The decision to delay the British CVF project troubles the consortium

08:03 GMT, June 30, 2009 defpro.com | As defpro.com reported last Wednesday, a report by the British Parliament on the UK's Type 45 destroyer programme outlined a number of problems that have been encountered in this important defence programme. One of those problems had been rising costs. The Ministry of Defence was said to be “confident that it will avoid making the same mistakes in the project management arrangements” for its two new aircraft carriers. Whether it has been for the same reasons or not, a leaked memo from the consortium building the carriers pointed out that the programme could cost an additional £1 billion ($1.7 billion). This would amount to a 25 % increase as total costs reach nearly £5 billion.

As the BBC reports, according to industry sources this price jump is largely due to the Government’s decision of last December to delay the carrier project by two years. The joint venture between BAE Systems and VT Group (BVT) had to reprofile the project and thereby had running expenses longer than expected. The remaining additional costs reportedly are attributed to the MoD’s accounting treatment and includes inflation adjustments and interest on capital.

The Public Accounts Committee (PAC) of the UK House of Commons noted, in the above mentioned report, that “the [ministry] believes it will not fall into the same trap on the carriers.” This may be the case, as the MoD delayed the carrier programme with the full knowledge that increased costs would result from the decision. This pricey decision was taken in order to “reprioritise investment, to meet current operational priorities, and to better align the programme with the Joint Strike Fighter aircraft.” The ministry is expected to publish an initial estimate next month and a formal costing is scheduled to be available later this year.


Losing another key capability?

It remains to be seen if the rising figures will have any consequences for the programme’s very right to exist as the pressure rises simultaneously. According to information obtained by the BBC, the chief executives of the project observe a “severe pressure through the opposition and the media. [...] This is a very real fight for the programme’s survival.”

The discussion about the carrier program has proven to be bad timing as work on the carriers was “progressing well” and steel for the first ship was scheduled to be cut next week, a BVT spokesman said. In a situation finding the Ministry of Defence already short on cash for some of its most significant procurement programmes, news of additional costs could threaten the entire project. It, then, is not surprising that suggestions for eliminating one of the carriers, or possibly the Trident nuclear deterrent, have been voiced in the course of the past weeks.

The fear that future UK defence capabilities could be stripped of some of its major programmes has been working a circuit since the national budget, and the MoD’s flexibility, has been reduced. On the occasion of the Defence Ministers decision back in December, the Editor, Dr. Ezio Bonsignore, published his thoughts on the British CVF programme (see http://www.defpro.com/daily/details/209/) stating “there are reasons to fear that the Royal Navy, after having deliberately relinquished operational control over its own Fleet Air Arm in order to protect the carrier programme, will end up losing both [the carriers and the Joint Strike Fighter].” This fear has now been provided with new ground as UK budget issues become rougher.


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By Nicolas von Kospoth, Managing Editor