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Case Study:

Royal Australian Navy Future Frigate Program

The situation

The Hunter Class Frigate Project (HCFP) is Australia’s ~$45 billion acquisition of nine anti-submarine frigates to replace the Royal Australian Navy’s ANZAC Class frigates and to implement a sovereign Australian continuous naval shipbuilding (CNS) strategy. The Project involved the competitive evaluation process involving 3 existing ‘off the shelf’ ship designs subject to specific Australian “minimum change” requirements, that would be modified and built in Australia.

Brian Wilson

Our contribution

FreebodyCogent was engaged to provide independent strategic procurement advice and expert commercial/financial services, including development of the commercial, performance, price & payment frameworks for the Competitive Evaluation Process (CEP). FreebodyCogent as the Commonwealth’s financial lead were part of the Commonwealth’s engagement team from the outset, with key accountabilities and responsibilities for:

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Procurement strategy-setting and development of commercial, cost and financial recommendations;
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development and implementation of the financial frameworks, and tender acquisition and life cycle cost models for the head contract;
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Critical review, analysis, and evaluation of industry’s commercial compliance and financial responses;
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Engagement with respondents during the tender and offer definition periods to improve compliance and cost and final negotiation of contract terms and conditions; and
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Establishment of key cost, risk, and performance control measures for utilisation by the contract management organisation post-contract execution.

The results

Development of a contract and commercial model, structured to accommodate the design and delivery of vessels in three batches, delivering ongoing capability and reductions in risk and uncertainty as design and production matures. The model:
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anticipates four-stage iterative approaches to Government for funding (design plus three batches of three vessels) within an overall baseline budget estimate; and
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establishment of the core mechanisms governing price & payment, cost & performance control, financial & other incentives measures, incorporating both Cost Plus and Target Cost Incentive commercial models.

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