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UK Carriers face new delay over rising cost
Final clearance to build the Royal Navy's new aircraft carriers risks slipping further behind schedule amid continuing disagreements between industry and the Ministry of Defence over rising costs. The two sides meet tomorrow to try again to resolve their financial differences after the consortium building the carriers said the price would be around £300m above MoD expectations.

After years of negotiations the Aircraft Carrier Alliance, which includes BAE Systems, VT Group, Thales and MoD officials, should have submitted final price details for the long-delayed project last Thursday. Recent guidance from the MoD has been that the cost of the two vessels would be about £3.5bn, which itself is up from an initial estimate of between £2.8bn-£3bn.

However, the consortium says the carriers cannot be built for less than £3.8bn, but has agreed to work on a incentive scheme that the MoD hopes could reduce the cost to £3.6bn. The consortium partners would share any cost saving.
That's $7.2 billion USD
One person linked to the alliance expressed exasperation yesterday on learning that last week's deadline for a final price had been missed. "I just can't believe that. I really thought everything had been sorted out," he said.
Clearly a youth with little experience in defence contracting.
Another source suggested that the last-minute hitch was due to concerns that the Treasury will not agree to £3.8bn. "I think that after all this time the Defence department would settle for £3.8bn - but they are not the ones paying for it."

Once the price is approved, the companies can start preparing to construct the carriers and employ staff. The MoD's latest timetable for that to start was December, with the two carriers expected to enter service in 2012 and 2015.

An MoD official said yesterday: "We are making progress on negotiations and we are optimistic that we can finalise negotiations at a price we can afford and industry can deliver."

Construction of the carriers was hailed as a new way of working for the MoD and industry, and an attempt to avoid the large cost overruns that have dogged other major defence projects.
Nothing new there. They promise that every time
Lord Drayson, the defence procurement minister, has demanded that industry share more of the risk should the carriers hit problems or run over budget. The defence industry now has to work to fixed prices and pay penalties fees when things go wrong.

The carriers, each weighing 65,000 tons and 280 metres long, will be three times the size of the existing Invincible-class vessels.

Sounds and looks a lot like a Forrestal class carrier. (Even has an E-2 on deck in the romantic artists rendering.) Considering that the current cost of a CVN 21 carrier is $8.1 billion USD, wouldn't it make a lot more sense for the Brits to order two of those instead of getting into bed with the frogs and their CDG trackrecord? Precedent was set with the SSBNs and I can't imagine we'd object to a deal that allows them to share some of the fixed costs. Learn a lesson from Airbus, mates. Get a real carrier for a small bit more. And maybe less by the time they're done.
Posted by: Nimble Spemble 2006-11-02
http://www.rantburg.com/poparticle.php?ID=170626