U.K. May Delay Carrier 18 Months
By ANDREW CHUTER
LONDON — 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.
Some executives here wondered whether the government is seriously considering delaying the program, or if it was just an option to be considered, then ruled out.
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.
A spokesman for the MoD said the two sides were now “finalizing the last few details of the ToBA.”
The spokesman was unable to comment in time for this article.
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.
Alliance leader BAE declined to comment.
“Any issue concerning budgets is a matter for the MoD, it would be inappropriate for us to comment,” he said.
Broad Spending Cuts
The move comes as the defense sector here is bracing itself for spending reductions of about 1.5 billion pounds a year for at least the next three years as the MoD attempts to balance its books.
Government spending plans for defense over the next three years were rolled out in July. The figures showed a planned 1.5 percent a year average increase in real terms, taking spending up to 36.9 billion pounds in 2010/11.
That’s not enough to stave off a squeeze on the military and industry.
Ministry officials and the armed services have for months been battling, sometimes among themselves, to agree exactly where the ax will fall to achieve the required cuts as part of a process known as Planning Round 08.
That process is reaching its climax ahead of the financial year 2008-09, which gets underway in April.
Wherever the ax falls, controversy is likely to follow. For that reason the government, currently unpopular and under constant fire for what many say is its failure to properly fund a military heavily engaged for years now on overseas operations, may want to limit major program cuts and head off more criticism.
Finding the required level of cuts is proving a tough task. Part of the reason for that, say government insiders, is that the MoD’s room for maneuver has been limited by a political commitment in July to go ahead with three large defense programs.
On the day it rolled out its spending plans in July, the government signaled its intention to proceed with renewal of the nuclear deterrent, a British Army armored vehicle program known as the Future Rapid Effects System, and the aircraft carriers.
“Contractually, we haven’t committed ourselves to these three programs but politically we have. If you add that to programs which are already under contract with industry, the amount left in the middle to cut is not that large,” said a government source.
In a heated debate in the House of Lords late last year over the future of the armed forces, Adm. Lord Boyce, a recent chief of the Defence Staff, said the MoD was putting “blood on the floor” as it slashed defense programs.
He said he was particularly concerned about the future of a Royal Navy that had already suffered numerous cuts to its frigate and destroyer numbers and faced the possible prospect of still more reductions in fleet numbers.
The two carriers are likely to initially operate with GR9 Harrier strike aircraft currently deployed on the small 21,000-ton Invincible class carriers, but are expected later in the decade to switch to the short take-off and vertically landing version of the F-35 Joint Strike Fighter. å
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