AUSTRALIA will have three new Spanish-designed air warfare destroyers after the National Security Committee of Federal Cabinet last night signed off on the deal.
The decision, to be announced this morning in Canberra, ends months of speculation and fierce rivalry between the competing designs for the massive ships.
Speculation had been rife that a larger U.S. design was under favourable consideration, which would have meant more jobs in South Australia.
The Advertiser understands the decision was consistent with the recommendations of Defence Minister Brendan Nelson.
The ships will be constructed by Adelaide's ASC (formerly the Australian Submarine Corporation) at Osborne, with a total contract value of $7.9 billion over the life of the construction phase.
The contract is initially for three ships, although more ships could be ordered after that.
The three ultra-modern destroyers will hit the water in 2014, 2016 and 2017.
The Royal Australian Navy believes the ships will take Australia's defence capability to a higher level than ever before.
Up to 1500 full-time jobs will be associated with the contract, although the decision to go with a modified version of the lighter Spanish Navantia ship means fewer SA design jobs than the heavier American alternative, designed by Gibbs & Cox.
It had been suggested the Defence Department wanted the American version because of its greater size and weight and the potential for further upgrades.
However, defence analysts had suspected the Government would eventually go with an Australianised version of the Spanish design because, unlike the American alternative, it is essentially proven technology.
The National Security Committee opted for value, proven performance and delivery certainty, as well as the possibility of acquiring four ships for the price of three. The Spanish option was recommended by the Defence Materiel Organisation and Defence Capability Committee but strongly opposed by navy chief Vice-Admiral Russ Shalders, who argued the U.S. design offered better capability.
It is likely Premier Mike Rann will accept the decision offers both positives and negatives for the state.
The Spanish ship will result in less design work being conducted in SA but a fourth ship would prolong the construction work at ASC.
It is believed ASC now will be able to start construction much earlier, because the Spanish design involves significantly less development.
This makes the Government's 51 per cent stake in ASC, which will be sold next year, more attractive to potential buyers.
It also makes more attractive the Government's Techport Australia area adjoining ASC, which is being pitched as a base for subcontractors.
It is believed the Government is a few weeks away from appointing a contractor to develop the Techport concept, with major national property developers being considered.
The National Security Committee also signed off on a decision to build amphibious ships, with the Spanish design again triumphing.
That contract has been awarded to Tenix, based at Williamstown, Victoria.
Although ASC did not win this work, as much as $100 million worth of hi-tech fit out work for the amphibious ships will be conducted in SA.
The decision also means Australia's ship-building capabilities are locked in for at least the next decade, particularly at Osborne and Williamstown.
Defence sources said this maintenance of building capacity was of crucial strategic and economic importance.
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