U.K., Companies Agree on Price for Two Aircraft Carriers: Sources
By ANDREW CHUTER, LONDON
A program to build two aircraft carriers for the British Royal Navy is expected to go before the Ministry of Defence’s (MoD’s) Investment Approvals Board (IAB) Nov. 9 after a last-minute deal was agreed over the price of the vessels between government and the industry alliance set to build the warship.
At one stage last week, it looked as though the Defence Procurement Agency’s plan to present the business case for the aircraft carrier development and construction to the IAB when it meets Nov 9 had foundered.
Now, though, sources close to the program say a series of meetings in recent days between senior officials from industry and the MoD has culminated in a compromise agreement on the price the government is willing to pay for the carriers.
At one point, Defence Procurement Minister Lord Drayson and the chief executives of the top companies involved in the Aircraft Carrier Alliance, created to build the vessels, met in an attempt to bridge the gap between the 3.5 billion pounds ($6.6 billion) the government was willing to pay and the 3.8 billion pounds the alliance wanted to charge.
IAB go-ahead is the start of a process which, if things go according to plan, could see the government announce the deal, known here as Main Gate, before Parliament goes into Christmas recess in mid-December.
The two sides have settled on an incentive agreement which reduces the final cost of the two 65,000-metric-ton carriers to about 3.6 billion pounds, sources say.
The Aircraft Carrier Alliance includes BAE Systems, Babcock International, KBR, Thales, the VT Group and the MoD.
The first of the two warships, the largest ever proposed for the Royal Navy, are expected to enter service in 2013.
The MoD was unable to respond to requests for comment late Nov. 8. Alliance leader BAE declined to comment.
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