Annex A (continued)
TYPE 45 ANTI-AIR
The Type 45, equipped with the Principal Anti-Air
Missile System (PAAMS), will be a versatile Destroyer capable
of contributing to world-wide maritime operations in multi-threat
environments. The programme came into being following agreement,
in April 1999, between the UK, France and Italy not to pursue
the tri-national Horizon programme. The three nations continue
to collaborate on PAAMS.
The contract for the design and build of the
first three ships was placed with BAE SYSTEMS Electronics (the
commercial title for the Type 45 Prime Contract Office) on 20
December 2000. The extension of the contractual commitment to
six ships and the signature of shipbuilding sub-contracts was
announced on 18 February 2002.
Envisaged as a replacement for the Type 42 destroyers,
the Type 45 will be a multi-role, general-purpose platform capable
of operations across the spectrum of tasks, from peace support
to high intensity warfare. Its primary role, utilising the PAAMS
system, will be Anti-Air Warfare (AAW), providing effective area
air defence against aircraft and missiles. The current requirement
for PAAMS is to meet the most demanding threat foreseen for 2007
(when the Type 45 is due to enter service), with a Growth Potential
Study to examine areas of potential enhancement to meet future
In order to get Type 45 and PAAMS in service
as quickly as possible, a strategy of incremental acquisition
of platform capability, from a baseline standard which is both
affordable and achievable in the time to in-service date, has
been adopted. This will enable the insertion of additional capability
throughout the life of the Type 45s as requirements become affordable
and to take advantage of future changes in defence requirements
and technology advances. Following the placement of the Demonstration
and First of Class Manufacture (DFM) contract on 20 December 2000
we have been able to accelerate part of the Incremental Acquisition
Plan (IAP) and a hull-mounted sonar (the top priority in the Plan)
will be fitted to all the ships on build.
The principal cost/capability trade-off in the
PAAMS programme has been the acceptance of a capability sufficient
to meet the threat at ISD, rather than beyond. However, the PAAMS
Full Scale Engineering Development and Initial Production (FSED/IP)
contract includes a Growth Potential Study that examines the modifications
that may be required to meet emerging threats.
The current planning assumption is for the acquisition
of a class of up to 12 Type 45s.
Strategic Defence Review
The requirement to replace the Type 42 destroyers
was scrutinised and confirmed in the Strategic Defence Review.
This is now being addressed by the Type 45 Programme.
The Type 45s will be fitted with PAAMS, which
incorporates the Sampson multi-function radar, representing a
quantum leap in capability from the outset. This system will defend
the Type 45 and ships in its company from multiple attacks by
aircraft and even the most sophisticated anti-ship missiles. The
ship will have a powerful general-purpose capability and be able
to accommodate up to 60 Royal Marine commandos and their equipment.
The Type 45 will also be capable of operating the Lynx and Merlin
Equipment Replaced and In-Service Date (ISD)
The Type 45 Destroyer and PAAMS are planned
to replace the capability currently provided in the Type 42 destroyer
and its GWS30 Sea Dart weapon system. It is planned that the eleven
Type 42s currently in service will be replaced progressively by
Type 45s starting in 2007.
Deliveries of the Class are planned to complete
by the middle of the next decade. Prior to Main Gate, the ISD
definition for the Type 45 was revised to match the availability
of the First of Class for operational tasking after sea training.
Marconi Electronic Systems (MES) was nominated
as the Prime Contractor for the Type 45 Programme on 23 November
1999, and at the same time contracted to complete the Preparation
for Demonstration (PFD) phase of the programme. This responsibility
passed to BAE SYSTEMS when MES merged with British Aerospace.
On 20 December 2000 the DFM contract, which was to complete the
design and build of the first three ships, was placed with BAE
SYSTEMS Electronics, which is the commercial title for the Type
45 Prime Contract Office (PCO).
Under the MoD's original procurement strategy,
the first of class (HMS DARING) would have been assembled by BAE
SYSTEMS Marine, with a substantial contribution from Vosper Thornycroft
(VT), the second (HMS DAUNTLESS) by VT, and the third (HMS DIAMOND)
by BAE SYSTEMS Marine. Thus, both companies would be in the position
of having assembled at least one entire ship. Both companies were
(and continue to be) jointly involved in developing the design
for the Type 45. It was intended that the Prime Contractor would
manage, with MoD oversight, competitions for the manufacture and
assembly of subsequent batches of Type 45 destroyers.
Following consideration and rejection of an
unsolicited bid from BAE SYSTEMS Marine for the construction of
the full class of Type 45 ships, as well as an MoD commitment
to the company on other naval construction programmes, an alternative
procurement approach was accepted in principle in July 2001. This
required extending the existing MoD contract to a further three
Type 45s (bringing the total to six). It also involved sections
of each ship being built by Vosper Thornycroft at their new facility
at Portsmouth and by BAE SYSTEMS Marine at the yards on the Clyde
and at Barrow in Furness. The First of Class (HMS DARING) would
be assembled and launched by BAE SYSTEMS Marine at Scotstoun,
with the remainder assembled and launched by BAE SYSTEMS at Barrow.
The focus of design support to the whole Class would remain at
Scotstoun, with continuing participation by both shipbuilders.
An extension to the contractual commitment to six ships and the
signature of shipbuilding sub-contracts on this basis was announced
on 18 February 2002.
On 14 March 2003, following MoD agreement to
a company request, BAE SYSTEMS announced that all of their Type
45 production work planned to be undertaken at Barrow would be
transferred to their yards on the Clyde. This change of plan resulted
from delay to the Astute attack submarine programme. BAE SYSTEMS
considered that this slippage would introduce an unacceptably
high risk of conflict between the Type 45 and ASTUTE production
programmes at Barrow. In addition, the company did not consider
that they would be able to retain the necessary capacity at Barrow
until it was required for Type 45 construction and that it would
be highly unlikely that they could recruit sufficient suitably
qualified people in the future to support both programmes. BAE
SYSTEMS therefore concluded that the best way of reducing risk
was to carry out all of their work on Type 45 at their yards on
the Clyde, leaving Barrow to concentrate on ASTUTE.
Collaboration continues with France and Italy
on PAAMS. On 11 August 1999, France placed a contract on behalf
of the three nations for Full Scale Engineering Development and
Initial Production (FSED/IP) with the tri-national consortium
EUROPAAMS acting as Prime Contractor.
National lead contractors were nominated by
their governments. The UK member is UKAMS, which began as a jointly-owned
subsidiary of Siemens Plessey, GEC and BAe SEMA. Following subsequent
industrial restructuring, UKAMS is now a wholly owned subsidiary
of, and remains within, the recently formed MBDA (formerly Matra
BAe Dynamics). FSED/IP sub-contracts have been let by the Prime
Contractor and the placement of second tier sub-contracts is now
complete. The programme remains on schedule to meet the ISD for
the Type 45 First-of-Class.
The PAAMS Programme MOU and its FSED/IP Supplement
were signed by France, Italy and the UK in March 1996. The UK
share of the costs of PAAMS FSED/IP will be higher than those
of France and Italy on two counts. First, we are bearing the costs
of developing the SAMPSON Radar, which, whilst more capable than
the FR/IT EMPAR radar, will be used only in the UK variant. Second,
the UK is making a contribution to the development cost of the
Franco-Italian Family of Future Surface to Air Missile Systems
(FSAF) Programme, elements of which are necessary for PAAMS. In
addition, the UK currently plans to fit PAAMS to a larger number
of ships than the French and Italian navies combined.
The PAAMS Programme is managed by the tri-national
PAAMS Programme Office (PPO) in Paris which reports to a tri-national
PAAMS Steering Committee (PSC). The aim is to delegate as much
programme management work as possible to the PPO, although co-ordination
of UK policy on PAAMS remains the responsibility of the Type 45
Integrated Project Team (IPT). Charters, agreed with France and
Italy, set out the arrangements for co-ordinating PAAMS with the
national Type 45 ship-programme and the Franco/Italian bilateral
Work is progressing on the transfer of PAAMS
Munitions procurement into OCCAR (Organisme Conjoint De Co-operation
En Matie"re D'Armament). This is seen as a sensible and cost
effective development which will allow the UK to remain at the
heart of PAAMS/FSAF production and development activities.
The potential for achieving economies of scale
by co-operative purchasing of common items in the Type 45 and
Franco-Italian Horizon warship programmes has been explored, but
without success to date. However, there have been benefits from
PAAMS industry (UKAMS) working closely with the Type 45 industry
(BAE SYSTEMS). The most significant was the initiative to develop
a common architecture, including servers and consoles, for the
PAAMS and Combat Management System. This improves inter-system
operability and will generate considerable savings in through
Export potential for the Type 45 system as a
whole is constrained by its high technological specification and
cost, but elements of the system such as the selected prime mover
(the Rolls Royce/Northrop Grumman WR21 gas turbine), the electric
propulsion system (Alstom), and PAAMS (in particular its associated
multi-function radar) have considerable potential export prospects
up to the value of several billion pounds over the next fifteen
years. There could be prospects for refit programmes as well as
in new build hulls. There is continuing interest from the Royal
Australian Navy, which has plans for three air defence destroyers
from 2013, with a capability very similar to Type 45.
In accordance with government policy for the
construction of Royal Navy warships, Type 45 will be built in
UK shipyards. Industrial factors were taken fully into account
in the decision in 2001 to adopt the alternative strategy by which
MoD committed itself to the procurement of the first six Type
45 destroyers in return for changes in the shipbuilding strategy.
The decision for substantial sections of each ship to be built
by VT (at its Portsmouth facility) and by Marine (at its yards
at Barrow and on the Clyde) allowed each yard to increase efficiency
and produce better value for money for the taxpayer as well as
offering the best prospect of maintaining the in-service date.
The effectiveness of this approach was supported by the findings
of a detailed study by RAND into the MoD's naval acquisition strategy.
This revised strategy was made legally binding between the Prime
(BAE SYSTEMS) and the two build sub-contractors (BAE SYSTEMS Marine
and Vosper Thornycroft) in February 2002. Industrial factors were
also a key consideration in the decision by BAE SYSTEMS in March
2003 to focus all of its Type 45 work at its Clyde yards while
the Barrow facility concentrates on its role as a submarine producer.
VT is not affected by this re-location of work and will continue
to manufacture its share of the key sections at its Portsmouth
For PAAMS, the UKAMS consortium was formed as
a convenient marriage of those companies possessing the technologies
crucial to the programmenotably the existing FSAF contractors
and the Sampson radar supplier Siemens Plessey Systems (now AMS).
PAAMS work share is constrained by existing FSAF arrangements,
but the aim is to achieve equitable work share throughout the
life of the programme as far as practicable, subject to considerations
of cost-effectiveness and competition.
The Type 45 Programme is being undertaken in
accordance with the principles of Smart Acquisition. The Type
45 IPT was formally established in September 1999, consisting
of the MoD Project Team at Abbey Wood and the single Prime Contractor
Organisation (PCO) two miles away at Filton, Bristol. A charter,
setting out the working ethos between the DPA and PCO, has been
agreed and has proved to be successful in creating an environment
where truly joint working can take place. The Department is confident
that the Smart Acquisition approach to requirements management,
through the development of an initial operating capability, which
could be progressively enhanced through a programme of incremental
upgrading, provides the optimum environment in which the first
of class ship can be delivered on time and to cost.
The PAAMS FSED/IP contract was placed on 11
August 1999. This includes the supply of the systems and associated
equipments and spares for the three nations' first of class ships.
Negotiations are currently taking place with industry for systems
for follow-on ships. Contracts are expected to be signed by France,
on behalf of the UK and Italy, in the summer of 2003.
For the warship, the Prime Contractor, BAE SYSTEMS
Electronics, was contracted on 20 December 2000 to undertake the
DFM phase. This contract has since been extended to include the
second batch of three Type 45s.
Milestones and Costs
The tables below show the high level milestones
and approved budget.
TYPE 45 DESTROYER
||Original Approval||Current Estimate Completed
|Expenditure (See Note 1)||£6,168 million (approval for six ships, including PAAMS)
|Start of warship Demonstration and First of Class Manufacture (DFM) phase (for first three ships) (see note 2)
||September 2000||Deember 2000. (Extended to include further three ships in February 2002)
|First-of-class ISD||November 2007 (availability for operational takings)
||November 2007 (availability for operational tasking).
|DFM completed (ISD of 6th ship)||August 2011. (December 2009 for third ship)
||December 2001 (December 2009 for third ship)
| ||Original Approval
||Current Estimate Completed|
|Delivery of 1st PAAMS(s) System is First of Class Type 45
||March 2006||March 2006
Note 1. Following Main Gate Approval in July 2000,
figures show: total approved level of expenditure for six ships
and prior approvals covering predominantly PAAMS FSED/IP, HORIZON
and T45 Assessment phase (Latest Approval); against the current
estimate of expenditure (Current Estimate). Expenditure is calculated
at out-turn prices.
Note 2. Warship assessment phase completed on placement
For a projected class of up to 12 ships, the total cost is
expected to be of the order of £8 billion, including £2.8
billion total acquisition costs for PAAMS (with figures calculated
on a resource basis, as in MPR 2002).
The first stage of a phased approach to support, now on contract,
aims to devise the optimum support solution for all Type 45 equipments.
The study will also define the means of managing in-service support,
coupled with Post Design Services. It is planned that a Contractor
Logistics Support (CLS) contract will be in place a year before
ISD, to provide experience in its operation during trials and
validate the in service support solution for the In Service phase.
Front Line, Storage and Reserve
On average two or three ships would be undergoing maintenance
(including one or two in refit) leaving the rest of the class
available to the Commander-in-Chief Fleet for tasking.
Commonality of many of the PAAMS systems and sub-systems,
including in particular the Aster missile, will ensure a good
level of interoperability with both France and Italy. In the warship
context, the requirement for interoperability with Joint and Combined
Forces at system and sub system level is a high priority. Multi-link
capable, the ship will be able to share its operational picture
with allies, and control assets in theatre with NATO land, sea
and air forces that are similarly equipped, providing maximum
flexibility in force mix. As part of the class solution, Type
45 will be fitted with the US Co-operative Engagement Capability
which will greatly enhance the force situational awareness and
bring the full benefits of the Sampson radar to other suitably
equipped platforms in the task force. The Fully Integrated Communications
System will provide the infrastructure to support a wide range
of communications facilities, including Bowman, which will provide
a secure command and control net with UK land forces.
Disposal of Equipment Replaced
The sales potential of Type 42 warships is being examined
as part of the disposal process.
The Type 45 is planned to have an in-service life of 25 years.
The Type 45 has been designed with space and weight margins
that will allow for greater capability to be added in the future.
Its systems and sub-systems will be updated as appropriate throughout
the life of the platform to take account of developments in technology
and the operational environment. It is possible that the Future
Surface Combatant programme, currently in the early stages of
concept development, will draw on major elements of the Type 45.
The Strategic Defence Review identified a need for four additional
Roll-on Roll-off vessels, making a total of six, to support the
deployment of the Joint Rapid Reaction Forces (JRRF).
A PFI contract with AWSR Shipping Ltd was signed on 27 June
2002 for a service until December 2024. The last of the six ships
was delivered to AWSR this month (April). This has meant the full
sealift service under PFI arrangements being in place ahead of
the target date.
The requirement is for guaranteed, worldwide delivery of
JRRF early entry equipment, including containerised ammunition,
at sustained speeds of at least 18 knots. The vessels are of commercial
design. They are not provided with warlike features such as a
self-defence capability or military communications, although the
selection of appropriate commercially available equipment maximises
their operational use. Ship size is a balance between optimum
load carrying capacity and the need to operate into small ports
with draught restrictions and no specialist RORO facilities; manoeuvrability
is built into the design to assist with berthing in the absence
of tug support.
Trade-off between operational risk and value for money has
been tested in the competition and negotiations. Although MoD's
sealift requirement for JRRF operations might need the full six-ship
capability, its estimated routine transport needs would only support
a four ship service; two ships, which remain available to MoD
at short notice (20 and 30 days), can earn commercial revenue.
The long-term requirement is for a capability of six vessels
Strategic Defence Review
Operational analysis in the SDR subsumed earlier studies
of strategic lift to identify the number of RORO vessels, and
The RORO service can be used across a full range of missions
and military tasks that require deployment of UK forces into theatre
through a seaport of disembarkation. It is not the intention to
use the service in "battle conditions" but the ships
may need to transit warlike zones and may be under escort as part
of a task force.
Equipment to be Replaced and In-Service Date
With the availability of the full service expected from April
2003, the provisional service based on three chartered ships has
After Initial Gate in March 1999, an Invitation to Negotiate
(ITN) was issued to four consortia for the full six-ship service.
Assessment of the bids received in July 1999 indicated that a
Private Finance Initiative (PFI) solution was likely to provide
value for money. After optimisation of the bids to reflect commercial
and capability trade-offs, final bids were received on 14 January
2000. However, as MoD could not be certain that it was receiving
the best value for money, the bids were revised and confirmed
by the bidders in July 2000. The competition confirmed that each
potential service provider intended to build new, or convert existing,
ships to meet the operational requirement. The selection of AWSR
Shipping Ltd (AWSR) as the preferred bidder was announced on 26
After a period of negotiation, MoD entered into a preliminary
agreement with AWSR in December 2000. This cleared the way for
shipbuilding contracts to be let by AWSR with the German Flensburger
yard (for four ships) and Harland and Wolff (H&W)(for two)
in time to benefit from Shipbuilding Intervention Fund support.
In entering into this preliminary agreement, MoD accepted contingent
liabilities; these were discharged on signature of the PFI contract.
By ordering ships from two shipyards, AWSR were able to offer
early delivery of the capability, which was of benefit to Defence
because it reduced the period in which availability of sufficient
guaranteed strategic sealift to support the JRRF could not be
assured. Difficulties in the detailed commercial arrangements
for the two H&W ships subsequently threatened the timely completion
of the PFI negotiations and early delivery of the service. Having
sought direction from Ministers, in March 2001 MoD therefore took
over the commercial shipbuilding contracts with H&W as part
of the PFI arrangements (AWSR's shipbuilding contracts with Flensburger
were not affected). The H&W contracts have been managed on
MoD's behalf by AWSR. The latter undertook to purchase the ships
on delivery at the commercial prices and take them into the PFI
arrangements. One ship was purchased in this way in December 2002
and the other in March 2003.
Award of the PFI contract was planned for Summer 2001 but
negotiations were complicated by several factors: the developing
tax and other aspects of the Government's initiatives on the shipping
industry set out in "British Shipping: Charting a New Course";
H & W's future financial stability; and developing with AWSR
and the Seafarers' Unions the relationship between commercial
crewing arrangements and the deployment of Sponsored Reserves.
These factors were compounded by the extra wariness and risk aversion
induced in the insurance, commercial shipping and financial markets
by the events of 11 September 2001. The PFI contract was signed
on 27 June 2002 for a service until December 2024.
The PFI service provider must provide a guaranteed service,
which includes the possibility of transiting warlike zones as
well as limiting the possibility of interference from other nations.
To provide this guaranteed service, AWSR has agreed that the ships
will be manned by UK seamen eligible to be called out as Sponsored
Alternative Procurement Options
An Investment Appraisal considered a wide range of options
including: do nothing for 20 years, short and long term charter
options, and conventional design and construction (with MoD ownership).
None of these matched the value for money offered by the PFI approach.
The issue of export potential does not arise directly in
the circumstances of this project.
The requirement has been addressed through competition. It
was recognised before the competition that this might involve
a new build by the selected PFI contractor. As the requirement
was for a service to be provided using commercial, non-warlike
vessels, the competition could not be restricted to UK shipyards.
AWSR's service is based on four ships built by the German Flensburger
shipyard and two by H & W.
The two ships built at H & W are likely to be the last
two ships built in the yard in the foreseeable future. H &
W has reduced its workforce to around 130 and intends to focus
on its high-skill design capability, renewable energy, structural
steelwork and ship repair.
The programme is being managed using a Smart Acquisition
approach. Under the PFI arrangements, the service provider is
responsible for the design, finance, manning, operation and maintenance
of the service. PFI is inherently "Smart" in that it
looks at whole life costs, harnesses commercial skills and opportunities,
and seeks to place risk in the hands of the parties best placed
to manage it. The opportunity for commercial trading of capacity
under-used by MoD will reduce the cost of the service to the MoD;
AWSR take risk on finding commercial work for the two ships not
required for MoD's routine transport work.
Milestones and Costs
Following PFI contract let on 27 June 2002, the full service
is expected to be available from April 2003, against a target
date of January 2005.
The capital cost of the asset element of the PFI service
is around £175 million. The annual service cost to the MoD
is related to usage but might amount to £40 million per annum
Under a PFI arrangement the service provider is responsible
for the operation and maintenance of the service and is paid against
"Front Line" Numbers
All six ships, under the PFI arrangements and with optimum
risk transfer, are at the graduated readiness required for JRRF
The service supports the NATO Defence Capabilities Initiative
in a number of areas but full commitment is limited by contractual
limitations appropriate to a PFI contract.
Disposal of Equipment Replaced
As the PFI vessels became available, the charters for the
ships providing the "provisional service" expired.
The contract covers until December 2024, 20 years from the
target date for the introduction of the full service, and the
contractor will be responsible for the disposal of the assets
at the end of the contract. The
20-year period is related to value for money, financing and ship
A change procedure will allow, for example, technical upgrades
offering value for money to be introduced by agreement.