Pentagon admission deepens AUKUS crisis as billions fail to lift submarine production

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A senior Pentagon official says Virginia-class production remains stuck near 1.2 submarines a year despite billions in additional funding, reinforcing doubts about whether the United States can release three used boats to Australia from 2032 without weakening its own fleet.

Australia’s AUKUS submarine plan is facing its clearest warning yet from inside the Pentagon, after a senior US defence official acknowledged that billions of dollars in additional funding have failed to increase production of Virginia-class submarines.

Austin Dahmer, a senior policy official at the US Department of Defence, told the National Commission on the Future of the Navy that Virginia-class submarines had continued to emerge at only about 1.1 to 1.2 boats a year since 2022. The United States needs to produce two annually for its own fleet and approximately 2.33 a year once the intended AUKUS transfers to Australia are included.

Dahmer said production was not expected to reach two submarines a year until about 2032, the same year Australia is supposed to receive its first second-hand Virginia-class boat. His central conclusion was blunt: the AUKUS strategy may be sound in theory, but production capacity is its point of failur

More than 18 of the US Navy’s 48 in-service nuclear-powered attack submarines are reportedly unavailable while undergoing or awaiting maintenance. This would mean that at least 37 per cent of the American fast-attack fleet is not operational, almost twice the US Navy’s preferred limit of 20 per cent.

The problem is not simply a temporary scheduling disruption. The United States has accumulated a structural maintenance and construction crisis after decades of shipyard contraction, workforce reductions and inadequate investment in industrial capacity.

Its four public naval shipyards face large maintenance backlogs and shortages of experienced tradespeople, nuclear-qualified technicians and inspectors. Private shipyards cannot readily absorb the excess work because they are already struggling to construct Virginia-class attack submarines while simultaneously delivering the Columbia-class ballistic missile submarine program, which has higher strategic priority. 

Retired US Navy official Arthur “Trip” Barber identified shipyard wages and employee retention as fundamental weaknesses. The problem is not merely recruiting additional workers, but persuading experienced tradespeople to remain through the lengthy period required to become fully productive in nuclear-submarine construction.

This matters because submarine output cannot be accelerated simply by hiring large numbers of inexperienced workers. Nuclear shipbuilding depends on highly specialised welders, electricians, engineers, inspectors and supervisors whose competence is developed over years.

Virginia-class production is currently estimated at only about 1.1 to 1.2 submarines a year. To replace retiring American boats, meet US Navy requirements and provide submarines to Australia, production would need to rise to approximately 2.33 boats annually. The US Navy has reportedly told Congress that even reaching two submarines a year has slipped to 2032.

America’s submarine industry cannot meet its own navy’s needs, yet Australia is relying on it to deliver ours.

Australia is contributing billions of dollars to the American submarine industrial base, while Australian personnel are working in US shipyards to acquire maintenance and nuclear stewardship experience. The Australian government maintains that this assistance will increase the number of operational Virginia-class submarines sufficiently to permit the first transfer in the early 2030s.

The latest evidence undermines the assumption that additional funding alone will solve the problem. Congress has already allocated billions of dollars to expand the American submarine industrial base, while Australia has committed at least $US3 billion, including $US2 billion already provided or committed and a further $US1 billion to come.

Yet Dahmer told the commission that the production rate had not moved. He warned that further appropriations would not change the outlook unless they were tied to measures capable of materially shortening construction and maintenance timelines.

This shifts the argument beyond whether governments are spending enough. The more difficult problem is whether money can overcome shortages of skilled workers, low shipyard retention, constrained suppliers, inefficient production processes and competition from the higher-priority Columbia-class ballistic missile submarine program.

The eventual sale is not automatic, and the timetable is not legally guaranteed. Dahmer described AUKUS as a “conditions-based agreement”, rather than a time-based commitment.

Under US law, the president in office at the time of each proposed transfer must certify to Congress that releasing a submarine to Australia will not degrade American undersea capabilities. If US production remains near 1.2 boats a year, maintenance backlogs persist and the operational fleet remains below requirement, the conditions necessary for approval may not exist in 2032.

In practical terms, Australia has been given a proposed pathway, not an enforceable entitlement to receive submarines on particular dates.

The United States has now clarified that all three submarines initially proposed for sale to Australia will already have served in the US Navy. Australia is therefore no longer expecting the original three-boat transfer to include newly constructed submarines.

The Australian government continues to describe the pathway as achievable. Its published plan remains for American and British submarines to rotate through HMAS Stirling from as early as 2027, followed by Australian acquisition of Virginia-class submarines in the early 2030s and the delivery of Australian-built SSN-AUKUS boats from the early 2040s.

But the worsening American industrial position raises the prospect that the central bridge within this carefully sequenced program may not materialise. Without the Virginia-class transfers, Australia could retire its Collins-class boats without a sovereign replacement ready to enter service.

These delivery risks are emerging as an independently organised public inquiry into AUKUS hears evidence challenging the project on broader grounds.

The inquiry, which is supported by the Australian Peace and Security Forum but is not a statutory government inquiry, has held public hearings examining nuclear safety, emergency planning, employment, radioactive waste, strategic dependence and the growing presence of American forces and infrastructure in Australia.

AUKUS commits Australia to vast costs and strategic dependence without a credible fallback plan.

At a Fremantle hearing, former defence minister Linda Reynolds reportedly agreed that basing nuclear-powered submarines near the city would increase its significance as a potential military target. Public-health witnesses also raised concerns about whether Western Australian authorities possess adequate evacuation, hospital and environmental-response plans for a severe nuclear or conventional accident involving a submarine.

Some of the accident scenarios presented to the inquiry represent worst-case projections rather than official risk assessments. Nevertheless, they expose an unresolved public-policy issue: Australia is constructing the infrastructure required to host, maintain and eventually operate nuclear-powered submarines while many detailed emergency, environmental and waste-management arrangements remain either incomplete or unavailable for public scrutiny.

The government has committed substantial funding to expand HMAS Stirling and associated facilities in Western Australia. From 2027, the planned Submarine Rotational Force-West will involve regular deployments of US and British nuclear-powered submarines, supported by Australian personnel and infrastructure. The government says these arrangements will prepare Australia to operate and sustain its own fleet.

Critics see a different strategic transformation. They argue that AUKUS is turning Western Australia into an increasingly important American submarine logistics and operational hub, making Australia more deeply integrated into US military planning and reducing Canberra’s practical freedom to remain outside a future American conflict.

Former defence minister Christopher Pyne reportedly told the inquiry that one of AUKUS’s major strategic advantages was the creation of a new American submarine base in the Indian Ocean. Although Australia formally retains sovereignty over its facilities, the remark reinforced fears that the project is serving American force-projection requirements as much as, or more than, an independently determined Australian defence strategy.

Pyne also reportedly acknowledged that AUKUS was unlikely to be delivered on time or within budget, while arguing that national security outweighed those concerns.

Employment claims are receiving similar scrutiny. The government promotes AUKUS as a generational industrial program that will create thousands of skilled jobs in South Australia and Western Australia. Union and policy witnesses appearing before the inquiry argue that these figures obscure the work lost when Australia cancelled the French-designed Attack-class submarine project in 2021.

The central risk is no longer theoretical: the promised Virginia-class bridge may never arrive on schedule.

That program was intended to build 12 conventionally powered submarines in Australia with substantial local industrial participation. Critics contend that SSN-AUKUS will contain a lower proportion of Australian work, while many of the most technically advanced components, systems and intellectual property will remain controlled in the United States and Britain.

The waste question is equally unresolved. Australia has accepted responsibility for managing radioactive waste generated by its nuclear-powered submarine program, including the eventual disposal of spent reactor units. The location of a permanent high-level waste facility has not been announced, and critics say affected communities and First Nations custodians have not been meaningfully consulted. Their age, remaining reactor-core life and maintenance condition will therefore be critical to their operational value and the period for which they can bridge the gap before SSN-AUKUS arrives.

Together, the shipyard crisis and the inquiry evidence expose the central contradiction within AUKUS.

Australia is committing hundreds of billions of dollars, restructuring its defence force and aligning its strategic infrastructure with the United States around a submarine pathway whose crucial first stage depends on an American industrial system already unable to meet its own navy’s requirements.

At the same time, the Australian public is being asked to accept profound changes in nuclear stewardship, military targeting risk, radioactive-waste responsibility and foreign-force access without having been given a comprehensive public assessment of the alternatives.

None of this proves that AUKUS will collapse. The United States could expand production, reduce its maintenance backlog and conclude that transferring submarines to Australia strengthens the combined allied force. Australia could also develop the workforce, infrastructure and regulatory system required to sustain nuclear-powered submarines safely.

But each of those outcomes now depends on overcoming structural problems that cannot be solved through political reassurance alone.

The most immediate question is no longer whether AUKUS carries risk. It plainly does. The question is whether the Australian government has a credible alternative if the United States cannot release the promised Virginia-class submarines, the British-designed SSN-AUKUS is delayed, or the financial and strategic costs continue to escalate.

Canberra has not publicly presented a detailed contingency plan for the possibility that the first Virginia-class submarine cannot be transferred in 2032, that later transfers are postponed, or that the boats offered have less useful operational life than anticipated.

The Australian Submarine Agency maintains that all three partners are making the investments required to deliver the agreed pathway and says Australia has appropriate bilateral and trilateral agreements and governance arrangements in place.

That response confirms the political commitment to AUKUS, but it does not directly answer the industrial question raised by Dahmer: what mechanism will lift Virginia-class production when billions of dollars already appropriated have failed to move the annual delivery rate?

Australia is therefore proceeding with the largest and most consequential defence acquisition in its history while the operational bridge at the centre of the program grows less certain, its costs remain open-ended and its effects on national sovereignty are becoming increasingly difficult to dismiss.

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