MoD 'to scrap cut-price frigates plan' after fears ships would not be able to protect themselves
Hopes of bolstering the Royal Navy with a fleet of five “bargain” frigates at an all-in cost of £250m per vessel have foundered after the Ministry of Defence conceded the ships could not be delivered at that price.
The National Shipbuilding Strategy unveiled in 2017 floated the concept of a new class of budget warship that would support the UK’s shipbuilding sector by spreading work around yards, along with breaking BAE Systems' near-monopoly.
Named the Type 31e - with the “e” denoting it was for export - the new ships were priced at a point that would be attractive to export customers, with a tight deadline of the first one going into service in 2023.
However, Whitehall and industry sources have confirmed the £250m target has now effectively been abandoned after warnings that a viable vessel could not be built at the price.
It is understood that what the MoD terms “government-furnished equipment” - thought to cover items including weapons and sophisticated software - will now not be included in the costing.
The MoD is also taking on more financial risk related to the project, such as foreign exchange movements and inflation pushing up the cost for bidders.
“The parameters have changed,” said one Whitehall insider. “We’re reverting back to a more normal form of procurement.”
Naval experts raised concerns that at £250m the ships could be under-armed and not able to protect themselves, making them a liability rather than an asset to the Navy.
The first tender to build the Type 31e was halted last summer, with the MoD saying that there were “insufficient compliant bids”.
It is now understood that industry concerns about how capable a vessel could be delivered under the price cap was part of the reason the original competition was scrapped.
Bidders for the Type 31e include a partnership of BAE Systems and Cammell Laird, and groups led by Babcock and Thales, as well as one bid headed by Atlas Electronik UK.
“At £250m for everything, it was a very big risk for industry to take on,” said one industry source involved in the bidding. “The basic cost of £250m for a ship hasn’t changed, but now some equipment won’t be included in that price. Financial conditions around the contract such as inflation and currency risk have also been altered.”
Defence analyst Howard Wheeldon described the development as “good news for the Navy”. He added: “It sounds like a way forward for the Type 31e has been found, paving the way for the Navy to get the ships it needs.”
An MoD spokesman said: “The preferred bidder for the design and manufacture of the ships will be announced by December 2019, and we intend to purchase five ships at an average production cost of £250m per ship.”https://www.telegraph.co.uk/business/2019/05/07/hopes-cut-price-frigates-navy-dashed-mod-gives-way-250m-per/