UK carrier programme may face delays

British defense officials are considering delaying the Royal Navy’s 3.9 billion pound ($7.7 billion) program to build two aircraft carriers for up to 18 months or longer to help plug a yawning hole in the defense budget.

Partners in the BAE Systems-led alliance set up to deliver the 65,000-ton carrier have been asked to look at ways of adjusting the spending profile on the program to help overcome cash shortages at the MOD over the next three years.

Britain is cooperating with France to design the carriers, which will be the Royal Navy’s largest warships ever.

“One option being considered is continuing the design work but delaying cutting metal by 12 months. Another is to freeze the program entirely for 18 months,” said one industry source.

The former would just be tenable, but the latter would likely kill the program, the source said. Another source said the program could be delayed by as much as five years.

The carrier is among the programs being reviewed by the Ministry of Defence as it attempts to iron out the peaks in its budget over the next two or three years by altering spending plans rather than abandoning or heavily delaying projects.

The carrier alliance, which also includes Babcock, Thales UK and the VT Group, is expected to respond within days to the MOD request with proposals for keeping the program in place while easing pressure on the budget.

“Changing spending profiles on defense programs happens all the time,” said one industry executive. “The alliance could choose to do a number of things like push equipment procurement to the right and delay supplier payments to change the spending profile on the program. It would certainly be a preferred option to a delay which eventually costs everybody money.”

Threat to Proposed Merger

A substantial delay in the program would throw into doubt an agreed merger of Britain’s only two remaining naval surface ship builders.

BAE Systems and the VT Group initialed a tie-up of their respective yards on the Clyde in Scotland and at Portsmouth in Southern England last summer. Completing the deal is contingent on a Terms of Business Agreement (ToBA) with the government, which sets out a 15-year partnering arrangement. The carrier is the centerpiece of a defined workload to be undertaken by the merged operation throughout the duration of the agreement.

The alliance, which has the MoD as a partner, has agreed to terms for undertaking the construction program but the deal remains unsigned.

Under current plans, the first of the carriers, HMS Queen Elizabeth, is to enter service in 2014; the second vessel, HMS Prince of Wales, two years later. The original in-service date for the first carrier was 2012.

Cutting the first metal on the program is expected to take place around the end of this year. The warships will be built in large blocks at yards around the United Kingdom before being floated to the Babcock yard at Rosyth for final assembly.

Source: A. Chuter - DefenseNews

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