contribution/subsidy/bail out, considering the UK government’s Infrastructure and Projects Authority rated core production capability for nuclear submarines as red, defined as ‘successful delivery of the project appears to be unachievable. There are major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable. The project may need re-scoping and/or its overall viability reassessed.” One hopes a multi-billion-dollar cash injection will lead to a change in its viability.

But another significant development in AUKUS submarine land has been largely overlooked—one that potentially has even larger implications for Australia’s own SSN plans, if Australia is willing to think it through and act.

That development is the revision to the US Navy’s schedule for the submarine that will follow the Virginia-class SSN, currently known as SSN(X). The US Navy’s budget documentation states, ‘The PB 2025 budget [i.e. the President’s proposed budget] reflects the shift of lead ship authorization from the mid-2030’s (as submitted in PB24) to 2040 due to budget limitations. The FY2025 funding level supports 2040 lead-ship authorization.’

In other words, due to lack of funding, America’s SSN(X) program is being deferred. Authorisation had already been deferred from 2031 to 2035; this pushes it even further into the future.

A US Navy spokesperson briefed the US media to say that authorisation in 2040 will mean start of construction will be in the ‘early 2040s’. Based on SSN construction timelines, particularly for the first of class, it’s hard to see delivery of the first SSN(X) submarine occurring before 2050.

The frank admission that budget pressures make the US Navy’s shipbuilding ambitions unachievable is telling, but hardly new. So how is this relevant for Australia’s SSN enterprise, considering the Australian Government’s pathway to a nuclear submarine capability doesn’t involve acquiring any SSN(X) vessels?

One of the elements of the Albanese government’s ‘optimal pathway’ that took many analysts and commentators by surprise when it was announced in March 2023 was that it involved acquiring between three and five Virginia-class SSNs from the US, but then building the British-designed SSN-AUKUS here.

For many it was almost incredible that Australia would go to all the trouble of introducing into service the most complex technology in the world and then switch to another boat and operate US Virginia class and the AUKUS class submarines simultaneously.

The arguments against that pathway are powerful; aside from the cost and overhead of having two different classes of SSN, it makes little sense to acquire a boat whose parent nation and navy are on the other side of the world, and which will spend little time operating in our area of strategic interest. Considering that AUKUS is all about China, why not stick to boats that are designed and operated by a navy that operates in the same region as us and faces the same threats and operating conditions as us rather than the North Atlantic? Moreover, partnership with the US offers far greater economies of scale than with the United Kingdom’s struggling nuclear programs. In fact, a study into the SSN transition pathway that I contributed to in late 2021 didn’t even consider the approach that was to be adopted under the optimal pathway as it just seemed too implausible. If that was the ‘optimal’ pathway, the other ones must have been awful.

The Government and the Department of Defence haven’t really explained in detail why their preferred pathway involves building SSN-AUKUS, a boat that hasn’t even been designed yet, let alone started construction or entered service (the echoes of the Hunter-class frigate program are very loud), rather than the tried and tested Virginia design that is being evolved over time.

Commentators have filled that vacuum with theories suggesting that the SSN-AUKUS submarine will be more suitable for Australia due to its smaller size, or smaller crew, or smaller cost (noting that none of those things are yet definitively known). The more cynical have suggested it’s driven by a US desire to inject money into the ailing UK nuclear submarine enterprise to preserve its viability, or that it was UK advocacy that opened the door to Australia getting US and UK nuclear submarine technology and this is the payback.

But the Australian Submarine Agency’s briefing pack for Senate estimates hearings in October last year that was released under a freedom of information request sheds some light on this issue with the most explicit justification to date. The briefing pack offers the ASA’s senior leadership the following talking points.

If pressed: If the Virginia Class SSN is seen as a suitable solution for the Royal Australian Navy from the early 2030s, why not build Virginia class submarines for Australia so we have just one class of submarine?

  • The reality is the Virginia class SSN submarine is projected to cease production in the US in the 2040s which will see the US reorient its supply chain and production for its next generation fast attack submarine (SSN-X).
  • If Australia were to be building Virginia class SSN submarines long after the US has finished production and reoriented to SSN-X, we could be facing supply chain, industrial base and design upgrade challenges.
  • Australia will follow the UK in its production of the first SSN-AUKUS and both countries will be building the same submarine for several decades thereby realising efficiencies in supply chain, industrial base and design for upgrades as required.

The issue, then, seems to be one of timing. We need to synchronise our program with one of our major partners, and if we are going to be out of synch with the US, we need to get in synch with the UK.

With the re-set of the SSN(X) schedule, that justification falls apart.

If the lead American SSN(X) is going to be delivered around 2050, then the US Navy will be building Virginias right up to that point. In light of the well-documented pressures it is facing in its SSN numbers, it can’t afford to have a gap in production of submarines, so it will keep building Virginias for much longer than was planned when the current AUKUS pathway was developed. If the last Virginia is coming of the production line shortly before 2050, that gives Australia a lot of time to produce its own Virginia fleet before US production ends. We won’t be building Virginias ‘long after the US has finished production.’

If we assume Australia is still getting the first three transferred Virginias in 2032, 2035 and 2038, it could aim to deliver the first locally built Virginia around 2039, fifteen years from now. That would be followed by boats in 2042, 2045, 2048 and 2050, resulting in a fleet of eight Australian nuclear submarines faster than the current ‘optimal’ pathway.

Australia would then be able to transition to production of the SSN(X) to replace its Virginias, staying in synch with the US Navy’s transition to SSN(X). That could have the first Australian SSN(X) being delivered around 2054 in time to replace the first Virginia transferred in 2032. As in the US, there would be continuity of production here meeting the bi-partisan commitment to continuous naval shipbuilding.

Of course there are risks around this approach, but are they greater than the risks around the current pathway? For example, the current approach already acknowledges there are significant risks around the schedule of SSN-AUKUS. It was only in October last year that the UK Government gave BAE Systems a detailed design contract for the submarines, but according to the Government the UK will start construction of the first SSN-AUKUS this decade. That seems very optimistic, considering the UK’s performance in its Astute SSN and Dreadnought SSBN programs, the pressure on the UK’s submarine industrial base and the overall challenges facing the UK Ministry of Defence’s acquisition budget.

Under the current ‘optimal pathway’ plan, any delays in the UK’s SSN-AUKUS will flow through into Australia’s program. The fact that the Government has said we will seek to have between three and five Virginias transferred recognises this; the final two are a fallback in case of delays in SSN-AUKUS.

Overall, with this new development in the US submarine sector, it’s hard to see how building Virginias here, combined with transfer of some former US Navy boats, wouldn’t deliver an SSN capability faster and with less risk than the current pathway.

Of course, this alternative pathway also sees Australia adopting one SSN and then transitioning to another. However, that transition happens much later, and only occurs after Australia has established a robust SSN capability of eight Virginias, rather than early in its time operating nuclear submarines. Moreover, the new pathway would conduct the transition from Virginia submarines to next generation SSN(X) boats in lockstep with the US, providing economies of scale that the UK can’t match. Also, the US Navy will continue to operate Virginias for decades beyond the introduction into service of SSN(X) just as it is doing with its Los Angles-class boats which ceased production in 1996 but are still serving. Our Virginias will not be orphaned.

Certainly, we shouldn’t change course without good reason, particularly since our torturous pathway to replace the Collins has already managed to upset virtually every submarine producing nation in the western world. The impact on relations with the UK would no doubt be considerable (the continuation of the Hunter program being delivered by the British company BAE might help smooth things over).

But even with the latest announcement about future contributions to the UK’s nuclear submarine program the sunk cost in terms of money and resources to date is negligible compared to the overall cost of the program – and negligible in comparison with the $4 billion wasted pursuing the cancelled French Attack class submarine. And the key achievements in Australia’s SSN program to date are just as (or even more) relevant in this revised pathway (such as legislation enabling the transfer of US SSNs to Australia, the start of training of Australian submariners in the US, planning to establish Submarine Rotational Force-West at HMAS Stirling).

There may be other reasons for the Government’s decision to opt for SSN-AUKUS over a Virginia/SSN(X) pathway other than schedule synchronisation. Size, crew, cost (SSN(X) will be a truly expensive vessel), and various unstated US or UK sensibilities may indeed have played a role. Without the Government explaining its choice it’s hard to know—and Australian taxpayers have a right to know why the Government chose SSN-AUKUS and is sticking with that choice as things change.

 But an inability to synchronise with the US is no longer a relevant argument. In fact, acquiring an all-Virginia class fleet of eight submarines now looks not just feasible and lower risk than the current pathway, but it also synchronises Australia’s submarine capability with the larger US capability program given the recent US decision. That synchronisation is a long term and very valuable advantage for Australia’s submarine capability.

There is one other potential implication of the deferral of the SSN(X) program that we should raise, even though we can’t fully explore it here. That’s the issue of synergies between the SSN-AUKUS and SSN(X) programs. The AUKUS governments have claimed that there will be significant synergies between the US and UK’s SSN programs in terms of shared technologies. However, the timelines of those two programs have now moved further apart, with their respective construction start dates separated by more than a decade. How that will affect the programs, particularly the UK one which is heavily reliant on US technologies is worthy of further exploration.

Overall, though, there is now an opportunity for Australia to pursue a lower risk and faster pathway to acquiring and operating nuclear submarines to the current double transition between Virginias and SSN-AUKUS boats. Taking this opportunity will require clear-minded decision making and a willingness to change course at what is fortunately still an early stage of this decades-long program. The financial sunk cost is minimal, although the reputational sunk cost grows with each announcement sending us further down the current pathway, and while politicians play with other people’s money, it’s their own reputations at stake.

It could help the AUKUS partners to bear in mind the old saying: ‘When the facts change, I change my mind’. If the Government was able to do it on something as contested as tax policy, resetting submarine policy should almost be easy in comparison. I’m not holding my breath though. With AUKUS governments adopting the truly perplexing mantra of ‘too big to fail’—most commonly associated with the US government’s massive bail out of the failed banking and finance sector—we shouldn’t expect what’s rational to prevail.