ISD is defined as acceptance of the certificate
of design and the performance statement, with the subsequent delivery
of 60 missiles that are fit for purpose.
|ISD approved at Main Gate:
|Current ISD:||December 2000 (50%), April 2001 (90%).|
These are to be revised (see paragraphs 8 and 9 of the main text).
||To align production deliveries with candidate aircraft availability
||Missile hardware and software technical difficulties
There are no additional costs as a result of the existing
|Main Gate equivalent||1992
||Development and Production|
|Approved Cost at Main Gate||828
£m, outturn prices, as at 31 March 2000.
||Difference in price uplift between specific indices and the GDP deflator
||9||Requirement to carry out Service Evaluation Trials (+£30m). The purchase of buffer connectors providing an interface between the missile and aircraft electronics (+£1m). An Environmental Round to measure the on-board environment of ASRAAM on various aircraft (+£2m). Various studies required to clarify the project requirement (+£1m). The decision to convert operational missiles to telemetered missiles during production (+£2m). An increase in DERA support to the development and production package. (+£9m). Reduction in cost of the rocket motor following selection of a conventional rocket motor (¸£9m).
||38||Reduction in prices as a result of contractual negotiations (¸£38m). Renegotiation of the contract to convert from fixed to firm price, introduction of a Smart gainshare incentivisation and integration of a new processor (+£3m).
||Liquidated Damages and Consideration Payments due to late delivery of missiles.
|Accounting Adjustments and Redefinitions
||17||Derivation of the approved cost on a resource basis.|
|Expenditure to 31 March 2000:
||£72 (Feasibility) + £479m (Development and Production)
|Years of peak expenditure:||2001-02 and 2002-03
|Unit Production Cost;||£0.2m
|Further expenditure in clear prospect:
|Quantities required:||* * *
KOSOVO-RELATED URGENT OPERATIONAL REQUIREMENTS: INTERIM
PRECISION GUIDED BOMB, MAVERICK, AND SECURE AIR TO AIR COMMUNICATIONS
During the conflict in Kosovo it became apparent that gaps
existed in certain key capabilities because the equipment operated
by our Armed Forces was not optimised for the particular operational
circumstances that they encountered there. On 24 July 2000 the
Secretary of State for Defence announced that the three most important
of these gaps would be filled as quickly as possible. These are
an all-weather interim precision guided bombing capability pending
the introduction of Staff Target(Air) 1248 around late 2006, Maverick
air-launched anti-tank missiles, and secure communications equipment
for key aircraft. Since the announcement in July significant progress
has been made in these three areas, including the introduction
into service of Maverick on 15 February 2001. The cost of this
equipment was met from the additional £200 million allocated
to the MoD by the Treasury Reserve in July 2000. This memorandum
updates the Committee on the background to, and progress made,
in bringing these three key projects into service.
1. The Kosovo campaign demonstrated the importance of
being able to bomb accurately in weather conditions that preclude
the use of laser-guided weapons. With the exception of Tomahawk
Land Attack Missiles, which were used successfully during the
conflict, the Department recognised in its post-conflict report
that more needed to be done by both the UK and its Allies to develop
a better capability to strike targets in poor weather conditions.
This was consistent with the results of the Strategic Defence
Review (SDR), which recognised the importance of precision guided
weapons and the need to be able to strike whilst minimising collateral
damage. The Department has an extant requirement (ST(A) 1248)
for an all-weather precision guided bombing capability to enter
service around 2006. However, given the importance of this capability,
confirmed during the Kosovo campaign, a requirement was raised
to bring an interim system, capable of being operated by Tornado
GR4s, into service at an earlier stage.
2. The Interim Precision Guided Bomb (IPGB) will be deployed
on Tornado GR4 aircraft in all phases of war and operations other
than war as an integral part of the whole strike inventory. This
includes Tomahawk missiles, Laser Guided Bombs (LGBs), Maverick
missiles, and from 2002, Stormshadow and Brimstone. Each of these
systems represents a different precision attack capability and
the most appropriate weapons for the circumstances will be deployed.
3. Given the importance of the capability, the procurement
of the IPGB has been "fast tracked" under the Department's
Urgent Operational Requirement (UOR) procedures. Two off-the-shelf
weapons were considered: the Enhanced Paveway series offered by
Raytheon and the Joint Direct Attack Munition (JDAM) offered by
The Boeing Company.
4. Paveway 2 and 3 Laser Guided Bombs (LGBs) are already
in service with the RAF. The enhancement proposed by Raytheon
consists of an additional Global Positioning System (GPS) guidance
kit and inertial measurement unit fitted to the standard Paveway
LGB. This addition allows the weapon to switch between laser guidance
and GPS guidance depending on the circumstances and this can be
done even after the weapon has been launched. JDAM is based on
the US Mark 80 series of bombs (not currently in service with
the RAF) and consists of GPS guidance only.
5. Whilst both weapon systems met the accuracy criteria,
some additional risk was attached to the JDAM solution. The Mk
80 bomb series is not in service with the RAF and additional safety
trials would have been required to confirm that the system is
compatible with Tornado. Additionally the RAF's Multi-Function
Bomb Fuze (MFBF) is not compatible with JDAM and a US fuze would
have been required. As well as representing an additional logistics
support requirement, the US fuze would have required further trials
to prove that the system met UK-specific standards. In comparison,
Paveway LGBs are currently operated from Tornado aircraft and
the Paveway series is compatible with the MFBF. Whilst trials
are still required to confirm GPS data transfer, significantly
less risk is associated with this solution than with JDAM.
6. As a result, the MoD decided to purchase *** Enhanced
Paveway 2 (EP2) bombs (based on a 1,000 lb weapon) and up to a
*** EP3 bombs (based on a 2,000 lb weapon). A contract has been
let with Raytheon. The current planned In Service Date is October
2001. This is defined as the delivery of at least *** IPGBs, the
modification of *** Tornado GR4s, sufficient trained air-and-ground-crew,
all necessary support equipment, and cleared operational Flight
Programme (the weapons and systems management software).
7. Prior to contract signature in December 2000, a number
of risk reduction trials were completed. Further trials, including
live firing, are planned for the near future. The EP2 weapons,
and an initial batch of EP3 weapons, are currently being manufactured.
Milestones and Costs
8. Key milestones are:
9. The project has a budget of £75 million. The
Department is currently forecasting an outturn of £72.5 million,
although the exact cost will not be confirmed until the receipt
of BAe Systems' firm price offer for integration and support.
Although the Department is not currently forecasting the need
to do so, the additional capability given by the EP3 bombs may
be traded against cost in order to keep costs within budget.
10. Although Raytheon are based in the US, BAe Systems
are responsible for integration work and software upgrades to
the Tornado GR4's mission computer. A close working relationship
has been fostered between the RAF, BAe Systems, and Raytheon to
ensure that the weapon enters into service on time.
11. The EP2 and EP3 bombs are based on the Paveway Laser
Guided Bombs, already in service with the RAF, and will use the
in-service MFBF. Only the GPS guidance kit will be new and additional
support costs, therefore, will be minimal. Raytheon have been
contracted for one year to provide training in the use and maintenance
of the system. The on-aircraft GPS signal feed is provided by
new hardware introduced onto Tornado; the system is relatively
cheap and inexpensive. BAe Systems will be contracted to provide
12. The IPGB is being procured to meet a short term requirement,
pending the introduction of the wider PGB capability around the
end of 2006. However, there may be utility in retaining any remaining
stock at this point and a decision will be taken nearer the time
based on the size of the residual stock pile.
13. The development potential for this project is largely
dependent on the outcome of the competition for ST(A) 1248. There
would be little utility in significantly developing the interim
capability unless Enhanced Paveway bombs are selected as the solution
for ST(A) 1248. This will not become apparent until ST(A) 1248,
which is being managed as a conventional competition, reaches
its Main Gate approval towards the end of 2002. The Department
does not intend to mandate the EP series of bombs as the solution
to ST(A) 1248 as technology will mature over the coming years
and an alternative system may offer a greater capability and utility.
14. During the Kosovo campaign, the RAF identified an
Urgent Operational Requirement (UOR) to integrate Maverick onto
the Harrier aircraft. With the cessation of hostilities during
the integration phase, this was put into abeyance. However, as
part of the Kosovo Lessons Learned process, the perceived lack
of capability to attack mobile, hard armoured targets without
incurring collateral damage was further considered. This led to
the initiation of a UOR in January 2000 to trial fully the integration
of the Infra Red (IR) guided AGM-65G2 Maverick missile on the
Harrier GR7. At the time, this was assessed to be the weapon best
able to fill the majority of our overall requirements, which were:
(a) availability for immediate introduction into service;
(b) ability to destroy mobile, hard armoured, high value
(c) ability to be used as part of an early entry, theatre
(d) delivery from medium level;
(e) for use by day and by night in a European theatre;
(f) low risk of collateral damage;
(g) resistant to known countermeasures.
15. Maverick will be used from land and carrier bases
primarily for the Air Interdiction (AI) and Close Air Support
attack of mobile hard armoured and high value tactical targets,
during an air or air/land campaign. Due to its large blast fragmentation
warhead, Maverick also has utility as a pre-planned AI weapon
against static targets if marginal weather conditions prevent
the use of laser guided bombs. The Harrier GR7's integral optical
system and the Maverick IR sensor will be used for the recognition
and identification of detected targets before lock on and weapon
release. Maverick will reduce the risk of collateral damage as
the missile is locked onto the target by the pilot before launch.
16. In certain conditions, Maverick could be used instead
of Cluster Bombs. During Kosovo, for example, we used cluster
bombs when they were assessed to be the appropriate weapon for
the target. If we had had Maverick it is likely that we would
have been able to attack more armoured targets, in more difficult
circumstances, and more often. We always retain the right to use
the most appropriate weapon in our inventory in any given circumstance
in order to ensure the swift conclusion of conflict and to safeguard
the lives of UK and allied Service personnel.
17. Due to the urgency, the requirement has been satisfied
by a single source purchase from the sole manufacturer, Raytheon.
It was originally planned that Maverick would enter service in
December 2000 but export procedures in the USA took longer than
expected and this delayed the transport of the missiles to the
UK and the necessary aircrew training. The delay had no significant
18. An assessment was made of other existing and potential
candidate systems for the precision attack of mobile tactical
targets from the air. These included:
(a) RBL 755 medium level cluster bomb;
(b) CRV7 free flight rocket;
(c) Laser Guided Bomb (Paveway);
(d) Brimstone anti armour missile.
19. An off-the-shelf procurement of Maverick G2 missiles
was identified as the most appropriate solution that was immediately
available for procurement and rapid integration onto existing
aircraft. A contract was placed with Raytheon for *** missiles
and these have now all been delivered.
20. Prior to the decision to purchase Maverick, integration
trials were undertaken to ensure that the missile could be successfully
integrated onto the Harrier GR7. The trials concentrated on the
integration of the necessary software. Successful trials were
undertaken between April and September 2000 and included the live
firing of two missiles in the USA.
Milestones and Costs
Other Related Equipment
22. Brimstone is being procured separately and is due
into service with the RAF in October 2002. Brimstone and Maverick
are complementary systems. Brimstone was chosen to counter mass
armoured targets, and consists of an autonomous missile that seeks
out targets within a designated area. This means that it is not
necessarily suited to conflicts with tight Rules of Engagement,
but it enhances aircraft survivability by allowing the aircraft
to stand-off from the target. In addition, it is a smaller missile
than Maverick so more can be carried on each aircraft sortie.
Maverick is being procured to destroy single, identified targets,
static or mobile, in areas with a high risk of collateral damage.
23. Whilst Maverick is made by a US company, BAe Systems
were responsible for integration work and software upgrades to
the Harrier's mission computer.
24. An innovative package has been negotiated with Raytheon
which provides a warranty for the duration of the capability requirement
detailed in the UOR. The contractor logistic support arrangements
that have been established require the purchase of minimal in-service
spares for maintenance activities carried out at RAF units and
there is no requirement for purchase of depot test equipment.
The contract includes stringent performance indicators on Raytheon
with an agreed target of greater than 95 per cent of missiles
serviceable during the contract life. The warranty covers in-service
support activities such as Design Authority responsibilities,
fault investigations, modifications, technical publications, repairs,
the provision of spares, and transportation costs. The warranty
also covers initial aircrew and groundcrew training. In addition,
a Foreign Military Sales case is being negotiated through the
UK Defence Procurement Office with the US Department of Defense
to obtain technical information in support of operational and
25. ***. Current guidance from the Design Authority indicates
that, subject to Defence Ordnance Safety Group advice, a Service
Life in excess of 25 years could be achieved.
26. The Kosovo air campaign highlighted the need for
secure communication between aircraft in joint and coalition operations.
27. Secure air-to-air communications will provide RAF
aircrews with the ability to contribute to the application of
air power in any future coalition operations. ***.
29. A number of different ways of engineering the requirement
were identified, as there was no common solution for all the aircraft
types involved. The UHF radio and cryptographic equipment used
will be a common element. Equipment has been procured via single
source arrangements in order to minimise technical, timescale,
and cost risks. Existing service assets have been used where appropriate,
and, so far as possible, were modified only so far as to provide
the required secure facility. Where new equipment was acquired,
this was because either no suitable surplus in-service items existed
or because it was not possible to modify or adapt such equipment
for the task in hand.
30. Major equipment suppliers were chosen because of
their ability to meet the extremely tight lead times. Rockwell
Collins (USA) supplied ARC 210 radios. BAe Systems supplied Wide
Band Secure Speech equipment. RACAL Avionics (now THALES) supplied
JTIDS (Tactical Datalink) Control Units, since there were insufficient
items available in service stocks. DARA Sealand and DERA Boscombe
Down designed and built various interface units, since no commercial
product existed. Raychem (USA) supplied specialist double screen,
twin core cable for the installations. There was no UK manufacturer
able to meet the required timescales.
Milestones and Costs
32. The cost of the enhancement contract is expected
to be £33 million. The total cost including 15 years through-life
support is £40 million VAT inclusive.
33. Support for the equipment will initially be covered
by warranty. Spares will need to be procured in order to support
the deployed aircraft and will be dependent upon basing policy
and operational requirements. It may be necessary to procure further
turn-round spares in order to ensure that the required equipment
availability is met. To retain value for money the equipment will
be supported for a 15 year period.
34. The secure air-to-air communications equipment is
planned to have an in-service life of 15 years.
35. In addition to the immediate response work, steps
have been taken within the resource planning framework to introduce
a wider programme to fit equipment to support larger scale deployments.
Details of this programme are being developed.
SEA LIFT ASSETS: ROLL-ON-ROLL-OFF (RORO) SHIPS
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). After Initial
Gate in March 1999, an Invitation to Negotiate (ITN) was issued
to four consortia. Assessment of the bids received in July 1999
indicated that a Private Finance Initiative (PFI) solution was
likely to provide value for money. After optimization 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 would intend 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 October 2000.
Following 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.
***. Through ordering ships from two shipyards, AWSR has
been able to offer early delivery of the capability, which is
of benefit to Defence by reducing the period in which availability
of sufficient strategic sealift to support the JRRF could not
be assured. However, difficulties in the detailed commercial arrangements
for the two H&W ships were threatening the timely completion
of the PFI negotiations and early delivery of the service. In
March, MoD therefore took over the commercial shipbuilding contract
with H&W as part of the PFI arrangements. (AWSR's shipbuilding
contract with Flensburger is unaffected). The H&W contract
will be managed on MoD's behalf by AWSR. On delivery of the ships
to them, AWSR will provide the full six ship service on PFI terms.
It is expected to complete negotiations leading to award of the
full PFI contract this summer.
Until the full service can be available a provisional service
is being managed by MoD which provides an enhanced level of sealift
compared to that previously available.
1. The requirement is for guaranteed, world-wide delivery
of JRRF early entry equipment, including containerised ammunition,
at sustained speeds of at least 18 knots. The vessels will be
of commercial design. They will not be provided with warlike features
such as a self-defence capability or military communications,
although the selection of appropriate commercially available equipment
will maximise 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 Ro-Ro facilities;
manoeuvrability is built into the design to assist with berthing
in the absence of tug support.
2. Trade-off between operational risk and value for money
has been tested in negotiations.
3. The long-term requirement is for a capability of six
vessels in total.
4. Operational analysis in the SDR subsumed earlier studies
of strategic lift to identify the number of RoRo vessels, and
5. 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.
6. Following the expiry of the contracts for the bareboat
charter of RFAs SEA CRUSADER and SEA CENTURION in January and
April 2001, these two vessels have been rechartered, along with
Merchant Vessel Dart 10, to provide an enhanced level of sealift
(the "provisional service") pending the introduction
of the PFI service; a fourth vessel will be chartered on an ad
hoc basis as required. The target date for the full PFI service
to be available to provide the increased capability identified
by the SDR is 2005, but, under the preliminary agreement signed
last December, it will be available by 2003.
7. Under the PFI arrangements, the service provider will
be 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.
8. 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. Furthermore, there is also a clear operational
requirement to man these vessels with British seamen, as a minimum,
for security considerations. AWSR have bid, and will be contracted
to provide, British seafarers eligible to be called out as sponsored
reserves for all vessels when working for the MoD.
9. An Investment Appraisal has considered a wide range
of options including: do nothing for 20 years, short and long
term charter options, and conventional design and construction.
None of these matched the value for money offered by the PFI approach.
10. The issue of export potential does not arise directly
in the circumstances of this project.
11. Both the interim and long term requirements have
been addressed through competition. It was recognised before the
competition that the long-term requirement 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. The selected
PFI solution involves the build of four ships by the German Flensburger
shipyard and two by H&W.
12. The programme is being managed using a Smart Acquisition
13. Key milestones as currently planned:
|Approving issue of Invitation to Negotiate assuming PFI.
|Assessment of bids (including the "revise and confirm" round)
||Late 1999July 2000
|Main Gate||To approve selection of preferred bidder for PFI solution
|Announcement of preferred bidder||
|Preliminary agreements in relation to shipbuilding subcontracts
|MoD take over commercial shipbuilding contract with H&W
|Full Service||By 2005
14. The capital cost of the asset element of the PFI
service will be around £175 million. The annual service cost
to the MoD is related to usage but might amount to £40 million
per annum (fuel excluded).
15. Under a PFI arrangement the service provider is responsible
for the operation and maintenance of the service and is paid against
16. The intention is that all six ships, under a PFI
arrangement, with optimum risk transfer, should be at the graduated
readiness required for JRRF operations.
17. The services supports the NATO Defence Capabilities
Initiative in a number of areas but full commitment is limited
by contractual limitations appropriate to a PFI contract.
18. As the PFI vessels become available, the charters
for the ships providing the "provisional service" will
19. The contract will be 20 years from 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 life.
20. A change procedure will allow, for example, technical
upgrades offering value for money to be introduced by agreement.