LONDON — A £472 million ($670 million) deal to continue work on a program to build a new class of Type 26 anti-submarine frigate has been sealed by the Ministry of Defence and shipbuilder BAE Systems, but both sides are being coy about when the warship's production will get underway.
BAE said March 22 that the £472 million contract it had been awarded would run for 15 months starting in April.
The new contract follows on from a £859 million, 12-month extension of demonstration phase work now coming to a close at the end of this month.
The latest deal will involve further maturing of the design and manufacturing of equipment for the first three of eight ships scheduled to be built by BAE at it's Glasgow, Scotland, shipyards to replace the Royal Navy's aging Type 23 fleet.
Neither the company nor the MoD would comment on whether a production contract would follow immediately after this latest demonstration deal comes to a close in June 2017, but that's the likelihood.
Analysts and industry executives said that with work on some long-lead items ordered by BAE for the first ship already well advanced, they expect a production order for the platform itself around mid-2017.
Around this time last year, Defence Secretary Michael Fallon told Parliament the manufacturing phase for the Type 26 would start in 2016 with delivery of the new capability to the Royal Navy in 2022.
That start date is being pushed back a little with both parties now only saying the Type 26 "will in time replace" the long-serving Type 23.
That may simply be reflecting a desire not to become a hostage to fortune by announcing the timing rather than anything more sinister; although MoD budgets may become a bigger-than-normal problem during the financial year 2017/18.
The first Type 23, HMS Argyll, is scheduled to be retired in 2023, but some work has been done recently to see if additional life can be squeezed out of a platform that is already being updated with a number of new systems, such as MBDA's new Sea Ceptor anti-air missile.
Royal Navy officers and industry executives have previously said the delivery schedule for the Type 26 was dictated by the pressing need to start pensioning off Type 23s starting in 2023.
The timing of the build program is complicated by the decision in last November's strategic defense and security review (SDSR) to reduce Type 26 numbers from 13 to eight and introduce a new class of at least five light, general purpose frigates.
The build programs are likely to be concurrent. Executives have previously said the general purpose frigate, known as the Type 31, could enter the build program much earlier than imagined.
The Royal Navy are in the early concept phase on the Type 31 and have yet to lock down a design.
To complete the building program at the BAE shipyard, the SDSR added two offshore patrol vessels for the Royal Navy to the three already under construction at BAE.
The MoD refered to the recent Type 26 deal as a "demonstration contract," although in reality much of the work revolves around manufacturing and award of supply chain orders to help maintain program momentum .
Rolls-Royce gas turbines, GE Power Conversion with the electric propulsion motor and drive system, and Babcock International's air weapons handling system are among the local and foreign contractors already under contract to supply items for the first three warships.
The first MT30 gas turbine destined for the Type 26 is scheduled to be handed over to BAE by the end of the year.
By the end of the latest contract, BAE said in a statement it hopes to have around 50 equipment suppliers awarded manufacturing deals.
Diesel generators, mission bay doors, and stabilizer and steering gear selection will be among the deals to be struck over the next few months
Geoff Searle, Type 26 program director at BAE, said: "This is a significant investment in the program and an endorsement of the government's commitment to sustain this important national capability. The program is progressing well, and over the coming months more of our partners in the supply chain will start to manufacture equipment for the first three ships as we continue to progress towards the manufacturing phase."
The contract award comes hard on the heels of an announcement that one of Britain's most senior businessmen has been put in charge of a government drive to deliver a national shipbuilding strategy for the naval sector here.
Sir John Parker's appointment as the chairman of the National Shipbuilding Strategy was part of the Treasury's budget day announcements on March 16.
A Treasury-led effort to develop a surface warship building strategy has been underway since at least January 2015, when the initiative was announced by the chancellor, George Osborne, during a visit to the Portsmouth naval base on England's south coast.
The businessman's credentials include stints as chairman of Babcock International, BVT Surface Fleet and currently Anglo American. He's a naval architect and a non-executive director of the Airbus Group.
The appointment was welcomed by industry executives. "He's very shrewd, trusted by government and seen as impartial. He's an elder statesman and I would struggle to find someone better," one industry executive said.
An MoD spokeswoman said Parker will report on the strategy to government ministers by the deadline of the Autumn Statement 2016, which is expected no later than early December.
"His report will include recommendations on the management and governance arrangements for implementing the strategy in the longer term, including arrangements for any external oversight," the spokeswoman said. "He will lead the high-level engagement with key senior defense, government departments and industry stakeholders. He will provide strategic direction and guidance to a cross Whitehall teams and report to Ministers."
Key to the strategy is the build program for the Type 26 and Type 31 frigates.
Parker has been put in charge of leading strategic efforts to put Britain's naval shipbuilding industry on a more sustainable, long-term basis with a mix of Royal Navy and export orders.
"It will look at the potential to build a new complex warship on a regular schedule and maximize export opportunities in order to deliver capable ships and value for money, as well as maintaining jobs and skills," the spokeswoman said.