Select Committee on Defence Written Evidence


Annex A

NEW CHAPTER OUTCOMES

Political Decisions

  The Policy (or Grand Strategic) decisions of the New Chapter were that:

    —  HMG should be ready and willing to deploy significant military forces overseas to act against international terrorist organisations when non-military tools fail to achieve its aims.

    —  HMG can use military force both against international terrorist organisations and supporting states.

    —  HMG can use military force for any or all of prevention, deterrence, coercion, disruption and destruction.

Military Strategic Decisions

  The Military Strategic decisions were that:

    —  The MoD should adjust the posture and capabilities of the Armed Forces to make them better able to conduct counter-terrorist operations.

    —  The MoD should be capable of mounting military operations further a field than the SDR core regions of Europe, the Mediterranean and the Gulf, and with only limited support from local infrastructure.

    —  The MoD should have sufficient critical enabling capabilities to support the anticipated level of concurrency.

    —  The MoD should aim to achieve knowledge superiority over international terrorist organisations.

    —  The MoD should be ready to counter the use of CBRN methods by terrorists.

Capability Decisions

  The Capability decisions flowed from the Policy and Military Strategic decisions. They identified 10 Areas for Improvement as follows:

    Home Operations:

    —  Air defence of the United Kingdom, to protect against attacks and threats by means of renegade aircraft.

    —  Maintenance of the maritime integrity of the United Kingdom, to protect against attacks and threats by means of renegade shipping.

    —  Availability and quality of military capability in support of the civil authorities, to respond to civil contingencies in the United Kingdom.

    —  Resilience of information infrastructure and high-level military headquarters, to protect against attacks which would inhibit the effective command and control of Armed Forces operations.

    Overseas Operations:

    —  Precision of control, to improve and accelerate the process of converting raw data into actionable intelligence in the hands of decision-makers and theatre commanders.

    —  Precision of application of force, to strike the right targets hard with a minimum of unintended casualties and accidental damage.

    —  Rapidity of effect to create forces capable of more rapid deployment with improved mobility and firepower.

    —  Force protection to counter threats which inhibit the freedom of operation of deployed forces.

    —  Critical assets for concurrency.

    —  Overseas infrastructure and support for operations.

FUTURE CARRIERS—CVF

  Under the CVF project, we will procure two large aircraft carriers to replace the three Invincible-class carriers from around 2012. These carriers will operate the STOVL variant of the Joint Strike Fighter, the Maritime Airborne Surveillance and Control (MASC) capability and other rotary wing aircraft in a variety of roles.

  Competitive contracts for the CVF Assessment Phase were awarded in November 1999 to BAe Land and Sea Systems (now BAE SYSTEMS) and Thomson-CSF (now Thales Naval Ltd). As was announced on 30 January 2003, we now envisage taking the project through an alliance approach, with BAE SYSTEMS acting as the Prime Contractor and Thales taking a major role as the Key Supplier. The Ministry of Defence will also take up a formal role in the alliance. The MoD is currently negotiating with the two companies on establishing the alliance structure. A move into the next phase of the project is expected in May.

Operational Requirement

  The Strategic Defence Review (SDR) concluded that the ability to deploy offensive air power will be central to future force projection operations, and that aircraft carriers can provide valuable flexibility in a range of operational circumstances. They can also offer a coercive presence, which may forestall the need for war fighting. There is an increasing likelihood of future operations being conducted by forces far from their home bases. In such operations, host-nation support, including access to suitable air bases, cannot be guaranteed, particularly during an evolving regional crisis or the early stages of a conflict.

  The SDR concluded that the three INVINCIBLE-class carriers should be replaced with a new class of larger and more capable carriers, known as the Carrier Vessel Future (CVF) class. The objective is for these ships to support an increased emphasis on offensive air operations and force projection as a central component of joint maritime operations. As such, it is intended that CVF will operate the STOVL variant of the F35 Joint Strike Fighter (JSF), the Maritime Airborne Surveillance and Control (MASC) capability and other rotary wing aircraft from all three services in a variety of roles. The SDR also saw advantage in future carriers being capable of carrying more fixed-wing aircraft than the INVINCIBLE class vessels, in order to be able to contribute more effectively to the support of operations on land and at sea.

Trade-offs

  Decisions on trade-offs between cost and capability and time and capability will be finalised during the third and final stage of CVF Assessment.

Numbers

  We shall procure two large carriers, each capable of carrying up to about 48 aircraft. The vessels are likely to be in the region of 60,000 tonnes.

Strategic Defence Review

  The SDR assessed the requirement for aircraft carriers within the overall requirement for an offensive air capability. It concluded that "there is . . . a continuing need for Britain to have the capability offered by aircraft carriers" and the emphasis for replacement carriers should be on "increased offensive air power, and an ability to operate the largest possible range of aircraft in the widest possible range of roles" (The Strategic Defence Review, Supporting Essays, pages 6-6 to 6-8). These conclusions were endorsed by the New Chapter work of 2002.

Military Capability

  The CVF will deploy offensive air power in support of the full spectrum of future operations, including force projection, as a central component of the maritime contribution to joint operations.

Equipment to be Replaced and In-Service Date

  The planned out of service dates for HMS INVINCIBLE, HMS ILLUSTRIOUS, and HMS ARK ROYAL are 2010, 2012, and 2015 respectively. The first CVF is scheduled to enter operational service in 2012 and the second in 2015.

Acquisition Strategy

  The CVF procurement strategy is based on competition and prime contractorship, with clear and unambiguous output requirement specifications.

  The first stage of the Assessment Phase involved the examination of carrier design options and helped inform the UK's decision, in January 2001, to select JSF as the aircraft with the best potential to meet the JCA requirement. The remainder of Stage 1 then focused on vessels capable of supporting JSF. This stage of Assessment was completed in June 2001.

  Stage 2 of the Assessment Phase ran from November 2001 to November 2002, during which time the competing consortia concentrated on refining their designs. For much of this stage, a twin-track approach was followed looking at designs capable of supporting the two variants of JSF under consideration for the JCA role; namely a conventional CV carrier, utilising catapults and arrestor gear, and a STOVL design, fitted with a ramp and optimised for STOVL aircraft operations. When the decision was announced on 30 September 2002 to proceed with the STOVL variant of JSF, it was concluded that, in the interests of flexibility, value for money and maximising our investment over the whole of its service life, the carrier should be built to an innovative adaptable design. This will be CV based but modified to operate STOVL aircraft in the short to medium term whilst retaining the ability to be adapted to operate other aircraft types after the JSF leaves service.

  During Stage 2, the Department continuously assessed the two consortia's work in order to provide a firm factual basis for the selection of the preferred prime contractor in early 2003. The evidence from the Continuous Assessment process confirmed that, in order for the carriers to enter service on time, both companies would need to augment substantially their available resources to achieve the necessary maturity before manufacturing could begin. Our detailed analysis showed that each company has significant strengths. BAE SYSTEMS displayed a good understanding of the project's complexities in its project management and prime contracting, and had developed a good relationship with all the key shipyards. The company also demonstrated the skills that are necessary to integrate the different systems into an effective warship. Thales UK provided an innovative design that is flexible enough to meet our needs and has strengths in a number of key areas, including weapon and defence systems and the interface between the ship, aircraft and flight deck operations.

  It was this evidence that led us to the conclusion that, to deliver value for money, provide the best capability and significantly reduce risk to the programme, we needed to exploit all the strengths of both companies. An alliance approach appeared to offer the best means of bringing together the necessary resources and expertise to deliver the programme. We envisage that this alliance will be led by BAE SYSTEMS as the preferred prime contractor, with responsibility for project and shipbuilding management. Thales UK will assume a major role as key supplier to produce design solutions. The Ministry of Defence will also take up a formal role in the alliance. The precise details of the alliance arrangement are now being discussed and agreed between the two companies and the MoD. They will be based on all parties working together, as a single team to deliver the capability to time and cost. The MoD's role will include ensuring the availability of other assets for which we are rightly responsible, such as suitably trained manpower and the JSF aircraft, during the design and build phase.

  It is anticipated that the alliance will formally start in the third and final stage of assessment in May and that this will take the programme through to the award of a Demonstration and Manufacture (D&M) contract early in 2004. In order to avoid any delays to the programme, both companies are continuing to progress key elements of assessment phase activity ahead of the formal commencement of Alliance working.

  The Demonstration element of the D&M phase will initially continue design and risk reduction work from the Assessment Phase, the intention being to achieve the highest possible level of design maturity before construction begins. The planned In-Service Dates of the two carriers remain unchanged at 2012 and 2015.

Alternative Acquisition Options

  During the first stage of Assessment, a wide range of carrier and aircraft options were considered, including conventional take-off and landing, short take off and vertical landing, and short take off, but with arrested recovery. The costs of extending the lives of the three existing carriers by 10 years was also assessed to provide a baseline against which the cost effectiveness of all the options could be evaluated.

Co-operation with France and the US

  Whole ship collaboration is unlikely to be a viable option, but opportunities for co-operation are being reviewed during Assessment, especially for equipment systems and subsystems. In particular, discussions are continuing with the French and US to explore areas for possible co-operation in common areas of aircraft carrier technology at a system or sub-system level. A two-star steering committee has been set up with France, to oversee the activities of two working level groupings, looking at operational and future procurement aspects of aircraft carriers. There is a mutual understanding between the UK and France, at Ministerial level, that industry to industry co-operation represents the best way forward for any UK/France co-operation on aircraft carrier issues.

Export Potential

  It is unlikely that this project will lead directly to whole-ship sales, although the commercial marketing of CVF design skills and production technology could benefit UK industry. Much of the ship's equipment could have export potential. Industrial Participation proposals will be invited, as appropriate, for offshore content of the proposed solution.

Industrial Factors

  In accordance with government policy for the construction of Royal Navy warships, the CVF will be built in UK shipyards. Industrial factors were taken into account in the decision to adopt the alliance approach for CVF. In terms of shipbuilding, analysis has concluded that the optimum solution appears to revolve around the involvement of four main yards: BAE SYSTEMS Marine at Govan; Swan Hunter in the North East; Vosper Thornycroft in Portsmouth; and Babcock BES at Rosyth. The participation of other yards has not yet been ruled out. It is estimated that CVF will sustain or create some 10,000 jobs across the UK during the course of its design and manufacture.

Smart Acquisition

  The CVF programme is adopting and further developing a range of Smart Acquisition techniques. These include a greater emphasis on identifying, evaluating, and implementing effective trade-offs between system performance, whole-life costs and time; the adoption of incremental acquisition for areas such as the combat systems; and the use of off-the-shelf equipment and commercial standards, where appropriate. An Integrated Project Team (IPT) is managing the project under the leadership of an industrialist recruited in an open competition. In accordance with Smart Acquisition, what would previously have been Feasibility and Project Definition stages have been combined into a single Assessment phase, with increased investment and innovation through the use of SMART project management processes to achieve early risk reduction. The two consortia have been encouraged to be innovative throughout the project.

  The alliance proposal for CVF emerged from the findings of the CA process. This has provided a new and faster means of determining the relative strengths and weaknesses of competing contractors. The process also broke new ground by addressing significant but less tangible issues—such as the contractors' ability to work with the MoD, which is important when the MoD could be working with the selected prime and key supplier for many years. The CA process ran throughout Stage 2 and provided the MoD with a robust and transparent method of determining the way ahead for the programme. It was a move away from the traditional tender assessment approach and enabled the MoD to make its decision more quickly than would otherwise have been possible.

  This innovative alliance approach also builds on the principles of the Defence Industrial Policy document published in October 2002. It will enable us to make the most of the resources and strengths of both companies and the skills and expertise of the IPT. We will continue to maximise the advantages offered by competition (at the sub-contractor level) during the remainder of the Assessment Phase, thus ensuring that we achieve best value for money. The alliance approach is intended to allow a seamless transition from Assessment through to Demonstration and Manufacture and will directly address the concerns of industry and the MoD about the level of risk reduction required on major programmes. Both BAE SYSTEMS and Thales have welcomed the alliance approach.

Acquisition Phases

  A number of small-scale pre-feasibility studies were completed prior to the award of the assessment contracts. A risk register will be maintained throughout the life of the project as the core of an integrated risk management system. This contains both MoD and contractor inputs and is the focus for risk reduction work during the Assessment phase. The risk reduction work will help to provide confidence in the data that will support the Main Gate submission to proceed with Demonstration and Manufacture.

Milestones and Costs

  Recent and planned CVF milestones are shown in the table below.

Milestones
Dates
Announcement of Joint Strike Fighter Short Take Off Vertical Landing
30 September 2002
Announcement of preferred prime contractor and alliancing strategy
30 January 2003
Start Stage 3 of Assessment
May 2003
Main Gate Approval
February 2004
Design and Manufacture Contract Award
Early 2004
In Service Dates
2012 and 2015


  Total acquisition costs for the two carriers are currently being revised by the CVF Alliance and will take account of the adaptable design. We envisage that the costs will be in the region of £3.2 billion to £3.4 billion (resource costs, outturn prices), excluding the aircraft. Costs incurred to the end of FY02/03, including pre-feasibility studies, total around £101 million.

In-Service Support

  We plan to investigate the let of a contract for design, build and an initial support period as one package. Collaborative support arrangements are unlikely.

  Contractor Logistic Support (CLS) will be considered for maintenance and logistics where value for money and coherence with wider Royal Navy support systems can be demonstrated. The benefits of CLS include a strong focus on reliability for initial designs; better standards of availability, reliability, and maintenance; and an incentive to the contractor to design and build systems that minimise support costs. One option to be considered is the adoption of best practice in supply chain techniques, to minimise MoD ownership of spares, by contracting for agreed spares availability from industry.

  The upkeep cycle of the CVF will reflect the vessels' modern design, and developments in upkeep practice such as "reliability centred maintenance" rather than lengthy and expensive refits. This will enable availability requirements to be met by only two carriers.

Front Line Numbers

  Both CVF will be assigned to the front line.

Interoperability

  The aim is to maximise the interoperability of the CVF with the greatest possible range of UK and allied aircraft and with other carriers, to the extent that this can be achieved cost-effectively. This is being explored further during the Assessment Phase.

Disposal of Equipment Replaced

  Prospects for the sale of the INVINCIBLE class will be explored in due course.

In-Service Life

  Each CVF is planned to have an in-service life of 30 years with a stretch target of up to 50 years.

Development Potential

  The CVF programme is closely linked with the JCA and MASC programmes (the latter managed by a dedicated team within the CVF Integrated Project Team). The carriers' innovative adaptable design means it could be adapted in future to operate other aircraft types after the JSF leaves service.



 
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Prepared 23 July 2003