Royal Australian Navy Discussions and Updates

[alexsa]

Sycamore Specification JPG attached

Did not think this stuff was in the public domain, glad you posted it as it can put an end the "its and OPV" nonsense once and for all.

The one point I will make is while it is down as acquired for the commonwealth the vessel is owned by the NAB. Not going to go into the mechanics of that process, but that is how the ownership is detailed on registration.

 

[hauritz]

The whole concept of a civilian organisation providing fleet support is interesting. I am not sure that many other countries do this to the same extent as Australia.

This is maybe the direction the navy will take when it comes to replacing its hydrographic and oceanographic vessels.

It makes me wonder whether or not we should look at eventually forming something like the RFA .

 

[t68]

Extremely happy that the RAN has access to another vessel for training purposes, but have often wondered is it the best way to go about it being a private consortisuim freeing up short Term cash flow for goverment compared to the long term.

I remember the old HMAS Jervis Bay GT203 being a training and troop transport ship with roll on/off capabilty as well as training with the LCH. Just dissapointed we may have been able to get a bit more than what we got, something along the line of the Makassar class. But done and dusted now think it was a missed opportunity for the RAN.

 

[ASSAIL]

The whole concept of a civilian organisation providing fleet support is interesting. I am not sure that many other countries do this to the same extent as Australia.

This is maybe the direction the navy will take when it comes to replacing its hydrographic and oceanographic vessels.

It makes me wonder whether or not we should look at eventually forming something like the RFA .

The capital cost of an RFA lookalike would still fall under the defence budget and therefore navy would still wear the opportunity cost so no net benefit.

DMS provides its own capital so the only cost to defence, across a wide range of activity, is simply recurrent costs. This is a very efficient method of providing capability that is not purely military and frees up the budget for the main game.

 

[t68]

DMS provides its own capital so the only cost to defence, across a wide range of activity, is simply recurrent costs. This is a very efficient method of providing capability that is not purely military and frees up the budget for the main game.

Under who's budget does DMS get paid under?

 

[alexsa]

Under who's budget does DMS get paid under?

Defense will pay for the service but at a known rate under contact. It is no different to contracting for any other service that defense currently use (Basic Flying training for instance). The advantage is the upfront cost and ongoing costs of the vessel does not need to be found and Defense simply budget for yearly costs.

The day to day cost of operating the vessel and the periodical maintenance sits with the commercial entity. If the service cannot be provided the then contractor is liable for and alternate or a penalty. I don't see the penalty issue coming up noting the Sycamore will do more that helo training and DMS will have three good size special purpose vessels to spread the load (Noting they have Stoker and Bessant as well)

Don't forget also a commercial entity as owner can depreciate the asset. The commercial operator will be looking for a profit over the operating cost of the vessel within the contract they have with defense and their costs back to the 'owner'.

It is a neat way of providing an asset that is not required to be at the beck and call of Defense all the time.

 

[ASSAIL]

Under who's budget does DMS get paid under?

As Alexsa has said, DMS is an independent commercial entity. It is no different to you hiring a lawn mowing service to cut your grass. You don't pay for the machine or his ute, you don't have to replace them when they age, you simply pay for the service at a known rate and the money you save by not buying a ute, a mower, an edger and replacing them when they fail, you can spend on whatever else you please and your grass is still cut!

 

[t68]

As Alexsa has said, DMS is an independent commercial entity. It is no different to you hiring a lawn mowing service to cut your grass. You don't pay for the machine or his ute, you don't have to replace them when they age, you simply pay for the service at a known rate and the money you save by not buying a ute, a mower, an edger and replacing them when they fail, you can spend on whatever else you please and your grass is still cut!

I understand the analogy your getting at, but in this case there is only one user of the hired item unless boarder force and DFAT also get billed when in use via their dept.

If I hire the lawn mower from Kennards Hire we have multiple hires by different entities, because at the end of the day if it only has 1 customer that 1 customer payed thru the nose over the life of the contract for the item and all associated cost's.

Only diffrence is that your books look good for the short term instead of the upfront cost of the equipment. Serco -DMS are there to make a profit whereas the RAN is not. Saw all that when PM Howard privatized DAS Distribution.And the new incoming bills for service rendered money from the commonwealth to private company's at absorbent prices compared with money moving from one Gov dept to another, majority of money stayed in gov hands except for expence's which would be the same if it was gov or private.

 

[John Newman]

I understand the analogy your getting at, but in this case there is only one user of the hired item unless boarder force and DFAT also get billed when in use via their dept.

If I hire the lawn mower from Kennards Hire we have multiple hires by different entities, because at the end of the day if it only has 1 customer that 1 customer payed thru the nose over the life of the contract for the item and all associated cost's.

Only diffrence is that your books look good for the short term instead of the upfront cost of the equipment. Serco -DMS are there to make a profit whereas the RAN is not. Saw all that when PM Howard privatized DAS Distribution.And the new incoming bills for service rendered money from the commonwealth to private company's at absorbent prices compared with money moving from one Gov dept to another, majority of money stayed in gov hands except for expence's which would be the same if it was gov or private.

As I understand it DMS has been providing it's support services to the RAN for around 20 years, so nothing new there. And I believe they have approx 100 ships/boats in their fleet too.

All appears to be ok with me.

 

[ASSAIL]

I understand the analogy your getting at, but in this case there is only one user of the hired item unless boarder force and DFAT also get billed when in use via their dept.

If I hire the lawn mower from Kennards Hire we have multiple hires by different entities, because at the end of the day if it only has 1 customer that 1 customer payed thru the nose over the life of the contract for the item and all associated cost's.

Only diffrence is that your books look good for the short term instead of the upfront cost of the equipment. Serco -DMS are there to make a profit whereas the RAN is not. Saw all that when PM Howard privatized DAS Distribution.And the new incoming bills for service rendered money from the commonwealth to private company's at absorbent prices compared with money moving from one Gov dept to another, majority of money stayed in gov hands except for expence's which would be the same if it was gov or private.

I'll make this simple; the annual costs of running DMS vessels is nearly the same whether they're manned bySerco or Navy with one very large exception. The RAN has no contingent liabilities ie they don't pay for sick leave, super, long service or annual leave. They don't pay for medical expenses or any other extraneous expense such as training recruitment administration ad nauseum.
These on costs usually account for about 30% of total wage costs in most businesses and more if superannuation is considered

Further, they don't pay for building or refitting the vessels and they don't have to replace them at the end of their lives.

 

[Volkodav]

It has worked quite well for support vessels, i.e. workboats, tugs, lighters for fuelling etc. as well as training and rescue vessels. What didn't work was trying to do the same with patrol boats, it often left the RAN without sufficient capability and cost DMS/Serco a mint when the government selected design proved incapable of meeting the actual operational needs of the service, verses the idealised (and cheaper to support) duties contracted for .

 

[ASSAIL]

It has worked quite well for support vessels, i.e. workboats, tugs, lighters for fuelling etc. as well as training and rescue vessels. What didn't work was trying to do the same with patrol boats, it often left the RAN without sufficient capability and cost DMS/Serco a mint when the government selected design proved incapable of meeting the actual operational needs of the service, verses the idealised (and cheaper to support) duties contracted for .

Yes I agree but the difference was that navy manned them and so the cost benefit didn't arise, in fact it so obfuscated the arrangement and maintenance became so confused that the normal relationship between the users and maintainers broke down, the navy lost incentive and were forbidden to look undertake basic work, DMS became frustrated that the ships were being used way beyond their design limits and the whole arrangement became a dogs breakfast. You know exactly the bs that happened.
Some issues are apparently resolved now that boats have gone to single crews.

 

[t68]

I'll make this simple; the annual costs of running DMS vessels is nearly the same whether they're manned bySerco or Navy with one very large exception.

Yep, I did mention that with,

majority of money stayed in gov hands except for expence's which would be the same if it was gov or private.

The RAN has no contingent liabilities ie they don't pay for sick leave, super, long service or annual leave. They don't pay for medical expenses or any other extraneous expense such as training recruitment administration ad nauseum.
These on costs usually account for about 30% of total wage costs in most businesses and more if superannuation is considered

Correct they don't have it on the defence books per say, but being a sole user contract all that would be built into the contract, so they pay it anyway, DMS is not there to make a loss. From what I understand you run boat charter service in Darwin, I imagine all those cost would be worked into any contract otherwise you're go broke pretty quick

Further, they don't pay for building or refitting the vessels and they don't have to replace them at the end of their lives.

All part of the contract price, if a new vessel was required at end of contract that would be written into the next, as for the ship itself will be either sold or broken up for scrap and DMS will get all procceds.

All this makes seence for corparations which becomes tax relief or credit which is not applicable to the RAN, as for goverment it's just a larger expence overtime compared to doing itself.

But for the sake of the aurgument i think we will agree to disagree.

 

[oldsig127]

But for the sake of the aurgument i think we will agree to disagree.

Not mentioned in this discussion unless I've misunderstood or missed something is the matter of crewing. NOT the cost, which has definitely been mentioned, but the numbers.

Navy - all the services actually - is restricted to a maximum number of uniforms. Offloading so called "tail" roles allows them to recruit and retain that many extra "teeth" roles which would otherwise be puttering around off JB when they could be cruising the Gulf. Counting the crews for the very considerable number of small and specialist vessels operated by DMS you'll likely find an extra crew for a frigate or two otherwise employed.


oldsig

 

[alexsa]

Yep, I did mention that with,

Correct they don't have it on the defence books per say, but being a sole user contract all that would be built into the contract, so they pay it anyway, DMS is not there to make a loss. From what I understand you run boat charter service in Darwin, I imagine all those cost would be worked into any contract otherwise you're go broke pretty quick

All part of the contract price, if a new vessel was required at end of contract that would be written into the next, as for the ship itself will be either sold or broken up for scrap and DMS will get all procceds.

All this makes seence for corparations which becomes tax relief or credit which is not applicable to the RAN, as for goverment it's just a larger expence overtime compared to doing itself.

But for the sake of the aurgument i think we will agree to disagree.

Actually defence have not been the sole user of DMS assets in the past. The Seahorse vessels also did some commercial work and were available for other ad hoc government work as needed. DMS manning is, and will be, spread across its fleet allow crews to be rotated to vessesl with high work loads. Added to that, beyond merchant training the crew on these vessels do not need the specialist training needed to serve on a warship ..... which they tend to provide to Naval ratings and officers. Not an insignificant cost.

Yep the cost of the ship was considered in the contract, as it the cost of a building when you rent it. However, as a commercial asset the value can be offset by depreciation ....... not and option for a warship. This factor is also significant. By the way when you scrap a ship the return on about 1000 light laod tonnes is not going to be much.

Finally if the ship breaks ...... it is not Navy's problem, DMS (Serco) are responsible for this and bear the cost (and must provide and alternative for the services) with no change to the contract rate. Essentailly this process controls your costs and eases budgeting

Irrespective of who you may disagree with this is a cost effective solution (noting it covers a range of vessels) that has delivered new tonnage for submarine rescue, bunkering, training, aviation training and will provide an ice breaker .... in record time ....all without the bloated process surrounding warship builds that must pass defence approval processes....... which adds significant cost and is subject to a lot of politicing.

So I really do think you have no idea what you are on about when you disagree.

 

[t68]

Irrespective of who you may disagree with this is a cost effective solution (noting it covers a range of vessels) that has delivered new tonnage for submarine rescue, bunkering, training, aviation training and will provide an ice breaker .... in record time ....all without the bloated process surrounding warship builds that must pass defence approval processes....... which adds significant cost and is subject to a lot of politicing.

Actually I'm not questioning the Capital Asset Acquisition Program (CAAP) as part of the Fleet Marine Services Contract as a whole entity, there are a range of services which Navy need and would be better utilized under Fleet Marine Services Contract for bunkering and harbour support, no doubt about it.

What I am questioning should the multi-role aviation training ship been a part of the service contract, which in my opinion is no. I believe it it should have been a commissioned ship as part of the RAN.

The ship it's self could have been acquired under CAAP, expence's to run the ship should be no different from Gov-Private, I just don't think we should be paying extra over the long term than we have to, going private is not always better

So I really do think you have no idea what you are on about when you disagree.

That's one way you can look at it, the other is to politely put an end to the discussion as we have differing views, it's done and dusted can't change it now can we.

 

[gf0012-aust]

Actually defence have not been the sole user of DMS assets in the past. The Seahorse vessels also did some commercial work and were available for other ad hoc government work as needed. DMS manning is, and will be, spread across its fleet allow crews to be rotated to vessesl with high work loads. Added to that, beyond merchant training the crew on these vessels do not need the specialist training needed to serve on a warship ..... which they tend to provide to Naval ratings and officers. Not an insignificant cost.

Yep the cost of the ship was considered in the contract, as it the cost of a building when you rent it. However, as a commercial asset the value can be offset by depreciation ....... not and option for a warship. This factor is also significant. By the way when you scrap a ship the return on about 1000 light laod tonnes is not going to be much.

Finally if the ship breaks ...... it is not Navy's problem, DMS (Serco) are responsible for this and bear the cost (and must provide and alternative for the services) with no change to the contract rate. Essentailly this process controls your costs and eases budgeting

Irrespective of who you may disagree with this is a cost effective solution (noting it covers a range of vessels) that has delivered new tonnage for submarine rescue, bunkering, training, aviation training and will provide an ice breaker .... in record time ....all without the bloated process surrounding warship builds that must pass defence approval processes....... which adds significant cost and is subject to a lot of politicing.

I think that the use of this acquisition model is one of the smartest things that RAN (Govt) has done as it has addressed and dealt with some of the hurt that they have to front whenever they've had their turn at the gate reviews. Like RAAF they have now worked out how to reduce their mass at those gate reviews and thus get what they need with a minimum of fuss and aggravation. Under any other procurement and acquisition model these vessels would most probably have failed to get up. The other side bar is that the opposition and people like Xenophon have been so asleep at the wheel that they probably don't even realise that the vessels exist and that has neutered some other issues which traditionally would have triggered a political scatological storm

Army now has to work out its own solution to complement RAAF and RANs success at getting stuff through - and it could possibly be done across multiple vectors with some creative thinking

 

[alexsa]

Actually I'm not questioning the Capital Asset Acquisition Program (CAAP) as part of the Fleet Marine Services Contract as a whole entity, there are a range of services which Navy need and would be better utilized under Fleet Marine Services Contract for bunkering and harbour support, no doubt about it.

What I am questioning should the multi-role aviation training ship been a part of the service contract, which in my opinion is no. I believe it it should have been a commissioned ship as part of the RAN.

The ship it's self could have been acquired under CAAP, expence's to run the ship should be no different from Gov-Private, I just don't think we should be paying extra over the long term than we have to, going private is not always better



That's one way you can look at it, the other is to politely put an end to the discussion as we have differing views, it's done and dusted can't change it now can we.

While you may think you are being polite your supercious tone and failure to understand the economics of this issue is what causes ire.

Case in point ...... there are significant additional costs in training a naval rating or officer compared to a merchant marine rating or officer. This in no way denigrates the merchant marine as they are very capable but tend to specialise in a single type of vessel and can often remain on a single vessel (vessel type) for a prolonged period. They are not required to operate on different vessels during their career and do not require the combat related skills needed to serve on a warship.

Naval personal will run through a shore / sea cycle and will undertaking specialist training as they progress ..... or (as critically) shipboard systems progress. Add to that, given the current state of the commercial maritime industry the wage cost is narrowing as well.

The prime advantage of this process is -

• Known costs under contract
• Rapid response to needs for as long as they are required
• Small commerical crew keeps costs down (the manning on this vessel is variable depending on what function they are undertaking)
• No responsiblity for maintenance or unforeseen issues
• Operating costs can be offset by other commerical work for either government or industry

This service is fundamentally no different to the other commerically provided services (including submarine rescue vessels) that you appear to have no issue with. It is notable that some of these are also available for military training.

I have a feeling you have never served in the merchant navy. I suggest that you have never been involved in procurement of either commercial vessels or military vessesl and finally I don't think you understand the operating model fo commercial vessels yet you persist in decrying this as a poor choice.

This is simply a platform that allows the RAN to conduct a range of training operations without tying up a warship or tying up a crew to man the training asset.
Opinion in ignorance adds nothing.

 

[Stampede]

While you may think you are being polite your supercious tone and failure to understand the economics of this issue is what causes ire.

.
Opinion in ignorance adds nothing.

I wonder as a hypothetical, should the Commonwealth feel a need due to a worsening of strategic circumstance to increase the size of the defence force by say 20%.
Would out sourced services as have been discussed be transferred to the navy?
Is there provision in the contract for such commercial ships to be seconded for ACTIVE duty, crewed and operated only by the RAN ?
While we don't have a RFA to my knowledge is there scope to change the contract due to strategic need or do we stay with the status quo.


Regards S

 

[alexsa]

I wonder as a hypothetical, should the Commonwealth feel a need due to a worsening of strategic circumstance to increase the size of the defence force by say 20%.
Would out sourced services as have been discussed be transferred to the navy?
Is there provision in the contract for such commercial ships to be seconded for ACTIVE duty, crewed and operated only by the RAN ?
While we don't have a RFA to my knowledge is there scope to change the contract due to strategic need or do we stay with the status quo.


Regards S

The terms of the contract are not publicly available but it is worth noting this is not a warship but a training platform.

It's utility in a combat situation may be limited and any HADR role could be managed with the civilian crew