The stories of changes to the T31 budget have at their heart relatively minor but key changes...
1: Exchange rate risk and inflation risk is taken by MOD, not by industry,
2: GFE not included in the total cost.
The first thing this indicates is how the tight the margins are within the T31 programme - for example the bidders are worried that future changes in exchange rates / inflation could push them into the red if they have to manage them from within a fixed programme cost. The message appears to be that they can meet the budget (with a bit of free GFE) based on current estimates of future exchange rates and inflation, but not if reality significantly differs from these estimates. It makes sense for MOD to take on this risk, otherwise industry would require a wider profit margin (and hence reduced T31 capabilities).
As we are now nearing the end of the competitive design phase, the offer to supply GFE for free is also likely to have only a small impact. What GFE are we talking about?
Probably the most likely is the 4.5 inch Mk 8 Mod 1 naval gun. MOD already owns spares in addition to those now fitted to the T23s and 'gifting' them to the T31 programme will not cost MOD 'real' cash, while avoiding the cost of bring a new calibre into service. Some other systems that might be candidates for GFE include the Hammerhead CESM system, Type 2170 torpedo defence system, decoys, and 30 mm MSI ASCG.
The Artisan radar is part of the BAE bid, but not Team 31. I don't think the radar choice for the third bid has been made public. At this very late stage, I doubt any of the bidders will want to change their design to incorporate Artisan. Even the BAE bid will likely only request 3 or 4 Artisan radars as GFE, and still have to buy 1 or 2 new sets for the first 1 or 2 ships constructed.
No one is likely to request the S2050 hull mounted sonar. To overcome obsolesce issues associated with the S2050 sonar and introduce a modern, sustainable architecture with lower through-life costs, in 2014 MOD awarded Ultra Electronics a £27 million contract for the Sonar 2050 Technology Refresh, latterly re-designated Sonar 2150. The contract covered the development and production of inboard/outboard sonar equipment for only the eight ASW Type 23s. Sonar 2150 incorporates a new, modular and fully digitised array, wiring is cut by one-third, reducing electrical supply requirements and making it possible to contain the sonar within a hull-mounted cone of reduced size and weight. Following the RN’s lead, Chile has now also opted to fit Sonar 2150 on its Type 23 frigates. The old S2050 sets on the five GP T23s, with their old 1990's obsolescent technology and increasingly difficult future support, are not going to be attractive to anyone. If HMS are included in any of the bids, fitting brand new S2150 sets, or another make/model, is far more likely.
Pretty much the same goes for the CMS, cabinets and computing infrastructure on the GP T23s. No one is going to take on the huge risk of trying to support this legacy equipment on their new ships.
The underlying message appears to be that some, or maybe all, the bidders need some of this GFE to be supplied for free if they are to squeeze within the £250m per ship budget.
We are now almost at the end of the competitive design phase and each bidder will be required to submit their tender to MOD within the next few weeks. The fact that we are not hearing (as yet) stories of the bidders demanding that the budget be significantly increased is probably a good sign. What we have heard (so far) is the bidders asking for help from MOD in managing future risks and can they have a bit of GFE for free. If that is all we hear, with no further demands over the next month or so, that is probably good news.