Project History

[Parts extracted from the NAO's Major Project Report 2008]

Future Aircraft Carrier received Initial Gate approval in December 1998 and Invitations to Tender were issued in January 1999. Following tender evaluation, competitive firm price contracts for the Assessment Phase, each potentially worth some £30m, were awarded to BAE Systems and Thales UK in November 1999. Initially, the Assessment Phase was broken down into two stages. The first involved the examination of several carrier designs, and helped inform the decision in January 2001 to select the United States Joint Strike Fighter as the option with best potential to meet the Joint Combat Aircraft requirement. Stage 1 completed in June 2001, following which proposals from the contractors for Stage 2 were considered, together with an assessment of their views on the level of work needed to adequately de-risk the programme. After careful consideration, the conclusion was reached that the original two-stage approach no longer offered value for money and the Assessment Phase strategy was changed.

The competitive second stage was revised and shortened (completing in November 2002) and enabled the competing contractors to concentrate on refining their designs and taking key tradeoff decisions. An innovative Continuous Assessment process was used throughout to evaluate the contractors' performance which led to the conclusion that an alliance approach involving BAE Systems, Thales UK and the Department represented the best approach to Future Aircraft Carrier. The innovative Alliance procurement strategy will enable the full exploitation of the resources and strengths of the alliance participants with the shared objective of improving on agreed performance targets and was announced in January 2003. A third stage of assessment was therefore taken forward on this basis to further increase the maturity of the design and determine the alliancing strategy for Future Aircraft Carrier. Stage 3 completed in March 2004.

In July 2004, the Assessment Phase was extended into Stage 4 to further mature the design and carry out risk reduction work, to ensure that the best technical & procurement solution was achieved. Alliancing principles were agreed with BAE Systems and Thales UK and further developed with the selection in February 2005 of Kellogg, Brown & Root UK Ltd as an additional participant in the Alliance. The timescale for completing the design and risk reduction work was further extended in August 2005 (into Stage 5) although this did not result in any additional cost to the programme. The Assessment Phase completed end January 2006 at a revised total cost of £297m (following receipt of Cost Certificates from the alliance participants).

Following direction from the Investment Approvals Board, the project has adopted an incremental approach to Main Gate approval with the Demonstration and Manufacturing Phases being divided into two sequential Main Gate approval points. The first phase (Demonstration), which included expanding the alliance to include Babcock Engineering Services and VT Shipbuilding, was approved by the Investment Approvals Board and Treasury in December 2005. The total cost of the Demonstration Phase (excluding Indirect Resource Departmental Expenditure Limit, but including non recoverable VAT) was approved at £297m (not to exceed) and £254m (at 50% confidence). The Demonstration Phase should complete in mid 2008 with total expenditure to 31st March of £252m. The second and final Main Gate approval, to proceed with the Manufacturing Phase of the project was announced by Secretary of State on 25th July 2007 at a not to exceed cost of £3.9billion including the capitalised Assessment Phase costs and Demonstration Phase costs.

In March 2006, the UK agreed a Memorandum Of Understanding that provides for the supply to France of a common baseline design data pack to enable French industry to bid for the design, manufacture and support of one Future Aircraft Carrier (France). France has paid an initial entry fee and contributed to the costs of the UK Demonstration Phase.

After extended negotiations, with cost a major issue, contracts to build the two new aircraft carriers were signed on 3 July 2008 - nearly five years later than once hoped .  The contracts, worth in the region of £3 billion, were signed by the MOD with a new joint venture called BVT Surface Fleet - formed by BAE Systems and VT Group - and other members of the Aircraft Carrier Alliance.  The later include Babcock, Thales UK, BAE Systems Submarine Solutions at Barrow and BAE Systems Integrated System Technologies (Insyte).

It was stated by the MOD that the new carriers were expected to enter service in 2014 and 2016 respectively (previously announced target dates were 2012 and 2015), and then remain in the fleet for at least thirty years. Contracts authorised encompassed work worth:

• £1,325m for the construction of giant sections of both ships by BVT Surface Fleet at Govan on the Clyde and Portsmouth;
• £300m for the construction of giant sections of the ships at the BAE Systems yard at Barrow-in-Furness;
• £675m for the bow section and final assembly and completion of the ships by Babcock Marine, with assembly taking place at Rosyth;
• £425m for design and engineering for Thales UK;
• £275m for design and supply of Mission Systems for BAE Systems Integrated Systems Technologies (Insyte). 

Contracts worth several hundred million had been previously placed, including those for diesel generators, aircraft lifts, the steel for the ships and key electronics.

Jobs expected to be created or sustained from the construction of the carriers include:

• Construction of a hull section at Portsmouth - 1,200 jobs;
• Construction of hull sections at Govan - over 3,000 jobs on the Clyde;
• Construction of a hull section at Barrow-in-Furness - 400 jobs, with additional employment in the North East;
• Work at BAE Systems Insyte at Frimley, Surrey - 145 jobs;
• Work under contract to Thales UK at Bristol and Crawley - 250 jobs;
• Assembly of the ships at Rosyth - 1,600 jobs.

Then Defence Secretary Des Browne said of the announcement: "This is a historic day for everyone in defence. The two aircraft carriers will provide our forces with the world-class capabilities they will need over the coming decades. They will support peace-keeping and conflict prevention, as well as our strategic operational priorities. Today's contract signing seals the future for thousands of jobs, and ensures that we will have a Royal Navy fit for the 21st century."

Current Situation

On 11 December 2008 the UK's new Defence Secretary - John Hutton - made a written ministerial statement to Parliament.  Towards the end of this appeared the paragraph "We have concluded that there is scope for bringing more closely into line the introduction of the Joint Combat Aircraft [JCA] and the Aircraft Carrier [CVF]. This is likely to mean delaying the In Service Date of the new carriers by 1-2 years.  We are in close consultation with the Aircraft Carrier Alliance on how this might best be done."

It is expected that construction of HMS Queen Elizabeth will begin in 2009 with her completion now likely in 2015, entry in service following in 2016.  The future of HMS Prince of Wales seems more uncertain, with rumours that her cancellation is being considered in the MOD's Planning Round 2009 (PR09)  - which is due to complete in Spring 2009.

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