The NAO report found that the MoD had not included £9.6 billion of forecast costs in the equipment plan.

The NAO report found that the Department has not included £9.6 billion of forecast costs in the Plan. This variance arose as a result of the Department’s 2017 budget setting process not being able to match costs to available budgets. In addition, the NAO’s review found that the Department has understated forecast costs by at least a further £1.3 billion as the planned cost of buying five Type 31e frigates are not included in the Plan, while the cost of nuclear-related projects continues to grow.

There are also significant risks to the cost of the Equipment Plan: over-optimism in forecast costs of £3.2 billion as calculated by the Department’s independent Cost Assurance and Analysis Service; and the risk of increased costs of £4.6 billion due to the Department not using foreign currency exchange rates that reflect market rates at the date of the Plan.

The Department is also relying on ambitious savings to help fund the Plan. The Department reports that it has achieved savings of approximately £7.9 billion against an increased savings target of £16 billion, with approximately £8.1 billion still to be achieved by 2027. However, there is a lack of transparency on the full amount of savings included in the Plan and the Department does not have evidence to support all the savings it has claimed to date.”

 

The build plan for the Type 31 Frigates is expected to follow a similar pattern to that of the Queen Elizabeth carriers and early Type 45 Destroyers in that blocks will be built in yards around the UK and assembled at one main location.

Modern shipbuilding makes considerable use of prefabricated sections. Entire multi-deck segments of the hull may be built elsewhere around the UK, transported to the building dock or slipway, then lifted into place and assembled into one ship. This is known as block construction and is far more cost effective. Yards pre-install equipment, pipes, electrical cables and any other components within the blocks, to minimise the effort needed to assemble or install components deep within the hull once it is welded together.

Where is the Type 31e Programme today?

Recently Babcock announced that it would lead a team of industry partners in a bid for the new £1.25 billion Type 31e Frigate with work to be undertaken in Scotland, England and Northern Ireland.

Babcock say work would be shared across the UK its facilities in Fife and Devon being among the prime locations for building. Ferguson Marine on the Clyde will also be in line for the work. Babcock will act as the overall programme lead, whilst Thales will have overall responsibility for the development of the Mission System solution. The make-up of the team, the company say, will ensure that the economic benefits of the programme are shared across the UK. Ferguson Marine on the Clyde, Harland & Wolff in Belfast and the Babcock facilities in Fife and Devon will all have ‘key roles to play’, while much of the equipment provided by Thales and others will support jobs across the UK.

Babcock CEO Archie Bethel said:

“Team 31 will allow Babcock and Thales to take forward the key lessons from the Aircraft Carrier Alliance and apply them in a new and highly capable team with Harland & Wolff, BMT and Ferguson Marine. We firmly believe that our combined skills can deliver an affordable and effective Type31e Frigate programme for the Royal Navy and offer something new and exciting in the export market. With a high degree of UK content and the use of innovative technologies, we believe that our approach will deliver real benefits to UK plc.”

Victor Chavez, CEO of Thales UK said:

“Thales UK is delighted to be working with Babcock and our partners as part of Team 31. We recognise the diversity of roles anticipated for Type31e and, together, we will create and exciting, innovative and flexible capability for the Royal Navy based on the best of UK and international technologies in an open-system architecture that will ensure long term value for money.” 

Sarah Kenny, BMT CEO said: 

“BMT has supported the UK and global maritime sector for decades. As a proud member of Team 31, we are delighted to be shaping the Type 31e programme, and we welcome the opportunity to bring our substantial global engineering experience to bear on this vital UK defence programme. We are confident that the combined Team 31 offering will meet the exacting requirements of the UK MOD whilst creating UK shipbuilding industry momentum and a competitive offering for wider export opportunities.”

Babcock were originally offering the ‘Arrowhead 120 while BMT were offering the Venator 110, the companies now say that they will be exploring both available designs to determine the best possible option. The companies say that new arrangement draws on combined strengths and will deliver ‘innovative, capable, affordable and flexible customer solutions, within a fast changing and increasingly demanding environment’.

As we reported last year, BAE Systems announced a partnership with Cammell Laird, who would ‘Prime, build and assemble’ the vessels at their Merseyside facility while the Clyde will focus on the Type 26 Frigates. If the bid is successful, Cammell Laird would be main contractor with BAE providing design and combat systems.

BAE themselves say that shipbuilding capacity on the Clyde will be full until the mid 2030s while the Ministry of Defence want the first of the new Type 31 Frigates in service by 2023.

The MoD is hoping to reduce its reliance on BAE and cut the costs of procurement by spreading shipbuilding across civil and naval yards. To this end, the government are implementing the results of an independent report into the National Shipbuilding Strategy by Sir John Parker which recommended that the Type 31 Frigate build be spread across the UK, with blocks and components being constructed in yards in both Scotland and England.

The National Shipbuilding Strategy is intended to be a “radical, fundamental re-appraisal of how we undertake the shipbuilding enterprise in the UK, intending to place UK naval shipbuilding on a sustainable long term footing.”

BAE themselves signalled their own reluctance to bid for the Type 31 Frigate as prime contractor due to concerns of a “race to the bottom” on price. Speaking to The Herald here, BAE managing director Iain Stevenson said:

“We do want to be involved in Type 31. But we have questions. Does it have a budget? What are the timescales. We have not got solid facts. Type 31 could be a race to the bottom. If it is a front price contract people might bid for it to win and it and it might put them out of business. We would not, because we are BAE Systems.”

In a press release signalling a their intention not to bid to build the vessels BAE say:

“BAE Systems is focused on the manufacture and delivery of the two QE Class carriers, the five River Class Offshore Patrol Vessels (OPV) and the first three City class Type 26 warships, as well as continuing to develop and upgrade combat management systems on all Royal Navy ships. Taking account our current and future workload, including Type 26, our shipbuilding capacity on the Clyde will be full until the mid 2030s.”

68
Leave a Reply

15 Comment threads
53 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
28 Comment authors
  Subscribe  
newest oldest most voted
Notify of
TH

There are serious questions to be asked regarding financial mismanagement and the wasting of taxpayer pounds by the MoD. They are given vast sums of our money and must learn to budget properly as any householder has to. The military must learn to live within its means. I read with interest an article written by former defence chiefs Generals Brammall and Ramsbotham which suggests that the nuclear deterrent is a waste of public money. With the disaster of Brexit fast approaching, expenditure cuts will surely occur and rightly so.

farouk

The military must learn to live within its means. Actually the Military does, the vast amount of financial mismanagement is carried out by civil servants and politicians. Classic example, stationary, I would order through the official MOD catalogue , however the cheap pens they supplied, would break within seconds, sick of ordering such crap, I out of my own pocket bought Bic pens by the box load. Its the same with the eco photocopying paper, problem is as it is so cheap it jams. As for your comment regards getting rid of the Nuclear deterrent, lets say we do, what… Read more »

Ben P

Classic TH troll. Go back to your bridge.

Fedaykin

“There are serious questions to be asked regarding financial mismanagement and the wasting of taxpayer pounds by the MoD” – Much evidence that is true considering the number of bungled defence programs….need I mention FRES? “They are given vast sums of our money and must learn to budget properly as any householder has to. The military must learn to live within its means.” – Sounds perfectly reasonable to me. “I read with interest an article written by former defence chiefs Generals Brammall and Ramsbotham which suggests that the nuclear deterrent is a waste of public money.” -There are ex defence… Read more »

dadsarmy

I didn’t actually follow FRES, but the thing is that to evolve future strategy, you will get projects like FRES and GCS that don’t end up themselves being entirely successful. But a lot is learnt from such projects, and hopefully that is incorporated into future strategies and designs.

Big business does the same, it has million pound “wasted” projects from which much is learnt, but since as businesses they have an actual bottom line they tend to get criticised less for that, though of course shareholders do want a report, and an accounting of how the project contributed effectively to R&D.

marc

“Spot on in respect of Brexit,expenditure cuts are happening right now”proof?

Paul.P

Brexit is starting to have an effect. Its undeniable.
http://www.bbc.co.uk/news/business-42432516
Also NHS euro nurse retention decimated.

Є ТЬ!

You are f..cked ruSs troll from Olgino!

TH

No.

andy reeves,

!!

andy reeves,

is it just me or does the type 31 sounding like a con job and it will never actually happen

andy reeves,

the return to R.N service of h.m.s broadsword and h.m.s brilliant from brazil part of the ocean deal.

Steven

“disaster of BREXIT” LOL.

beginning to think the t31 is all a big con, and won't even happen

type 31 not going to happen

Steve

Disaster of BREXIT?

Which of course you already know the outcome, so far the data suggests the exact opposite.

This about the Military not current political viewpoints.

Alan Reid

Brexit hasn’t happened yet, Steve …… but let’s hope TH is too pessimistic.

andy reeves,

time for a single british defence force? with better ability to look ahead at defence need, merge the s.a.s and s.b.s ,merge fleet air arm and R.A.F mergers in the army have worked without diminishing the nations security. and title the next t 26 gibraltar, to give the finger to spain. remove the ski ramps on the carriers, fit emals instead and buy the navalised gripen or rafale, sparing the nation £millions against the cancelled order for the f 35. comission surveys for the 19 submarines in mothballs with the view of returning as many as possible to service.

Callum

I’m sorry, but very little you just said will save us money. In fact, it would cost us MORE. EMALS is stupidly expensive and currently unproven, and you want to make massive structural changes to two aircraft carriers that have just finished construction. Even if we went ahead with the millions of pounds worth of work that required, cancelling our F35 order at this stage is just impractical, especially because we’re buying the variant with the most British investment and a lot of the money is going to British businesses. Buying a completely foreign design like the Gripen or Rafale… Read more »

Pacman27

I think this is precisely the kind of discussion the UK should be having. We have a large budget – that is undeniable, but we are constrained by clean up activities from having a much larger military previously and the requirements of politicians to show off our mini US style capabilities. So here is my view: 1. Politicians to rein in their requirements and align to a more sensible regional outlook. 2. Provide separate funding for the MOD to drastically reduce its estate to 12 or so UK based super bases (review non UK bases separately). 3. Provide separate funding… Read more »

Steven

andy, what the hell are smoking ?

Harry Bulpit

The sas is the most elite fighting force in the world, and people have literally died trying to get in. Those honour and tradition mean nothing to people these days. A fighting force is only as good as its moral, and these planned mergers would only destroy what is left of British moral.

Daniele Mandelli

Agree.

Dave Branney

Totally agree. Historically and in practice the SAS and SBS have two totally different roles. The SBS are your sneaky scouts, who live by stealth. The SAS on the other hand are there to smash down doors and to take out the target the SBS has been observing. That’s not to say the SBS don’t go full out when required, but generally they don’t. And conversely the SAS are very adept at surveillance. The SAS and SBS share the same selection process, however to join the SBS you also have pass the additional swimmer selection, which apparently is horrendously difficult… Read more »

Paul.P

This is radical out of the box thinking and is long overdue for debate.

Peter Craig

Well that was an informed comment regarding Emals and carrier A/C!

dadsarmy

Brexit is looking bad Alan, but as an economist said, put 5 economists in a room together and you’ll get 6 different views. Scotland is adapatable being small, one of the points us Indy supporters make, but as long as the UK can be adaptable, it can do well out of Brexit (I voted Remain and still would to give my standpoint).

Fedaykin

What data? I haven’t seen any evidence of BREXIT being anything but a disaster.

andy reeves,

brexit? i’m just sick of the word. i wish i’d stayed in bed on the referendum day.

Steve

Lowest Unemployment in 45 years
Highest Foreign inward Investment in Europe
Manufacturing at record highs
Pound back at pre vote levels

Chris

Fedaykin – OK so lets have your sources and links for all this “BREXIT being anything but a disaster”

And if its the Guardian it doesn’t count ….

Aaron Darkwood

Brexit hasn’t started yet.

Chris

Steve – I thought the same thing. The poor dears are so embittered because people didn’t do as they were told they just can’t let it go. Self righteous egos so bruised they seek to create ‘disaster’ at every news item even if it has nothing to do with the discussion and wish to have us ignore the democratic wish of the British electorate. Best of three? I have a quiet smile every time the good news keeps coming despite their pathetic ‘Project Fear’. I waited 40+ years for my 2nd referendum (having voted to Remain in the EEC in… Read more »

Geoff

The T31 project is clearly going nowhere….more study groups and partnership negotiations.

Patrick

Give it some time, it already has a fast tracked timeframe compared to the T45 and T26 programs.

andy reeves,

we’re all aware that the M.O.D couldn’t organise a tea party.

Ben P

There is actually a very tight planned out timeframe for the type 31. It is very clearly going somewhere. It is not like the type 45/26, they are getting a already designed ship.

Paul.P

Type 31 seems well organised. Fixed cost, fixed timetable, minimum requirements + adaptabilty criteria and project phases which between customer and potential competitive vendors which formalise dialogue on design compromises. It seems the MOD and RN might be learning how to do things. Better late than never I suppose…
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/645149/T31e_RFI.pdf

Daniele Mandelli

Just who manages MoDs budget? It’s been going on for years. Heads should roll. Publicly. Instead all we will get is excuses and whitewash.
TH is correct on financial mismanagement but leave the other stuff out. Brexit has nothing to do with it.

Steven

Thank you Daniele, a voice of reason 🙂

AV

Brexit: best thing since sliced bread.

Daniele Mandelli

Best thing that has happened in my lifetime.

AV

Agree totally 🙂

Paul.P

Brexit is. Tsunami. How things turn out will depend on how we organise the clean up. Throw away rubbish, keep what is of value and build new and better.

dadsarmy

“while the cost of nuclear-related projects continues to grow”

This is the sheer stupidity of the cost having been transferred to the defence budget.

To have or not to have a nuclear deterrent is rightly the decision of Government and Parliament, therefore the cost shold be borne directly by the Government as previously, via the Treasury.

The decision as to whether to have 5 T31e and 138 F35-B is rightly part of the MOD’s domain, and that should be out of their own budget, without having it cut by increasing costs of nukes.

In this respect the UK is stark staring bonkers.

JohnStevens

Agree.. The nuclear ballistic missile subs should be run separately by the treasury.. Think currently it’s taking about 6% of the defence budget each year! That money is so very much needed for the conventional armed forces. Even though i’m a huge supporter of the UK keeping it’s nuclear deterrent it should never of been included in the in the MOD budget.

JohnStevens

core MOD budget *

Mr Bell

They should scrap the type 31 project and go back to a more simple patrol version of type 26 that could be upgraded to full fat asw type 26 in the future if needed. Save on developmental costs and give the RN 13 full sized powerful surface combatants. As for Brexit and TH etc points of view, what a load of hot air. If you live in a democracy you have to accept the majority vote. If Brexit ends badly then so be it. It was the voted for will of the people. No one knows what the ultimate outcome… Read more »

Daniele Mandelli

Join NAFTA for a start.

Trade more with the Commonwealth.

Agree the EU will come running soon enough.

All this talk of tariffs always ignores that it works both ways.

Paul.P

The big ‘failure’ of the EU is that joining it failed to improve oir balance of trade. The UK cannot feed herself. The idea was that we would a) substitute French agriculture for Commonwealth food and that b) the EU would buy our exports instead of the Commonwealth buying our exports. Part a) happened but part b) has been a disaster. The EU have bought our financial services but despite valiant efforts to resurrect our manufacturing industry we have a huge deficit in manufactures with the rest of the EU. So we continue to need to borrow to finance this… Read more »

Stephen G.

It says something that “British” exports are Nissan, Toyota, Hitachi, etc., etc.

Mr Bell

Sorry for spelling errors…bloody auto correction on laptop. At least I am not a Putin loving Russian like TH.

Paul.P

Let me get my head around this…no budget for Type 31? So I interpret this to mean the 13 ship Type 26 budget was completely spent up by 8 ships. Words fail me.

Daniele Mandelli

How much was that budget?

Paul.P

Dunno, but until now I was naively assuming that the budget for 13×5,400 ton Merlin capable flight deck Type 26 = the budget for 8×6,900 ton Chinook flight deck capable Type 26 PLUS 5 x 4000 ton Wildcat capable Type 31. I simply cannot comprehend how it comes to pass that a potential shortfall of 5 RN frigates was not foreseen as the project specification matured. There must have been a complete lack of project governance.
http://www.naval-technology.com/projects/global-combat-ship-gcs-programme/

Daniele Mandelli

Lets hope there is an answer and all is in hand otherwise yet again it shows parts of the MoD are totally incompetent and should be publicly named and tried for failing to control and keep track of the finances given them.

Paul.P

I believe the RN do understand the significance of technology trends and budget constraints. Note this ( now withdrawn) publication.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/658163/20120503-JCN112_Black_Swan-U.pdf
This is not to say the idea of a ‘sloop of war’ is the answer but it does at least demonstrate that someone is thinking stratefically about how to turn the problems of complex warship costs into opportunities for new technologies. Seems to me we have an education issue. Neither the civil servants nor the MPs who sit on the parliamentary commitees who oversee defence spending were well enough equipped to do their job.

Paul.P

Since the often quoted cost of. Type 26 is £1billion per ship I assume the total project budget was £8billion to cover 13 ships.

Paul.P

So basically fhe MOD are saying that the 5 River 2s have come out of the Type 26 budget; bye bye Type 31?

Daniele Mandelli

I give up. Lost the plot completely!

Daniele Mandelli

From reading elsewhere, such as Gabriel’s Blog, it seems the money for T31 is there within the T26 budget and it had not yet been updated at the time of the NAO report.

Aaron Darkwood

Why do people keep stating reducing our forces to that of the USMC? You do realise we would have to DOUBLE our army size to get anywhere close to the 182,000 they have? There are no obvious gaps in forces that could be reduced. I do wonder what is in a type 26 that makes it a billion pounds, and a bear same size type 31 that makes it £250 million? Clearly it’s not steel cost? Could cheaper type 26 be an option as someone suggested? What would it lack to reduce 750 million? Type 31s will launch with likely… Read more »

Daniele Mandelli

Infantry Battalions could be reduced, and some of the manpower used instead to form the all important enablers, Combat Service Support Regiments that have been cut by the “cap badge mafia” leaving the army with 6 Infantry Brigades that are brigades in name only without a single RS, RE, REME, RA or RLC formation supporting them.

They do not want the bad press of cutting Infantry Regiment historical names so cut the supports instead leaving the British Army ridiculously unbalanced.

Darren

I think the BREXIT thing is not relevant in terms of cliff edge. Some good reports by Minogue, Ian Milne and Batten stated the actual direct cost of eu to the UK is around 60 billion a year, this was a few years ago too. The direct and indirect cost could be as much as 10% of our GDP, eu regs only benefit a tiny amount while UK regs would benefit far more to the UK economy. Out total business with eu is 8% in which we run a huge deficit, 11% with non eu Countries in which we have… Read more »

Daniele Mandelli

Careful with the positives of Brexit Darren. Lots of remoaners around who want democracy subverted and ignored.

Darren

I know. It is anti-democracy at work. It is horrendous. I do not know of any other Country that had this opposition to wanting to be free, seen as bad. No other.

Daniele Mandelli

Agreed. Keep fighting!

Darren

Will do cheers Daniele, and as I say to all, please excuse my poor grammar. It’s shame we cannot edit.

dan

Ah politics got to love them. Take a budget turn it end for end and blame it on something that has not happened yet. The bottom line is what dose the UK need. Food, Trade, Defence. and make it work for you .