July 20, 2004

U.K. defers carrier investment decision

The British Government still plans to have its two future aircraft carriers in service by 2012 and 2015. An alliance of BAE Systems and Thales was expected to have inked a contract to build the ships back in April. But it has been struggling with the UKP 2.9 billion (about $5.4 billion) the government has budgeted for the ships.

Yesterday, Lord Bach, Minister for Defence Procurement announced that the assessment phase for the production of what will be the biggest and most powerful aircraft carriers ever built in the U.K. is to be extended "to enable further risk reduction work to be undertaken."

The two new, larger, aircraft carriers will replace three existing Invincible class ships.

In January 2003, Defence Secretary Geoff Hoon said they would be designed and built by an alliance between the Ministry of Defence and BAE Systems/Thales UK.

The ships will be designed and built entirely in the United Kingdom, with shipyards at Babcock BES at Rosyth in Scotland, BAE Systems on the Clyde, Swan Hunter in the North East and Vosper Thorneycroft at Portsmouth potentially playing key roles, creating or sustaining around 10,000 jobs.

In yesterday's announcement of extension of the assessment phase of the project, Lord Bach said that the Ministry of Defence and BAE and Thales have now agreed the alliancing principles for the program.

The Assessment Phase extension will, said the statement, "give the MoD the opportunity to fully realise risk reduction activity, including de-risking the technology, supply-side arrangements and the program's contractual arrangements, key tenets of Smart Acquisition. During this time, the Department will also conclude the final Alliance Agreement and the contracts for the next phases, before moving to the main investment decision during 2005."

"This process," continued the statement, "will include setting the target cost and schedules, and will be done in parallel with the ongoing work to further increase CVF design maturity. It does not adjust the underlying program but rather shifts the point at which we make the main investment decision. Our target ISDs remain 2012 and 2015."


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