It is understood that the Ministry of Defence paid an extra £100 million for new Offshore Patrol vessels in order to satisfy a requirement to pay BAE a minimum of £230 million per year.

A house of Commons Briefing Paper explains the agreement:

“In 2009 the Government signed a 15 year Terms of Business Agreement (TOBA) with BAE Systems and Babcock. The TOBA guaranteed BAE Systems a minimum level of surface ship build and support activity of £230 million a year.

This was judged as the minimum level of work possible to sustain a credible warship-building industry in the UK and thus avoid the delays encountered during the Astute class submarine build caused in part by the loss of skilled staff following the gap between Astute and the Vanguard class submarine build.

If cancelled the MoD would be liable for industry closure costs and compensation to BAE Systems.”

Regarding the cost of the new Offshore Patrol vessels:

“The provisional cost of the new vessels was given as £348 million but because the TOBA required a £230 million a year spend with BAE, the Defence Secretary estimated the additional cost to the MoD of the ships, over and above the payments the MoD would have had to have made to BAE, is less than £100 million.”

The paper adds:

“Philip Hammond, then Defence Secretary, admitted “we are effectively ordering the OPVs to soak up money we would have been paying in any case to have these yards stand idle.”

Lord Astor of Hever said the Government provisionally agreed a firm price of £348 million with BAE Systems for the supply of three OPVs, inclusive of initial spares and support. He said this sum is “entirely contained within provision set aside to meet the Ministry of Defence’s obligation for redundancy and rationalisation costs.”73 Mr Hammond estimated the additional cost to the MoD of the ships, over and above the payments the MOD would have had to have made to BAE, is less than £100 million.”

The first of the five new vessels, HMS Forth, is expected to be handed over to the Royal Navy in 2017.

The Offshore Patrol Vessels have been ordered to fill a gap in orders after the second carrier and before the Type 26 frigates begin construction.

The Strategic Defence & Security Review states:

“We will buy two further new Offshore Patrol Vessels, increasing the Royal Navy’s ability to defend UK interests at home and abroad.”

The vessels will be used by the Royal Navy to undertake various tasks including border protection roles, including anti-smuggling, anti-piracy, fisheries patrols, and immigration law enforcement.

 

16 COMMENTS

  1. As I’ve pointed out to you before, you are mistaken if you think this briefing paper represents new news. It is merely a collection of publicly available data put together to level set those that wish to debate the upcoming FSS. The author has no inside information and is not leaking any new news.

    But you keep censoring away, I’m sure that serves some purpose. SMH.

  2. Is it £100m over the 5 ships, so less than £20m per ship?

    I doubt we could have got a lot of extra features for that, as it would have required more design time which would have eaten up most of the money, but we could have got something.

  3. These are poor excuses for warships. What were the MOD and NAVY top brass thinking? Why not look at the Irish or Spanish OPVs for decent ships that have presence and potency. The same thick top brass allowed the NAVY to not have any anti ship missiles on our helicopters once Sea Skua goes.

  4. This may not be new news, but it is right to keep the MOD to account on all it’s ill managed fiscal spending.

  5. i would have told bae to swivel since the destroyers they built are not up to scratch with propulsion failures,they were the ones who designed and built them giving suppliers specs to work to,so the book should stop at them,so i would have said no your not getting the money simple,s

    • Why not fit proper guns.

      For info- The standard WW2 RN destroyer had at least 4x 4.7″ main guns; 10x 21″ Torpedo tubes; various 40mm and 20mm AA guns. Had radar and fire control. Could do 35kn on 1750 tons.
      How did they do it?! I know which I’d rather be in if push came to shove.

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