LONDON ― An increase in the cost to complete the British Royal Navy Astute-class nuclear submarine program as well as technical issues with the gun on the British Army’s upgraded Warrior infantry fighting vehicle were the main reasons behind a £358 million (U.S. $507 million) rise in the cost of the 28 largest projects during 2017, according to the Ministry of Defence.

The final four of seven Astute-class attack submarines being built for the Royal Navy by BAE Systems at its Barrow-in-Furness yard saw costs rise by £516 million over the course of the last year, the MoD recorded in its project performance summary, which was published as part of the 10-year defense equipment plan Wednesday.

The Warrior capability sustainment program saw its costs rise by £136 million during the year as a result of issues surrounding the new 40mm cannon being fitted to the vehicle by prime contractor Lockheed Martin UK.

The MoD said the cost rise on the submarine program was sparked by a number of factors including increased building schedules for the final four Astute-class boats now being tested or built at the yard in northwest England.

The fourth boat to join the fleet, HMS Audacious, completed a test dive in the basin of the BAE yard last month and is expected to be handed over to the Royal Navy toward the end of the year.

The cost of the four submarines is now forecast to come in at £6.69 billion, some £836 million more than when their build was approved.

Like the submarine, the Warrior capability sustainment program was hit by cost and schedule delays last year.

Costs on the Warrior update increased £136 million over the year, taking the expected total cost of the program on current forecasts to £1.48 billion.

The in-service date slipped 19 months during 2017, MoD figures showed.

The MoD put the latest cost increase down to “technical and engineering challenges associated with the new cannon build standard” on the updated vehicle.

Lockheed Martin UK distanced itself from the cost increase, saying the cannon wasn’t its direct responsibility.

“We don’t recognize the figure of £136 [million] ―the cannon is GFE [government-furnished equipment] and any inquiries would have to be directed to the MoD,” a company spokesperson said.

The Warrior capability sustainment program saw its costs rise by £136 million as a result of issues surrounding the new 40mm cannon being fitted to the vehicle by prime contractor Lockheed Martin UK. (Courtesy of Lockheed Martin)
The Warrior capability sustainment program saw its costs rise by £136 million as a result of issues surrounding the new 40mm cannon being fitted to the vehicle by prime contractor Lockheed Martin UK. (Courtesy of Lockheed Martin)

The Warrior upgrade, which includes a new turret and other modifications, is using a new type of 40mm cannon known as the cased telescoped weapon system developed by CTA International, a joint venture between BAE Systems and Nexter.

The weapon has also been ordered for the British Army’s Ajax armored reconnaissance vehicle program being led by General Dynamics UK.

Lockheed is also leading the turret work on that program. The French Army has also ordered the cannon system.

Lockheed Martin UK reported last week that it was continuing to make progress on the program and had delivered eight of the upgraded fighting vehicles to the British Army’s armored trials and development unit for qualification and verification trials over the next year.

The company spokesman said Lockheed was on track with the program and had met every development contract milestone so far.

The MoD and Lockheed Martin continue to negotiate over the manufacturing contract for the Warrior. The company declined to comment on the status of the talks.

Data released by the MoD showed the in-service date for the upgraded Warrior vehicle as 2022 ― 39 months behind the original schedule.

The MoD said in the report that the delay to the Warrior capability sustainment program “is directly tied to the cost increase” issues around the cannon.

Overall, with several programs achieving price reductions, the aggregate cost of the 28 programs under review rose by £358 million, or 0.8 of the total cost.

That’s a deterioration compared with 2016 when major program costs rose by £237 million.

Program delays have also increased in 2017 to a total of 57 months compared with 34 months in 2016.

One of the longest delays was on the Project Marshall program being run by Thales UK and the National Air Traffic Service primarily to upgrade air traffic services on air bases in the U.K. and abroad.

The MoD reported a two-year delay on the program and said the in-service date has now been pushed back to June 2019.

Thales and NATS won the contract in 2014. The deal is expected to be worth about £1.5 billion and run for 22 years.

The MoD report said they were protected from cost overruns by the contract terms.

The cost and time overruns are a fraction of the problems defense procurement has run into. For example, in 2001, costs on the 20 largest programs rose during the year by 6.6 percent, and delays totaled 557 months, the National Audit Office reported.

Until 2015, major defense programs’ cost and time performance were independently verified by the National Audit Office, the governments spending watchdog, but the effort was axed, and for the last two years a much reduced report has been published by the MoD itself.