By Jamie Freed
SYDNEY, March 4 (Reuters) - Northrop Grumman Corp (NYSE:NOC) NOC.N is pushing for Australia to acquire Triton maritime surveillance drones earlier than planned, after a draft U.S. defence budget proposed a two-year pause in production, the firm said on Wednesday.
Australia is the only foreign customer for the remotely piloted aircraft, after Germany scrapped a plan in January to buy the Triton drones. proposed pause provides options for Australia to buy the drones cheaper, and hasten opportunities for local suppliers, if it helps to fill the production gap, said Doug Shaffer, the vice president of the firm's Triton programme.
"The price is a significant savings to Australia," he told reporters, but gave no further details.
A spokesman for Australia's defence department said it was aware of the budget request to the U.S. Congress and was discussing the impact of the proposed pause with the U.S. Navy and Northrop Grumman.
"Until the legislation is approved, the pause on Triton funding is not confirmed," the spokesman added.
Budget papers for fiscal 2021 that were released last month for the U.S. defense department include a two-year production pause for the U.S. Navy in FY2021 and FY2022.
The drones would help boost monitoring activities by Australia, which has the world's third-largest exclusive economic zone after France and the United States, and the world's largest maritime search and rescue region, sprawling over a tenth of the earth's surface. 2018, Australia announced plans to invest A$1.4 billion ($921.48 million) to acquire the first of six of the remotely piloted aircraft to step up its anti-submarine warfare and maritime strike capability, alongside its fleet of manned Boeing (NYSE:BA) Co BA.N P-8A Poseidon planes.
As part of its investment, Australia entered into a A$200 million cooperative program with the U.S. Navy to develop, produce and maintain the Triton aircraft.
At the time, Australia said it expected the first aircraft to be introduced into service in mid-2023 and all six delivered by late 2025.
The proposed pause in U.S. production raises the risk that the U.S. Navy will not complete its order for 68 aircraft, leading to a higher cost for Australia with future improvement costs spread over a far smaller fleet, said defence analyst Marcus Hellyer.
"The sunk cost fallacy suggests it could be better to cut our losses and get out now, even if we have spent hundreds of millions already," Hellyer, a senior analyst for defence economics and capability at the Australian Strategic Policy Institute (ASPI), said on its website.
As yet, Australia has made no decision to defer any portions of the Triton programme, the defence spokesman said.
"There are no Australian Tritons currently in production, and no decision has been made by the Australian government to defer elements of the Triton programme," he added. ($1=1.5193 Australian dollars)