The Ministry of Defence has raised the prospect that it may have to pay more than expected for the next generation of Royal Navy frigates, all but conceding that its plans for a fleet of cut-price vessels are unachievable.
The Type 31e frigate — a boon for British shipyards which had formed consortiums to bid to build the five ships — is a cut-price vessel designed with export orders in mind. The ships, which are intended to carry out maritime security, interdiction and other tasks, will replace the Type 23s.
The programme is a key part of the UK’s national shipbuilding strategy but the original procurement process had to be abandoned last summer after the MoD said it had not received enough “compliant” bids.
The competition was restarted at the end of August but the MoD has come under pressure over the modest budget of £250m per ship it has allotted to the programme. Industry executives have warned privately that it would be difficult to meet that cap.
“If you want a ship that can be deployed in areas where people shoot at you, you cannot get one for that price,” Francis Tusa, editor of Defence Analysts, told the Financial Times in March.
Sources close to the competition told the FT that while the average price tag of £250m per ship still stood, “the mood music was that there would be more leeway”.
One change, said a source, was that government-furnished equipment for the ships, which was originally part of the £250m price tag would no longer be included, giving companies greater flexibility.
The MoD said that it intended “to purchase five ships at an average production cost of £250m per ship”. The department, however, had concluded that it must make some prudent adjustment to the cost parameters of the programme to ensure consistency with standard defence procurement practice. The total programme cost will now be determined at the main investment point.
Three teams, led by BAE Systems, Babcock International and Atlas Elektronik UK, have been shortlisted for the competition. The preferred bidder will be announced by the end of next year. The MoD wants the first of the five frigates to be delivered in 2023.
