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Trevor Hollingsbee

It was the then Dutch-owned Swan Hunter (now defunct) who took the taxpayer for such a ride with the Bay class. Mod and BAE Systems were subsequently praised by the Parliamentary Committee for saving the project.

Andy

People forget about the Dutch owned Swan Hunter screwing the taxpayer because they are so use to BAE doing it.

But the greatest scoundrel is HM Treasury with there constant feast and famine approach to naval ship building .

The debacle of the Type 45 programme, the MARS program and now we have the type 26 programme which promises 8 but only funding for 3 has actually been provided and the build times have been stretched which will increase the unit costs.

But I am pleased that the RFA has got 4 nice looking tankers.

donald_of_tokyo

Andy-san, at least in T45 program, Treasury payed the amount of money they promised. Cut in hull number is simply because of cost rise (especially the PAAMS), and not related to Treasury.

On T26, I also remember BAES was stating 350M GBP per hull, at first, and then ~500M or so. Now it looks like 750M per hull, excluding design and initial build costs. Is Treasury giulty here? Not sure.

On MARS, I have no idea.

I think we must blame Treasury when they did bad thing, but if not, not blame it. BAES, is the same.

Thanks.

Andy

Greetings Mrs Donald
The main reason for the unit costs increase was the treasury decision to only order 1.5 hulls every 2 years instead of 2.5 every 2 years with the type 45 leading to BAE charging more because they had based there tender on 12 ships built over 6 years .
The same with the type 26 they pitched 13 at 750 a hull built at 2 every year but the treasury insists on ordering only 1.25 hulls leading to a 6 year construction time per hull which increases the unit costs.
It is a fact that stretching build times saves no money at all but leads to higher costs and less units.
The national ship building report said to give best value for money the treasury should support a 2.5 hulls build per year any less would lead to increased costs over the long term.
So there own report damn them for imposing stretch build times yet they still do it giving poor value to the ship yards, navy and the taxpayer.

donald_of_tokyo

Thanks, Andy-san.

# Sorry, I’m male…. (^^;

Stretch build is bad for build cost, I agree. I also agree it is one of the main cause of T26 being so expensive. But, I understand in T45, it is not that much the case, they were built relatively fast; 1 hull per 6-9 months. Also, how about the PAAMS developing cost inflation? (Of course, I may be missing something here …)

Second things to think is, stretch build has its own rationale.

Fast build means the gap to fill = TOBA. TOBA is not a waste of money, it is something REALLY REALLY needed, or the work-force/trained-engineer will vanish. Reviving it back requires huge cost.

In BAES Clyde, TOBA was 230M GBP per year. If, we build T26 fast and there was a gap of 5 years between the last T26 and the first T45-replacements, we need 1.15B GBP for nothing.

When this happened in T26 start, RN were forced to build 5 River B2 OPVs. It is NOT BAES fault, it is purely MOD/HMG/RN fault.

On the other hand, ordering 8 T26 at once, not starting with only 3, must have good effect on cost (there was a roumor that BAES proposed that they can build 9 hulls, if money for 8 hulls are ordered at once). This is clearly HMG/MOD not taking risk = ask BAES to take risk = cost more.

This is reasonable. The builder/supplier can take a long-term vision of man-power/training investments = can have the trained engineers at the moment they actually need. If they are forced to think short-term, they will be forced to head-hunt (expensive) engineers from other fields and then lay them off (also expensive).

Andy

The reason for the building of the 5 OPV was because Brown delayed the order for the Type 26 leading to gap between the last type 45 and the QEC program.
The type 45 was a 12 ship program costed at 6 billion, PAAMS went over budget by 10.4 % adding 700 million to the 6 billion build bill , but Brown refused to pay for it , BAE refused to absorb the cost because the overspend was down to both governments changing specs . So the order was cut to ten ,they then realised it would leave a gap in yards order book so it was changed to 8 with a longer build time and then because of the decision to cut the order by a third the cost of PAAMS rose again leading to only 6 Type 45s. That decision led to the OPV order.

The NAO said the decision to save 700 million actually cost the taxpayer 1.2 billion in associated costs.
The NAO said the cost over run while appearing to be high was acceptable over the build time for the original program .

The treasury is totally focused on short term finances which is not the way to run complex defence programs.
The taxpayer has to be protected but that can be done by good contracts.

For the sake of £700 million we would have had 12 type 45s and no need to buy the world’s most exspensive OPV which has been so badly built we have to bring a opv back into commission.

Gordon Brown , Geoff Hoon, George Osborne and Phillip.Hammond 2 Chancellors and 2 Defence Secretarys who destroyed the UK armed forces because of there ignorance and contemp for the UK military.

donald_of_tokyo

“The treasury is totally focused on short term finances which is not the way to run complex defence programs.”

That is their job. Cash is not there, it is flowing in and out. If you spend too much, the HMG will bankrupt and stop. (we see it in US)

– RN failed to predict such money shortfall, and did not reserved any cash, or could not cut some other things to pay for the 700M GBP then, which caused the 1.2B GBP loss in long term.

– Another option is debt. I remember Army was proposed to have debt, to buy something now, to be payed in future. Of course it is the Army which shall pay for the interest of the debt. Army rejected it (I think they were clever). But, if NAO is correct and 700M GBP could have saved 1.2B GBP, it might work?

– And the other option is HMG to increase tax, increase debts, or cut other budgets. This is NOT Treasuries task, it is HMG’s task.

Blaming Treasury is easy, I myself like to do it. But they are just doing their job = it is very easy to predict how they will react, like a physical law. It is the RN’s lack of long term vision, which is the major cause of these issues, I think.

In short, RN was way tooooo optimistic, and forced to pay for it.

This is NOT a story in the past. NOW RN must be realistic to look into their future. If not, RN will be forced to pay a lot more.

Andy

I fear Donald that Lord West decision to kiss the ring of Blair and Brown has sown the destruction of the UK military.

Duker

 Cash is not there, it is flowing in and out. If you spend too much, the HMG will bankrupt and stop.”

Like any business The Treasury has access to short term gilts to cover peaks and troughs, the overall defence has bigger pie than just shipbuilding and often money is underspent as well.
And no they cant run out of money, surely you know they have been creating it under ‘easing’ for almost a decade now.
the US Navy has a better system as the Congress allocates the money per ship or block of ships directly and the total sum is specified even if its spent over 4-5 years, the weapons systems are government furnished and funded directly the same way There is no Treasury that regulates the spending of departments money like the UK

Darren

NAO saw the price increase from Swan Hunter as fair and the true price. It was Swan Hunters who were srew*d over. Weren’t there many changes by MoD too?

Darren

NAO saw the price increase from Swan Hunter as fair and the true price. It was Swan Hunters who were srew*d over. Weren’t there many changes by MoD too?

Phil Owen

“Birkenhead Navy”… 😉

Great article

Challenger

Sound and look like like very capable ships.

Overall they have still been good value for money, but the combination of the balls up with the electric cabling, extra costs incurred in the construction as well as the fitting out in the UK, combined with the weak pound and the subsides and state aid foreign shipyards enjoy ends the debate over foreign vs domestic contracts for me.

Aside from the up-front costs what i find ridiculous is the British governments shortsightedness when it comes to the through-life benefits of putting investment into local companies when it’s clear that up-ton one third of the money goes back into the treasury via taxes, the workforce spends their income in the food, drink, retail sectors and it results in less people ultimately claiming benefits from the state. Awarding a contract to foreign company, however good, offers none of this.

I hope we retain the Wave Class. However the grave manpower situation within the RFA and the fact we’ve coped for a couple of years now on just 3-4 tankers (the 2 Waves, 1 Rover and/or the chartered Maersk Rapier) doesn’t bode well.

Rudeboy

Don’t forget Fort Victoria is an AOR so also passes fuel. Maersk Rapier is just for bulk fuel transport to depots.

Challenger

Fair points. The fact remains that the bean-counters will see that they’ve managed on fewer than 6 tankers for a number of years now (even factoring in Fort Victoria we’re talking 4-5) and question why exactly the Waves are needed once all the Tides are in service (presumably 1 of them can also fulfill the bulk transport role).

David Graham

What is ignored by both MoD and bean-counters is that 4 purpose built replenishment tankers need to be topped up as cargo is used. Tides have a capacity of 19,000 cu metres, which may sound a lot, but if a carrier or a carrier/AW group is operating for real, a lot of fuel will be used, both MDO and aircraft fuel. I’m not suggesting the prodigious consumption of FFO used by Victorious, Eagle and Ark Royal IV, but it will still be a lot. In the past, support tankers [most recently 4 STAT32 Leaf class plus Oakleaf] could be used to top up fast fleet tankers in operational [and large exercise] situations, and it was often carried out in the past. We now have no support tankers, and in the Waves, it gives the ability to do so, without wasting front line assets [the 4 Tide class].

One has to remember that, dependent on the area of operations, detaching a RAS tanker to load cargo is fraught with potential difficulties. Distance is one and needs no explanation. It is possible that loading ports might not want a belligerent [the tanker] in certain circumstances. Yes, RFAs are “merchant ships” but in today’s world, and bearing in mind the type of ships they undoubtedly are, DipClear might well become a problem. Frankly, detaching a Tide to be little more than a cargo carrier is plain daft.

Fort Victoria is being double-hulled as many will know, but really specifically modified to support the carriers in the dry stores, ammunition and aircraft spares departments. As a single-hulled AOR, she could carry 10,000 cu m of liquid cargo. Wave class can carry 16.000 cu m of fuel, including 3,000 cu m of aviation spirit.

Maersk Rapier [35,191 tons DWT] has been sold by her owners, and is replaced by Maersk Raleigh [UK flag] for bulk fuel transport to naval facilities in the UK and abroad. From time to time, Cambrian Fisher is chartered to freight fuel from UK to Falkland Islands. I don’t know if Maersk Raleigh could transfer fuel at sea by accepting a Tide or Wave class tanker’s gear.

Pump-overs were commonplace in the past. In Wave Knight During exercise Lime Jug in 1961 we took almost an entire cargo from Orangeleaf, and it was commonplace in the Far East for tankers to top-up one another when required.

But then, we had people at the top with real sea-going and operational experience, something sadly lacking today.

Baz

I agree with your statement about government short sightedness by not having the vessels or the next RFA ships built in the uk, it will be a win win situation for the uk ,jobs for uk workers and money going back into the treasury.

Don

Another great article – thanks.

Would be great if the site could have a section for all the infographics from the various articles that you could scroll through quickly for reference.

Sam

Agreed 🙂

Sam

Even though the Tides will not have Phalanx equipped from the get go which is a shame…they can be installed very quickly (great part of plug and play) and the Tides allready have two designed areas for them :). I am glad that more RFA ships are getting CIWS after lessons learned in the Falklands ( Frigate spoofed an Exocet which then aquired the Atlantic Convoyer).

Rob N

They are no getting CIWS thought… they are all in a shed not being installed! If an opperation or war comes there will be no time to fit them. Also there are not enought systems in the shed because MoD has been saving money on the sly by not ordering enought…

Sam

Phalanx can be installed in as little as 60 minutes (especially with ships allready fitted for it and I assume skipping a few peacetime checks). The RN has a fair few…there were 2 per type 42 which were undoubtedly removed and upgraded to Block 1b.

Rudeboy

IIRC there are c. 50 Phalanx, not all have been upgraded yet.

It’s a pity that we’ve ditched Goalkeeper, they’d make perfect sense to stick on the RFA’s as the size isn’t as big a deal. The Dutch have an upgrade programme for theirs, ultimately its cost. But with Goalkeeper refurbished and mounted on RFA ships we could have had Phalanx mounted NOT FFBNW on all RN major vessels.

Sam

Goalkeeper is a good system with greater range and killing power than phalanx due to it using the 30mm GAU-8 Avenger from the A-10 Thunderbolt compared to the 20mm M61 Vulcan – the only major issue being a long reload time of 9 mins. The navy went purely with phalanx as its non deck penetrating, smaller ( helpful on smaller ships ) and to have a uniform fleet CIWS ( saves on training costs for 2 different systems, 2 ammunition types, 2 companies to aquire tech support from etc etc etc)

Stephen

We definitely want the solid support ships built in Britain, they are 3 large ships, that work will be absolutely invaluable to British shipbuilding. We will always have a Navy so we will always need shipbuilding, it is in our interests that British shipbuilding is efficient and competitive as possible, with modern facilities and state of the art equipment, we have really fallen behind France, Germany, Italy, etc. in this area. British shipbuilding needs a steady stream of work otherwise it will never be worthwhile to invest in new facilities and equipment which will improve British shipbuilding’s efficiency and competitiveness.

This is what other countries do, use taxpayer funded ships like these to keep their own industries going and up to date, their own people in highly skilled well paid jobs and the money in their own country. We British people want at least some of our industries invested in and supported by the government for once. We should use the Navy and R.F.A., which are British taxpayer funded ships, to provide a relatively steady stream of work for British shipbuilding which in turn will make it worth their while to invest in new facilities and equipment, which will reward British shipbuilding with better efficiency and competitiveness.

Darren

There has been much discussion and coverage over ships that are not a/ or seen as a sovereign requirement, as logistics is not seen as vital which operate in dangerous areas and are actually multi-role as seen by many.

Ian

End game is – the Tides are a fantastic addition to the fleet.

Next time – build in UK
Waves – let’s see what happens.

One’s gone, who knows about the future. Tout Seul this very good news and I am very pleased.

Darren

So this is one heck of a miserable tale:

In 2012 the Pound was strong against the South Korean Won but Sterling has since weakened considerably. Currency rates and supply problems drove up costs and the final cost of construction was £550M for the four ships. RFA Tidespring was delivered nearly 18 months late after serious issues with electrical design and the discovery that multi-cable transit insulation did not meet new legislative standards. Foreign construction is clearly not the panacea that many believe it to be. Tidespring was finally delivered in April 2017 but the subsequent ships have been delivered promptly; Tiderace (Sep 2017), Tidesurge (Mar 2018), Tideforce (Aug 2018) and are reportedly well constructed.

Despite the hulls being built overseas, a further £150M has been spent with UK companies on design, equipment and fitting out the vessels to naval standards. In January 2015 A&P Falmouth won the £15M contract for the UK Customisation, Capability Assessment Trials and Support (UKCCATS) work to adapt the four ships. This includes dry-docking and some maintenance on each ship after the delivery voyage. About four months of customisation work includes installation of light weapon mounts, ballistic protection, military communications and IT systems. A&P then manage the sea trials and are responsible for supporting the ships in service for the next two years. A&P are hopeful of winning the Future In-Service Support (FISS) ‘cluster’ contract to support the Tide class for at least 5 years beyond the UKCCATS period.

So are we saying 715 million quid has been spent on these ships? They are no value for the UK taxpayer what so, even if that is the case and never was at 452 million which means, 904 million pounds at 50% tax clawback, or 753 million pounds at 40% tax clawback and 645 million pounds at 30% tax clawback (not likely to be this low). A huge rip off by being built abroad (and that is just the shipbuild bit, which the UK never states, but only the whole price, why did they nly give the shipbuild bit for South Korea?!)!

Other UK shipyards were interested but sadly built ships so long ago. The boss of Pallion had interest in them, and KOFAC website for Barrow also promoted the building of these ships at Barrow. But the lack of manpower was an issue too.

Regarding the Bays. I only ever heard of changes made by the MoD in which Swan Hunters were worried about because of cost increases, which may be fair, but to a Yard that had not built ships for a while… I believe the end price was fair and correct by NAO, but ModD wanted unrealistic prices by UK yards. This Country needs to get more intelligent in regards to Price/cost, tax back and investment in modern facilities as a requirement in procurement for future competitiveness.

Dr Stott (Naval Architect and look up his papers and presentations) has stated for this Country not to throw out the baby with the bathwater in terms of commercial shipbuilding (we lost far too much) which will help UK shipbuilding in general, but we need the backing of the UK government. South Korea relies on exports and no home Merchant fleet, so they could be in trouble, unlike Japan that still retains a home fleet that buys from Japan. Think About it!