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This section documents progress on the Type 45 destroyer Programme via official statements. Statements are given in date order. Source: Select
Committee on Defence, Session 2002-2003, Defence
- Eighth Report - Defence Procurement Memorandum from the Ministry of Defence (May 2003) TYPE 45 ANTI-AIR WARFARE DESTROYER AND ITS PRINCIPAL ANTI-AIR MISSILE SYSTEM (PAAMS) The Type 45, equipped with the Principal Anti-Air Missile System (PAAMS), will be a versatile Destroyer capable of contributing to world-wide maritime operations in multi-threat environments. The programme came into being following agreement, in April 1999, between the UK, France and Italy not to pursue the tri-national Horizon programme. The three nations continue to collaborate on PAAMS. The contract for the design and build of the first three ships was placed with BAE SYSTEMS Electronics (the commercial title for the Type 45 Prime Contract Office) on 20 December 2000. The extension of the contractual commitment to six ships and the signature of shipbuilding sub-contracts was announced on 18 February 2002. Operational Requirement Trade Offs The principal cost/capability trade-off in the PAAMS programme has been the acceptance of a capability sufficient to meet the threat at ISD, rather than beyond. However, the PAAMS Full Scale Engineering Development and Initial Production (FSED/IP) contract includes a Growth Potential Study that examines the modifications that may be required to meet emerging threats. Numbers Strategic Defence Review Military Capability Equipment Replaced and In-Service Date (ISD) Deliveries of the Class are planned to complete by the middle of the next decade. Prior to Main Gate, the ISD definition for the Type 45 was revised to match the availability of the First of Class for operational tasking after sea training. Acquisition Strategy Marconi Electronic Systems (MES) was nominated as the Prime Contractor for the Type 45 Programme on 23 November 1999, and at the same time contracted to complete the Preparation for Demonstration (PFD) phase of the programme. This responsibility passed to BAE SYSTEMS when MES merged with British Aerospace. On 20 December 2000 the DFM contract, which was to complete the design and build of the first three ships, was placed with BAE SYSTEMS Electronics, which is the commercial title for the Type 45 Prime Contract Office (PCO). Under the MoD's original procurement strategy, the first of class (HMS DARING) would have been assembled by BAE SYSTEMS Marine, with a substantial contribution from Vosper Thornycroft (VT), the second (HMS DAUNTLESS) by VT, and the third (HMS DIAMOND) by BAE SYSTEMS Marine. Thus, both companies would be in the position of having assembled at least one entire ship. Both companies were (and continue to be) jointly involved in developing the design for the Type 45. It was intended that the Prime Contractor would manage, with MoD oversight, competitions for the manufacture and assembly of subsequent batches of Type 45 destroyers. Following consideration and rejection of an unsolicited bid from BAE SYSTEMS Marine for the construction of the full class of Type 45 ships, as well as an MoD commitment to the company on other naval construction programmes, an alternative procurement approach was accepted in principle in July 2001. This required extending the existing MoD contract to a further three Type 45s (bringing the total to six). It also involved sections of each ship being built by Vosper Thornycroft at their new facility at Portsmouth and by BAE SYSTEMS Marine at the yards on the Clyde and at Barrow in Furness. The First of Class (HMS DARING) would be assembled and launched by BAE SYSTEMS Marine at Scotstoun, with the remainder assembled and launched by BAE SYSTEMS at Barrow. The focus of design support to the whole Class would remain at Scotstoun, with continuing participation by both shipbuilders. An extension to the contractual commitment to six ships and the signature of shipbuilding sub-contracts on this basis was announced on 18 February 2002. On 14 March 2003, following MoD agreement to a company request, BAE SYSTEMS announced that all of their Type 45 production work planned to be undertaken at Barrow would be transferred to their yards on the Clyde. This change of plan resulted from delay to the Astute attack submarine programme. BAE SYSTEMS considered that this slippage would introduce an unacceptably high risk of conflict between the Type 45 and ASTUTE production programmes at Barrow. In addition, the company did not consider that they would be able to retain the necessary capacity at Barrow until it was required for Type 45 construction and that it would be highly unlikely that they could recruit sufficient suitably qualified people in the future to support both programmes. BAE SYSTEMS therefore concluded that the best way of reducing risk was to carry out all of their work on Type 45 at their yards on the Clyde, leaving Barrow to concentrate on ASTUTE. PAAMS National lead contractors were nominated by their governments. The UK member is UKAMS, which began as a jointly-owned subsidiary of Siemens Plessey, GEC and BAe SEMA. Following subsequent industrial restructuring, UKAMS is now a wholly owned subsidiary of, and remains within, the recently formed MBDA (formerly Matra BAe Dynamics). FSED/IP sub-contracts have been let by the Prime Contractor and the placement of second tier sub-contracts is now complete. The programme remains on schedule to meet the ISD for the Type 45 First-of-Class. Collaboration The PAAMS Programme is managed by the tri-national PAAMS Programme Office (PPO) in Paris which reports to a tri-national PAAMS Steering Committee (PSC). The aim is to delegate as much programme management work as possible to the PPO, although co-ordination of UK policy on PAAMS remains the responsibility of the Type 45 Integrated Project Team (IPT). Charters, agreed with France and Italy, set out the arrangements for co-ordinating PAAMS with the national Type 45 ship-programme and the Franco/Italian bilateral Horizon programme. Work is progressing on the transfer of PAAMS Munitions procurement into OCCAR (Organisme Conjoint De Co-operation En Matie"re D'Armament). This is seen as a sensible and cost effective development which will allow the UK to remain at the heart of PAAMS/FSAF production and development activities. The potential for achieving economies of scale by co-operative purchasing of common items in the Type 45 and Franco-Italian Horizon warship programmes has been explored, but without success to date. However, there have been benefits from PAAMS industry (UKAMS) working closely with the Type 45 industry (BAE SYSTEMS). The most significant was the initiative to develop a common architecture, including servers and consoles, for the PAAMS and Combat Management System. This improves inter-system operability and will generate considerable savings in through life costs. Export Potential Industrial Factors For PAAMS, the UKAMS consortium was formed as a convenient marriage of those companies possessing the technologies crucial to the programme—notably the existing FSAF contractors and the Sampson radar supplier Siemens Plessey Systems (now AMS). PAAMS work share is constrained by existing FSAF arrangements, but the aim is to achieve equitable work share throughout the life of the programme as far as practicable, subject to considerations of cost-effectiveness and competition. Smart Acquisition Acquisition Phases For the warship, the Prime Contractor, BAE SYSTEMS Electronics, was contracted on 20 December 2000 to undertake the DFM phase. This contract has since been extended to include the second batch of three Type 45s. Milestones and Costs TYPE 45 DESTROYER
PAAMS
Note 1. Following Main Gate Approval in July 2000,
figures show: total approved level of expenditure for six ships and
prior approvals covering predominantly PAAMS FSED/IP, HORIZON and T45
Assessment phase (Latest Approval); against the current estimate of
expenditure (Current Estimate). Expenditure is calculated at out-turn
prices. For a projected class of up to 12 ships, the total cost is expected to be of the order of £8 billion, including £2.8 billion total acquisition costs for PAAMS (with figures calculated on a resource basis, as in MPR 2002). In-Service Support Front Line, Storage and Reserve Interoperability Disposal of Equipment Replaced In-Service Life Development Potential Source: Select
Committee on Defence, Session 2001-2002, Fourth
Report - Major Procurement Projects Memorandum from the Ministry of Defence on Major Procurement Project Survey (March 2002) TYPE 45 ANTI-AIR WARFARE DESTROYER AND ITS PRINCIPAL ANTI-AIR MISSILE SYSTEM (PAAMS) The Common New Generation Frigate (CNGF), a collaborative
programme with France and Italy, was planned to replace the UK's Type 42
destroyers in the early part of the century. CNGF comprised two distinct
collaborative programmes: the Principal Anti Air Missile System (PAAMS)
and the ship with its other systems (Horizon). Whilst the contract for
the development and initial production of PAAMS has been placed, the
Horizon project did not progress satisfactorily. The three nations
agreed on 25 April 1999 that it would not be cost-effective to pursue a
single prime contract for the ship and that the tri-national Horizon
programme would end upon completion of its Project Definition and
Initial Design Phase (Phase 1) at the end of October 1999. The UK is now
taking forward its ship programme, designated the Type 45 Anti-War
Warfare Destroyer Programme, through a national Prime Contractor,
building on the tri-national project work already carried out and
pursuing opportunities for co-operative procurement in equipping the
ships. OPERATIONAL REQUIREMENT 1. PAAMS and Horizon both derived from the single Tri-Partite Staff Requirement for CNGF. The requirement was approved by the three participating nations, the UK, France and Italy, in December 1992. At the start of Project Definition for Horizon in 1995, the intention was that PAAMS would provide an anti-war warfare capability sufficient to meet the most demanding threat foreseen. It was subsequently agreed that the initial capability sought should be sufficient to meet the most demanding threat forecast at the then expected In-Service Date (ISD) for CNGF (2004), but that a growth path to provide the capability necessary to address future predicted threats would also be identified as part of this work. This remains the position for the Type 45, which will provide effective area air defence against aircraft and missiles. We have confirmed that PAAMS will be able to meet the most demanding threat foreseen for 2007, when the Type 45 is due to enter service. TRADE OFFS 2. The principal cost/capability trade-off in the PAAMS programme has been the acceptance of a capability sufficient to meet the threat at ISD, rather than beyond. However, the PAAMS Full Scale Engineering Development and Initial Production (FSED/IP) contract (see Paragraph 14) includes a Growth Potential Study that examines the modifications that may be required to meet the threat beyond 2010. Studies into cost/capability and programme/capability trade-offs for Project Horizon to achieve an affordable CNGF were undertaken as part of Phase 1 of its programme which completed on 31 October 1999. This work has been carried forward into the UK's national programme. NUMBERS 3. The UK planning assumption is for the acquisition of up to 12 Type 45s. The Horizon Memorandum of Understanding, which was signed in 1994, assumed French and Italian acquisition of four and six ships respectively. STRATEGIC DEFENCE REVIEW 4. The requirement to replace the Type 42 destroyers was scrutinised in the Strategic Defence Review. No changes were made to the operational case underpinning Project Horizon, which is now being addressed by the Type 45 Programme. MILITARY CAPABILITY 5. Type 45 destroyers equipped with PAAMS will
provide area defence against aircraft and missiles, including local area
defence against modern anti-ship missiles, to protect lightly armed or
unarmed ships. In this role, the warships will support maritime assets
across the range, from RoRo vessels through amphibious assault ships to
aircraft carriers, in both UK national and allied/coalition operations.
In addition, the Type 45—in common with all destroyers and
frigates—will be a multi-role, general-purpose platform capable of
operations across the spectrum of Defence tasks, from peace support to
high intensity warfare. EQUIPMENT REPLACED AND IN-SERVICE DATE (ISD) 6. The warship and PAAMs are planned to replace the capability currently provided in the Type 42 destroyer with its GWS30 Sea Dart weapon system. It is planned that the eleven Type 42s currently in service will be replaced progressively as Type 45s enter service, starting with the First of Class in 2007. 7. The ISD for CNGF was defined as the completion of Part IV Trials, which indicate the ship is fit to enter service. The original estimated ISD was December 2002. This slipped to June 2004, largely owing to the need to synchronise the warship and combat system programmes. The last offer from the Horizon industry group pointed to a UK first of class CNGF being further delayed until 2007, although there was no detailed plan to support even this date. The planned ISD for the Type 45 first of class is now set at November 2007 with less risk in the programme than would have been the case for CNGF. Deliveries of the Class of up to 12 ships are planned to complete in 2014. Prior to Main Gate, ISD definition for the Type 45 was revised to match the availability of the Destroyer for operational tasking after sea training. There was no effect on the programme as a result of this change. ACQUISITION APPROACH 8. Marconi Electronic Systems (MES) was nominated as the Prime Contractor for the Type 45 Programme on 23 November 1999, and at the same time contracted to complete the Preparation for Demonstration (PFD) phase of the programme. This responsibility passed to BAE SYSTEMS when MES merged with British Aerospace. The nomination of BAE SYSTEMS ensured: the minimum of delay to the overall programme; that maximum benefit from the Horizon programme was carried forward into the UK national programme; and that the Prime Contractor would own much of the risk associated with that earlier work. On 20 December 2000 the Demonstration and First of Class Manufacture (DFM) contract, which was to complete the design and build of the first three ships, was placed with BAE SYSTEMS Electronics, which is the commercial title for the Type 45 Prime Contract Office (PCO). 9. The MoD's original procurement strategy for the Type 45 was announced by the Secretary of State in July 2000. Under this, the first of class (HMS DARING) would have been assembled by BAE SYSTEMS Marine, with a substantial contribution from Vosper Thornycroft (VT), the second (HMS DAUNTLESS) by VT, and the third (HMS DIAMOND) by BAE SYSTEMS Marine. Both companies continue to be jointly involved in developing the design for the Type 45. 10. Under this strategy, it was intended that the Prime Contract would manage competitions for the manufacture and assembly of subsequent batches of Type 45 destroyers with MOD oversight. It was expected that all UK shipyards would have the opportunity to bid for the manufacture of blocks for the second batch of ships (with the competition for assembly of this batch being limited to Marine and VT), and for both ship assembly and manufacture for subsequent batches. In line with Government policy, there were no plans to extend competition for warship construction for the Royal Navy to yards overseas. 11. In late 2000, the MoD and Prime Contractor received an unsolicited bid from BAE SYSTEMS Marine which proposed assigning construction of twelve Type 45 ships to that company, as well as commitment to other naval programmes. After careful consideration, in conjunction with other Government Departments, the bid was rejected. 12. In June 2001, a possible alternative approach emerged from BAE SYSTEMS Marine and Vosper Thornycroft. This required MoD commitment to a further three Type 45s (bringing the total to six, within the planned class of up to twelve) but did not include reference to other programmes. It proposed that substantial sections of each ship would be built by Vosper Thornycroft at Portsmouth and BAE SYSTEMS Marine on the Clyde and at Barrow in Furness. The First of Class (HMS DARING) would be assembled and launched by BAE SYSTEMS Marine at Scotstoun, with the remainder assembled and launched by BAE SYSTEMS at Barrow. The focus of design support to the whole Class would remain at Scotstoun, with continuing participation by both shipbuilders. After careful consideration, involving other Government Departments, this alternative approach was accepted in principle. 13. On 10 July 2001, it was announced that the construction of a further three Type 45s had been approved, subject to successful completion of contractual negotiations. The intention was to extend the MoD's contractual commitment with the Prime Contractor to include this second batch of three ships, bringing the total to six. At the same time it was expected that the Prime Contractor would sign legally binding agreements with the shipbuilders (BAE Systems Marine and Vosper Thornycroft) for their work on the first six Type 45 platforms. The extension to the contractual commitment and the signature of the shipbuilding sub-contracts was announced on 18 February 2002. PAAMS 15. In order to get PAAMS to sea as quickly as possible, a strategy of incremental acquisition of platform capability, from a baseline standard which is both affordable and achievable in the time to in-service date, has been adopted. This will enable the insertion of capability throughout the life of the Type 45s as requirements become affordable and to take advantage of future changes in defence requirements and technology advances. Following the placement of the Demonstration and First of Class Manufacture (DFM) contract on 20 December 2000 we have been able to accelerate part of the Incremental Acquisition Plan (IAP) and a hull-mounted sonar (the top priority in the Plan) will be fitted to all the ships on build. ALTERNATIVE ACQUISITION OPTIONS 16. Before the 1996 PAAMS Programme Memorandum Of Understanding (MOU) was signed, the UK considered a number of procurement options, including life extension of Type 42s and acquisition of off-the-shelf alternatives. COLLABORATION 17. The PAAMS Programme MOU and its FSED/IP Supplement were signed by France, Italy and the UK in March 1996. The UK share of the costs of PAAMS FSED/IP will be higher than those of France and Italy. This is because we are bearing the costs of developing the Sampson Radar, which, whilst more capable than the FR/IT EMPAR radar, will be used only in the UK variant, and because the UK is making a contribution to the development cost of the Family of Future Surface to Air Missile Systems (FSAF) Programme being used for PAAMS. In addition, the UK currently plans to fit PAAMS to a significantly larger number of ships than the French and Italian navies combined. 18. The PAAMS Programme is managed by the tri-national PAAMS Programme Office (PPO) in Paris which reports to a tri-national Steering Committee. The aim is to delegate as much programme management work as possible to the PPO, although co-ordination of UK policy on PAAMS remains the responsibility of the Type 45 Integrated Project Team (IPT). Charters, agreed with France and Italy, set out the arrangements for co-ordinating PAAMS with the national Type 45 ship-programme and the new Franco/Italian bilateral Horizon programme. 19. At 12 February 2002, the PPO had 21 full time staff (ten from the UK (including two locally employed), five Italian and six French) and four part time staff (one Italian and three French). The UK also has one member of staff located with the FSAF Project Office in Paris. The tri-national Joint Project Office (JPO) located in London disbanded on completion of Phase 1 of Project Horizon on 31 October 1999. The Type 45 IPT has an annual running costs budget of £4.2 million, including the salaries and expenses of UK staff working in the PPO and FSAF Project Office. 20. Work is currently being undertaken to enable the integration of PAAMS into OCCAR (Organisme Conjoint De Co-operation En Mati"ere D'Armament). The OCCAR Board of Supervisors has stated that entry should be completed by the end of 2002. 21. The reasons for the failure of the tri-national Horizon programme were the subject of analysis by the tri-national Horizon JPO and the Horizon Steering Committee. The lessons learned are informing the UK's approach to future potential collaborative ventures. A short paper summarising the lessons learned was provided to the Committee as an Annex to the 2000 Memorandum. 22. The potential for achieving economies of scale by co-operative purchasing of common items in the Type 45 and Franco-Italian Horizon programmes has been explored without success to date. However, there have been benefits from PAAMS industry (MBDA) working closely with the T45 industry (BAE Systems). The most significant was the initiative to develop a common architecture, including servers and consoles, for the PAAMS and Combat Management System. This improves inter-system operability and generates considerable savings in through life costs. EXPORT POTENTIAL 23. Export potential for the Type 45 system as a whole constrained by its high technological specification and cost, but elements of the system such as the selected prime mover (the Rolls Royce/Northrop Grumman WR21 gas turbine) and PAAMS (in particular its associated multi-function radar) have considerable potential export prospects up to the value of several billion pounds over the next fifteen years. There could be prospects for refit programmes as well as in new build hulls. There is a growing level of interest from the Royal Australian Navy, which has plans for three air defence destroyers from 2013. INDUSTRIAL FACTORS 24. For PAAMS, the Matra BAe Dynamics UKAMS consortium was formed out of the companies possessing the technologies crucial to the programme—notably the existing FSAF contractors and the Sampson supplier Siemens Plessey Systems (now BAe Defence Systems Ltd). PAAMS work share is constrained by existing FSAF arrangements, but the aim is to achieve equitable work share throughout the life of the programme as far as practicable, subject to considerations of cost-effectiveness and competition. 25. For the national Type 45 warship programme, MES, as part of GEC, was part of the Horizon International Joint Venture Company (IJVC) and was heavily involved in the work that was undertaken by the IJVC during Phase 1 of the Horizon programme which completed at the end of October 1999. To avoid further delay to the replacement of Type 42 destroyers, it was essential that the chosen Prime Contractor would be able to make maximum use of the outputs of the HORIZON definition work and demonstrate an ability to resource the programme and deliver to the required timelines in partnership with the IPT. SMART ACQUISITION 26. The Type 45 Programme is being undertaken
in accordance with the principles of Smart Acquisition. The Type 45 IPT
was formally established in September 1999, consisting of the MoD
Project Team at Abbey Wood and the single Prime Contractor Organisation
(PCO) two miles away at Filton, Bristol. A charter, setting out the
working ethos between the DPA and PCO, has been agreed. The Department
is confident that the Smart Acquisition approach to requirements
management, through the development of an initial operating capability,
which could be progressively enhanced through a programme of incremental
upgrading, will enable the first of class ship to be delivered on time
and to cost. 27. The principal lessons for the UK that were learned from the outcome of the Horizon programme have been built into the Smart Acquisition Initiative. These lessons covered the procurement strategy, risk reduction, communication with industry at an early stage of the project, and affordability. ACQUISITION PHASES 28. The PAAMS FSED/IP contract was placed on11 August 1999. This includes the supply of the systems and associated equipments and spares for the three nations' first of class ships. Systems for follow-on ships will be covered by a Supplement to the PAAMS programme MOU which is expected to be submitted to Ministers for signature by the Summer of 2002. 29. For the warship, the Prime Contractor, BAE SYSTEMS Electronics, was contracted on 20 December 2000 to undertake the DFM phase. This contract has been extended to include the second batch of three Type 45s. MILESTONES AND COSTS 30. The tables below show the currently planned milestones and approved budget. HORIZON
TYPE 45 DESTROYER
Note 1 31. Delays in the PAAMS programme were largely related to slow progress in agreeing a procurement strategy with partners and then in negotiating a satisfactory contract. 32. Forward commitment now amounts to £2,252 milliob (this figure has been increased from the one reported last year because of the ongoing progress in the ship programme). For the projected class of 12 ships, the total cost is expected to be of the order of £8 billion, including £2.8 billion total acquisition costs for PAAMS (with figures calculated on a resource basis, as in MPR 2001). The years of peak expenditure are expected to be 2007-08 and 2008-09. 33. Under the terms of the Horizon MOU, the UK carried liabilities in respect of additional expenses associated with winding up the Horizon JPO/International Joint Venture Company (IJVC). Following completion of the contract, the IJVC has been wound up without any claim on the MoD. The JPO was closed on 31 October 1999, with no additional expenses being incurred. IN-SERVICE SUPPORT 34. As part of the initial contract to procure the first three Type 45s, BAE SYSTEMS undertook to study options for Contractor Logistic Support (CLS) of the platforms, reporting by the end of 2001. As this study progressed it became clear that a CLS contract based on whole warship availability would be extremely complex and necessarily require a high degree of contingency built in to cover the contractor's risk exposure. Additionally, it would not enable the MoD to optimise its resources and priorities over all platforms. It was therefore decided, in conjunction with the Warship Support Agency, to alter the scope of the study into a phased approach to support. The first phase, now on contract, is to devise, in conjunction with the Warship Support Agency, the optimum support solution for all T45 equipments. From this, it is envisaged there will emerge a range of support from conventional support, or CLS contracts through the Equipment IPT, to a core CLS contract for the T45. The study will also define the means of managing in service support, with the aim of delivering a bid in late 2003 to undertake the core CLS activity including post design services. 35. Ship staff training and spares storage are potential bottlenecks to ships coming into operational service. The former can be managed by the increased use of experienced Type 42 crew which would reduce the need for pre-joining training when the Type 45 comes into service; use of computer-based training will reduce disruption to operational programmes. `Just In Time' stock management techniques will also reduce the volume of spares to be held, thus minimising the need for new storage facilities during the transition period. It is planned that a CLS contract will be in place a year before ISD, to provide experience in its operation during trials and validate the in service support solution for the In Service phase. FRONT LINE, STORAGE AND RESERVE 36. Assuming a class of 12 ships, nine or ten would, on average, be available at any one time to the Commander-in-Chief Fleet for tasking, while two or three would be undergoing maintenance, including one or two in refit. It is not planned to hold any ships in storage or as in-use reserves. INTEROPERABILITY 37. Commonality of many of the PAAMS systems and sub-systems, including in particular the Aster missile, will ensure a good level of interoperability with both France and Italy. In the warship context, the requirement for interoperability with Joint and Combined Forces at system and sub system level is a high priority. DISPOSAL OF EQUIPMENT REPLACED 38. The sales potential of Type 42 warships as they are being disposed of is being examined. IN-SERVICE LIFE 39. The Type 45 is planned to have an in-service life of 25 years. DEVELOPMENT POTENTIAL 40. The Type 45's systems and sub-systems will
be updated as appropriate throughout the life of the system to take
account of developments in the operational environment. It is possible
that the Future Surface Combatant programme, currently in the early
stages of concept development, will draw on major elements of the Type
45. THE RAND REPORT ON THE TYPE 45 PROCUREMENT STRATEGY, AND THE WARSHIP SUPPORT MODERNISATION INITIATIVE The MoD commissioned RAND EUROPE in April 2001 to investigate potential procurement strategies which the MoD could pursue for its future warship programme over the next 10-15 years with particular reference to the Type 45 Anti-Air Warfare Destroyer. This followed an unsolicited proposal received in December 2000 from BAE SYSTEMS Marine, which proposed assigning construction of twelve Type 45 ships to that company, as well as commitment to other naval programmes. This differed from the Type 45 shipbuilding procurement strategy at that time which saw Vosper Thornycroft building one of the first batch of three ships and competing for later batches. Interim results from RAND's study informed MoD's decision to proceed with a revised procurement strategy for the Type 45, which was announced by the Secretary of State for Defence on 10 July 2001. RAND continued their study, taking a broader look at the foreseeable balance of demand and supply in the sector, and the potential effects of different procurement approaches. The study is now complete and at the time of writing RAND is expected to publish their report shortly. This memorandum sets out the background to the study, RAND's approach, and the results that informed the decisions on Type 45. Another issue for MoD in considering the unsolicited
proposal was the potential impact on the development of the Warship
Support Modernisation Initiative. This memorandum also provides details
of this initiative, including the MoD's current views on the relative
merits of the proposals put forward by industry and the trade unions. THE COMMISSIONING OF THE RAND REPORT 1. On 11 July 2000 the Secretary of State for Defence announced the approval of the procurement of the first three Type 45s. At that time the procurement strategy envisaged a prime contract placed later that year with BAE SYSTEMS Electronics with back-to-back sub-contracts with BAE SYSTEMS Marine (Marine) (for the assembly of the first and third ships) and Vosper Thornycroft (VT) (for the assembly of the second ship). Marine would also be expected to sub-contract a pre-determined amount of work on the first ship to VT. A substantial element of the total manufacture work on all three ships would be shared between VT and Marine. The precise division of manufacture work was subject to negotiation between the Prime Contractor, and Marine and VT. This strategy was intended to ensure that both yards would have sufficient experience to compete equitably for the second batch of Type 45 (which were planned to be ordered around 2004), and to preserve the potential for competition not only for later Type 45 production, but also for future warship production, such as the Future Aircraft Carrier. In the event, Marine and VT could not agree a risk sharing partnership in time for sub-contracts to be let back-to-back with the prime contract (the Demonstration and First of Class Manufacture contract) which was placed in December 2000. 2. Later that month, the MoD received an unsolicited proposal from Marine, through the Type 45 Prime Contract Office. The proposal suggested, inter alia, that Marine should build all twelve planned ships and appeared to offer substantial savings to the MoD over the previous procurement strategy for Type 45. As with any approach which appears to offer value for money, MoD was obliged to consider it seriously. An immediate concern however was that by assigning all the Type 45 work to Marine, the potential for competition for the production of future major warship programmes could have been put at serious risk. 3. During the early part of 2001, MoD spent considerable effort in clarifying elements of the proposal, and sought to supplement the internal analysis with appropriate expert advice from outside Government. In April 2001, RAND EUROPE, a wholly-owned subsidiary of the US RAND corporation, was commissioned to study the advantages and disadvantages of alternative procurement strategies for MoD's future warship programmes, and in particular in relation to options for the Type 45, over the next 15-20 years. The study was expected to inform (but not determine) decisions by the MoD on individual programmes with the aim of securing value for money over the warship programme as a whole. 4. RAND is a very experienced and influential policy-analysis think tank, and has been conducting analyses of military shipbuilding, industrial base, and competition issues for two decades. Most recently, RAND has completed major studies on the US aircraft carrier industrial base, the US submarine industrial base, and on the appropriate role of competition in the production of the Joint Strike Fighter. In each case, the United States' most senior defence decision makers made policy choices based on RAND's analysis. 5. RAND has no commercial interests in the US or UK shipbuilding industries. In this particular study, MoD set the context and defined the problem for RAND. Thereafter, RAND independently developed the study's approach, analysis and conclusions. While RAND considered comments and suggestions from all interested parties along with the way, the report's findings and conclusions are theirs and theirs alone. RAND'S APPROACH 6. RAND conducted a quantitative and qualitative comparison of the advantages and disadvantages of having one or two shipbuilding companies produce the Type 45 over the next 15 years. Options examined included single source procurement, dual source competitive procurement and dual source directed buys, employing either whole-ship or modular (`block') production techniques in one or more shipyards. 7. RAND developed a new analytical model of the UK shipbuilding industrial base, which considered all current and future Marine and VT programmes. Using the model RAND estimated workforce, overhead, and investment costs for different options, to display the relative cost impacts on the Type 45 of different acquisition and production strategies, and, in broad terms, to assess the effect of those strategies both on the United Kingdom's shipbuilding industrial base and on the costs of other current and future MoD ship programmes. 8. Using historical information and informed by previous studies, RAND also considered the likelihood of competitive pressures in bidding for subsequent batches of Type 45 reducing costs enough to overcome the cost penalties of distributing work among two producers, using break-even analysis. In addition, they considered the risks associated with different production strategies—ie whole ship or block construction. 9. RAND were provided with information by the Equipment Capability Customer organisation and Integrated Project Teams in the MoD and by five UK shipbuilders—VT, Marine, Swan Hunter, Appledore, and Harland & Wolff. Much of this information was commercially confidential, and the published report will necessarily exclude such data. THE INTERIM RESULTS WHICH INFORMED THE TYPE 45 PROCUREMENT STRATEGY DECISIONS 10. RAND is expected to publish its report on the overall study shortly (a copy of the report will be placed in the House of Commons Library). The interim results, which informed the decision in July 2001 to alter the Type 45 procurement strategy (described in the separate Type 45 memorandum), were made available to the MoD throughout June and July 2001. The key findings included the following:
— For strategies that directed Type 45 work to particular, multiple shipyards, allocation of blocks was more cost-effective than the allocation of whole ships, because the workforce would increase their productivity as they progressively gained more experience building those blocks. Unlike the unsolicited proposal, such a strategy would also have the benefit of keeping both shipbuilders involved in the Type 45 programme and potentially available to compete for future warship programmes. RAND identified risks in the construction, fitting and delivery of blocks, but believed these could be managed; — Discounting the possible effects of competitive pressure to produce savings on later batches of Type 45 (which were uncertain and would have depended on both VT and Marine continuing to bid), a revised strategy similar to that announced by the Secretary of State for Defence on 10 July 2001 should offer significant savings over the previous strategy; — While a strategy that directed the same blocks over the life of the programme to both VT and Marine was likely to cost more for Type 45 than the unsolicited proposal, the additional costs were likely to be recouped if they enabled competition to be pursued on other warship programmes. FURTHER WORK 11. RAND'S further work on the Type 45 procurement strategy study has included looking at some of the broader capacity and procurement policy issues in relation to the sector. The final report is expected to outline areas which require further investigation. In addition, RAND has been commissioned to assist the MoD in evaluating the build strategy proposals of the two competing primes in the Future Carrier (CVF) programme. 12. The Type 45 procurement strategy report is not expected to make specific recommendations concerning procurement strategies for future programmes, although it has helped clarify the issues regarding block production (which is likely to be employed for CVF). The study has also provided an indication of the industrial capacity required to sustain the future programme, suggesting that, while there is a current risk of excess capacity in the shipbuilding industry if MoD orders are not supplemented by export and commercial work, the workforce will need to expand considerably by the end of this decade to accommodate the forward warship building programme as currently planned. THE POTENTIAL VOSPER THORNYCROFT MOVE TO PORTSMOUTH 13. One issue with implications for the Type 45 programme, beyond the scope of work which RAND were commissioned to analyse in detail, was the potential impact on the Warship Support Modernisation (WSM) Initiative. THE WARSHIP SUPPORT MODERNISATION INITIATIVE 14. Through the WSM initiative, the Department is pursuing changes to warship repair and maintenance arrangements which should help address current over-capacity and achieve significant savings to the Defence budget. 15. Memoranda of Understanding (MoUs) outlining the principles within which negotiations would take place were signed in January 2001 with each of the interested companies—Devonport Management Ltd, Babcock Rosyth Defence Ltd, and Fleet Support Ltd. A separate MoU was also signed with VT to pursue the possibility of them moving their steel shipbuilding operations from Woolston, Southampton, to land leased at the Naval Base. The move was a commercial decision by the company and in their view contingent upon ship build procurement decisions—specificially, on the Type 45—by MoD. Such a move would lead to additional revenue to the Department, through the WSM initiative. On 18 February this year, VT announced that activity at their Woolston site would cease in 2003 and that they were going ahead with the move to Portsmouth. 16. Agreement has been reached on a 125-year lease with VT for land and buildings within Portsmouth Naval Base. VT are to invest in new steel ship building facilities on an area at the southern end of No. 3 basin, comprising three large dry docks (two of which would be filled in, in order to construct a large shipbuilding hall), extensive workshop facilities, storage facilities and a large office complex. 17. This lease is separate from the discussions that have been held over the last year with Fleet Support Ltd, and their proposals for partnering. Its agreement does not pre-empt decisions on the wider WSM Initiative, nor signal that decisions have already been made. 18. Final detailed proposals from the trades unions and from each of the companies were received in September 01. The trade union proposals hinged on co-operation with Naval Base management in the implementation of in-house efficiencies and also explored the avoidance of transfers to the private sector through alternative forms of partnering arrangements with industry. The company proposals covered the provision of engineering support plus related logistics activities and facilities and estates management at the Naval Bases. All options have been evaluated and compared for best value for money against an internal Benchmark. The results of this analysis are now with the Secretary of State for a decision on the way ahead. Source: Select
Committee on Defence, Session 2001-2002, Fourth
Report - Major Procurement Projects WARSHIP BUILDING STRATEGIES 8. In April 2001, the MoD commissioned consultants RAND Europe to
investigate potential procurement strategies for the MoD's warship
programme over the next 10-15 years. The study's impetus came from
difficulties encountered in negotiating the contract for the Type-45
destroyer, and many of its conclusions were directed towards mapping out
that programme's future direction. Type-45 procurement 9. The previous Committee produced a report on the Type-45 destroyer programme (and its associated PAAMS anti-air missile) in 1999. It highlighted the delays, cost overruns and collaboration difficulties of its predecessor programme—the Common New Generation Frigate—which led the UK to withdraw from it in April 1999 and launch its own national Type-45 destroyer programme. The MoD had appointed Marconi Electronic Systems (subsequently BAE Systems Electronics) as the Type-45 prime contractor in November 1999, without competition because the firm had previously been involved in the aborted collaborative programme. The MoD's plan, announced in July 2000, was for two principal sub-contractors to build the first three of what could be "up to" 12 vessels in the programme—BAE Systems Marine to build two, and Vosper Thornycroft one. The intention was to allow both BAE Systems Marine and Vosper Thornycroft to be able to compete for the assembly of further Type-45s, with ship modules, or 'blocks', to be able to be supplied by these and other shipyards. 10. In late 2000, however, one of the subcontracting shipyard firms, BAE Systems Marine, submitted an unsolicited proposal to build all 12 Type-45 destroyers. The MoD "could see that the Type-45 procurement strategy was not delivering results," and commissioned the RAND study to help inform its consideration of the new proposals. Sir Robert Walmsley told us that at December 2000, when the MoD placed the prime contract to build the first three destroyers, the ship's design immaturity was such that the prime contractor could not place sufficiently specific sub-contracts with either Vosper Thornycroft or BAE Systems Marine. The MoD had been looking for a risk-sharing agreement between the prime contractor and each of these two shipyards that would require the shipyards to take a risk that work would be added subsequently to the specification. As the Chief of Defence Procurement put it, "we were unable to persuade the prime contract office and the shipbuilders to share that risk." 11. While the MoD subsequently rejected the unsolicited BAE Systems Marine proposals, the RAND study allowed the Department to accept a new joint BAE Systems Marine/Vosper Thornycroft proposal for BAE Systems Marine to assemble six batch-one vessels from 'blocks' built by both firms. The revised contract, for six vessels, was placed with BAE Systems Electronics (the prime contractor) in February 2002. The RAND study also helped the MoD evaluate construction options for the Future Carrier (paragraph 25). 12. RAND took as its starting point (or 'reference case') the option of one shipyard producing all of the Type-45s, taking advantage of the cost efficiencies possible from 'learning' over a long production run, and then evaluated the possible additional costs or savings should the MoD instead follow one of four alternative approaches— (a) dividing (whole) ships between two shipyards, through competitions for each batch of three vessels; (b) keeping the then already planned division of work between BAE Systems and Vosper Thornycroft yards for the first three vessels, and then dividing subsequent ships between them through competition for each subsequent batch of three vessels (this essentially mirrored the procurement approach then already being developed by the MoD); (c) dividing the (whole) ships in the entire class between two shipyards, according to the MoD's direction and without competition beyond the initial decision point; and (d) dividing not just ship assembly but also the construction of major 'blocks' between two shipyards, by MoD direction and without competition beyond the initial decision point. 13. These four options for dividing the work would add to the production costs that could be achieved by a single shipyard, taking advantage of production efficiency savings that are possible when it is decided at the outset to place all of the work with one shipyard. According to RAND's calculations, the extra costs of dividing the work were 10-13% in the case of a whole-ship division between two yards (options a, b and c above), and about 5% for a division of ship 'blocks' between two yards (option d above). These extra costs would reflect the way that Type-45 construction overheads at the shipyards would be spread over fewer ships in each location when the work was divided, and Astute submarine construction overheads spread over fewer ships at the BAE Systems Marine yard at Barrow. The study then examined the likelihood that savings from competition at intervals (as in options a and b) could more than offset these extra costs. There is little reliable evidence on the savings possible from warship competition, and RAND's analysis gave a wide range of figures. Data from 31 ship and missile programmes suggested savings from competition averaging only 7%, with some programmes producing competition savings of up to 40% on the one hand, and others with extra costs of 30% on the other. 14. RAND concluded from their analysis that "historical competitive programme data suggest that there is approximately a 50:50 chance that competition, if it can be sustained over the programme as a whole, will result in equal or lower costs than a sole source. Therefore, there is no dominant answer to whether competition or sole source would be likely to lead to lower costs". The Chief of Defence Procurement put that in context against past MoD procurement policy— If you compare that with the robustness of [RAND's] conclusions about the Joint Strike Fighter, where they were absolutely against the introduction of competition, I found this slightly reassuring because we have persuaded ministers that a competitive strategy was good, partly to not put all your eggs in one basket and partly we thought it would probably lead us to lower costs. Here were RAND validating that initial strategy, not saying it was obviously right, but certainly not saying it was wrong. 15. Informed by the RAND analysis, the MoD decided to allocate the
Type-45's six 'blocks' between the two shipyards, with the same blocks
for each ship to be allocated to specific shipyards. Vosper Thornycroft
will build virtually all the ship forward of the bridge (two blocks), as
well as both masts, the funnel and the upper works. The BAE Systems
Marine Barrow shipyard will build the engine rooms (two blocks) and,
after ship-one, will assemble the ships. And BAE Systems Marine's Clyde
yard will make the stern and the operations room (each a separate
block), as well as assembling ship-one. 16. The unsolicited proposal from BAE Systems Marine was rejected because of a number of factors. First, BAE Systems had attached conditions about other equipment programmes in order to generate the proposed cost savings, and this would have entailed, we were told, "signing up to quite a major shift in our policy, which was to distribute warship building for competition reasons." We noted, nevertheless, that with the 'block' allocation strategy dividing all of the work at the outset, it provides, according to RAND, "no opportunity for continuing competition throughout the production programme, no basis for expecting any reduction from [initially agreed] costs, and minimal incentive for innovation. Therefore, this [block allocation] strategy must be evaluated on criteria other than that of [a comparison of the costs of other options]". The consultants concluded that— The option of having specified shipyards build the entire production run of some blocks should lead to costs that are slightly higher than the sole-source option but lower than the estimated cost of competitive dual sources for the entire ship, assuming little or no cost reduction through competitive pressures. The cost of a directed buy of blocks from two shipyards falls within the range deemed affordable by the MoD, retains the advantages of sustaining two shipyards, and is not critically dependent on subsequent, and uncertain, reductions of cost through competitive pressures. 17. Second, the MoD told us that under BAE Systems' unsolicited bid a large component of the Type-45 programme would have been undertaken at Barrow, resulting in congestion in that shipyard between modules of Type-45 destroyers and Astute submarines in the Devonshire Dock Hall: "Either Astute or Type-45 would not have to have much of a hiccup for the whole place to come to a grinding gridlock." We noted, however, that the RAND study also foresaw such risks with the 'block allocation' strategy that was finally settled upon, and they cautioned that under the MoD's new plan "scheduling of the construction and delivery of the blocks must be closely managed; a block that arrives late at the assembly yard [at Barrow] may cause significant delays in not only the Type-45 programme but also in the Astute programme". 18. In adopting the RAND strategy of seeking 'learning curve' efficiencies from allocating ship modules over a long production run, we questioned the MoD about its decision to offer a construction contract for only six vessels rather than for the entire twelve of the class. CDP told us that committing to 12 would have reduced the flexibility of the defence programme. He assured us, however, that the conditions for pricing the seventh and subsequent ships were linked to the productivity secured in the first batch ordered, while retaining flexibility over its equipment fit— I feel very comfortable with six. I feel very comfortable with the productivity that we will get on ship-seven onwards. I feel very comfortable that the economies of scale that we have on the equipment production by going for six are very sensibly close to those we would get for 12, but it is not as good, I accept that. But we now have the flexibility. We will decide when we order the second six ... what the modification state ... is for the equipment, and whether we want [for example] a different sonar or not. If we had gone for all 12, all that would be locked up now. The last ship comes off in 2014. That is a long time ahead. I do not like predicting the future with that much certainty. However,... we do have a budget for all 12 ships. There is a very sound operational case for all 12 ships. 19. It appears to us that that 'sound case' for all 12 of the
anti-air warfare destroyers will be the stronger if our carriers are not
to have a dedicated air-defence aircraft (we discuss later in this
report the early withdrawal of the air-defence Sea Harrier and the
non-air-defence role of its Joint Strike Fighter replacement). In its
response to our predecessor's report on the Type-45 programme, the MoD
stated that the balance of Type-45s and Future Surface Combatants—set
by the SDR at 12 and 20 ships respectively—would be subject to
"continuing critical operational analysis". It is our
hope that the 'sound case' to which CDP refers now settles the result of
that analysis, and that the MoD has accepted that it needs at least 12
destroyers.
Letter from the Ministry of Defence (10 April 2001) TYPE 45 ANTI-AIR WARFARE DESTROYER AND ITS PRINCIPAL ANTI-AIR MISSILE SYSTEM (PAAMS) The Common New Generation Frigate (CNGF), a
collaborative programme with France and Italy, was planned to replace
the UK's Type 42 destroyers in the early part of the century. CNGF
comprised two distinct collaborative programmes: the Principal Anti Air
Missile System (PAAMS) and the ship with its other systems (Horizon).
Whilst the contract for the development and initial production of PAAMS
has been placed, the "Horizon" project did not progress
satisfactorily. The three nations agreed on 25 April 1999 that it would
not be cost-effective to pursue a single prime contract for the ship and
that the tri-national Horizon programme would end upon completion of its
Project Definition and Initial Design Phase (Phase 1) at the end of
October 1999. The UK is now taking forward its ship programme,
designated the Type 45 Anti-Air Warfare Destroyer Programme, through a
national prime contract, building on the tri-national project work
already carried out and pursuing opportunities for co-operative
procurement in equipping the ships. OPERATIONAL REQUIREMENT 1. PAAMS and Horizon both derived from the single Tri-Partite Staff Requirement for CNGF. The requirement was approved by the three participating nations, the UK, France, and Italy, in December 1992. The UK requirement was, and continues to be in the national Type 45 programme, for a ship to provide effective area air defence against aircraft and missiles, to replace the Type 42 destroyers. At the start of Project Definition for Horizon in 1995, the intention was that PAAMS would provide an anti-air warfare capability sufficient to meet the most demanding threat foreseen. It was subsequently agreed that the initial capability sought should be sufficient to meet the most demanding threat forecast at the then expected in-service date for CNGF (2004), but that a growth path to provide the capability necessary to address future predicted threats would also be identified as part of this work. This remains the position for the Type 45, and we have revalidated that PAAMS will be able to meet the most demanding threat foreseen for 2007, when the Type 45 is due to enter service. TRADE OFFS 2. The principal cost/capability trade-off in the PAAMS programme has been the acceptance of a capability sufficient to meet the threat at ISD, rather than beyond. However, the PAAMS Full Scale Engineering Development and Initial Production (FSED/IP) contract (see Paragraph 12) includes a Growth Potential Study that examines the modifications that may be required to meet the threat beyond 2010. Studies into cost/capability and programme/capability trade-offs for Project Horizon to achieve an affordable CNGF were undertaken as part of Phase 1 of its programme which completed on 31 October 1999. This work has been carried forward into the UK's national programme. NUMBERS 3. The UK planning assumption is for the acquisition of up to 12 Type 45s. The Horizon Memorandum of Understanding, which was signed in 1994, assumed French and Italian procurement of four and six ships respectively. STRATEGIC DEFENCE REVIEW 4. The requirement to replace the Type 42 destroyers was scrutinised in the Strategic Defence Review. No changes were made to the operational case underpinning Project Horizon, which is now being addressed by the Type 45 Programme. MILITARY CAPABILITY 5. Type 45 destroyers equipped with PAAMS will provide area defence against aircraft and missiles, including local area defence against modern anti-ship missiles, to protect lightly armed or unarmed ships. In this role, the warships will support maritime assets across the range, from RoRo vessels through amphibious assault ships to aircraft carriers, in both UK national and allied/coalition operations. In addition, the Type 45—in common with all destroyers and frigates—will be a multi-role, general-purpose platform capable of operations across the spectrum of tasks, from peace support to high intensity warfare. EQUIPMENT REPLACED AND IN -SERVICE DATE (ISD) 6. The warship and PAAMS are planned to replace the capability currently provided in the Type 42 destroyer with its GWS30 Sea Dart weapon system. The Type 42s are scheduled to be withdrawn from service from the Type 45 first of class in service date and then at intervals staged to match the in-service dates of incoming hulls, with the exception of HMS Birmingham, which left service in 1999. 7. The ISD for CNGF was defined as the completion of Part IV Trials, which indicate that the ship is fit to enter service. The original estimated ISD was December 2002. This slipped, largely owing to the need to synchronise the warship and combat system programmes, and the internationally agreed ISD for CNGF was amended to June 2004. The last offer from the Horizon industry group pointed to a UK first of class CNGF being further delayed until 2007, although there was no detailed plan to support even this date. We are confident that the Type 45 first of class can be delivered within a similar timescale and with less risk. A 12 ship build programme could be completed in 2014. ISD definition has since been revised to reflect the availability of the Destroyer for operational tasking after sea training. This will normally be two months after the completion of Part IV Trials and sets the ISD for the first of class as November 2007. There is no effect on the programme as a result of this change. ACQUISITION APPROACH 8. Marconi Electronic Systems (MES) was appointed as the prime contractor for the Type 45 Programme on 23 November 1999 when it was also contracted to complete the Preparation for Demonstration (PFD) phase of the programme. This responsibility passed to BAe Systems when MES merged with British Aerospace. The appointment of BAe Systems (formerly MES) ensured the minimum of delay to the overall programme; that maximum benefit from the Horizon programme was carried forward into the UK national programme; and that the prime contractor would own much of the risk associated with that earlier work. On 20 December 2000, the Demonstration and First of Class Manufacture (DFM) contract, which is to complete the design and build of the first three ships, was placed with BAe Systems Electronic—the commercial title for the Type 45 Prime Contract Office (PCO). 9. The MoD's procurement strategy for the Type 45 was announced by Secretary of State in July 2000. Under this, the first of class (HMS Daring) would be assembled by BAe Systems Marine, with a substantial contribution from Vosper Thornycroft (VT), the second (HMS Dauntless) by VT, and the third (HMS Diamond) by BAe Systems Marine. Both companies are jointly involved in developing the design for the Type 45. The Prime Contractor will be letting sub-contracts for the build of the ships as soon as an affordable price at an acceptable risk has been agreed. 10. Under this strategy, it is intended that the Prime Contractor would manage competitions for the manufacture and assembly of subsequent batches of Type 45 destroyers with MoD oversight. It is expected that all UK shipyards would have the opportunity to bid for the manufacture of blocks for the second batch of ships (with the competition for assembly of this batch being limited to Marine and VT), and for both ship assembly and manufacture for subsequent batches. In line with Government policy, there are no plans to extend competition for warship construction for the Royal Navy to yards overseas. 11. Separately, the MoD and the Prime Contractor have received an unsolicited bid from BAe Systems Marine concerning the procurement approach to the Type 45 programme. This proposal is being evaluated and the MoD will consult with other Government departments before coming to a conclusion. 12. Collaboration continues with France and Italy on PAAMS. On 11 August 1999, France placed a contract on behalf of the three nations for Full Scale Engineering Development and Initial Production (FSED/IP) with the tri-national consortium EUROPAAMS acting as prime contractor. Prime contractor members were nominated by their governments and the UK member is UKAMS, which began as a jointly-owned subsidiary of Siemens Plessey, GEC and BAe SEMA. Following subsequent restructuring, UKAMS is now a wholly owned subsidiary of, and remains within, Matra BAe Dynamics. FSED/IP sub-contracts have been let by the prime contractor, and the placement of second tier sub-contracts is now well underway. 13. In order to get PAAMS to sea as quickly as possible, a strategy of incremental acquisition, from a baseline standard which is both affordable and achievable in the time to in-service date, has been adopted. This will enable the upgrade of capability throughout the life of the Type 45 Class to take advantage of future changes in defence requirements and technology advances. Following the placement of the Demonstration and First of Class Manufacture (DFM) contract on 20 December 2000 (see paragraph 26) we have been able to accelerate the Incremental Acquisition Plan (IAP) so as to enable a hull-mounted sonar (the top priority in the Plan) to be fitted to all the ships as they are built. ALTERNATIVE ACQUISITION OPTIONS 14. Before the 1996 PAAMS Programme MoU was signed, the UK considered a number of procurement options, including life extension of Type 42s and acquisition of off-the-shelf alternatives. COLLABORATION 15. The PAAMS Programme MoU and its FSED/IP Supplement were signed by France, Italy and the UK in March 1996. The UK share of the costs of PAAMS FSED/IP will be higher than those of France and Italy because we are bearing the costs of developing the Sampson Radar, which will only be used in the UK variant, and because the UK is making a contribution to the cost of the Franco-Italian technology in the Family of Future Surface to Air Missile Systems (FSAF Programme) being used for PAAMS. In addition, the UK currently plans to fit PAAMS to a significantly larger number of ships than the French and Italian navies combined. 16. The PAAMS Programme is managed by the tri-national PAAMS Programme Office (PPO) in Paris which reports to a tri-national Steering Committee. The aim is to delegate as much programme management work as possible to the PPO, although co-ordination of UK policy on PAAMS remains the responsibility of the Type 45 Integrated Project Team (IPT). Charters, agreed with France and Italy, set out the arrangements for co-ordinating PAAMS with the national Type 45 ship-programme and the new Franco/Italian bilateral Horizon programme. PAAMS is a candidate programme for administration within OCCAR (Organisme Conjoint De Co-operation En Matie"re D'Armament). The optimum date for joining is under debate. 17. At 1 February 2000, the PPO had 21 full time staff (10 from the UK, five Italian, and six French) and four part time staff (one Italian and three French). The UK also has one member of staff located with the FSAF Project Office in Paris. The tri-national Joint Project Office (JPO) located in London disbanded on completion of the Project Definition and Initial Design Phase of Project Horizon on 31 October 1999. The Type 45 IPT has an annual running costs budget of £4.5 million, including the salaries and expenses of UK staff working in the PPO and FSAF Project Office. 18. The reasons for the failure of the tri-national Horizon programme were the subject of analysis by the tri-national Horizon JPO and the Horizon Steering Committee. A short paper synthesised their and others' views into a single national "lessons learned" report and is informing the UK's approach to future potential collaborative ventures. A copy was provided to the Committee as an Annex to last year's (2000) Memorandum. 19. The potential for achieving economies of scale by co-operative purchasing of common items in the Type 45 and Franco-Italian Horizon programmes has been explored without success to date. However, a recent improvement in relations between the two ship programmes has allowed some more constructive dialogue to take place. EXPORT POTENTIAL 20. Export potential for the system as a whole is constrained by its high technological specification and cost, but elements of the system such as the selected prime mover (the Rolls Royce/Northrop Grumman WR21 gas turbine) and PAAMS (in particular its associated multi-function radar—SAMPSON in the UK variant) may have considerable export prospects to the value of several billion pounds over the next 15 years. There could be prospects in refit programmes as well as in new build hulls. There is a growing level of interest from the Australian Navy where their recent white paper envisaged three air defence destroyers from 2013. INDUSTRIAL FACTORS 21. For PAAMS, the Matra BAe
Dynamics UKAMS consortium was formed out of the companies possessing the
technologies crucial to the programme—notably the existing FSAF
contractors and the Sampson supplier Siemens Plessey Systems (now BAe
Defence Systems Ltd). PAAMS work share is constrained by existing FSAF
arrangements, but the aim is to achieve equitable work share throughout
the life of the programme as far as possible, subject to considerations
of cost-effectiveness and competition. 22. For the national warship programme, MES, as part of GEC, was part of the Horizon International Joint Venture Company (IJVC) and was, therefore, heavily involved with the work that was undertaken by the IJVC during the Horizon Project Definition and Initial Design Stage, which completed at the end of October 1999. To avoid further delay to the programme to replace the Type 42 destroyers, it was essential that the chosen prime contractor would be able to make maximum use of the outputs of the HORIZON definition work, and demonstrate an ability to resource the programme and the timelines in partnership with the IPT. SMART ACQUISITION 23. The Type 45 Programme is being undertaken within the principles of Smart Acquisition. The Type 45 IPT was formally established in September 1999, consisting of the MoD Project Team at the DPA and the single Prime Contractor Organisation (PCO) two miles away at Filton, Bristol. A charter, setting out the working ethos between the DPA and PCO, has been agreed. The Department is confident that the Smart Acquisition approach to requirements management, through the development of an initial operating capability, which could be progressively enhanced through a programme of incremental upgrading, will enable the first of class ship to be delivered on time and to cost. 24. The principal lessons for the
UK that were learned from the outcome of the Horizon programme, covering
the procurement strategy, risk reduction, communication with industry at
an early stage of the project, and affordability, have been built into
the Smart Acquisition Initiative. ACQUISITION PHASES 25. The PAAMS FSED/IP Phase contract was placed on 11 August 1999. This includes the supply of the systems and associated equipments and spares for the three nations' first of class ships. Systems for follow-on ships will be covered by a second supplement to the PAAMS programme MoU on which formal negotiations with France and Italy are close to conclusion. 26. For the warship, the prime contractor BAe Systems Electronics was contracted on 20 December 2000 to undertake the DFM phase. The next batch of three Type 45s is expected to be ordered around 2004. MILESTONES AND COSTS 27. The table below shows the currently planned milestones and approved budget at MPR 2000 price base:
Source: House
of Commons - Hansard With permission, Mr. Speaker, I would like to make a statement about the procurement strategy for the Type 45 destroyer. It is almost a year to the day since I announced to the House the decision to procure the first batch of three Type 45 destroyers, as part of a planned class of up to 12 ships. The Type 45s will be the largest and most powerful air defence destroyers ever ordered for the Royal Navy. Since that announcement, we have made good progress.
The contract to complete the design and build of the first three ships
was placed with BAE Systems on 20 December last year. Design work is
also progressing well. An integrated design team--whose members come
from the prime contractor, BAE Systems, and the two shipbuilding
companies BAE Systems Marine and Vosper Thornycroft--has been
established at Scotstoun for the last six months. In addition, a
number of key subcontracts, such as those for the Rolls-Royce WR21
engine and much of the combat system, have now been placed. There have
been a number of successful test firings of the Aster missile, the
ship's main armament, which is being developed with France and Italy. At the end of last year, however, BAE Systems Marine put forward an unsolicited proposal for the construction of all 12 of the Type 45 destroyers. We have been examining this proposal carefully to establish whether it offered better value for money for the taxpayer. We have also called on the services of RAND--a highly respected independent consultancy, experienced in this type of issue--to take a fresh look at possible procurement strategies for this programme in the context of the future warship programme as a whole. For the original procurement strategy to work, the
shipbuilding companies need to work closely together during the
development and manufacture of the first batch of ships already on
order. Such co-operation has not been encouraged by the existence of
the unsolicited proposal, nor by the prospect that the companies would
have to compete against each other for the second batch of ships. Vosper Thornycroft at Portsmouth, and BAE Systems Marine--on the Clyde and at Barrow-in-Furness--will both build and outfit substantial sections of each ship. The yards will continue to build the same sections throughout the programme, to increase efficiency and produce better value for money for the taxpayer. Under the strategy, a commitment has now been made to six ships in a planned class of up to 12 ships. That commitment has therefore doubled the number on order. This larger volume of guaranteed work, and a stable foundation to the project, will allow industry to make long-term investment decisions. Subject to negotiations being completed satisfactorily, I propose to adopt this revised approach, through which we are confident that we can secure demonstrable value for money. We are seeking demanding efficiency improvements from industry. The initial findings of the RAND study support this new approach. It reflects the best features of the BAE Systems Marine bid in terms of learning from experience from one ship to the next, but it also preserves the possibility of competition for a number of subsequent defence programmes. The new strategy gives a welcome level of stability to our warship building industry. Above all, it offers the best prospect of achieving the in-service date for the Type 45 destroyer, with deliveries to the Royal Navy starting in 2007. Any significant delay in that date would have significant operational and cost penalties. The new approach gives Vosper Thornycroft a defined and significant role in the Type 45 programme. The company will be able to move its operation, as planned, into the Portsmouth naval base, and to invest in new shipbuilding facilities there. The new approach also provides a solid foundation from which the company can sustain its export business and enter competitions for future naval programmes. The company estimates that the substantial level of high-quality Type 45 work should sustain a steady level of some 650 jobs well into the current decade. Type 45 work, together with the first three Astute class submarines and the order for two alternative landing ships (logistic) announced last year, should support BAE Systems Marine shipbuilding for the rest of the decade. The company's own estimates show that, once the total construction programme is up and running, work on Type 45 vessels can sustain a steady level of some 1,200 jobs on the Clyde and about a further 900 jobs at Barrow-in-Furness. I understand that, in the light of this package of work, the company has no plans to close any of its yards. This revised procurement strategy for the Type 45 destroyer is a further example of the benefits of smart acquisition, which involves an integrated team approach by the key industrial partners. The companies involved have welcomed this new strategy, and I commend it to the House.
NOTE 1. Following Main Gate Approval in July 2000, figures show: total approved level of expenditure for six ships and prior approvals covering predominantly PAAMS FSED/IP, HORIZON and T45 Assessment phase (Latest Approval); against the current estimate of expenditure (Current Estimate). Last year's figures therefore excluded the financial approval for six ships. Expenditure is calculated, as for MPR 2000, at out-turn prices on a resource basis. 28. Delays in the PAAMS programme were largely related to slow progress in agreeing a procurement strategy with partners and then in negotiating a satisfactory contract. 29. The table below shows cash expenditure to date (ie excluding accruals and interest on capital). Forward commitment amounts to £2,168 million (this figure has been increased from the one reported last year, since it now includes the Type 45 DFM commitment). For the projected class of 12 ships, the total cost is expected to be of the order of £8 billion, including £2.8 billion total acquisition costs for PAAMS (calculated on a resource basis, as in MPR 2000). The years of peak expenditure are expected to be 2007-08 and 2008-09.
NOTE 1: Excludes aborted NFR Programme and other pre-CNGF costs. 30. Under the terms of the Horizon MoU, the UK carried liabilities in respect of additional expenses associated with winding up the Horizon JPO/International Joint Venture Company (IJVC). Following completion of the contract, the IJVC has been wound up without any claim on the MOD. The JPO was closed on 31 October 1999, no additional expenses being incurred. IN -SERVICE SUPPORT 31. As part of the initial contract to procure the first three Type 45s, BAe Systems has undertaken to study options for Contractor Logistic Support (CLS) of the platforms. These reports will be prepared in consultation with the DPA and are expected to be completed by the end of 2001. The development of CLS in parallel with ship design activity is encouraging the Prime Contractor to consider low cost maintenance when selecting ship's equipment and material. The decision to pursue these recommendations, in whole or in part, will be based on their potential to improve support and produce savings, bearing in mind any requirement to keep elements of support within the uniformed sector for strategic reasons. 32. Ship staff training and spares storage are potential bottlenecks. Increased use of experienced Type 42 crew would reduce the load on pre-joining training, and thus the training bottleneck, when the Type 42 replacement comes into service. Use of computer-based training will reduce disruption to operational programmes. "Just in Time" stock management techniques will reduce the volume of spares to be held, thus minimising the need for new storage facilities during the transition period. It is planned that a CLS contract will be in place a year before ISD, to provide experience in its operation during trials. FRONT LINE, STORAGE AND RESERVE 33. Assuming a class of 12 ships, nine or 10 would, on average, be available at any one time to the Commander-in-Chief Fleet for tasking, while two or three would be undergoing maintenance, including one or two in refit. It is not planned to hold any ships in storage or as in-use reserves. INTEROPERABILITY 34. Commonality of many of the PAAMS systems and sub-systems, including in particular the Aster missile, will ensure a good level of interoperability with both France and Italy. In the warship context, the requirement for interoperability will remain a high priority. DISPOSAL OF EQUIPMENT REPLACED 35. The sales potential of Type
42 warships is being considered. IN -SERVICE LIFE 36. The Type 45 is planned to have an in-service life of 25 years. DEVELOPMENT POTENTIAL 37. The Type 45's systems and sub-systems will be updated as appropriate throughout the life of the system to take account of developments in the operational environment. It is likely that the future aircraft carrier programme, currently in its assessment, and the future surface combatant currently in the early stages of concept development, will both draw on major elements of the Type 45. Source: Ministry
of Defence Press Release HOON ANNOUNCES FIRST TYPE 45 DESTROYERS Defence Secretary Geoffrey Hoon today announced the construction of the first three Type 45 Anti Air Warfare Destroyers for the Royal Navy, within a planned class of up to 12. The MOD will negotiate a £1 billion order for the construction of the first three ships of the class with prime contractor BAE SYSTEMS later this year. The programme is expected to sustain up to 5,500 jobs in BAE SYSTEMS Marine and Vosper Thornycroft shipyards and in other defence industries in the UK. Mr. Hoon said: "The Type 45 will be the biggest and most powerful air defence destroyers ever ordered for the Royal Navy and their construction will be a tremendous opportunity for British industry. When these new ships enter service from 2007 they will represent a huge improvement in capability over the Type 42 destroyers they will succeed. "The innovative ways that we are procuring these ships, using modular methods of construction and batch ordering from the start of the programme, demonstrate the changes we are making under the Smart Procurement Initiative. Innovations such as these are the key to delivering equipment to the Armed Forces faster, cheaper and better. "I am also pleased to announce that the Type 45 will be known as the ‘D’ Class and the first two ships of the class are to bear the historic names HMS DARING and HMS DAUNTLESS." An order for the construction of the second batch of ships is expected to be placed with the prime contractor around 2004. The main armament of the Type 45 is the world leading collaborative UK/French/Italian Principal Anti Air Missile System (PAAMS), which is designed to defeat salvo attacks by new generations of anti-ship missiles. More information about the Type 45 - ends -NOTES TO EDITORS 1. The first and third ships of the class will be assembled by BAE SYSTEMS Marine and the second ship will be assembled by Vosper Thornycroft. The First BAE SYSTEMS ship will carry the name DARING and the Vosper Thornycroft ship will carry the name DAUNTLESS. The name of the third ship will be announced in due course. 2. Contracts for the construction of the first three ships are expected to sustain about 1,500 jobs at BAE SYSTEMS Marine and about 1,500 at Vosper Thornycroft. A further 2,500 jobs are expected to be sustained elsewhere in the UK in defence industries. 3. BAE SYSTEMS was appointed prime contractor for the Type 45 project last year and is class design authority and is responsible for managing the programme and running competitive procurements for all ship equipment with the exception of PAAMS, which is being procured by MOD collaboratively with France and Italy. 4. The Type 45 is projected to have a deep load displacement of about 7,200 tonnes, making it the largest destroyer ever to enter service with the Royal Navy and the largest general- purpose surface warship (excluding aircraft carriers and amphibious ships) since the Tiger class cruisers of the 1941 programme. 5. The Smart Procurement Initiative is a MOD programme to overhaul the way the Department has traditionally bought military equipment and find new and innovative ways of doing business to deliver equipment to the Armed Forces faster, cheaper and better. The Defence Procurement Agency Type 45 Anti Air Warfare Destroyer project team, led by Brigadier Keith Prentice and the prime contractor Project Office, led by Brian Phillipson, have worked together in an integrated project team to deliver the project to extremely demanding cost, time and performance requirements. 6. The Type 45 is planned as a class of up to 12 ships with the first ship entering service in 2007 and the last in 2014. Total cost of the project including weapons systems is estimated to be £6 billion. The Type 45 will succeed the Royal Navy’s existing force of 11 Type 42 destroyers, which entered service between the mid 1970s and the mid 1980s 7. The Type 45 equipped with PAAMS will provide area defence against aircraft and missiles including modern anti-ship missiles. In this role the Type 45 will support maritime assets across the range, from aircraft carriers to logistics vessels. In addition, the Type 45 will be a highly potent, multi-role, general purpose platform capable of operations across the spectrum of tasks from peace support to high intensity warfare. It will also operate either the anti submarine version of the Merlin helicopter, or Lynx. 8. For further information, please contact Peter Haslam at the Defence Press Office on 020 7218 7950. 9. Further information is available on the Type 45 Destroyer web-site at www.type45.com 10. The web-site address for the RN pages is www.royal-navy.mod.uk/type45 and images can be sent from the RN Photographic Office on 020-7218-2016. 11. The MoD web-site can be found at http://www.mod.uk Alternatively you may contact the MoD Press Office by e-mail at press@dgics.mod.uk Source: Select
Committee on Defence, Session 1999-2000, Tenth
Report - Major Procurement Projects Further Memorandum from the Ministry of Defence (19 April 2000) TYPE 45 ANTI-AIR WARFARE DESTROYER AND ITS PRINCIPAL
ANTI-AIR MISSILE SYSTEM (PAAMS) OPERATIONAL REQUIREMENT TRADE OFFS NUMBERS STRATEGIC DEFENCE REVIEW MILITARY CAPABILITY EQUIPMENT REPLACED AND IN -SERVICE DATE (ISD) 7. The ISD for CNGF was defined as the completion of Part IV Trials, which indicate the ship is fit to enter service. The original estimated ISD was December 2002. This slipped, largely owing to the need to synchronise the warship and combat system programmes, and the internationally agreed ISD for CNGF was amended to June 2004. The latest offer from industry pointed to a UK first of class CNGF being further delayed until 2007. We are confident that the Type 45 first of class can be delivered within a similar timescale and the 12 ship build programme is planned to complete in 2014. ISD definition has since been revised to reflect the availability of the Destroyer for operational tasking after sea training. This will normally be two months after the completion of Part IV Trials. There is no effect on the programme as a result of this change. PROCUREMENT APPROACH 9. The MoD's concern is to maintain a competitive base, not only for the Type 45 build programme but also for the downstream Future Surface Combatant. With this in mind, Vosper Thornycroft, VT, is also being involved in the Type 45 PFD contract. Following successful completion of this phase, the next stage will be a contract with the prime contractor for the demonstration and first of class manufacture, DFM, phase ie including the build of the first-of-class ship planned for award later this year. The MOD and the company will then have higher confidence in a programme that can meet the Royal Navy's requirement on time and within budget. Subject to satisfactory progress, the DFM prime contract will also involve VT and Marconi Marine (YSL) Ltd with a view to allowing the efficient construction of Type 45 Destroyers at both yards. The detailed contractual arrangements for the DFM phase remain under consideration and it remains the MoD's intention to oversee the competition for follow-on ships. In line with MoD policy, there are no plans to extend competition for warship construction to yards overseas. 10. Collaboration continues with France and Italy on PAAMS, and, on 11 August 1999, France placed a contract on behalf of the three nations for Full Scale Engineering Development and Initial Production, FSED/IP, with the tri-national consortium EUROPAAMS acting as prime contractor. Prime contractor members were nominated by their governments and the UK member is UKAMS which began as jointly owned subsidiary of Siemens Plessey, GEC and BAe SEMA who were selected on their industrial capabilities to provide the equipment required—see paragraph 17 below. Following subsequent restructuring, UKAMS is now a wholly owned subsidiary of Matra BAe Dynamics. FSED/IP sub-contracts have now been let by the prime contractor to all the main equipment suppliers. ALTERNATIVE PROCUREMENT OPTIONS COLLABORATION 13. The PAAMS Programme is managed by the tri-national PAAMS Programme Office, PPO, in Paris which reports to a tri-national Steering Committee. The aim is to delegate as much programme management work as possible to the PPO although co-ordination of UK policy on PAAMS remains the responsibility of the Type 45 Integrated Project Team (IPT). A new charter that sets out the arrangements for co-ordinating between PAAMS and the national Type 45 ship-programme has been agreed with France and Italy, in place of the previous PAAMS/Horizon charter, as has a charter between PAAMS and the new Franco/Italian bi-lateral Horizon programme. 14. At 1 February 2000, the PPO had 21 full time staff: 10 UK, five Italian and six French; and four part time staff, one Italian and three French. The UK also has one member of staff located with the FSAF Project Office in Paris. The tri-national JPO located in London disbanded on completion of the Project Definition and Initial Design Phase of Project Horizon on 31 October 1999. The Type 45 IPT has an annual running costs budget of £4 million including salaries and expenses of UK staff working in the PPO and FSAF Project Office. 15. The reasons for the failure of the tri-national Horizon programme were the subject of analysis by the tri-national Horizon Joint Project Office, JPO, and Horizon Steering Committee. A short paper which synthesised their and others' views into a single national "lessons learned" report which could be used to inform the UK's approach to future potential collaborative ventures has been compiled and a copy is attached at Annex A. 16. The potential for achieving economies of scale by co-operation purchasing of common items in the Type 45 and Franco-Italian Horizon programmes has been explored without success to date. An opportunity exists later in the year to revisit the question when Type 45 and Horizon equipment selections will have been identified. EXPORT POTENTIAL INDUSTRIAL FACTORS 19. For the national warship programme MES, as part of GEC, was part of the Horizon International Joint Venture Company, IJVC, and was thus heavily involved with the work that was undertaken by the IJVC during the Horizon Project Definition and Initial Design Stage which completed at the end of October 1999. To avoid further delay to the programme to replace the Type 42 destroyers, it was essential that the chosen prime contractor would be able to make maximum use of the outputs of the HORIZON definition work, and demonstrate an ability to resource the programme and the timelines in partnership with the IPT. SMART PROCUREMENT 21. The principal lessons for the UK learned from the outcome of the Horizon programme covering, procurement strategy, risk reduction, communication with industry at an early stage of the project and affordability, are already built into the Smart Procurement Initiative. ACQUISITION PHASES 23. For the warship, the prime contractor BAe Systems was contracted in November 1999 to complete the Preparation for Demonstration, PFD, phase. Phase 1, Project Definition and Initial Design, of the aborted tri-national Horizon programme completed on 31 October 1999 and the prime contractor has indicated that he will pull through some 70% of Horizon output into the national Type 45 Programme. 24. The PFD contract is planned to complete later this year, following which Main gate approval will be sought for DFM, phase—see paragraph nine above. MILESTONES AND COSTS 25. Table 1 below shows the currently planned milestones and approved budget for MPR99 price base. Table 1
26. Delays in the PAAMS programme were largely related to slow progress in agreeing a procurement strategy with partners, and then in negotiating a satisfactory contract. 27. Table 2 below shows expenditure to date, updated to 1999 prices. Forward commitment amounts to £881 million. For the PAAMS FSED/IP and national warship contracts, the total cost is expected to be of the order of £6 billion including £2.2 billion total acquisition costs for PAAMS. The years of peak expenditure are expected to be 2005-06 to 2007-08. Table 2
Note 1: Includes aborted NFR Programme costs, around £7 million. 28. Under the terms of the Horizon MOU, the UK carried liabilities in respect of additional expenses associated with winding up the Horizon Joint Project Office/International Joint Venture Company, IJVC. Following completion of the contract, the IJVC has been wound up without any claim on the MoD. The JPO was closed on 31 October 1999, no additional expenses being incurred. IN -SERVICE SUPPORT 30. Ship staff training and spares storage are potential bottlenecks. Increased use of experienced Type 42 crew would reduce the load on pre-joining training, and thus the training bottleneck, when the Type 42 replacement comes into service. Use of computer based training will reduce disruption to operational programmes. "Just In Time" stock management techniques will reduce the volume of spares to be held, thus minimising the need for new storage facilities during the transition period. FRONT LINE, STORAGE AND RESERVE INTEROPERABILITY DISPOSAL OF EQUIPMENT REPLACED IN -SERVICE LIFE DEVELOPMENT POTENTIAL
Source: Select
Committee on Defence, Session 1998-1999, Eight
Report - Major Procurement Projects The National Type-45 warship 26. The MoD told us that it was confident that it could deliver the ship on time, by making as much use as possible of the results of Horizon's competitive Project Definition work still underway. The UK is already bound financially to support this work, which is due to be completed in October this year. Marconi Electronic Systems' involvement in the Horizon programme clearly puts it in a good position to take forward the national warship programme, but the MoD told us that its ability to use the Horizon 'Phase 1' work was not determined by its choice of prime contractor. Nevertheless, the selection of a prime contractor for the Type-45 would be heavily influenced by bidders' willingness to utilise this Phase 1 work— Until we have appointed a prime contractor for the national programme we will not know [how much of the Phase 1 work is usable] ... We have made substantial progress in designing the ship and we must use that to save time in moving forward with the national programme. It will be for the prime contractor to decide, but a great deal of our consideration of who that prime contractor should be will rest on his ability and willingness to exploit the results of the work undertaken so far. To facilitate competition for the prime contractor, all contenders should be given access to the results of the Project Definition and Phase 1 work already undertaken. 27. While it remained a possibility that new competitions would be held for the ship's 'development programmes' (Figure 2), the MoD would be looking at the results of the earlier competitions for the scope for adapting them to a national solution. The Horizon Joint Project Office is negotiating with the bidders to make their offers available for the Type-45, and it will also do so for any French/Italian follow-on ship programme. Considerable effort and cost has been expended on the 'development programme' competitions, and the MoD should indeed seek to make good use of the results to save further cost and time. Potential prime contractors for the Type-45 will have to weigh up the risk and cost of utilising the work already done under Horizon, and it is not clear whether any useful purpose would be served by the MoD compelling them to re-run these competitions. 28. The design of the new Type-45, like the Horizon frigate before it, will be influenced and constrained by its primary role as a platform for deploying PAAMS. In particular, the ship will need to be able to support an elevated aerial structure for the heavy Sampson radar in order to maximise the distance at which threats can be identified, and it will need a beam and depth able to accommodate the large missile silos of the PAAMS system. When such requirements are combined, the MoD expects that the ship would have to be nearer 6,000 tonnes than the 4,000 of, for example, the Type 23 frigate. The ship cannot therefore be evolved from the Type-23. The US Aegis destroyer is sufficiently large—at 8,500 tonnes —but the MoD considered it unaffordable. 29. As a national programme, however, there is scope for design flexibility in other areas. Collaborative projects inevitably involve some compromise in arriving at a common specification (this is accepted because any additional costs involved should be outweighed by the savings from economies of scale in development and production). Accordingly, in turning to a national solution some elements of the collaborative Horizon warship may now be cut back, to suit the UK's requirements more closely. A notable example is the high cost of the Electronic Warfare System (EWS) for Horizon, which might have cost £180 million to develop and £14 million to manufacture for each ship. The Common EWS requirement was unaffordable within the development funds available, but a reduced requirement was never properly agreed between the three partner countries. For the UK's national warship, however, the EWS will be governed by available funding from the outset, with enhancements coming later. By removing non-UK requirements, the MoD expects the costs of the EWS to be only a third as high. Savings would also be possible in regard to the Combat Management System if missile defences could be simplified. CDP told us that— We will probably avoid an inner layer missile system which was part of Horizon. It was a system designed to defend the ship against what are called leakers— in-coming missiles which get past the PAAMS system. What is interesting about that is not that it is just a technicality, it is the complication of having two missile systems, and the operational handover and the split-second timing that is necessary to do that makes the task of the combat management system enormously more difficult. So by deciding that PAAMS is good enough, why do we need an inner layer missile system on introduction into service? We have saved money on the production cost of the ship and, just as important, we have hugely simplified the combat management system. That is the type of trade-off we are looking at. The MoD must of course avoid gold-plating for the Type-45, and it is sensible to throw overboard the top-heavy and expensive non-UK elements of Horizon that helped to capsize that project. It may be possible to make savings by carefully trading off cost and capability, but we trust that this does not jeopardise the enhancements in naval air defence capability, which we will still need to have early in the next century. 30. Not all of the benefits offered by pursuing a national warship programme involve cost savings and trimming back capabilities. It will be easier, for example, to adapt the requirement to provide additional evolving capabilities sought by the UK. When we visited the US in October 1999 we were briefed on the flexibility afforded by the Lockheed-Martin VLS-41 missile launcher. While the French/Italian 'Sylver' PAAMS launcher is tailored for the anti-air 'Aster' missile, the VLS-41 (already in service on many US Navy ships) can accommodate missiles fulfilling a number of roles—tactical ballistic missile defence, land-attack, anti-surface ship and anti-submarine, as well as anti-air warfare. We were told that the UK has already ordered the Sylver launcher for its first-of-class Type-45. Lockheed-Martin were concerned however that should the MoD wish to extend the role of the ship beyond simply an anti-air warfare capability, a ship design focussed exclusively on the space and weight requirements of the Sylver launcher might preclude the use of the larger and heavier VLS-41 system in follow-on batches of the warship. 31. The MoD should take full advantage of the opportunities afforded by the national Type-45 programme to explore the potential for using alternative sub-systems, looking beyond the equipment available from the three former partner countries. The Future Surface Combatant will no doubt seek to address the evolving requirements for capabilities currently provided on the Type-23s, which it will succeed. More immediately, however, we recommend that the MoD should explore the opportunities for designing the Type-45 to allow maximum flexibility for potential capability enhancements. In the particular case of the missile launcher for the Type-45, we expect the MoD to examine carefully the scope for designing-in the ability to fit a wider range of missile types including the sort of Tomahawk land-attack missiles (TLAM) that the Royal Navy used in Operation Allied Force. It may be possible to adapt the Sylver launcher at some future point for use with more types of missile, but a more flexible option would be to provide enough space in the ship to accommodate a VLS-41 launcher. This would also have the advantage of ensuring that there was potential for competition for the rest of the class. 32. As regards competition for supplying the new warship, CDP was careful not to restrict options for integrating the warship systems to only UK prime contractors, although Government policy is that UK warship hull construction should only be undertaken in UK yards. National hull construction is the approach also adopted by other countries with an indigenous shipbuilding industry. It seems that such an approach by each of the Horizon partners precluded some of the potential savings, as the design of each country's ship was to have differed, to reflect incompatible computer-aided design tools and cranage capacity in each country's shipyards. CDP was clear however about the advantages of constructing the UK ships in British yards— I do not see any reason to move away from our policy of constructing our warships in this country. In my view to do so without securing reciprocal arrangements with other countries would be a type of suicide note. I also think that, not just in commercial terms, but also [because of] the extreme complexity of building a warship and integrating all its systems, keeping control of security issues and the many other technical features of warship construction. When it comes to the systems, to insist on those being developed in companies operating in Britain would not be sensible. I think that would be penalising the Royal Navy. You only have to look at the armament of a ship with Harpoon missiles, or Exocet in the past, and many other pieces of equipment which have come from overseas, to realise that if you insist on having all the systems developed in this country we will pay both a financial price and one of military capability. 33. To build the warship, the MoD has three "obvious shipyards" in the UK: Yarrow on the Clyde, GEC Marine (VSEL) at Barrow-in-Furness and Vosper Thorneycroft at Southampton. With Yarrow and Barrow under the same ultimate ownership of BAe/GEC Marconi, the MoD is keen that Vosper Thorneycroft also can be a credible competitor, not least because competition will be needed for follow-on production batches of the class in order to retain incentives for the shipyards to improve their performance. The firm would have to enlarge its facilities to build the ship at its Woolston yard. The MoD's strategy to secure this competition means that while Marconi Electronic Systems has been given start-up work and a subsequently appointed prime contractor will undertake 'Preparation for Demonstration' work, the subsequent 'Demonstration and First-of-class Manufacture' contract will stipulate a warship design that lends itself to building the ships in the yards both of Vosper Thorneycroft and Yarrow Shipbuilders. 34. Now unfettered by the incompatibilities of the
equipment selections and competition policies of Horizon's partners, the
MoD acting alone can now make sensible procurement choices for the
Type-45's key systems. But that must mean keeping an open mind on
potential bids from the existing tri-national Horizon consortia and
other foreign systems-integration firms, as well as from UK suppliers.
Warship building itself, however, remains a closely protected industry
by all countries with an indigenous capability, and in that light, like
CDP, we see no reason to review unilaterally the policy not to allow
warship building to go overseas. 35. The MoD intends to procure the Type-45 warships in more than one batch. It considered that making a first-of-class prime contractor responsible for running the competitions for follow-on production would involve too much risk and possible conflicts of interest. The MoD told us that— Competing for follow-on ships in batches increases the pressure on tenderers to reduce prices. Savings of around 30% were achieved between the first-of-class vessel of the Type-23 and the 14th hull of that class and we do not believe that these savings would have been as large without the pressure of competition. We anticipate achieving a similar level of savings in the Type-45 programme. We welcome the MoD's intended approach of overseeing the competition for the follow-on vessels, rather than giving this responsibility to the first-of-class prime contractor. 36. A batch approach would also facilitate future capability enhancements. The MoD told us that although the basic ship design should remain the same, changes in some aspects of the design are inevitable in the time it would take to produce all 12 vessels. As CDP put it, "it is virtually inconceivable that some systems will not be capable of improvement, even if it is only by modifying the software". 37. CDP outlined the timetable now envisaged for procuring the Type-45, with an in-service date of 2007— The first bottleneck is to make sure we place the PAAMS contract this summer.[ ... The second bottleneck is to order the ship next year, the first of class ship. [A 'Preparation for Demonstration' contract will be completed by late 2000, when approval will be sought for placing a 'Demonstration and First-of-class Manufacture' contract.] ... It is important that we make use, where appropriate, of the work that has already been accomplished in Horizon Phase 1, because otherwise that sort of timetable would be far too optimistic. We then have about a five year ship design and construction programme. There is usually about a year and a half of design work before we start cutting steel and building the first module. We are satisfied that that is rational because that is what it takes on similar programmes. If all that comes to pass, contractors' sea trials will take place before the end of 2005. Then there will be a very demanding work-up of the systems, particularly the PAAMS system, in extensive trials on the first of class ... Then there will be operational work-up for the crew, and the ship will enter useful military service with the Royal Navy before the end of 2007. That is not an optimistic timetable. That is a timetable that is absolutely founded on our own experience of how long it takes to bring ships into service. CDP also told us of his determination to keep the programme on track— I hope I have made clear the determination to make sure PAAMS remains the critical path. We must not allow the ship to somehow delay the introduction into service of PAAMS. ...It was the fact we settled the PAAMS terms and conditions last autumn which has really brought the ship programme to a head because of a determination to keep them alive. ...We are not going to be blown off-course on the national programme, [and this is] because we have a timetable set by PAAMS. We welcome the CDP's determination to keep momentum
behind the Type-45 programme.
Source: Select
Committee on Defence, Session 1998-1999, Eight
Report - Major Procurement Projects Supplementary memorandum submitted by the Ministry of Defence on the Horizon Programme for the Common New Generation Frigate Q1. The committee would like a more detailed explanation of the factors behind the decision not to proceed with the Horizon programme; including the causes of delay with that project and the measures that the MoD took to try to speed up progress, and the MoD's view of the reasons for industry's difficulty in forming a Prime Contractor for Horizon. A1. There were a number of factors that caused delay to the Horizon programme. First, the three Governments wanted progress with the ship to match progress on PAAMS. It was important that these two elements of the CNGF programme should maintain alignment to avoid potentially nugatory expenditure if one element failed to make progress. In September 1996 the three nations agreed that work on Horizon should be slowed down pending a satisfactory resolution of problems on PAAMS. Adequate progress was achieved by April 1997, and it then took several months for industry to mobilise itself to move forward again on Horizon. Second, major delays to Horizon were caused by the Horizon International Joint Venture Company's (HIJVC) difficulty in agreeing and then executing the Phase 1 (or project definition) contracts. These had been divided into two batches so as to limit the financial exposure of the nations, but it took the HIJVC and their shareholders from May until September 1997 to agree the Batch 1 contract. It then took several months longer than planned to complete the work. The Batch 2 contract took from March to August 1998 to negotiate and has been delayed. However, all work under this contract is due for completion by the end of July 1999. Third, the inability of industry to provide an affordable offer, after being given numerous opportunities to do so, was also a delaying factor. Considerable effort had been expended by the Joint Project Office (JPO) and the HIJVC in identifying cost and risk reduction measures and by the Operational Staffs of the three nations in prioritising the operational requirement. Several measures were taken to try to speed up progress. The Horizon Steering Committee (HSC), in which the three nations had equal voice, was anxious to make rapid progress and, in 1997, adopted a JPO proposal for a revised programme, under which all major decisions would have been made by the end of 1998. The remaining difficulties on PAAMS were resolved in October 1998, resulting in a tri-nationally agreed contract proposal. However, it became evident that insufficient progress was being made by the HIJVC to demonstrate that the PAAMS contract could proceed in alignment with the platform. The company and its shareholders were repeatedly warned that further delays could not be accepted. Furthermore, it became increasingly clear that the industrial structure would have to undergo radical change if the HIJVC was to be entrusted with the design and construction of the three national first of class ships. In November 1998 the HIJVC was asked to table proposals for an improved industrial structure and to submit an affordable offer by the end of the year. After an unsatisfactory response, it was given another opportunity in January 1999, and a final chance in March 1999. There was no satisfactory response. The key difficulty in forming an effective industrial organisation centred on the selection of a Prime Contractor able to direct its subcontractors to the extent required to manage the overall risk. In essence, the very wide range of companies involved could not agree on one of them becoming an effective leader. This prevented the nomination of an empowered prime contractor taking full responsibility for the project, which is fundamental to best procurement principles. Q2. The Committee would also like information on the events leading up to the decision to pull out of Horizon, including the conditions for its continuation laid down by each of the three MoDs. A2. As stated by CDP in reply to Q3 of the evidence session, the UK did not withdraw from Horizon. The three countries involved agreed not to proceed to the next phase. All Horizon Steering Committee (HSC), National Armament Directors (NADs) and Defence Ministers' decisions were taken tri-nationally. The lack of progress on Horizon became crucial once negotiations with industry on the tri-national PAAMS contract were completed on 28 October 1998. The sequence of events following the first unsatisfactory proposals from the Horizon International Joint Venture Company (HIJVC) for robust industrial arrangements and an affordable offer for Horizon Phase 2 were: — 11 November 1998—The HSC met, following which the HIJVC shareholders were instructed to prepare proposals for more robust industrial structure and to submit an affordable offer for consideration by the HSC at their next meeting on 10-11 December 1998. — 10-11 December 1998—The HSC met but no new proposals were received from the HIJVC. Recommended that the NADs meet to discuss ways of resolving difficulties. — 14 January 1999—The NADs met and agreed to give the HIJVC till end of February to provide details required. — 1 March 1999—Revised proposals from the HIJVC received. — 9-10 March 1999—The HSC met to discuss the latest HIJVC proposals and advised the NADs that they were above budget; were deficient in key respects; did not commit industry to deliver performance, and gave insufficient attention to through life costs. The HIJVC also failed to identify an agreed industrial entity that could fill the Prime Contractor role effectively. — 22 March 1999—The NADs and Defence Ministers met; the latter agreeing to give industry four more weeks to produce a convincing timetable and industrial structure. — 9 April 1999—Marconi Electronic Systems (MES), the UK shareholder in the HIJVC, submitted a proposal for a Prime Contractor-led organisation but this was not endorsed by the other shareholders. — 14 April 1999—The HIJVC met with the HSC and confirmed that it was not able to provide an agreed industrial structure or timetable. — 21 April 1999—The NADs met and recommended to Ministers that Phase 1 should be completed, but that the development and production of the warships should continue on a non tri-national basis. — 25 April 1999—Defence Ministers met and agreed to terminate the tri-national Horizon Programme upon completion of Phase 1. Q3. How much of the £180 million estimated cost of the Electronic Warfare System has been spent? What aspects or capabilities within the planned Horizon EWS are not now expected to be required in the national Type 45 A3. The £180 million was industry's estimate of the development costs to achieve the full performance requirement within the time constraints; none of this has been spent. The three nations set a budget of £10.1 million for the Electronic Warfare (EW) Project Definition studies that precede development and £9.95 million of this is contractually committed (£2.1 million paid by 28 June 1999.) These costs are shared equally between the three nations. Early work indicated that the performance required from the Horizon Electronic Warfare System (EWS) was unachievable within the development funding available. Differences in national operational doctrines made it difficult to agree priorities for elements of the EWS requirement when considering options for cost-capability trade-offs. As a result, a reduced requirement consistent with the level of funding was never properly agreed between the nations. Industry will now be invited to propose a solution to the UK's requirements alone, but this will be governed by the available funding, substantially reduced from that allocated to the Horizon EWS. Until we receive offers from industry it is not possible to state which aspects or capabilities planned for the Horizon EWS will form part of the Type 45 EWS; but it is likely that reduced, although still adequate, overall performance coupled to an incremental acquisition approach will be part of the national solution. Q4. The Committee would like a note with further information on the competition for the Combat Management System. This should include details of the procedures (and the organisations involved) for assessing the competition; information on the stage in the competition currently reached; and the results of the CMS competition or, if still unresolved, the latest assessment of the respective bids by each of the Defence departments and industry groups involved in assessing the bids. The Committee would appreciate a candid view (classified if necessary) of the significance of the CMS competition in bringing the Horizon programme to a halt. A4. Competing bids for the Combat Management System (CMS) were received from HEPICS (a consortium of GEC, CSEE Defence, Matra Cap Systeme, Dassault-Electronique and Datamat) and EUROCOMBAT (a consortium of BAE SEMA, Thomson CSF and AESN (Alenia)) following completion of two-year Project Definition studies. The bids were initially assessed by the Joint Project Office (JPO) in accordance with assessment criteria and weightings agreed with the three nations in advance. During this stage, the JPO was assisted by the Horizon Joint Venture Company (HIJVC) and the CTAG (Co-operative Technical Assistance by Governments) team comprising the UK's Defence Evaluation and Research Agency (DERA) and its French and Italian equivalents. The commercially sensitive data was protected through limited distribution on a strictly "need to know" basis. These controls remain in place to protect information which is the commercial property of the originators and to retain the potential for future competition or commercial negotiations. In July 1998, responsibility for the management of the selection process was passed to the HIJVC, as the prime contractor designate, together with a copy of the JPO's assessment report. The HIJVC subsequently issued two Requests for Information to both consortia seeking clarification on certain points and giving revised delivery dates consistent with the HIJVC's latest schedules for achieving in-service dates for each nations' first of class ship. A very limited number of national officers were permitted to review the offers and the assessments. The competition itself has not been concluded. The JPO is currently seeking permission from the two consortia to pass details to the three national authorities to assist in the selection of the CMS for their national programmes. It was the procurement of the CMS, not the
competition itself which caused difficulties. As part of the proposals
for industrial restructuring, DCNI (at that time a free standing
organisation within the French MoD procurement authority which has
played a leading role in several French naval CMS) had proposed to
supply the CMS. This proposal was unacceptable to the members of both
competing CMS consortia and to MES. While this was undoubtedly a
significant issue in industry's failure to agree on restructuring, it
was by no means the only factor in a series of events leading to the
termination of the Horizon programme. Q5. What is the MoD's current assessment of the likely optimum size of Type 45 batches, and what factors are likely to be taken into account in determining the batch size. How much in broad terms does the MoD expect to save by ordering the warship in several batches rather than a single order. A5. The total class size and procurement strategy has yet to be agreed, but our expectations are that based on a class of 12 ships the most likely combination would be one or two First of Class (FOC) vessels plus 2-3 follow-on batches of between five and three ships. The batch size will be determined by consideration of the value for money offered, and by the stability of the ships' specification and delivery schedule. Competing for follow-on ships in batches increases the pressure on tenderers to reduce prices. Savings of around 30 per cent were achieved between the First of Class vessel of the Type 23 and the 14th hull of that class and we do not believe that these savings would have been as large without the pressure of competition. We anticipate achieving a similar level of savings in the Type 45 programme. The potential savings which might be achieved if the entire class was ordered as a single batch can only be the subject of speculation, since this would be an unprecedented departure from current practice. Such an approach is unlikely to be adopted for a number of reasons. Firstly, warship design naturally evolves through the life of the particular class, for example, to take account of changing operational requirements. Formulating a contract with time, cost and performance parameters to anticipate design changes would be impracticable especially in terms of the commitment and risks involved in a programme of this complexity. Secondly, the industrial implications of such an approach could lead to a single supplier dominating warship procurement to the detriment of competition in the medium/long term. Q6. What are the possible implications of any delays in replacing the Type 42s on the in-service lives of other ship types? A6. There could be potential implications for the coherency of the Destroyer/Frigate programme in terms both of affordability and industrial loading further downstream. There could be slippage in the planned Future Surface Combatant (FSC) programme and hence a requirement to run on Type 23 frigates at some additional expense. This has to be speculation at this stage however, and other factors would need to be taken into account in such circumstances. Q.7 To what extent will the Tri-national Staff Requirement (TSR) for Horizon and the former UK Staff Requirement for the Type 42 replacement be subsumed in the requirement for the new Type 45. A.7 The Type 45 Requirement will be derived from the TSR for Horizon after the removal of those French and Italian requirements, for which the UK has no need. In line with Smart Procurement, it is probable that the requirement will evolve and be satisfied progressively as oeprational circumstances require. Q.8 At the time the CNGF programme was agreed, what was the MOD's assessment of the relative costs for the UK of the CNGF programme, a possible national programme, joining US programmes (such as Aegis) and any other options considered at that time? A.8 The approval to enter Horizon
Phase 1 was given in 1995. the submission examined the following balance
of cost and performance options: *** Q.9 What arrangements will be put in place to conduct a Post Project Evaluation of the Horizon programme, and when does the MoD expect such a review to be completed? (The Committee would wish to be appraised of the results when ready). A.9 The Joint Project Office's
first priority is to complete Project Definition (Phase 1) and to
provide all the outputs to the nations in a form in which they can be
readily used for their follow-on programmes. Its second priority is to
close the office by 31 October 1999. As part of this closure process
they will be providing an audit of the work done, a project history and
views on the lessons to be learned. Taken together, these will provide
the basis for both a comprehensive national evaluation and for
discussion with our Horizon partners on how lessons learned can assist
future collaboration. Q10. The Committee would appreciate a note giving further details of the tentative lesson emerging from the Horizon programe, including the MoD's assessment of how the absence of the factors noted by CDP in Q34 contributed to difficulties in managing the Horizon programme? A10. The Joint Project Office will be providing their views of the lessons to be learnt by October 1999. When complete, these will be assessed and appropriate conclusions will be drawn. At this stage, it seems that four of the
major lessons to be drawn from this experience are that: — The operational requirement should be agreed in detail, be affordable against agreed budgets and be nationally achievable in the timescales required by the service customer. Where national requirements diverge a handling strategy must be specified from the outset. — Early in the programme, an industrial organisation must be established which meets the requirements of industry and of all participant governments. For the UK, this means the appointment of an effective prime contractor. — Data bases should be established very early on in a project's life to collect Integrated Logistic Support (ILS) data, particularly that required to conduct the comparative analysis of through life costs for the competitions for individual weapon and ship equipments. — There should be a common view of the risks and how to manage them, and technical obstacles to collaboration, such as differing national shipbuilding and safety standards, must be harmonised early in the programme. Q11. What is the MoD's assessment of the potential for Vosper Thornycroft to undertake the construction of Type 45 ships itself (ie at its own yard), including any additional infrastructure that would be needed? Would allowing VT to compete for the construction of Type 45s involve any additional costs for the MoD? A11. VT's yard at Woolston will require development to be able to assemble a ship the size of Type 45. We understand that the yard has already considered how best to do this. We have yet to select a national Prime Contractor (PC) for the warship. We expect to place a three-month "start-up" contract with Marconi Electronic Systems (MES) to include risk reduction work pending the establishment of the PC. This contract will lead to the Preparation for Demonstration (PFD) contract with the chosen PC, to be completed in late 2000, when approval will be sought for the Demonstration and First of Class (FOC) Manufacture (DFM) contract. A credible competition between shipyards is well established as the best way of achieving value for money in warship production. Thus, the DFM contract will require the development of a design suitable for production by at least VT and Yarrow Shipbuilders Ltd (YSL). Any extra costs involved in enhancing opportunities to complete Type 45 construction will be incurred only where they could be recouped through savings downstream. Q12. Will there be restrictions on the MoD's ability to use the bids submitted for the main development items of Horizon—CMS, EWS, FICS—in developing the national Type 45? To what extent is the MoD's ability to use the Horizon phase 1 work (and the costs of doing so) determined by the selection of the prime contractor for the First-of-class Type 45, and would selecting BAe/GEC make it easier and cheaper to use the Phase 1 work? A.12. Access to material which is the commercial property of the companies concerned is currently being negotiated. The ability of the UK to use the output of Phase 1 is not determined by the choice of prime contractor as the UK has full access to the products of the Phase 1. A key criterion in the selection of the Prime Contractor will a candidate's ability to make as much use as possible of the work done in the Horizon Programme and take full accountability for doing so. MES are well placed in this respect. Q.13. In what circumstances would UK warships without potent self protection be able to operate in French or Italian navy task forces—would the provisions of UK area-air-defence warships (Types 42 or 45) be an essential pre-condition? A.13. There are a wide range of circumstances in which allies are prepared to rely on each other. The key role of the Type 45 would be to protect ships from air attack, including those which do not themselves have self-protection systems such as Sea Wolf. The Type 45 would be expected to be present in any task force containing high value UK ships. It would also be possible for UK ships to oeprate under the area AAW protection of FR or IT warships provided their capabilities were appropriate to the threat. This would be an operational decision to be made, in part, on a balance of risk. A French or Italian Aster missile based system provides a sound basis for protecting UK units. Q.14. CDP indicated that so far the UK had spent around £150 million on the CNGF programme. Does this figure include the cost of the MoD's own staff time, and if not what is the Department's broad estimate of such a cost? A.14. Figures quoted to the
Committee do not include MoD staff time. UK Staff costs for the CNGF
programme, including the Horizon and PAAMS project offices, are running
at approximately £4.5m/year. Q.15. Is it the MoD's intention to replace the Type 42s with Type 45s on a one-for-one basis, what factors are likely to influence the number of Type 45 warships needed, and when does the Department expect to make such an assessment? A.15. While it may seem that the Type 45s replace the Type 42s on a 1 for 1 basis, the logic is different. The aim is not to replace "hulls" but rather "capability". Including both SHEFFIELD and COVENTRY (sunk in 1982), there were originally 14 type 42s plus 3 CVS and BRISTOL which all operated Seadart. Past analysis, which was revisited during the SDR, determined that (based on the AAW capability provided by PAAMS and the predicted threats) it was necessary to have 12 Type 45s to provide the required level of protection for a credible range of Military Tasks. The issue of how many Type 45s will be built
will be revisited using operational analysis. A recommendation will be
made as part of a further submission seeking approval for the warship
Demonstration and First of Class Manufacture contract at the end of
2000. The factors which will be considered include the predicted overall
capabilities of the frigate/destroyer force. Ongoing analysis will seek
the best balance between the Type 45 and the FSC which enables
anticipated (and possibly concurrent) tasking, ranging from operations
other than war to full scale war fighting, to be achieved. Q.16 The Committee would like a brief note on progress with any other collaborative (or potentially collaborative) warship programmes in which the UK is involved, with details of the other countries potentially involved. A.16 There are no current collaborative programmes involving the development of complete warships. There are, however, specific related equipment programmes in place through the auspices of Government to Government MOU, namely: — UK/FR/IT Principle Anti Air Missile System (PAAMS). — UK/US Intercooled Recuperated (ICR) Gas Turbine Engine/WR21. — UK/US Co-operative Outboard Logistics Update (COBLU). — UK/CAN/FR/GE/IT/NE/US NATO Improved Link Eleven. — UK/US Trimaran Demonstrator Trials Programme. — UK/US Joint Tactical Information Distribution System (JTIDS). — UK/US Surface Ship Torpedo Defence (SSTD). There is also one programme in the final stages of negotiation: — UK/US/FR/NL Technology, Equipment and Systems Development for Environmentally Sound Ships and Naval Installations of the 21st Century.
Source: Ministry
of Defence Press Release FRANCE, ITALY AND UK AGREE ON FUTURE ANTI-AIRCRAFT
MISSILE SYSTEM "The Defence Ministers of France, Italy and the United Kingdom met on 25 April in Washington and agreed to adopt a joint solution to their navies’ future Anti-Air Warfare requirements. They intend quickly to place the contract for the development of the PAAMS missile system which will be the heart of the future air defence for their fleets. This is very good news for the European industrial grouping (Thomson-CSF, Aerospatiale, Matra BAe Dynamics, and Alenia) in both financial and technological terms. "They also concluded, in the light of the industrial proposals they had received, to adopt a collaborative approach to meeting their respective requirements for the warships on which PAAMS will be deployed. Although it would not be cost-effective to pursue a single prime contract for the warship, the three countries will build on the tri-national project work already carried out, to pursue opportunities for cooperative procurement in equipping these vessels." UK Defence Secretary George Robertson said: "These decisions combine the principles of Smart Procurement and effective European collaboration. We have now a very good result for the navies and industries of the three nations, and for European defence. "The PAAMS missile system will provide a powerful air defence capability for the Royal Navy which will be simply the best in the world and will be effective well into the next century. The advanced technology and the employment which this multi-billion pound project will provide will help to keep Britain in the front rank of the aerospace and electronics industry. "The collaborative framework that will be adopted for the frigate recognises that international procurement must follow the same logic as national procurement – defence can only afford projects which are delivered cost-effectively and on time. In this case, the best approach is through a national prime contract combined with seeking the maximum benefit from collaboration over equipment for the ships." Work on the warship programme will now be taken forward by a MoD Integrated Project Team working closely with industry in accordance with Smart Procurement principles for the effective management of affordability, timescale and risk. The work completed on Horizon to date will be incorporated where possible in the national programme. |
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© 2004-10 Richard Beedall unless otherwise indicated. |
