Taiwan Sub Contest Finally Taking Shape

Defense News

04/14/08

Taiwan Sub Contest Finally Taking Shape

By WENDELL MINNICK

TAIPEI — One of Asia’s biggest pend­ing procurements is the $11.7 billion Foreign Military Sales (FMS) pro­gram to build eight diesel-electric at­tack submarines for Taiwan. General Dynamics Electric Boat likely will be pitted against Northrop Grumman Shipbuilding-Newport News, with Lockheed Martin and Raytheon fighting over the combat system contract.

Taiwan’s state-owned China Ship­building Corp. and the military-run Chungshan Institute of Science and Technology will likely get a large piece of the pie. Taiwan’s Navy has four diesel­ electric boats in its inventory, with two Dutch Hai Lung-class (Sea Dragon) submarines and two for­mer World War II-era U.S. Navy Guppy II-class subs procured in the early 1970s and used only for train­ing purposes.

Taiwan’s subs are aimed at deter­ring a Chinese naval blockade and protecting its sea lanes of commu­nication, on which the island’s exis­tence depends. Taiwan’s two Sea Dragon subs must cover the Taiwan Strait and Pacific coastal areas.

The addition of eight submarines will signify a remarkable boost to Taiwan’s self-defense capabilities and offset China’s growing ability to deny vast areas of the Taiwan Strait and Pacific Ocean to Taiwan and possibly Japanese or U.S. forces.

U.S. President George W. Bush of­fered submarines to Taiwan in 2001. Divided into two phases, design and build, the program has been one of the most controversial arms deals the United States has granted to Tai­wan. China has repeatedly and adamantly demanded an end to U.S. arms sales to Taiwan, and Taiwan’s legislature aggravated U.S.-Taiwan relations for years by continuously blocking the submarine budget.

However, a budget for $62 million for the design phase was approved by Taiwan’s legislature in June 2007 with total costs for the first phase estimated at $360 million.

“This $360 million is spread out in three payments over three years [in the annual defense budget], with the first year around $60 million or so,” said Mark Stokes, former coun­try director for China and Taiwan in the U.S. Office of the Secretary of Defense from 1997 to 2004.

In January, Taiwan submitted a formal letter of request (LoR) to the U.S. Navy’s International Programs Office for a letter of offer and ac­ceptance (LoA) for designing and building the eight subs.

“The exchange of a LoR and LoA represents a government-to-gov­ernment contract and would cover Phase 1 of the submarine program — the end result being construc­tion-ready architectural drawings,” said Stokes, who supports Taiwan’s submarine program.

“Phase 1” is scheduled to last three years, but is dependent on if third-party designs (i.e. French, German or Spanish) could become avail­able. This is deemed as unlikely, as China has applied considerable political pressure to prevent any European arms sales (including designs) to Taiwan. “The expectation is that the Jav­its Report would include the Tai­wan submarine program, and initi­ation of the congressional notifica­tion process should be in the June time frame,” Stokes said.

After the 50-day notification process is completed, the LoA will be sent to Taiwan around August for signature. After a month, Tai­wan will be required to deposit funding in the FMS account, and the U.S. Navy will send out a re­quest for proposals (RfP) to U.S. in­dustry for both design and con­struction with six months to reply. Final selection of a prime contrac­tor is expected in mid-2009.

However, a former U.S. defense official assigned to the American In­stitute in Taiwan (AIT), the de fac­to U.S. Embassy in Taipei, said the legislature will have problems find­ing the money for phase two, the build program.

“The legislature needs to take a deep breath and pass a special budget for this $8 billion to $10 bil­lion deal,” he said. “No ship build of this size has ever been passed be­fore, so they have to come up with a plan for funding this unusually large amount of money.” Cooperation from the U.S. side is questionable, and past opposition from the U.S. Navy may delay fur­ther progress on the deal, he said.

“It will take more than funding a few million dollars for more study. NAVSEA [U.S. Naval Sea Systems Command] has to pitch in and fa­cilitate cooperation from the U.S. side to make this happen. NAVSEA is strongly influenced by our nu­clear Navy, so we need to see NAVSEA have a change of heart,” he said.

“If these two things are not doable, then there can’t be a sub program supported by the U.S. side. My prediction is that even if Taiwan formally asks for the subs, right now, the U.S. administration will not do anything except defer a de­cision for the next administration.” Stokes agreed that gatekeepers in the Pentagon bent on killing the program could cause problems.

“I wouldn’t rule out a scenario in which there is a stall in the con­gressional notification or residual bureaucratic resistance within the U.S. Navy,” he said. “If the latter, Taiwan could spend $360 million and not have much to show for it three years from now.” The U.S. Congress has fully en­dorsed the sale of the subs.