Editorial

Patience may be a virtue, but it has to have a limit

21 October 2006

I write this as the Future Aircraft Carrier (CVF) project  CVF is finally set to start the real Main Gate approval process - this being called Main Gate 2 (MG2) to differentiate it from the unique Main Gate 1 the project went through in late 2005 in order to re-confirm the requirement and secure funding to keep the project running for another year.

The initial MG2 submission to the MoD's Investment Approvals Board is apparently going to be made on 26 October 2006, with a final Cabinet level approval note hoped for (but far from certain) in January 2007. [See update below]  I've been regularly reporting on the CVF project since it was initiated by the Strategic Defence Review in 1998, and the procurement process began in earnest with Initial Gate in 1999.  At the time there was an expectation that orders would be placed in late 2003, with construction work on the first carrier beginning in shipyards this year (2006) for entry in to service in 2012. 

To an outsider - and I'm sure many in the Royal Navy as well - the pace of the project seems to be designed to test the patience of a saint.  Since that Initial Gate back in 1999 there has been time (and more) for World War 2 to have been fought.  Also, at least 500 people (many very well paid) are currently directly or indirectly working full time on the project in the offices of the Aircraft Carrier Alliance (mostly seconded employees), the MOD and DPA, BAE Systems, Babcock, Thales UK,  VT Shipbuilding, KBR;  as well as second tier suppliers and partners such as Rolls-Royce, BMT Defence, Alstom and many others.  It's probably almost impossible to calculate the cost of the project to taxpayers and companies involved so far, but the official  £300 million represents only a starting point for any analysis.

It must be hoped that the Royal Navy's patience, and the tax payers burden, is now about to be rewarded.  But while a rapid Main Gate 2 approval note will be the cause of a round of drinks in many bars and wardrooms, it doesn't mean the ships have actually been ordered - that will be many months of negotiations away, and most of the detailed design work also remains to be done.  Official statements are deliberately vague and it's a great unknown when exactly shipyards will start building the new aircraft carriers and when can the Royal Navy can expect to commission them.  But it does seem certain that the latest Invincible-class CVS, HMS Ark Royal wont be leaving service in 2013 as currently planned - unless the government is will for the UK to lack any aircraft carrier for several years.  And if CVF is not about to be approved and progressed, the time has surely come for some blunt and truthful discussions in order to avoiding the wasting of yet more money and time.  Cancellation of CVF would be very painful for the Royal Navy and reduce UK defence capabilities in a manner that future governments may bitterly regret, but it would at least allow the Royal Navy to move on in the way it did successfully after the cancellation of CVA-01 in 1966.

Meanwhile, the indirect price the RN is having to pay in order to get CVF at time of intense pressure on the defence budget is mounting every week.  It now seems very unlikely that the MOD and BAE Systems will be able to agree an "affordable" price for the seventh and eight Type 45 destroyers, particularly given that BAE has allegedly  submitted a bill to the MOD that's rumoured to amount to £250 million in relation to additional costs incurred on the first six T45's due to MOD requested changes.  No final announcement is currently expected regarding T45-07 and -08 until next year - it had once been expected in late 2005.  Similarly, an already long awaited announcement about additional Astute class submarines has been delayed until next Spring. 

Further bad news is emerging in connection to the Future Surface Combatant, tentative plans for a Medium sized Vessel Derivative - probably based on the Type 45 - to replace the four Type 22 Batch3 frigates in the middle of the next decade seem to have been shelved.  Instead a single FSC class is likely to start replacing the T22B3's and thirteen remaining Type 23 frigates from 2018-20.  It would seem safe to assume that the replacement won't be on anything like a one-for-one basis, experience in relation to the replacing the Type 42 destroyers  would indicate the eventual construction of just  8-10 FSC's, albeit these being much larger ships than their predecessors.

The impact of an ever decreasing fleet on the need for expensive major bases and support facilities cannot be ignored.   A few weeks ago I visited Portsmouth Naval Base, the sole operational warship there was the destroyer HMS Nottingham.  The harbour tours had a long list of other ships that were  "in", but these - ranging from the aircraft carrier HMS Invincible to the patrol vessel HMS Dulverton  - were in fact a phantom fleet of decommissioned ships waiting for disposal.   The Royal Navy is about 60% the size it was when Portland Naval Base closed in 1995 - and still getting smaller every year.  The time is surely close when Devonport or Portsmouth Naval Base (or at least large parts of these) will be officially no longer be required.

Update 8 November 2006:  The CVF Project failed to make the expected Main Gate submission on 26 October 2006 to the Investment Approval Board.  The reason is believed to be a £300 million difference in cost between the Aircraft Carrier Alliance's bid for building the ships and the MOD budget, thought to be £3.5 billion.  It had been expected that a compromise would be reached - all parties were hinting that it was very close through most of September and October - but this clearly did not happen. 

This failure to make the long scheduled MG submission is at best another disappointing delay of unknown length, and at worst a severe blow to the credibility of the project in eye's of some very senior people.  However an unconfirmed report dated 8 November 2006 in Defence News said that after last minute negotiations the Defence Procurement Agency and the Aircraft Carrier Alliance had settled on an incentive agreement which reduces the final cost of the two 65,000-metric-ton carriers to about £3.6 billion.  The project may have been discussed at the meeting of the Investment Approvals Board scheduled for 9 November 2006, and potentially the government could announce Main Gate approval in Parliament in mid-December, before the Christmas recess.

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