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The Treasury and the Ministry of Defence (MoD) have agreed a £3.9 billion budget to build two Royal Navy aircraft carriers, The Times has learnt.
An announcement is expected before Easter after long talks between the consortium that will build the carriers — led by BAE Systems and Thales UK — and the Government.
The budget includes incentives to lower the price, with the shipbuilders taking a share of any cost reductions. This is seen as a key change in defence procurement and is likely to set the standard in future.
Under terms of the contract, the top price for the two ships will be £3.9 billion and it is hoped that savings will eventually cut that to £3.6 billion.
A further incentive programme will encourage the shipbuilders to share costs with France, which is also preparing to build a carrier. This could save a further £300 million.
Apart from BAE Systems, the consortium includes VT Group and Babcock. Thales UK is responsible for design.
The Future Carrier Alliance, as the consortium is known, is an attempt by the MoD to pool industrial talent and get away from the procurement culture of cost overruns and production delays.
Although Lord Drayson, the Defence Procurement Minister, is expected to confirm the decision to go ahead with the carriers by Easter, a formal contract is unlikely to be signed before the autumn.
The ships will be called HMS Queen Elizabeth and HMS Prince of Wales and will form the backbone of the Royal Navy for 30 years. They are due to enter service in 2012 and 2015. BAE joint venture, page 53
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It's amazing that the govt. can waste £9.3bn on the games, and yet won't allow the navy to build at full spec top quality ships. As i understand it the 2 carriers will be without side armour, will not have AAM defence such as Sea Sparrow on the US carriers. CIWS are a v. last resort and are not fulproof.
Really these ships need to have a large pot of cash to build the ships, kit them out fully and ensure that they are fully operational, not like other navy projects whereby the ship is built at a v. reduced budget, isnt then sea worthy and has to go back into port for another refit at twice the cost.
Come on Gordon, wakey wakey!
Rob, Greater London,
Yet again the arrogant dry economists (the ones who are wet behind the ears) at Treasury rule the roost (or here the waves), regardles of the views of those who will have to operate the ships.
Perhaps the UK should look at the history of penny pinching the armed forces in the last century to see if it can learn the lessons it should have done. There were some very close shaves.
Gerry Watts, Hobart, Tasmania, Australia
I really fear that these long overdue warships, when finally contracted by the civil service penny pinchers in the Treasury and MoD, are really designed and built as proper warships with specifications as wanted by those who sail and fight at sea. I hope the lesson was learned with HMS Ocean which was built to cicilian vessel standards and has since had millions spent during refits to bring it up near battle standards - simple things like redundant cabling circuits so that if cables got shot away there was a duplicate or even a triplicate circuit using armoured cable ducts.
Chris Goodman, Fareham , UK
While the contract to share cost savings is a long-overdue innovation, it doesn't hide the fact that this is a ship designed by the Treasury, rather than one the Royal Navy really wants. No doubt it will enter service in a bare-bones basic configuration. Hopefully the RN will then be able to add the bells and whistles in future refits. Thats if they don't get sunk in some future conflict first because of the penny pinching.
G, London,
Excellent news, I hope the entire ships are built in the UK, as of now I understand only the hull is to be british built in 4 blocks at 4 different shipyars in the Uk with final assebley at Rosyth ,eg some 60% of construction. The other 40% is at presemt to be put out to tender. I hope that this 40 % stays in the UK as well. Let France pay for the use of the design and build there own vessel
ray ccampbell, winnipeg, canada