Except that the USS Kidd was first commissioned into the USN in 1981, it would now be a 31 year old, maintenance and crew heavy ship, hardly an ideal candidate for upgrades and continued service I would have thought.
Even in 1997 they had already spent 15-16 years in US Navy Commission.
The RAN should have been given the funding to replace the DDG's in the late 1990's, though it presumably would have reduced the number of ANZAC's, probably by being built in place of the first 3 ships of the class.
As a late 90s DDG replacement the Kidds could have been bought and upgraded instead of upgrading the FFGs. As mining boom mk1 hit RAN retention rates all FFGs could have been sold off and the far more capable Kidds retained, or we could have offered the first two ANZACs to NZ as a knock down price and kept Melbourne and Newcastle while selling the first four FFGs. In terms of jobs an industry support it doesn't matter if the upgraded ships were twenty something year old FFGs or teenaged DDGs, in terms of capability for the RAN and hence the nation there is no comparison between a FFG and a DDG.
AWD goes ahead and replaces the DDGs instead of the FFGs but due to them being younger, better maintained, less abused hulls this gives far greater flexibility in terms of schedule and designs being considered, i.e. a full evaluation could have been conducted on F-105, Daring, KDX III etc. Also one or more of the Kidds could have been used to trial CEAFAR / CEAMOUNT and / or AUSPAR and those systems could then have been specified for the AWD.
Buying and upgrading the Kidds thus delaying the AWD project (unless of course the government of the day had also retained the FFGs and wanted to replace them too) would have relieved the stress on the shipbuilding sector permitting the full local construction of the more urgent LHDs prior to rather than concurrently with the AWD.
Possible timeline had the Kidd's been acquired:
-Kidds acquired and upgraded one at a time during the late 90s early 2000s
-Corvettes to replace Fremantles and FFGs after last ANZAC, then
-Westralia replaced with local build AOR/AOE , then
-2x LHD full local build, then
-Success replaced with 1 or 2 local build AOR/AOE , then
-AWD (more proven design options) replaces Kidds, then
-Strategic support ship, Choules not needed and first LHD in service in time
-ANZAC replacement full local build and local design input, then
-Corvette replacement (LCS type concept?), local design, platform and combat system, showcase of Australian expertise, export success.
End result, much more capable RAN, similar or less money spent, no valley of death, sustainable shipbuilding industry exporting designs and ships.