Five Eyes, One Fleet: The Industrial Access Problem Nobody Is Asking About

Week 33 | July 2026

There is an Australian company in the US Navy's biggest drone-boat competition. Its name is Birdon, based in Port Macquarie, New South Wales. In late May Birdon made the Navy's seven-firm shortlist for at-sea testing of medium unmanned surface vessels. That should give AUKUS-watchers pause. The settled view is that allied firms can't really get inside American naval shipbuilding. Birdon, however, got inside. Look at how it managed that and the settled view turns out right about the wall and wrong about the door.

Birdon competed as an American company. Its US arm, Birdon America, runs Gulf Coast yards, and that arm was the one that entered the marketplace. The Australian parent's name on the company letterhead had nothing to do with eligibility.

That distinction is this whole brief.

In March the Navy killed its Modular Attack Surface Craft effort and stood up what it calls the MUSV marketplace: a rolling competition for medium unmanned surface vessels, run under Other Transaction Authority (OTA) instead of the usual acquisition rules, seeded with about $2.1 billion from last year's reconciliation bill. More than two dozen designs went in. Seven came out on 29 May: Sea Machines, Leidos, Saronic, Galliano Marine Services, PacMar Technologies, Birdon, and Huntington Ingalls. Each that finishes this year's testing collects $15 million and a shot at production. And it recurs: the next round, for high-capacity containerised-payload hulls, has proposals due around 1 August. So the door keeps reopening, and who gets through it is a live question.

Here's where most AUKUS commentary we’ve seen goes wrong. Talk about allied firms breaking into US defence work and people reach for the ITAR exemption. September 2024, finalised at the end of last year: the State Department stood up a licence-free channel for defence trade between Australia, the UK and the United States, letting the three move most defence articles and technical data across borders without the old paperwork. Useful, and it solved a real problem.

It does nothing for the problem in this brief.

The ITAR exemption governs trade. It lets allied companies send each other controlled technology without a licence. It says nothing about winning a US Navy contract; that’s a separate body of law. You can ship your autonomy stack to a US partner licence-free and still be barred from building the vessel it bolts onto. Its Excluded Technologies List, untouched by the final rule, leaves even the trade side with holes. Treat the ITAR change as the key to allied shipbuilding participation and you've got the wrong key and the wrong lock.

The lock is a line in the US Code. Title 10, Section 8679, commonly known as the Byrnes-Tollefson Amendment, bars construction of any naval vessel, or any major part of its hull or superstructure, in a foreign shipyard. The only way around it is a Presidential waiver on national-security grounds, not something handed out for a drone-boat competition. DFARS piles on: it bars contracting officers from awarding vessel-construction contracts in foreign yards at all. The Navy hasn't published the MUSV solicitation's full text, but the language it inherited from MASC already wanted materials sourced under the Buy American Act, and nothing suggests that expectation's gone away. 

Put those together and it's simple. An allied firm can hold a licence-free ITAR channel, a mature design and a willing US partner, and still cannot build the hull anywhere but America. The steel gets cut in a US yard. That's the wall Birdon climbed by becoming Birdon America, and the one every other allied hopeful walks into.

There's one way to duck the wall, and that's to stop selling hulls. Canada's most visible player here, Kraken Robotics, sells sonar and subsea batteries rather than platforms, and a component supplier never has to answer the where-was-it-built question. British USV builders get no such reprieve. They hit the same wall the Australians do, and would need the same American-subsidiary workaround to climb it.

OTA, the mechanism the marketplace rides on, cuts both ways. It lets the Navy buy from non-traditional players fast, skipping the acquisition rules that keep newcomers out. Good news for an allied newcomer, in principle. But OTA doesn't switch off the two things that actually bind: foreign-ownership review through CFIUS, and the US-build expectation. It lowers the procedural drawbridge and leaves the sovereignty moat exactly where it was.

The model for getting over that moat is Australian. Austal has run it for years through Austal USA in Mobile, Alabama: a wholly owned US subsidiary, walled off under a security arrangement that builds sensitive US Navy ships despite its Perth parent. Littoral combat ships. Fast transports. Ocean-surveillance ships. Submarine modules. It works.

The model has a bill attached. In August 2024 Austal USA pleaded guilty to securities fraud and obstructing a federal audit, and agreed to a US$24 million penalty, with an independent compliance monitor overseeing it from there. So the American-subsidiary path is open. It's also expensive and slow, and it comes with a compliance apparatus that will read your filings very carefully indeed. Birdon has walked it. Most allied firms won't have the patience or the balance sheet to follow.

Say an allied firm does all of this. Stands up the subsidiary, clears the reviews, buys into a US yard. What does the price of admission actually buy? A seat at a process its own insiders are now suing over.

In the last few weeks two of the American firms that missed the cut have taken the Navy to court. Saildrone and Blue Water Autonomy filed separate complaints in the Court of Federal Claims, unsealed in mid-July, both arguing the Navy ignored its own March evaluation criteria. Saildrone says its Spectre design met or beat every mandatory requirement, and that it learned of its rejection from the press. Blue Water, whose Liberty had been picked under the cancelled MASC program before the reset, wants a court to freeze testing and funding until it's re-evaluated.

Pause on what that means for anyone watching from Canberra or Portsmouth. These are US companies, building in US yards, with US supply chains, US lawyers and years of history with this Navy, and they still can't get a straight account of why they lost. Every advantage the localisation playbook is supposed to buy, they already held, and it wasn't enough to make the scorecard legible. So the allied firm that spends years and a fortune becoming American arrives exactly here: inside the room, reading the same opaque scorecard from further back in the queue, without a home-state senator to call when the answer doesn't come.

Step back from the American infighting: the sharper point is comparative. While allied firms localise, lawyer up and stand up subsidiaries to get a toe in the American door, the traffic the other way moves freely. Anduril, a US company, co-developed Ghost Shark with the Royal Australian Navy and last September walked off with an A$1.7 billion Australian production contract. The same company is now pitching Ghost Shark back to the US Navy. Australia stood up a Maritime Autonomous Systems unit in April for Ghost Shark, Ocius's Bluebottle and Speartooth, and put A$176 million into a 55-hull Bluebottle fleet.

The pattern is plain enough. An American prime can win inside the Australian system and build there, then take the same product home and sell it here too. An Australian firm has to naturalise before it can bid. One partner's market runs porous by default; the other's is sealed by statute. That's not the story AUKUS tells about itself.

Strip it back and the constraint is institutional, as it usually is in these pages. The hulls exist; Birdon and Saronic have them in or near the water. What holds an allied builder back is a body of law from a world where America made its own warships and everyone else bought them. AUKUS Pillar 2 has spent three years wiring the allies to fight as one. The acquisition system underneath still runs on Buy American and a statute that puts the hull in a US yard.

Whether that gap ever closes is now a political question. It would take a Presidential waiver of Section 8679, or an AUKUS-specific procurement lane written into law, before an allied yard could sell a finished vessel to the US Navy without first becoming American. Neither is on the table today. Until one is, the slogan holds for how the ships will fight and stops dead at the shipyard gate.

The next test comes fast. The high-capacity round opens around 1 August, and its detailed terms will show whether the Navy has given allied access a single thought, or whether the answer stays what it is now. You're welcome to compete. Once you're one of us.

The mirror image. Buried in the 2026 National Defence Strategy is a line that's easy to miss: Canberra wants to sell Ghost Shark and Ghost Bat overseas, not just build them at home. This week asked whether Australia can buy into the American system. Next week asks whether it can sell into everyone else's.

Since you have been, thanks for reading.

Cheers,

Mick

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