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Insiders have said that the plan of building three 6,500-ton destroyers are in crisis just a year after the ships' steel hulls began construction in Adelaide, Newcastle and Melbourne.
They threaten that this could be the biggest defence bungle after the 1990 Collins Class subs construction.
If not corrected, it could jeopardize the future of Australia's naval shipbuilding.
There are many causes of delays such as poor project management, mistakes from the engineers and lack of expertise as stated by HMAS Hobart.
It had initiated a dispute between BAE Systems and Defence Material Organisation as to who should be blamed.
The government of Australia understands that Stephen Gumley, the DMO chief was accused by BAE for exaggerating claims about their capability and this caused relations between partners to be strained.
BAE is accusing Australian Submarine Corporation and Navantia for contributing to the error by giving low quality drawings and poor information regarding the construction of the hulls.
The government had tried to hide this problem although they already know that the project is in big trouble for months now.
It was revealed last October about the first setback of the AWD project when the 200 ton central keel block had been built with inaccuracy to its dimensions which resulted because of faulty welding.
That caused a 6 month delay.
After that the project just kept on slipping and now BAE predicts there will be a 1 year delay with its hull blocks.
BAE's actions, according to Mr.
Gumley had caused a 2 year delay for the project.
Def.
Minister Stephen Smith had moved yesterday to strip BAE from some of the AWD work.
The AWD project manager had advised that if there will still be no action taken to relieve pressures with the Melbourne BAE Systems shipyard then it would take 2 years later than schedule to release the first ship.
13 of the steel hull blocks will be reallocated to Australian shipyard while 5 will be reallocated to the Navantia's shipyard located in Spain.
AWD advised that this will reduce delays by 1 year.
The delay would mean that all 3 destroys that are based on Spanish F111 boats won't be able to enter the service in 2014 as what had been initially planned.
Mr Smith had said that this decision will have a minimal impact to the workers of BAE as they are also building the Landing Chopper Dock ships for the navy.
They also included DMO, ACS and the Raytheon Australia.
Critics said that the structure is ineffective.
AWDs would be the most potent of the Australian built warships and it will be armed with the Aegis combat systems that will allow them to provide with the theatre ballistic missile defence that could cover wide area.
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