AUKUS: How Australia's Submarine Bet Became a Capability Risk

Prime Minister Malcolm Turnbull announced on 26 April 2016 that France's Naval Group (then known as DCNS) had won Australia's Future Submarine Program, beating Japanese and German competitors. The contract was to build twelve conventionally-powered Shortfin Barracuda submarines — a diesel-electric variant of France's nuclear Barracuda class. The initial contract value was approximately A$50 billion, making it the largest defence procurement in Australian history. France described the deal as a "partnership of the century."

After nearly three years of negotiations over technology transfer, intellectual property, and Australian industry content, Naval Group and Australia signed the Strategic Partnership Agreement on 11 February 2019. The deal formalised the industrial partnership and set construction schedules. Public debate later referred to a A$90 billion figure, but ANAO and Department of Finance material show the distinction between constant-dollar acquisition costs and higher out-turned program provisions across the program life. The first boat was not expected to enter service until the early 2030s.

By 2020, the Attack-class program was under sustained strain. The Australian National Audit Office identified design-delay risk and reported that Defence could not demonstrate that all design expenditure had fully achieved intended milestones. Later ANAO and Finance material also showed that public cost figures had been difficult to compare because some figures were stated in constant dollars and others in out-turned dollars. Disputes over Australian industry participation and schedule risk remained unresolved.

In February 2021, Naval Group submitted an initial design plan that Australia rejected as too expensive. Naval Group was given until September to revise the proposal. At a Senate committee hearing in June 2021, Defence Secretary Greg Moriarty admitted under questioning that he had been considering contingency plans should the French project fail — acknowledging that the program had faced ongoing problems for more than a year. The hearing took place while Australian officials were already in secret discussions with the United Kingdom and United States about an alternative.

In March 2021, Australian Vice Admiral Michael Noonan met in London with Royal Navy chief Admiral Tony Radakin and requested UK and US assistance in acquiring nuclear-powered submarines. The Wall Street Journal subsequently reported that Australia formally approached the United States in April 2021. These approaches were made while Australia's Strategic Partnership Agreement with Naval Group was in force. France was not informed. Naval Group was not informed. The negotiations were conducted in secret.

At the G7 summit in Cornwall, England in June 2021, Prime Minister Morrison, President Biden, and Prime Minister Johnson held trilateral discussions on the AUKUS arrangement. France, a G7 member and holder of an active submarine contract with Australia, was present at the summit but excluded from these discussions. The French government did not learn of the talks. Naval Group continued work on the Attack-class design during this period while Australia pursued a separate nuclear-powered-submarine pathway.

Prime Minister Morrison, President Biden, and Prime Minister Johnson jointly announced the AUKUS trilateral security partnership on 16 September 2021. The statement included Australia's cancellation of the Attack-class submarine contract with Naval Group. France received official notification only hours before the public announcement. Australia had by that point spent approximately A$2.4 billion on the French program. AUKUS committed the three nations to an 18-month consultation to identify a pathway for Australia to acquire nuclear-powered submarines, with no delivery timeline, no confirmed vessel type, and no cost estimate provided.

President Macron ordered the recall of France's ambassadors to both the United States and Australia on 17 September 2021, citing the "exceptional seriousness" of the situation. It was the first time in the history of the US-France alliance that France had recalled its ambassador to Washington. The French Embassy in Washington stated the decision reflected "a serious political act" given the "magnitude of the crisis." France did not recall its ambassador to the United Kingdom, which Macron described as a separate matter.

French Foreign Minister Jean-Yves Le Drian issued a series of statements condemning the AUKUS announcement. He called it "a stab in the back," stated there had been "a lie, there was duplicity, there was a major breach of trust and there was disdain," and said it resembled the behaviour of former President Trump. Macron told the press that Australia's cancellation of the contract "broke trust." Le Drian stated that France, the United States' oldest ally, had never before recalled its ambassador, underscoring the severity of the diplomatic breach.

Australia's newly elected Labor government, under Prime Minister Anthony Albanese, reached a settlement with Naval Group on 11 June 2022. Australia agreed to pay €555 million (approximately A$835 million) in compensation for the contract termination. The settlement covered sunk costs incurred by Naval Group and its Australian subsidiary. Combined with the approximately A$2.4 billion already spent on the program before cancellation, the total cost of the failed French submarine program to Australian taxpayers exceeded A$3 billion before a single submarine had been built.

On 13 March 2023, the three AUKUS leaders announced the "Optimal Pathway" — the detailed implementation plan. It comprised three elements: a Submarine Rotational Force-West of US and UK submarines based at HMAS Stirling in Western Australia from as early as 2027; the sale of three to five Virginia-class submarines to Australia from approximately 2032; and the joint development and construction of a new SSN-AUKUS class to be built in the UK and Australia, with Australian-built boats entering service in the early 2040s. The plan spanned three decades from announcement to full operational capability.

On 5 June 2024, the Australian government approved the next phase of the Collins-class life-of-type extension program, with HMAS Farncomb to begin sustainment and capability enhancement work in 2026. The government said the program would cost A$4 billion to A$5 billion and was intended to keep the Collins class available while Australia transitions to nuclear-powered submarines. The extension reduced near-term risk but also confirmed that AUKUS requires a long conventional-submarine bridge.

Congressional Research Service reporting documented that US Virginia-class submarines have been procured nominally at two boats per year since FY2011, but actual production had not reached that rate and had fallen to roughly the 1.1 to 1.2 boat-per-year range. This shortfall matters for AUKUS because selling three to five Virginia-class hulls to Australia would reduce the number available to the US Navy unless the submarine industrial base expands production above the Navy's own requirement. CRS describes AUKUS Pillar 1 as an undertaking comparable in scale and complexity to a major Defense Department acquisition program.

A UK parliamentary committee report published in April 2026 warned that the AUKUS submarine programme faced "shortcomings and failings" that threatened the partnership. The committee warned that political drift, workforce-mobility barriers, low submarine availability, and infrastructure pressures at Devonport, Clyde, and Barrow-in-Furness could impede delivery. UK submarine industrial capacity — already stretched by current fleet obligations — was identified as a critical constraint on whether AUKUS commitments could be met on the announced timeline.

As of May 2026, Australia has received no nuclear-powered submarines under AUKUS. The Submarine Rotational Force-West is scheduled to begin from as early as 2027, while the first Virginia-class sale is scheduled for the early 2030s and the first Australian-built SSN-AUKUS boat is projected for the early 2040s. ANAO reported that, as of February 2026, Defence planned to decommission one Collins-class submarine every two years from 2038 to 2048. That schedule leaves Australia dependent on both the Collins extension and the AUKUS pathway remaining broadly on track.