BAE says it cannot build ships to budget (UK's new aircraft carriers)

The Financial Times ^ | July 13 2003 22:09 | Last Updated: July 13 2003 22:09 | Mark Odell

[alnitak]

The UK Royal Navy may have to accept a sharp reduction in the size of its two new aircraft carriers after BAE Systems warned it could not build the designs to budget.

The company, which is Britain's biggest defence contractor, has told the Ministry of Defence that it would cost up to £4bn to construct the pair, compared with the £2.8bn costing in January.

BAE won the lead role on the programme to build the warships - the biggest ever to be built in Europe - after a bitter battle with Thales of France.

The navy has been told there are no more funds available. So to meet the original budget, planners have been asked to consider designing smaller and less sophisticated ships.

One MoD official said: "The choice is bleak. We either find more money or we build smaller carriers."

Any move to shrink the ships would reduce their effectiveness and ability to "project power" around the world.

Instead of carrying up to 48 aircraft each, as planned, each vessel could carry as few as 20. This reduction could also affect the UK's commitment to the F-35 Joint Strike Fighter - a joint programme with the US - which will be carried on the ships.

Tony Blair was planning this week to use the unprecedented level of US-UK co-operation on the F-35 to convince George W. Bush, US president, to ease restrictions on the sharing of sensitive defence technology. Such a move would make it easier for BAE to merge with an American defence company.

The MoD said the review was "normal" at this stage of the procurement cycle. It denied that the capability of the ships would be reduced. "Regardless of the final decision we are confident that the carriers will be able to fulfil the requirements identified in the SDR [strategic defence review]."

The government's decision to split the carrier contract earlier this year was denounced as a fudge by critics. Although BAE is leading the programme it was forced to build the ships to Thales' design. Over 40 years the contract will be worth about £9.2bn, including support and maintenance.

The scale of the budget overrun raises fresh doubts about BAE's ability to manage big defence contracts. Earlier this year taxpayers were forced to pay £700m to bail the company out on cost overruns on the Nimrod maritime patrol aircraft and Astute submarine programmes.

But rival industry executives and MoD officials say the government's decision to force BAE to build the ships to the Thales design is largely to blame.

A decision is expected this week on whether to award a multi-billion pound contract for Hawk fighter jets to BAE. No final decision has been taken. Additional reporting by Christopher Adams

[alnitak]

My jaw hit the ground when I read this. A £1.2billion increase in the space of 6 months? Who do they think they are kidding?

If this turns out to be true I for one will be seriously disappointed : these new carriers are supposed to be an upgrade to our current "mini" carriers. If they get scaled down that will be seriously compromised.

Does anybody know how much the USS Ronald Reagan cost? £4billion is about $6billion, I'm wondering if it would be cheaper just to ask the Americans to build us a couple to the same design...

[Support Free Republic]

Hint! Hint!Hint! Hint!Hint! Hint!

[squidly]

Believe I saw it stated somewhere that the U.S.S. Reagan cost about $4.5 billion. Odd, considering it is a much larger carrier than the ones we're talking about here.

[exit82]

The USS Constellation carrier just got decommissioned. We could sell it you cheap. It is 44 years old, but has been meticulously maintained, has all electronic upgrades, burns oil for fuel and is battle teated, having just finished helping winning the war in Iraq.

[squidly]

Newsmax article here says the Reagan cost about $5 billion. Maybe the British Admiralty should give Newport News Shipbuilding a call, get themselves a bigger carrier for less money.

[squidly]

battle teated

Boy, I could have some fun with that one.

[alnitak]

Thanks. Looks like it will remain out of our reach, unfortunately.

[tlb]

As I recall the British deisgn is 2/3 the tonnage of a Nimitz class carrier. That being the case I expect there are shipyards in the US besides Newport News that could handle such a contract. I don't think Newport News could however build Nimitzs for the Brits without deferring scheduled US naval construction.

All just theoretical discussion of course. The Commons would never " reward " US defense firms with such a contract in the current anti U S climate.

[SMEDLEYBUTLER]

The USS Constellation carrier just got decommissioned.

Constellation will be decommissioned on 7 August.

It is 44 years old,

Costellation was commissioned in October of 1961 making it less than 42 years old.

[Chewbacca]

Why not just ask the US government if the UK can purchase the USS Constelation? I hear they are planning to decommission it.

Probably cheaper for the UK to upgrade it than to buy a new one.

[exit82]

I think it is a British term;).

[exit82]

Thanks for the date of decommissioning. She is in defacto decommissioning, at port resting in San Diego awaiting the formal ceremony.

As for the age, we are both correct. The Constellation was christened in Oct. 1960,and commissioned a year later, and was built in the 1958-1960 or so time frame, so much of it is,indeed, 44 years old.