Babcock is currently embroiled in a dispute with the Ministry of Defence over increased costs in their Type 31 frigate contract, with neither side able to agree on who is responsible for covering these additional costs.
The disagreement stems from unforeseen macroeconomic changes that have resulted in higher actual and projected program expenses.
In November 2019, Babcock secured a contract from the Ministry of Defence to deliver five Inspiration Class frigates for the Royal Navy, with an average production cost of Ā£250 million per ship. The programme remains on schedule despite COVID-19 restrictions and is set to conclude in 2028.
However, unforeseen macroeconomic changes have led to increased costs, and Babcock has not reached an agreement with the customer regarding responsibility for these additional expenses.
According to a document received from Babcock by the UK Defence Journal this morning:
“In November 2019, Babcock was awarded the Type 31 contract by the UK Ministry of Defence to deliver five Inspiration Class frigates for the Royal Navy, based on Babcock’s Arrowhead 140 hull design, at an average production cost of Ā£250 million per ship. To date, we have recognised over Ā£600 million of revenue but no profit on the programme. Expected to conclude in 2028, the programme remains on schedule against a demanding production plan, despite the restrictions imposed by COVID-19. HMS Venturer, the First in Class ship is due to be structurally complete in December 2023 and construction commenced on the second ship, HMS Active, in January 2023.
Throughout FY23, we have been in dialogue with the customer about the contractual position regarding additional forecast costs resulting from certain material macroeconomic changes that were not foreseen at contract inception. These have led to an increase in the actual and projected programme costs to deliver the programme as planned. We have been unable to reach agreement with our customer as to who is responsible for the additional costs under the contract. As a result, a dispute resolution process (DRP) under the contract has commenced.
The DRP may lead to an arbitration. If the contractual position remains unresolved, the lack of recovery of these additional costs would need to be reflected in the Group’s FY23 year end results. Without recovery of the additional costs, the contract would be loss-making and our preliminary assessment, subject to finalisation and audit, is that a one-off provision of between Ā£50 million and Ā£100 million would be required to cover the duration of the contract.
The related cash impact would be of a similar amount, realised over the remainder of the programme. Any settlement or arbitral award would reverse the provision in part or in full. The position in relation to the Type 31 contract does not affect progress or profitability of the Group’s existing Arrowhead 140 export contracts and we continue to be in active discussions with a number of prospective customers.”
As above, a dispute resolution process has commenced, which may lead to arbitration. If unresolved, the contract would become loss-making, requiring a one-off provision of Ā£50-100 million. The situation, say Babcock, does not impact the profitability of Babcock’s existing Arrowhead 140 export contracts, and the company remains in active discussions with potential customers.
It sounds like Babcock didnāt get inflation protection in the contract and now they want to retrospectively include it
A bit like some Supermarkets?
….who are ripping the public off and no one seems to challenge them.
I believe its called ‘profiteering’ Geoff, even Dick Turpin wore a mask!!
Look at Tesco’s profits. Sales are up massively (inflation) but profits are way down. This would suggest the profiteering is coming from the suppliers or costs have actually rocketed in real terms. Brexit, Covid, China shutdowns, quantative easing and Ukraine all adding to the perfect storm.
Supermarkets are easy targets, but the competition is fierce and the law on price fixing and codes of practice severe. Margins are very low (single digits) in comparison to other businesses, but sheer volume of sales drive the headline quantum number that makes people look and comment.
Interestingly itās also not the growers and producers, as your average farmer is feeling itā¦.feed, power etc all through the roof. There is massive gouging in the system but its the producers of those resources right at the bottom that seem to be having a field dayā¦.especially if your producing energy your printing moneyā¦.everyone else is suffering the costā¦thatās why Russia is still flush after western sanctionsā¦.itās why BP etc are making 100billion and owning a windfarm or solar farm is just like picking up diamonds on a beach.
I’m not pro large profits but there’s been misrepresentation of some of the numbers publish in the UK press to get clicks or push a political narrative. BP don’t make 100b from the UK, so those types of headlines are misinformation and posted for political reasons rather than actually informing the UK public and has be the drive for the call for windfall tax. But BP is to return its profits for the UK, then it should return them in every country in operates, which is only fair. What would that do to BP? (a company the UK benefits from… Read more Ā»
Hi expat, it was not so much aimed at the Just the UK production but world wide as itās a global market and pricing. Energy producers have basically been raking it in due to supply and demand.
Global, but unlike China who’s doing its upmost to boost its global companies we appear to want to destroy the few successful ones we have!
What is this garbage about Brexit, we have copied the exact same terms we had when members of the EU with these third countries! Please refrain from such falsities. Have you read the actual U.K./E.U. deal? The first page says that any following agreement signed by the U.K. is a supplement to the EU deal. Jesus Christ.
Well, that was an angry response and you missed the point on Brexit which to be fair I didn’t elaborate on. One of the issues business has had is the complying with the legislation and the masses of paperwork required for both importing and exporting as we are no longer a member of the EU. It has nothing to do with tariffs and volumes. Certain products cannot be legally sold into the EU where they could be when it came from a member state. I’m not having a pop at Brexit, I actually wanted it! And not for immigration reasons.… Read more Ā»
It’s easy to talk about profiteering without actually looking at the numbers. Indeed, if life were so easy, there would be no need for accountants at all, just get your factual financial analysis from the brilliant fellows over at the Daily Mail.
Maybe, maybe not. Depends on the model contract being used. It is likely based on a construction contract. These generally have three inflation related mechanisms. Which one is chosen is tuck box. Calculating inflation into contacts isnāt easy. Inflation has risen sharply and may fall sharply. The other issue is that construction materials are starting to deflate. So MOD may not want to pay out for the inflation adjustments that are calculated right now and may want to settle it once the inflation curve is known for each ship. Contrary to popular belief MOD lawyers arenāt stupid but the legals… Read more Ā»
Thatās a good point. From this quote ā We have been unable to reach agreement with our customer as to who is responsible for the additional costs under the contractā, it does sound like they havenāt even established responsibility before even getting to the issue of calculating liability.
In my experience contractors will try to negotiate a multiplier factor into the contractual inflation/escalation formula, arguing that defence sector inflation is generally higher than RPI/CPI. MOD will try to turn this (during negotiations) into a deflationary factor (the exact opposite) in the escalation formula, arguing that the contractor should strive for ever greater efficiencies in its production and procurement processes. In the end they will usually settle for something close to the middle of either position. However, MOD will insist on a cap in the contract so that regardless of what the escalation formula results are, inflation can never… Read more Ā»
Interesting comment above that the “macroeconomic” changes are causing a Ā£50m-Ā£100m hole on the MoD contract but it “does not impact the profitability of Babcockās existing Arrowhead 140 export contracts”. I’m no economist but that doesn’t seem to make sense.
Itās possible that the export contracts have FX protection/insurance which offsets the inflation
The export contracts aren’t construction contracts for complete vessels. Rather they are to supply design and technical support services. So Babcock will earn fee income, something much easier to calculate than whole ship costs.
Are those platforms not being built overseas?
Certainly sounds like it. The first instinct is to say tough… didn’t do your due diligence properly, got complecent, etc. However, Babcock appear to be doing a good job and are definately shaking up the RN’s supply, especially with regard to BAE Systems. So whilst the MoD might be entitled to say” tough on yer bike” I hope they pause and consider the long term impact on future contracts. The T31 programme is a mold breaking programme helping to put a cap on ever rising prices. Babcock have also invested a considerable amount into Rosyth and should be given credit… Read more Ā»
I agree. With so few ship builders the MOD canāt afford to severe relationships over contract disputes, but at the same time canāt be a push over.
Nobody saw this high inflation coming, so even hedging against some rises would have been overwhelmed by now.
Should be remembered that most inflation has come from Western central banks printing money and helicopter cash from governments to help during COVID.
Babcock couldn’t have predicted these actions. Penalising them for it will be massively self defeating to UK plc.
The inflation is not to do with the printing of money (Well certainly not the bulk of it anyway). The main factor is two fold. Firstly the trigger is the war in Ukraine having an impact on Gas prices. Secondly the fact that the electricity price is set at the price it costs to generate via gas power plants…. If the Government simply eradicated this stupid method and actually had the price set by the cost of generation then our electricity prices would be significantly lower as a lot of our energy comes from wind power and that is massively… Read more Ā»
Things are already moving in this direction, in the energy market reform. However HMG must ensure that (for the next decade at least) that gas generation remains financialy sustainable to provide backup to intermittent renewables. This will still insulate UK from high gas prices because it will allow the price of gas generation to rise, ensuring gas is increasingly used only when needed due to weather. The amount of gas actually used will thus fall. HMG need to get a shift on with Nuclear new build too (e.g. Sizewell, SMR), as this is the only thing that can reduce the… Read more Ā»
The Government are not moving in this direction. If they wanted to they would have done it already. There are no bills and no proposed changes that I am aware of that are being put together. We can actually be fine with 100% renewables if the infrastructure is done right. However not enough money is being put into storage solutions and not enough is being done to roll out new schemes. For instance there are wind farms that are due to be connected in 13 years time despite being ready to be built right now! If the Government were serious… Read more Ā»
Canāt speak for the UK but in Canadaās case, absolutely the governmentās massive printing of money for COVID give-a-ways is our inflation source. Our neighbour to the south did the same albeit not to the same level.
So yours is nothing to do with energy prices? Unlike almost every other country in the world…
I am not sure the Bank of Canada agrees with you.
https://www.bankofcanada.ca/2023/03/understanding-the-reasons-for-high-inflation/#:~:text=With%20demand%20increasingly%20strong%20and,inflation%20taking%20hold%20in%20Canada.
Did not realize that the Canadian government had indulged in the same idiocy as the US. Absolute disaster, as Canada has always been my alternate rally point. š¤š³š±š
In UK its mainly fuel and food price surges caused by Ukraine conflict shortages and some lingering co-vid shortages such as in building construction materials. Everyone wants double digit wage rises to match the temporary inflation and if their granted it then locks in the inflation permanently due to higher labour costs.
Printing unbacked money always going to end badly, plus the few weeks of Liz Truss as PM driving the economy off the cliff.
The US and China print money all the time. It is not a bad solution to many issues. The current Inflation issues are mainly energy based not to do with the printing of money during Covid.
The only energy based inflation is due to Ambientalism punishing food and industrial producers with heavy regulation and costs. Plus G20 saying to everyone that there would not be any credit to develop fossil fuels anymore.
The main inflation issues are due to QE printing money to put out of 2008 crisis that was due to printing money due to credit. QE was bascally a tool that put huge amounts of money in stock exchange to sustain the retirement packages.
Stock exchange is not part of inflation statistics…
Then came the huge COVID money printing.
I am sorry but you are talking utter rubbish…. Energy and global manufacturing bottlenecks are the reason for the inflation. Environmental policies are not the issue. Wind power costs 5 times less than gas produced power. The quicker we move away from fossil fuels, the more money we save….
Everything we produce uses energy, if energy prices go up then everything we buy goes up and hence inflation goes up…. It is not rocket science….
I see you don’t have family and friends in agriculture and industry…Maybe you should go to Sri Lanka to learn…
Wind power needs to subsidies to run. There are days it do not even run.
Bottlenecks exist for a reason: when silly government makes lockdowns.
Wind farms do not need subsidies. They are only given subsidies so that they can compete in a more level playing field with fossil fuels which get subsidies in orders of magnitude greater than renewables! If we stop subsidising the oil industry we can stop subsidising the renewables industry….and yes I do have friends and family in agriculture. Not sure what your point is there…. All of them have installed solar panels all over their sheds and one installed a wind turbine which the others would also have done if the UK government had not banned them. As for bottlenecks.… Read more Ā»
Well I think you are not taking into account the utter tragedy that would have occurred without the lock down. The simple truth was the NHS would not have coped with the number of cases of covid 19 we would have seen in a spike that was not flattened by the lock downā¦.what most people miss is the lock down was less about preventing everyone from getting covid 19 but about spreading the loadā¦.simply put the NHS would have collapsed ( and I say this as a senior leader and planner of emergency services). The level of death and harm… Read more Ā»
All modern currencies are fiat and are essential unbacked and its value is decided by exchange rates with other currencies which is all driven by the international currency markets using the law of supply and demand both the demand which is set by the market and supply which is set by a government or central bank using monetary policy toolsā¦but the value of any modern currency is no more or less than what someone is willing to buy it forā¦.so countries do not create unbacked currency itās all unbacked effectively the central back creates more currency (digital) that itās uses… Read more Ā»
Excellent summary.
Yes, I say the same. Nice one Jonathon.
Iāve got a headache just reading that. šššš
What does Fiat mean?
Currency and markets is one of these things that some people understand easily and can use to their advantage while others donāt get it.
Basically made up money, fiat currency has no intrinsic value and is not backed by a commodity itās only value is in what someone is willing to pay for it ( currency markets).
then you have representatives currency which is a currency based on a specific commodity that is held by the issuer and example for this is gold standard..before 1971 every global currency had a nations gold holding behind itā¦so every pound was guaranteed by a bit of gold held by the Bank of England. It therefor is backed by something with intrinsic value.
Every days a school day. Thank for the explanation.
Sad really but I love currencyā¦im a collector and trader of specie and numismatist Also a dabbler in crypto, which I find utterly fascinating. One good idea is to alway hold about 10% or your savings in specie..silver is best to be honest unless youāre very wealthyā¦If your own nations money has a collapse..Silver specie is still worth what itās worth ( even if the silver market collapses you still have the numismatic value of the coinā¦.).
One of my favourite Fiat currency stories is of the pacific tribe that traded ownership of big carved rocks as a form of currency. This was already close to a fiat currency as the rocks where big, and basically immobile, but still technically the currency was backed in stone. One of the rocks, having been carved and being moved to the island by canoe was sunk. The islanders decided that it was “good enough” and the rock, now at the bottom of the sea and beyond reach of anyone to check if it was really there, entered the economy. A… Read more Ā»
Fiat rocks I like thatā¦.fiat currency rite largeā¦another really interesting one is shell currencyā¦.really common in societies that could not process ore.but again it was linked to an intrinsic value..they shells were pretty and used to make beads and so had value linked to the shell itself, trade beads were another interesting currency but again their value was based on the intrinsic value of the bead as an item of beauty that can be used as jewelleryā¦ā¦one of the interesting things is that the majority of currency across history is based on what people consider beautiful and the basis for… Read more Ā»
In theory currency creation should be linked to economic growth. Credit for example is currency creation that in theory should lead to economic growth.
Yes and if you look at how gold standard/silver standard currency worked it generally did well. It was the very best way to prevent hyper inflation evens as a nation only had the currency its gold and silver reserves backed.it allowed people to trust the money over government: fiat currencies fundamentally require complete trust in a government, central bank and monetary policyā¦when that fails the fiat currency becomes utterly without valueā¦.this has happened to a number of nations and is utterly catastrophicā¦this can also happen to a representative currency if a nation is stripped of its gold reservesā¦this is what… Read more Ā»
Gold backed money limits what a country can borrow and therefore limits Government spending. Gold would all be flowing out of the country with trade deficit to China etc . Living within are means would be like living in the 1950’s with make do and mend instead of over consume and waste lol
Well youāve sold it to me Peter Im a firm believer that the trade deficit with china being sustainable without ending in us being a client state to china is a bizarre delusion of the neoliberal world.
what trashed the gold standard in the end was the global catastrophe that was world war 1ā¦ā¦..
All currency throughout the ages has been contingent on the trust people place on it.
Yes but before 1971 currencies were backed by gold as a commodity.
No, it wasn’t. Gold was simply the wool we pulled over everyone’s eyes to imagine a physical representation of value. Just like cowry, whales teeth, and rice in other civilisations. The value of currency has always been backed by trust in the Government issuing that currency.
Sorry Matt thatās a gross simplification and in many ways not true..infact many currencies have existed long after the government the created them is no moreā¦the classic example is possibly the most well know currency and trade coin ever the Marie Theresa Thaler (MTT) this coin has been minted and traded with literally 270 yearsā¦it has been minted in many nations. It was a Conventionsthaler that was first minted in 1751 and on the death of Marie Thaler in 1780 every MTT was dated 1780..it was the definitive trade coin of its age and had such longevity that in WW2… Read more Ā»
Simply means that the MTT was backed by several governments, those that accepted it as legal tender. Silver, like gold, is a representation of value, which again is based on trust. When you receive MTT you’re trusting that you can sell it off to someone else for goods and services that you want. You might not accept rice whereas an Edo Japanese would – this is a reflection of that trust. Reality is that we’ve always used fiat money, because no government ever tied itself down to however much gold and silver was mined out of the earth that day,… Read more Ā»
No the last government that backed the Thaler was the Austrian government and they stopped backing it about 2 hundred years agoā¦.no one backed it they did not need to it was alway minted to a specific measure of silver and itās value was entirely from thatā¦nothing elseā¦as all coins and currencies wereā¦..there only value was in the silver or gold content or in the case of paper money the promise that that government would hand over that amount of silver or gold. as for Edo Japanā¦and being able to barter with rice..so want all societies have used both barter… Read more Ā»
But it is based on a culture that value such metals. It could value “kriptonite” instead.
The fact is that money value is linked to prodution.
You can have billions in bank notes but if there is nothing to buy it has no real value. That often happned in Communist countries that people had to wait years to have a car despite existing money.
Hi Alex yes but and this this the important but, humanity has always valued gold and silver and other pretty thingsā¦almost all currencies in history have been based on pretty sparksā¦if you are going to get down to absolutes itās alway Market valueā¦.how much can you sell a cup of water forā¦.depends if itās next to a tap thatās working that anyone can access or in a desert to someone dying of thirstā¦.but the difference is fiat money is really based in nothing more than money market valuationā¦representative currency currency is based on something physicalā¦( which still have a value… Read more Ā»
And what people give how much value to…
How much Mona Lisa value have?
For an European vs a Pacific Islander?
If Internet stops what is Google value?
Currency is theoretically backed by production, when you print money and put your country in lockdown you are logically creating inflation.
I am not even talking about the imablance of production vs money printing/credit in “normal” times.
Well thatās not actually true per seā¦.there is nothing backing fiat currency other than the currency itselfā¦the value of a pound is what the markets decide it isā¦.yes things like production Come into itā¦but itās more actual based on how much money a government or central bank created vs have much of that money people want to buyā¦so a county could be doing poorly economically but if the monetary policy of the nation is quantitive tightening its currency will maintain itās value ( reduced demand is countered by reduce supply and the value is retained) ā¦if on the other hand… Read more Ā»
Currency is connected to culture. For example billions in currency appeared when Western world political culture evolution gave value to CO2.
Wonderful we now trade CO2, rejoice we are getting richer.
More money created.
No big objection on your argument, but if you say “MOD must” handle it, it means we need to cut something else to do it. Cancel what?
I think we shall think this is of HMGs tasks, not MOD. In other words, HMG, not MOD, must find money to handle this surprising inflation to help UK’s shipbuilders to be sustainable.
Again, not MOD, I insist.
That’s fair comment. However HMG are facing inflationary pressure across all public sectors. Without financial restraint, there is a danger that inflation becomes a runaway feedback loop fed by wage spiral. Hence HMGs seemingly belligerent position on public sector wages. The same applies to government suppliers, a balance must be found between fiscal restraint and ensuring sustainability of the supply chain.
At the end of the day Ā£50-Ā£150m is not that much on a contract of this size.
I would expect that the final bill is about Ā£75m for MOD and Babcock will suck a bit up.
MOD did get an inflation settlement already.
I also donāt think any model could have really factored in a global pandemic followed on by a major war in Europeā¦bit of a perfect stormā¦.on a far different level the reason we are having shortages of salad veg is that the submarkets would not renegotiate their contracts and UK growers simply mothballed their glass houses ( energy costs to high) and European growers just sold to European supermarkets who paid the prices.
It would be a pretty simple arguement if they didn’t. For there to be a disagreement the wording must be poor, but exist.
I see your point. They also donāt state what they think theyāre entitled to. They give Ā£50m-Ā£100m as their own provision, but they donāt sound certain.
Do we have confirmation on 24 Sea Ceptor yet?
As the first of the class is actually under construction, that must be finalised and set surely?
I donāt believe thereās been official confirmation either way
And, CAMM (actually the whole SeaCeptor system, including systems integration into TACTICOS CMS) is NOT included in the Ā£1.25Bn contract, to my understanding.
And space for 1-2 MK41s FFBNW!?
It needs to be assured very quickly. With so few escorts, we can’t afford to have any inadequately armed. They must be able to withstand prolonged attacks. 24 should be the minimum, it’s the only SAM system they carry.
Totally, 24 as an absolute minimum….
“Totally, 24 as an absolute minimum….”
As is a sonar
They have sonarā¦
I thought that they didn’t Sean. I’ve not seen anything to suggest otherwise but I’d love to stand corrected.
RN calls it Sonar 270, itās more for defence against torpedoes than offensively hunting submarines.
https://en.m.wikipedia.org/wiki/SSTD
Which means the submarine can keep trying again & again, unless you have some means of making it stop, make it go away or killing it. An active sonar can be very good at making submarines go away (even in peacetime). Changing your hull mounted sonar from passive mode to active mode while sitting near on top of the submarine will usually make the nosying submarine move along (they now know that you know they are there).
It does, itās called a helicopter armed with Sting Ray torpedoes.
In a conflict if a submarine is sat beneath or near a surface combatant the crew should be seriously questioning the sanity of their captain. Itās like someone with a sniper rifle closing distance to shoot at point-blank range.
S270 is designed to detect torpedoes, not submarines. The submarine that launched the torpedo is not going to stay there. S270 can tell you all about the torpedo, but little about the submarine that launched it. Shifting to a land perspective, itās like the active protection system on an armoured vehicle (if you should be so lucky) or the laser designation detection system on same (if you are again so lucky). It helps you defend or tells you you have been targeted & from where. If all you can do is defend, eventually you will loose (unless someone comes to… Read more Ā»
Yes Iām aware of what the Sonar 270 is, itās a defensive measure to submarine attacks just like the guns and Sea Ceptors are defensive measures against incoming airborne attacks. The Sea Ceptor will take out incoming missiles but do nothing about the aircraft that launches them – which donāt need to come within the range (official 25km/ unofficial 60km) of Sea Ceptor. Well the T31 is 50% faster than most diesel electric submarines so that is one option. Of course while itās using its speed advantage it can also deploy its helicopter with Stingrays. Of course there it depends… Read more Ā»
They have a very good towed passive sonar system tuned for ASW but dont have an active sonar system.
Only T26 have towed system. Not the T31.
Type 31 are getting the S2170 sonar, SSTD – Wikipedia
Well that is an counter measures system. I never saw anyone calling the venerable Nixie a sonar, but maybe this one is a more evolved system and can have other uses, still its mission is making noises for the torpedo to hit it instead of the ship.
24 by the ’30s… that’ll be welcome.
I can only presume they have seen an unexpected and somewhat still unpredictable inflationary process develop due to recent events (since the contract signing) but pretty much canāt predict the final effect upon the whole contracted production process of these ships but have come to realise it will certainly be extra costs in that stated region depending upon what āflow chartā you follow, based on what they presently know projected forward. And thatās the point I guess as things are, shall we say, somewhat fluid in respect to inflation, the Ā£ and internal/external material costs as a result of the… Read more Ā»
Won’t that be provision for losses and eclude their anticipated profit on the deal? So the actual figure indiscussion would be Ā£50-Ā£100 mllion plus loss of profit.
No one knows what inflation and interest rates will be in 6 months let alone at the end of the contract so any estimate will be subject to significant change.
Or intentionally silent because the issue is a minefield.
Potentially but there would be need to be clauses around price changes to question or it wouldn’t be an argument. We agree I pay X for something and inflation raises we agreed X. Probably poorly drafted ones that didn’t fully flesh out under what scenarios price changes would be at cost of UK gov.
Sounds to me like Babcock are trying to wriggle out of the responsibilities that arise as the cost of doing business, and (yet again), the MOD contract hasn’t been written clearly enough to prevent Babcock from being able to try it on.
The contract was signed in Nov 2019. Pre covid and Ukraine. No-one could have predicted what was coming. Like Supportive Bloke said the MoD has been compensated for the inflation spike. Babcock deserves the same.
What Donkeys write these contracts. Who take on an 8 year multi billion pound fixed price contract with no inflation clause.
I bet they do have inflation clauses and hedging but inflation is at 10% and interest rates edging towards 5%.
Low inflation low cost of money has defined the West for over 20yrs so manifold changes in these rates in under 2yrs is unprecedented…and caused by government lockdowns, cash for furloughs and BoE QE.
Punishing Babcock for not being able to predict the future by the establishment that created it, would be unfair and self defeating.
Yes but thatās why you write in measures like RPI rather than trying to predict inflation.
It could be they have defined CPI/RPI clause but they are getting hit with price rises higher than CPI/RPI for some items, but you’re point is valid they should have back to backed the contracts with suppliers, so the supplier can only raise in line with what they get from the government.
Or potentially the companies that did correctly price in the risk of inflation into their contracts lost out. If this was the case, Babcock must feel the pain.
It would be interesting to know.
I don’t know of any economist in Nov 2019 who predicted the current inflation rate.
Babcock are well know in the Industry for bidding with very low margins, that said, I do feel a bit of sympathy with them as no one forecast what has happened over the last 3 years
Perhaps the extent of the inflation is the problem! Bearing in mind that ‘customer’ or Government actions affect inflation! If they can’t fulfill the contract because of unrecoverable costs it helps no one, still less deliver what we need!
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It seems like a small cost really in the grand scheme of things. We should accept the additional cost and let them get on with things. If we want a diverse supply chain sometimes you have to accept small additional (and they are small). We throw money away on local government managers (some earning Ā£600K for doing sod all) and then we penny pinch when it comes to manufacturing and defence. Give them the money and get on with the project as far as I can say. Take it from the overseas bribery budget instead or indeed the British Bashing… Read more Ā»
Its likely there was inflation protection but the governments liability was (rightly) capped or it didnt apply to certain materials/staff.
Maybe the Government should just pay a reasonable profit payment at the end of the project. Babcock should be split up to make businesses more manageable !
No-one could have foreseen the massive jump in energy costs which is probably the core issue as they will impact steel/aluminium prices as a minimum. Love to be a fly on the wall in that negotiation.
No one could foreseen Putin finally deciding to emulate his hero Hitler and trying to overrun and colonise his neighbours. The knock on effect here in the U.K. being very high inflation.
Putin is a **** but thatās not the cause of inflation bud. Just the excuse.
Go look at how much money weāve been creating out of thin air over the last decade or two. Look at āquantitative easingā to save the banks and prop up house prices at unrealistic levels.
Then look at our increased energy prices v. The record profits energy companies made last year despite supposedly losing millions pulling out of Russiaā¦
Except the facts totally contradict your political theory. The banking bailouts happened in 2008/9 and you think this caused the sudden increase in from late 2021 onwardsā¦? The BoE engaged in quantitative easing as a means of stimulating the economy to avoid a 1930ās style depression as the usual option of cutting interest rates was not an option. It did this as a result of: ā¢ the banking crisis (Ā£200bn), ā¢ the eurozone debt crisis (Ā£375bn), ā¢ the Brexit referendum (Ā£445bn), ā¢ the pandemic (Ā£895bn) As can be seen from the above figures, the quantitive easing due to the banking… Read more Ā»
Not sure what political theory you think Iām proposing. Suspect you think Iām a commie. Can assure you I am not. Have we spoke. Before? Usually I need at least 2 messages to illicit such anger. Apologies if I caused any offence. Not suggesting banking bailouts caused it on a 1-1. Thatās asinine. Thereās a Nobel laureate economist called Milton Friedman. Please go and look at his work on Gov spending and inflation. In short, theyāre directly linked. Thereās a lag from the time of issue to effect that we need to be aware of but in simple words; the… Read more Ā»
Iām well aware of the work of Milton Friedman, Thatcher based her approach to economics upon his work. There are many factors that determine inflation, one of these is government spending. Another is QE. Another is increase in production costs; eg wages, resources, transport or energy. Thatās why itās so difficult to correctly manage the economy, there are many factors, not to mention feedback effects. The BoE is charged by HMG with keeping inflation bellow 2%. It had only 2 main tools, setting interest rates and QE. With virtually 0% interest rates (and negative for the ECB) since the financial… Read more Ā»
I think you replied with such vitriol because you thought I was Jonny or was coming to his defenceā¦ hence your original āpolitical theoryā statement because you thought you were replying to someone (him) whose political theories youāve already debunked. Am I right? And are you big enough to admit itā¦? If youāre familiar with Friedman, youāll be aware of his assertions that Gov creating more cash is the primary driver of inflation. You disagree with him? Again, not saying QE was wrong, especially in 08/09. Iām saying they over did it since then, especially during Covid. Iāve NEVER said… Read more Ā»
No, I assume you simply have a political agenda to push which is why youāre ignoring the facts and counter-arguments that I present or you misrepresent them. Is there another reason? Yes like most economists I disagree with Milton Friedmanās assertion that government spending is the primary driver of inflation. It CAN be, in some situations/ economies. But to claim it is the primary driver in all circumstances is not scientifically credible. Friedman was not an apolitical economist, he had a political ideology to promote, that was furthered by his assertion. At best it coloured his economic thinking. The Central… Read more Ā»
Not pushed any political agenda. Please do quote where I did. āIgnoring factsā, another strawman. Iāve actually agreed with most of what youāve said. āYou disagree with Friedmanā. Ok cool. But we do agree QE is used by Central Banks (including BoE) as a tool, one of which is to drive inflation? The BoE do say this on their own website so hopefully we can both accept that. We also both agree that inflation started pre-invasion, a large part of which was the global economy restarting after the pandemic. I think we both also agree that Putins invasion caused a… Read more Ā»
You can protest all you like, the political agenda is obvious.
Youāre like a stuck record, I counter your claims, even pointing out the cognitive dissonance where you contradict yourself. But all you do is revert back to your original nonsense.
I learnt in the early days of the pandemic itās pointless to try a reason and debate logically with a conspiracy theorist. Itās like trying to rationalise with a member of ISIS, utterly fruitless activity.
āCounter claimsā by stomping your feet and saying āNo! Iām right!ā? Iāve offered evidence to demonstrate itās not Putins fault. Yours is where? Sad dude. āContradictā myself?? You mean, I say that the strawman you keep creating from made up nonsense about me is wrong? Pathetic. Enjoy beating your wife tonight (see, I can just make up wild assumptions too šš¼). In the absence of any evidence from you, Iām just going to assume you donāt have any but are too small (I can go for personal attacks too but was trying to have an adult conversation) to admit maybe… Read more Ā»
Nothing sets off a conspiracy theorist into a rage more than observing they are one š¤·š»āāļø
No rage here wifebeater. Just bored of being polite to someone like you.
As the conspiracy theorist youāre the one more likely to be a wifebeater, and a racist too.
You clearly donāt understand the word āpoliteā
Suggest you look up what ātenseā means in sentence structure.
āInsults are the last resort of the weak-minded when they feel powerless.ā – Russ Johnson
If Russ Johnson was correct I wouldāve expected better insults from you given all the practice you must get in using them š¤·š»āāļø
Personally I find using quotes is the last-refuge of those people too dim witted to compose their own reply.
The QE was not to prop up the banks, it was to prop up the government borrowing billions instead of raising taxes or cutting spending.
Iām afraid not. It was used for both. This chap explains it better than I can; ā Stage 1 QE started in 2009 and was last used in 2016. It created Ā£445bn of new money. That was used to buy Ā£435bn of government bonds, or gilts, and Ā£10bn of corporate bonds, which we can ignore. There were three goals to first stage QE. The first was to keep interest rates down. The Bank of England calls QE monetary policy for a reason. Buying gilts in the financial markets pushes up their price. And since the return paid on them is… Read more Ā»
Agreed but as usual our resident Nazi Johnny boy will either ignore your post, not reply and/or post some more Pro Russian garbage. Have you noticed how he has reduced his posts massively on the Russian/Ukraine articles and is now just posting generic shite on other stories (which he has previously stated he has no interest in) But then again mate itās hard for even Nazi Johnny boy to justify this illegal invasion when they have footage of the Russian Nazis cutting Ukrainian soldiers heads off!!!!
JohnInMoskva seems to be trying to improve his image by trying to be reasonable and knowledgeable in posts on subjects not involving Ukraine. He hopes his credibility will improve among newcomers to the forum so that when he starts vomiting his usual Nazi propaganda they might not immediately dismiss it for the bullsh*t it is.
New handler, last guy got whacked by a HIMARS outside Bukhmut š
Possibly mate, or his previous handler happened to fall from the first floor bungalow balcony, while drinking poison and stabbing himself in the back 7 times, and then rolled under an oncoming truck, twice. This form of accident happens a lot in Nazi Russia.
I think that accident is reserved for businessmenā¦
but given the state of the Russian economy they donāt really need them anymore š¤·š»āāļø
šš
To be honest, Russiaās plagued by all manner of deadly accidents these days. Iām surprised theyāve not banned smoking given how many ships the Black Sea fleet has loss through careless cigarette butts.
Then thereās the senior commanders who seem to keep tripping and falling into the paths of BMPs driven by disgruntled subordinates. I suspect there may be a design flaw in their army issue boots?
How the Russian insurance industry is coping with all the payouts Iāll never know. I donāt envy the task of those they employ as loss adjustorsā¦
Agreed mate, but maybe on my next day off I should cut and paste some of his previous garbage, propaganda and anti -Ukraine vomit, for the newcomers to peruse? He isn’t even commenting on the few Russian invasion/Nazi stories, which is a serious sign he is trying to keep a more “reasonable” low profile. But, as you say, it will only be a matter of time before his pro Putin bile flows once more, and he is cracking one off at his 2023 Putin calendar!
Oh Nazi troll, read my reply to Sean in regard to you and your current stupidity. Cant be arsed to write it twice, and you donāt deserve the original! Anyway, any condemnation yet of Putins illegal invasion of Ukraine?
Arent steel prices going down at the moment ?
The only thing going down are Russian male population number mate!
Expect a glut of young Russian mail-order brides in future š
Even with the increase itās still a good deal for 5 ships. Perhaps Babcock can add in a capability with that increase.
Ha. There were posters here a few years ago when T31 first surfaced wanting a whole list of items, totally missing the point that they are meant to be affordable, at a certain max price, as 13 full fat T26 were not.
I’m a fan of these and want a Batch 2.
I don’t want a Batch 2. The primary weakness of the RN escort force is the fact that only 40% of the planned fleet have any ASW capability. Diesel engined ships with non-quietened machinery will never be able to do that mission optimally.
I’d rather order fewer hulls of T26. This could be a stripped back version to save costs (fewer SAM’s, no Mk 41, cheaper gun, no multi-mission bay). These ships would do ASW in the North Atlantic or in Carrier Strike Groups where other escorts and or RAF/FAA aircraft have primary responsibility for AAW and ASuW missions.
My wording wasn’t great. Fewer hulls of T26 meant additional hulls than we’d get if we ordered a second batch of T31
Babcock say they can put ASW noise reduction in T31 but you have to specify it at build time. From the Arrowhead 140 web site.
āROLE SPECIFIC FEATURESUnderwater radiated noise signatures are managed within the platform, to reduce the range at which it can be detected by an adversary. This includes measures to counter the self-noise of the main propulsion, electrical power generation and auxiliary systemsā
Yes but even with this is probably not a patch on T26. Hard for the navy to accept an ASW platform thatās sub optimal. Anything that can carry a Merlin can be a decent ASW platform.
Iām sure we would all like to have built all 13 T26 but that ship sailed. That said, is there any point in having something ādecentā if ādecentā isnāt good enough bearing in mind that the newer Russian subs are getting pretty quiet?
A decision which is certainly above my pay grade.
In terms of more T26, even an optimistic view of T31 would have it out turning at Ā£1.5bn (this excludes the cost of fitting them with NSM). Let’s say T32 comes in at the same (it’ll probably be more due to inflation). That’s Ā£3bn for 10 ships that can’t do ASW. Add to that the cost of the River’s at Ā£650m which were only built because of political delays to T26. The quoted unit price for the second batch of T26 was Ā£750m per ship. So far the price of 10 frigates which require further investment to give them more… Read more Ā»
I understand what you say. But as the saying goes, we are where we are. My instinct is to favour more hulls over absolute ASW perfectionā¦but its just that, an instinct.
Really? Please tell me which OPV’s carry CIWS and SAM suites? Let alone a SAM with an anti-surface capability…
t26 is an anti submarine cruiser with land attack as well as multi role functions. I think a split but with T31 was the way to go. T31 will be forward deployed largely in to areas like the gulf with limited submarine threats. Easier to maintain a simpler more off the shelf solution like T31 in foreign stations.
I know that the T31 was conceived out of a budget snafu but instinctively I agree with the position you state. At the time we needed something like a global patrol frigate and T31 fitted the bill. By choosing the Arrowhead for T31 hull the RN gave themselves the option of enhancing its capability and/ or building a batch 2/T32 for whateverā¦ We are now in the āluxuriousā position ( subject to what we can afford) of being able to discuss whether more T26 or Arrowhead with noise reduction is what we want for more ASW. Depends on the threat… Read more Ā»
Of course, there are several levels of “hull quieting”. They just differ. Dutch M-class and Norwaian Nansen-class both surely meets the ASW hull standard of NATO. But, it is well known T23 is much more quiet than them. And T26 is much more quiet than T23.
NATO-standard-level quiet hull can do something. But, not sure to what extent.
What can be done with drones; sub hunting, sub killing?
Nothing yet. That why T26 is still designed around ship mounted/towed sonars
Loads could be, but it hasn’t been done yet. All the ASW dipping sonar kit on a Merlin could easily be put on drone boat which could sprint then go slowly and do some hunting. A T31 could hold a few of these and a helicopter as well.
As long as you get a vertical lift drone that can carry stringray and a dipping sonar….
š
Steve, agree that we could do with more ASW assets, but, what you are proposing is a complete re-design of the T26, not a cheap option. Surely far simpler and cheaper to put some noise reduction measures into the T31 and fit both a bow and towed sonar?
I would go for that. If itās a case to get the ships they have to be lightly equipped then thatās what will have to happen.
If the ships donāt have underwater detection devices then a merlin should probably be onboard Or sets are bought for wildcats. Hopefully drones can be made to work on nicely with the ship.
That’s the problem with ASW work, its a team game. A Merlin on its own is not really much use, as it needs queing into the search area, which is why they don’t deploy on T45’s all that often. A Wildcat can still drop a Stingray if guided to the drop point by other ASW assets, but yes, despite its ‘short’ legs, it would benefit the RN if they were fitted with a dipping sonar much like the S Koreans have done. Yes, the mythical ‘drones’, I’m sure in time it will be the way ahead, unfortunately not in the… Read more Ā»
So is a sonar buoy kind of similar to a dipping sonar perhaps with less power?
2 helicopters on each ship is probably ideal with dipping sonars until the drones can be made to work with a helicopters. Difficult to do that without more helicopters. Did the old lynx have dipping sonars?
The drones main goal should be improving situational awareness above and below the waves.
but also having plenty of other hulls with nothing more than an active sonar and a small ship flight also adds to you ASW capabilitiesā¦hunting a sub mid Atlantic need a dedicated ship as does escorting a carrier etc..but in more enclosed waters active sonar is useful and you donāt need a very expensive quite hull for that.
Batch 2 with quietening would go down well.
Just about everything else can be retrofitted (even if it costs more than it should/could have). Nothing drastically wrong with the A140 for a GP frigate (otherwise others would not have ordered it). No one else though is interested in a T31. By batch 2, I hope you mean T32, not more T31.
What I mean is T31 B2 which may well look like a T31 hull but enhanced with some more teeth!
At least T31 is an upgradable platform and got ordered rather than messing with Rivers (as one admiral suggested) or just getting nothing by waiting for the money tree.
Personally Iād rather order more T31 with a quietened hull and a bigger main gun or Mk41 from the off. Maybe more slots for Ceptor and a bow sonar and FFBNW a tail.
But maybe, just maybe, there is a cunning plan.
Maybe Babcock could get the bow sonars from the type 23s, extra sea ceptor cells, decoys etc or has something else lying around that could go onto the ships for very little cost.
I
There are sets that were never fitted to the T23ās that were not upgraded.
13 now sonar were announced as bought.
It would be silly not to fit things that are sitting around.
Spare space on the ships will be useful going forward.
Hopefully some or most of any major or additional upgrades will actually happen prior to the ships going into the water. Lots of mucking around otherwise.
Excellent point DM. ļ»æšļ»æ
Sorry to be a bit cynical but is this just a bit of a last minute extra moneygrab by Babcock due to shrinking margins or mismanagement of original costs? On the flip side Ā£250m per ship always sounded āridiculouslyācheap. Maybe it is!
Hope this isnāt going to lead to wrecking of a good thing with this program. Hope more T31 orders come for Babcock and the follow on T32s.
Likely theres a cap in the contract for cost growth to limit the governments financial exposure and the double digit inflation (even if only for a year or two before returning to historical norms) will have surpassed that cap when projected forward to delivery.
Good points and from others here too. It is a budget shipped after all! Could have done with 6…. I always like an “extra one” , except for carriers… Lol šš
Covid plus Ukraine is a bit more than anyone doing these contracts would have ever experienced before.
The idea of fixed price contracts is attractive but for anything long term are a nightmare. However it is all very well the ‘customer’ insisting on sticking to something that is advantageous to them but if it causes the supplier to go out of business or stop bidding is potentially a nightmare. There is no simple solution especially as the macro economy and raw material costs are outwith the suppliers control, and the macro economy is the responsibility of the ‘customer’ (Government as being responsible for MOD procurement) in this case.
Tricky. With only one side of the argument and inability to see the wording of the contract, impossible to make a judgement. From what little we know, Iād say ātoughā. The contract was fixed price. If thatās not profitable for you, donāt bid. If you sign a contract that then becomes a loss making endeavour, the law says ātough. You made a bad bargain. Suck it upā. I know we want to improve competition and break monopolies but Ā£50m wonāt put Babcock out of business (market cap is Ā£1.5B) and sends the right message. Taxpayers shouldnāt be on the hook… Read more Ā»
It depends if there are other matters MOD is negotiating over.
Babcock might take a very commercial view of it.
Given that profits caps are on the entire contact then it could be more complex than just the wording.
Procurement rules are supposed to prevent one negotiation affecting another. Each is meant to be handled in isolationā¦. Now, if thatās actually whatās happening or not I havenāt a clue. If not, you may be right.
āProfit capsā? Interesting. I heard āprice capā but not profit. Do you know how much theyāre allowed to make on them?
For SSRO
https://www.gov.uk/government/news/new-guidance-on-profits-on-single-source-defence-contracts-published
However, there are auditable profit caps on most contracts and strict rules as to what costs can be allocated to the contract.
All very interesting but the T31 contract is not SSRO.
We know Cammel Laird made a huge loss on RV SD Attenborough. If my memory works, building her needed 1.5 times more money than CL thought.
Basically, Babcock must see the same results. So, it is only about the “Putins’s war surprise” must be taken with special care or not, I think. Both way is possible. But, HMG need to find money. From where? Another cut in MOD? Probably.
Did not know of Cammel. Thank you for the info.
As I mentioned, all depends on contract & weāre discussing it without all the info but it seems to me youāre right. Babcock shouldnāt get any other treatment than Cammel. Unless that is, that Putin makes it an exceptional caseā¦ just my opinion but I donāt think it should.
Most contracts have clauses to cover scenarios which are not the fault of either side. Force Majeure is just one such example to cover things which we might think of as acts of god. Covid, War & its consequences might well stray into that territory. If I were the MOD I’d put something on the table. Ā£10-Ā£20 million per boat is chicken feed. I might also float the idea that a bonus were possible if they delivered on time and start talking about the price of the next batch of boats.
True, but force majeure for war usually requires a more direct interruption (ie if Babcock weāre building these in Ukraine & war stopped production). Itās been 20 years since I studied it but I seem to recall some cases involving deliveries from far east when Israel & Egypt conflict closed Suez for a while; courts said to ship owners āyouāre not at war, can still deliver. Just have to sail around Africa. Itāll cost more but thatās a you problem.ā This would seem similar. Weāre not at war & if events mean things are more expensive, not the customers problem.… Read more Ā»
It’s called ‘Project Management’, which appears to be missing once again on a defence project. Micro cost analysis when properly applied identifies under and over-runs and should be in action 24/7. I guess there is a weekly’ Around the Fire’ meeting with the senior controllers to check the progress. Well, it should be at least daily and any wobbles immediately flagged. You may say this is in place, yet there must be an element of poor fiscal monitoring on both sides by virtue of this article.
What would flagging up such problems a few days earlier achieve? Identifying a problem doesn’t fix it. What would the controllers actually do?
In my day it was Sigma but many other processes are available. Problem-solving does not necessarily mean additional costs but we are talking about government projects, which invariably escalate in real cost terms. Admittedly, costs are very liquid at this time but if managed professionally the total cost forecast for the five vessels should be resolved once the final hull hits the water.
Six Sigma is for process improvement, not project management. I would expect either Prince2 is being used for this project.
They are interwind, well they were in my day.
Theyāre complementary but not equivalent.
Agree improvement methodologies are there to improves processes already in place. Project management is there to create something new. You cannot improve so thing that is yet to be createdā¦so they can and should be complementaryā¦but used in different time and place for different outcomesā¦.for knowledge creation that what research methodology is for and for an actual product thatās what project management is forā¦.for improvement of what is there already you use QI..so you can actual use QI methodology to improve your project management processā¦which is sort of what agile does it uses Project management with a layer of QI… Read more Ā»
Any contract contains clauses written or implied to address situations which are not foreseeable. Provided that price increases are limited to these scenarios then that is reasonable. Babcock should not be bashed any more than any other company or individual in these tough times. That said companies & individuals need to be more robust. This will not be the last shock to affect us all.
So if we cut out Seaceptor, takeaway the helicopter and the gun?ļ»æšļ»æSeriously though please God we do not try to start cutting corners or delaying the programme. We’re going to need everything that floats the way the world is going.
So the Govt deliver an absolute black Swan event and don’t just damage the economy they completely trash it, and then tell Babcocks – your problem.
I’d be minded to remind the Govt of just what a step change in breaking a monopoly supply change has done for costs and if they don’t up, good luck on the T32 and it’ll be more than this sum they’ll be spaffing out to Big And Expensive.
Should Carlsberg ever do idiotic governments, it would be this one.
Pretty sure the government werenāt responsible for Putinās invasion of Ukraine or the pandemic. Both of which caused the current high inflation rates.
Keep putting them right on the causes for high inflation Sean. The ability of some posters to ignore how Ukraine and COVID have impacted on inflation in every developed country is astonishing. The only significant blame I’d ascribe to UK governments of both parties is not building gas storage or more nuclear over the last 25 years in order to improve our energy security and resilience to short term cost shocks
Unfortunately these days some people think itās morally justifiable to distort the facts if it furthers their pet political cause. Which is why itās so difficult to have reasoned debate when itās obvious your opponent is being deliberately disingenuous. More gas storage would be useful but the UKās big failure has been to invest in more nuclear. Renewable is great, but weāre going to have to increase the number of wind turbines by 30% in future years just to generate what we do from wind today – less wind is one of the effects of climate-change. The concept of SMRās… Read more Ā»
On the ‘macro’ side – I guess you’re involved in economics – So, you’ll always have more points you can rely on – I disagree.
The UK was a treaty partner to the territorial integrity of the Ukraine; now, we form – the Czech Republic in 38/39.
We should have learnt from that frankly watershed moment and deployed to Ukraine when they were invaded.
Check Mate š
Not involved in economics at all – closest I came was working in IT in the City for most of the 90āsā¦. But I do keep abreast of whatās happening economically as I plowed money into my personal pension funds as soon as I left university. So I now have funds more than 10 times the average for my age group. But I also know the crash in 2008 cost me Ā£200k and Putinās invasion cost me Ā£50k š¤·š»āāļø Yes ourselves and the USA were guarantors to Ukraineās territorial integrity when it abandoned its nuclear weapons. Which is why Iām… Read more Ā»
Well met Sean.
Sorry Sean, should have read Czech Mate.
(Hope all is good).
Sad news, but after 29 yrs of excellent service it’s time to say farewell.
UK Royal Navy Type 23 frigate HMS Montrose decommissions
19 APRIL 2023
“The UK Royal Navy’s (RN’s) eighth Type 23 Duke-class frigate, HMS Montrose (F 236), has officially retired after 29 years of active service.
The ship was formally decommissioned during a ceremony held at HM Naval Base, Portsmouth, on 17 April.”
LINK
Hi Nigel, wonder if it will be canabalised or even gifted to Ukraine or sold or kept as a training vessel or an exhibit?
Gifted to Ukraine would be the best bet if it still has some legs.
Maybe Babcock could be told “If you do not like the current contract, maybe the MOD should contact another shipyard”?
Babcock are the only game in town. Going to another UK shipyard would be fruitless. Laird’s couldn’t deliver a frigate in less than a decade, even with help. Govan is accelerating the build speed of the Type 26, H&W are doing the FSSS, nobody else even stands a chance. Going abroad would bring the wrath of Parliament down on the Ministry if they were stupid enough to try it. Asking for partial insulation against a large inflation rate spike isn’t outrageous. Everybody else is asking too, with differing levels of success. Threatening to go elsewhere would not only be a… Read more Ā»
So where are the profit margins?
Babcock won the contract and are contractually obliged. You take into account inflation surely this was done?
Sweep steak that the MOD will give in and pay?
I know we’ve had two, once in a century, economic disasters with Covid & Ukraine, but even Italy & France who have an even larger national debt than the UK are building highly capable warships. The T31 should have a 5′ Mod4 gun, 57mm in B position, 8×4 Mk41 & at least 24 Sea Ceptre & some anti Submarine capability such as Variable Depth Sonar & torpedoes built into the sides, as with T23 which they are replacing. The reported Sonar 270 is a replacement Nixie anti Torpedo decoy system, not a Submarine detection sonar. The T31 as it is… Read more Ā»
Every country in the G7 with the exception of Germany has higher national debt as a % of GDP. However thatās not only factor thatās relevant, as Liz Truss discovered to her shock last year. The 57mm gun met the RNās requirements and matches the main gun being fitted to the new USN Constellation class frigates. As for missiles, I think thereās only a single spot for them on the T31, so the question is how much space to assign for dedicated SeaCeptor silos, and how much for Mark 41 VLS, plus how much deck space for the NSM canisters.… Read more Ā»
You breaking the narrative of the UK being screwed while America and Europe power ahead, please stop š As you are no doubt aware it does not matter that America is about to over take Italy in terms of debt to GDP ratio and also paying the highest borrowing cost in the G7. Clearly it can just stay on this path forever with no consequences pumping out Zumwalt Class battle stars and B21 star destroyers to its hearts content while never so much as thinking of balancing a budget. Clearly the UK also screwed because it has higher inflation than… Read more Ā»
What can I say in my defence except that my childhood hero was the boy in Hans Christian Andersenās story, āThe āEmperorās New Clothesā š¤·š»āāļø š
Didnāt know the USA is paying the most to service its debts, thatās a very bad sign. Personally I think Italy is the shakiest in the short-term. But Japan has the worst long-term issues.
Totally agree with you about the lack of ASW capability. It’s a serious reduction in our ASW warfighting capabilities given that the 5 T23 GP ships that they are replacing have very decent ASW capabilities through their excellent hull sonar and quietened propulsion systems.
You’re basically describing a Type 26. We could have chosen 2 Type 26 or 5 Type 31 for the same budget. They chose 5 Type 31. You can agree or disagree with their choice but that was the choice.
Covid might well have been a once in a century event, but war that hits us economically isn’t. I only wish.
Royal Navy is the strongest in Europe so any comparisons with Italy and France are meaningless. As for ASW capability on T31, of course it would be amazing if they could be quietened and have more VLS but it is all about cost. I donāt know the maths for the cost and extra VLS and SSTD but I assume at least 1 hull would need to be knocked off for costs. All well and good except politically. Reducing hill numbers looks bad, regardless of capability. If the money isnāt there, it simply isnāt there. That is why T32 still isnāt… Read more Ā»
Hmm, no French Navy is the strongest in Europe. They have a proper carrier with AEW and aircraft with anti ship missiles.
5 crowsnest vs 2 E2s F35B with paveway IV with a range of 30km vs Rafale with 70km exocet. 2 carriers vs 1 carrier 8 ASW ships vs 6 ASW ships 6 destroyers vs 4 destroyers with less VLS. Crowsnest isn’t ideal but at least it can provide a permanent capability. Hopefully in the future drones will replace it. Again, no ASHM is unfortunate but that will be solved in the future. 5th gen vs 4.5th gen aircraft isn’t a comparison really. Astute is better than barracuda class with 1 more astute. Our destroyer force is much better than the… Read more Ā»
They have 3 E2D, UK have no Crownest operational.
Rafale have Exocet, ASMP, SCALP and for air to air Mica and Meteor, superior to the current level of F-35.
France have 6 modern ASW frigates, UK have none.
In total frigates are 11 vs 11 but French ships are more modern.
UK has advantage AAW destroyers 6 vs 4
No ones knows what is the best submarine but RN have number advantage 7 vs 5
They have 3 E2Cs, of which only 2 are deployed on the carrier. The La Fayette class is inferior to T23 as it has diesel propulsion and has much inferior air defence. Half of Frances destroyer fleet had just 32 VLS cells. AMRAAM on a 5th generation jet is superior to Meteor on a 4.5th gen jet regardless if meteor is the much better missile. If you look at CdGs wiki on the subsection development you will see why only one carrier is such a flaw. Or look at PWLS to see why 2 carriers is much better. Mica is… Read more Ā»
Do you think their profit margins accounted for double digit inflation? Its likely theres a cap in the contract limiting the governments financial exposure to cost growth to a maximum of 5 or 6% per annum as it was a fixed price delivery contract.
They will have taken account of inflation based around the average for the last 10 years and doubled it (probably). That doesn’t get close to what it is now although it will no doubt return to normal soon enough.
So just to be clear and very much like all these people on Strike claiming the cost of living Crisis is causing a problem, they are all employed in a secure Industry with all the perks that working in a sector provide. Yet you dont see anyone who is self employed joining that strike. ???? IF this Huge payrise is given will they hand it back when that cost falls. Even Nicola Sturgeon could do the maths on that one. Errrrrrrrrrrrrrr No. Babcock has huge contracts with the MOD, do you reckon they are going to risk them all for… Read more Ā»
What does the contract say? Is it under Scots or English law?
Sounds like some more contract write downs are on the way as high inflation will be hitting all parts of the business along with wage rise pressures ?
Hmmm…on a tangential maritime issue–read an article that stated HMS PWLS will be extended in drydock to remedy the misalignment of the second shaft, w/ a projected total cost of Ā£25M/multi-month delay, for this misadventure. Beginning to wonder whether the Admiralty should be contacting the Holy See to dispatch a certified priest exorcist willing to make port calls? š¤š³š±š
She will be out again soon enough. She is having some scheduled work done at the same time I believe.
Probably best to fix it just now while the other carrier is operational.
Morning MS.Exactly and in any event, the whole idea was to have one carrier operational whilst one was in refit/repair or standby. Read the Mail online article on this and weep!!
Any long term contract must include an escalation clause unless the contractor has pre estimated his cost increases and tendered on a fixed cost basis, in which case he has gambled on the future and the risk is his! If however there is a Force Majeure clause then this introduces a grey area.
However,one would think that these contracts would have been fine tuned to the nth degree by now so why do these disputes keep arising?
Ā£50-100 million stand by fund is nothing in the scheme of things, looks at the waste of funds on contracts the RAF have had such as Nimrod etc etc. The RN overall does good and not forgetting the monies are being spent for the most part in the UK unlike the other services. UK Gov get most of what they spend back on UK made products.
Surprised there hasn’t been a post about the new drone trials, with the jackel drone live firing a LMM missile. If successful and an order placed, it could be pretty game changing for the river class, allowing them to actually hunt at range. Firing a LMM at a pirate is pretty unlikely but it would for make them have second thoughts about trying to out run the RN ship.
Firing missiles from drones are not what we need for the B2 Rivers. We need remote sensors, like a smaller, cheaper version of Peregrine (Camcopter).
Jackal is a long way from either capability. Camcopter had LMMs strapped to it fifteen years before acceptance as a Royal Navy capability (without the LMMs), and it still has another year before it’s operational.
Kinda need both, as no point being able to identify criminals if cant then do anything about it as they are too far from the ship. Which is why US coast guard and the ones around the world all use helicopters but we were too cheap to pay for hangers.
It sounds like Babcock didnāt get inflation protection in the contract and now they want to retrospectively include it
O/T but significant news from Australian government
https://www.abc.net.au/news/2023-04-21/army-projects-drastically-cut-in-defence-shakeup/102254536
Interesting, I guess itās a realisation that you canāt defend Australia with IFVās. something had to give to pay for all the AUKUS naval spending.
They probably realised that if they need IFV they already lost.
I’d never dismiss the Aussie fighting spirit. If you’ve landed in Aus’ to conquer, you are in trouble no matter whose army you’re with!
Cutting defence significantly in the face of an aggresive, expansionist PRC is extremely short sighted & gives all the wrong signals. That artiliary support cut is the most foolish. Look at Ukraine crying out for more guns & ammo in the face of human wave attacks.
They are not cutting apparently, but putting the money in anti ship missiles and other assets for not one enemy have a chance of invading Australia.
Hanwa are investing in a plant in Victoria state to build the K9s that Australia ordered. Seems like they cancelled half the order. Maybe an opportunity for the UK to step in with an offer?
Delighted to see the Portsmouth harbour HMS Warrior live webcam is back online after a lengthy refit. Scans round the harbour. Great for checking what RN vessels are in port etc. See as far as the IOW on a good day.
https://historicdockyard.co.uk/warrior-webcam/