The Defence Strategic Review in Action: Hanwha’s Redback wins LAND400 Phase 3 Project

Korean defence contractor, Hanwha, has triumphed against Germany’s Rheinmetall in a protracted race to supply armoured vehicles for the Commonwealth’s LAND 400 Phase 3 project. The multi-billion dollar project has been the subject of much scrutiny and debate both prior to and following the Federal government’s publication of its ‘Defence Strategic Review’ (DSR), which recommends refocussing Defence’s resources from land, to sea and air.

In broad terms, the DSR recommended Australia’s need to move to “a new strategic conceptual approach to Australia’s defence planning and strategy” in order to meet the threat of a nearby adversary launching a major military attack on mainland Australia (now, no longer 10 years away). A key part of this strategy proffered by the DSR is less emphasis and reliance on land-based artillery (i.e., armoured vehicles) and instead, a greater focus on long-range missile capability and a stronger naval fleet. So practically, what will be (or has been) the effect on Australia’s Defence projects?

The LAND 400 Phase 3 Project is a perfect example. While the project originally asked for 450 infantry fighting vehicles to be manufactured and supplied to Australia’s Department of Defence, the Project now concerns the supply of only 129 infantry fighting vehicles. This is equivalent to just one mechanised battalion. Not only has the number of vehicles gone down, but the price tag has gone up. Originally forecasted for USD18 billion, the project will now cost tax payers USD27 billion, a number which does not add up in light of the number of vehicles slashed.

Hanwha makes a pleasing choice after a five-year tender process, with its Redback vehicle outperforming Rheinmetall’s Lynx following extensive technical and capability testing. The Redback is therefore expected to bring back some ‘sting’ to the Australian Army. The contract should also go to strengthening Australia’s economic, political and diplomatic ties with the Republic of Korea, as Australia’s fourth largest trading partner and one of Asia’s key economic players.

Whether the impact of the DSR will be as formidable in other Defence projects remains to be seen. As one of the first projects to be affected by the DSR’s recommendations, all which have been accepted by the Australian government, this does however set a strong precedent for the likely future consequences for Australia’s Defence Force.

Amidst the uncertainties of Australia’s defence landscape, particularly in the context of increasing security challenges across the Asia-Pacific region, DLA Piper’s understanding of, and expertise in the complexities and political nuances of defence contracting places us as a leading advisor to both Sovereign States and contractors.

For further information, please contact Gitanjali Bajaj and John Gallagher.