Singaporeans are New Zealanders for the purposes of the navy

Joe Black SG

http://www.engineeringnews.co.nz/articles/june_shock.htm

SHOCK AND AWE

Singaporeans are New Zealanders for the purposes of the navy project protector bid

A little known clause in a free trade treaty effectively allows Singaporean workers to be classed as New Zealand workers for the purpose of local content in large scale engineering projects.
The clause came to light in the frigate replacement Project Protector contract paperwork when it became evident that the Ministry of Defence would dwell upon the New Zealand content issue only AFTER the allocation of the contract.

This was a surprise to many who had assumed that the consideration would be central to the project from its initiation, and would even determine who would win it.
As it is New Zealand content will only intrude after the winner of the $500 million contract is known.

While it was understood that under CER, Australian interests would be a strong competitor for the contract, it has come as a revelation to most interested parties that on the face of it, they are on level pegging with Singapore interests too.

This is even more alarming bearing in mind the un-ashamed participation in winning large scale engineering contracts of the Singapore government.

There are some grounds for believing that even New Zealand government officials are unaware of the implications of the Singapore level playing field clause.

According to a senior trade negotiator based in Wellington, it is quite probable that the clause was slipped in after the agreement was signed.

Whatever happened, it has come as a big worry to the Whangarei and New Plymouth interests in the running for the project. Whangarei needs the contract to build the flotilla
of patrol boats in order to preserve its high-end shipbuilding industry.

New Plymouth needs it to establish the west coast shipbuilding and ship repair business that many see as essential if the region is to sheet home its claim to being the heavy engineering centre of the nation.

Both centres are investing heavily in the bid process with trade promotion authorities in both regions focused on the deal almost to the exclusion of everything else.

There is another nagging worry in relation to Singapore It is that the island state whose prosperity is built to a large extent on the flagging IT and communications industry will see Project Protector as a must-have contract.

This means that, in effect, they may be tempted to buy the business through a state subsidy that will probably be disguised.
On the face of it Singapore has the advantage of being able to build the entire project in the one place. This includes the frigate replacement, the multi-role capability tender, along with the six patrol vessels.

The Whangarei and New Plymouth bids are predicated on a dispersed construction with the multi role frigate replacement being constructed in Australia (Whangarei) and Great Britain (New Plymouth.)

I understand that the ¡®Singaporeans are New Zealanders¡¯ clause originally came to light when it became obvious that the Singapore side had no interest at all in New Zealand content.

Only when other bidders looked into what appeared to be an obvious omission by the seasoned international Singapore bid management, did they discover that for treaty purposes Singapore was New Zealand.

Everyone concerned is reticent on the whole issue. The Ministry of Defence has had a stormy passage in recent years in ship procurement and is anxious to give the impression that performance rather than politics is everything. They simply want the best vessels.

Yet politics is intruding, as it always will in a state tender of this size in which, especially at Whangarei, jobs are at stake.
Singapore, along with Australia, was pro coalition intervention in Iraq.

Some feel that the Whangarei and New Plymouth bids may be sacrificed in order to appease a United States administration known to be furious with the New Zealand government for its refusal to come out in support of the United States over the Iraq invasion.

Under this theory, the entire project could go to Singapore to ensure that there was no New Zealand input at all.
However, the picture is not as gloomy as it seems because others interpret the Singapore lack of interest in assessing local subcontracting capability as evidence that its shipyards are wary of the deal.

The New Zealand Ministry of Defence has a reputation for being extremely picky on specifications, requiring bells and whistles that are not justified by the necessarily restricted economies of scale in a New Zealand contract.

One worry for Singapore will be the ice-breaking capability customisation required in Project Protector. Another might be the seaworthiness performance guarantee also inherent in the contract. This would not be such a problem for Whangarei with its existing slippage resources or, for that matter, for New Plymouth, which is itching for the opportunity to build ship repair facilities on the West Coast.

But returning the patrol boats to Singapore for slipping would be a different matter. Of course they could subcontract locally, but here again, there would be problems.

Unless Whangarei gets Project Protector, its yards will very likely close down, and if New Plymouth doesn¡¯t get it, then no large scale slippage capacity will be built in the first place. That leaves Babcocks in Auckland, the Naval Dockyard outsourcer and facilities manager in a very strong position that the British company will not be slow to take advantage of.

As I noted before (NZ Engineering News March 2003) at $500 million Project Protector does not have a great deal of fat on it. However the rise of the New Zealand dollar in value could have the effect of making this increasingly attractive to a foreign constructor such as those in Singapore.

The Project Protector contract is extraordinary in so many ways. As a rule New Zealand Ministry of Defence procurement documentation is singularly rigid, as we have noted.
But on this occasion it is essentially a blank piece of paper on which the bidders can themselves fill in the lines between the dots. They must only meet a fairly straight-forward requirement cap-ability in regard to the number of troops to be transported, stores carrying capacity, days-at-sea, range, and so on.
The MoD requirements are said to be descriptive than ¡°proscriptive.¡±

There is a strong feeling that the MoD¡¯s legendary attention to detail will manifest itself on this project in regard to running and maintenance guarantees, which are likely to extend for 25 years. This means that the MoD staff vetting and approving Project Protector are unlikely to be around toward the end of the certified guarantee period, and so they are likely to be especially attentive to this entire issue.

The Navy has had problems in the past with the boilerplate (paper variety) inherent in performance/maintenance guarantees and especially so in regard to propulsion.It may be this aspect that is worrying the New Zealanders (Singapore variety) and the reason why they have so far given the impression of being backward in coming forward on Project Protector.

Still another reason being voiced aloud is that the Singapore offering could be too warmongery as it is known for the New Zealand MoD requirement.

The Singaporeans might not be able to pack it with the armaments and associated kit that comes with their standardised offering.
In contrast, the MoD requirement in regard to Project Protector is sometimes described as being for coastal merchantmen, but ones painted grey.

Whatever happens, Project Protector, as it heads into the home stretch of bidding selection, is proving to be the most intriguing large scale state engineering contract for many a long year.

Guys, I just came across this article. What do you think?

I have highlighted the areas which I was truly amazed (in a bad sense - of course).

Given the ST Marine has worked with a "picky" customer, namely the RSN/Mindef, for so many years, I thought they would have better known to engage local industries to help support the vessels instead of retaining all work in ST own shipyards so many thousand miles away. I was disappointed that the Kiwis engineering journals thought so unfavourably towards the ST Marine's bid.

Anyway, this is history now. Tenix won the race and is currently the preferred tender for the entire project. Sad to say that I had wished to see the Endurance class and the Fearless class flying the Royal New Zealand Navy flag.... Sad

CX SG

what for? to begin with, it was already noted that Sg wasn't very much interested in the project... and at 500 mils it was not considered a very fat project... it seems a lot to me, but i guess there are costs involved that we wouldn't know about and that amount might not constitute a very healthy profit margin.

not to mention that they needed ice-breaking capabilities... which implies that the vessels are gonna be operated in the waters around antartica... we have the experience for making such vessels meh? tropicalisation, sure... ice breaking? eh... better for ST to focus on their strenghts lah.

besides, its understandable that ST would want to locate most production within its own existing production facilities... it is inconceivable that they should build another shipyard in NZ if they can help it... at least not unless there's a FAT offset involved... and since it was already mentioned that its not considered a "fat" project, what are the chances of that?

so ultimately, i think there's no loss.