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On a dusty military training ground in Queensland's Shoalwater Bay, military personnel from Germany and South Korea are training side-by-side as part of multi-national exercises.
Key points:
- A decision is expected to be made this week on which company the government will choose to construct new infantry fighting vehicles
- The contract sits between German company Rheinmetall and South Korean rival Hanwha
- A decade ago the Labor government cancelled a $225 million order for South Korean weapons
Away from the realistic war-fighting scenarios they are rehearsing, a far more ferocious battle is playing out inside the corporate boardrooms of their respective countries, as a decision looms on a five-year-long tendering process for one of the Australian Army's most lucrative contracts on record.
As early as this week, a government decision is expected to be made on whether German company Rheinmetall or South Korean rival Hanwha is chosen to construct new state-of-the-art infantry fighting vehicles (IFVs) in a defence prize worth around $10 billion.
Rheinmetall is offering an existing vehicle known as Lynx made in Queensland, while Hanwha has developed an entirely new product for Australia known as Redback, which it is proposing to build at a Geelong facility in Defence Minister Richard Marles's electorate.
Earlier this year, Labor's Defence Strategic Review dramatically reduced the scope of the LAND 400 Phase 3 project which aims to replace the Australian Army's Vietnam War-era M113 Armoured Personnel Carriers, from an original 450 IFVs to 129.
With the Albanese government now searching for further savings in defence to cover the enormous cost of acquiring nuclear-powered submarines, Labor is even exploring the possibility of instead building the IFVs overseas.
Over the past few weeks, the German government has boosted its sales pitch with a pledge to buy more than 100 Australian-made Rheinmetall Boxer heavy weapon carriers, which company insiders concede is contingent on winning the much larger LAND400 deal.
With a decision looming within days, Berlin has continued its slick diplomatic and military-backed PR offensive to improve Rheinmetall's chances of winning the multi-billion-dollar IFV program.
German Army Chief Lieutenant General Alfons Mais has flown to Australia to meet with his troops taking part in Exercise Talisman Sabre for the first time and toured Rheinmetall's Queensland factory known as MILVEHCOE at Redbank.
Pressed on whether the Boxer deal would actually go ahead if Germany does not win the IFV contract, the Army Chief told reporters in Canberra he was still "expecting the first vehicle in 2025".
"I'm totally convinced, and I hope that our parliament will decide in the fourth quarter of 2023 that the contract can be signed."
South Korea, whose Redback vehicle was determined to be superior to the Lynx during the Army's rigorous "risk mitigation activity" in 2021, is now also dangling an incentive to bolster its chances in the $10 billion contest.
The head of South Korea's Defense Acquisition Program Administration says the Republic of Korea (ROK) could also eventually deploy the Australian-made Redback vehicle on its own soil.
"The Republic of Korea and Australia are key partners in safeguarding peace and democracy in the Indo-Pacific region," says Major General Cho Hyun-ki, Deputy Minister of South Korea's Defense Acquisition Program Administration
"If defence cooperation between the ROK and Australia is further expanded through the introduction of the Redback IFV by the Australian Army, the ROK military may consider acquiring the Australian Army's Redback IFV as an emergency force in the event of an emergency on the Korean peninsula."
Labor's politically difficult decision amid Defence spending pressures
On the day Scott Morrison became prime minister, outgoing defence minister Marise Payne released the original tender for the LAND 400 Phase 3 project, but political factors and elections have continued to delay a final decision.
Former defence minister Peter Dutton unashamedly but unsuccessfully pushed to overrule Army's preference for the Redback vehicle, even wearing a Rheinmetall jacket in his Queensland seat while casting his ballot in the 2022 election.
In contrast, when Labor won office, Defence Minister Richard Marles recused himself from the LAND400 Phase 3 decision given Hanwha's presence in his electorate, to avoid any conflict of interest.
Responsibility for the project now rests with Defence Industry Minister Pat Conroy, who some in the industry believe is hesitant about awarding a contract to a Victorian facility through fear of opening himself up to attack from now Opposition Leader Peter Dutton.
The Albanese government must also weigh up diplomatic considerations after earlier this year cancelling a planned second regiment of self-propelled Howitzers which were also ready to be built by Hanwha in Geelong.
A decade ago, the Gillard government controversially and abruptly cancelled Australia's original $225 million order for South Korean Howitzers, causing anger and embarrassment in Seoul.
Growing pressures on the defence budget from the recommendations of the Defence Strategic Review, and other deteriorating economic factors, mean Labor could yet be tempted to send much of the lucrative IFV construction work overseas.