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Aircraft Carriers' Costs Soar £1bn

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http://www.bbc.co.uk/blogs/thereporters/ro...sts_soar_1.html

A £1bn cost over-run is threatening the future of the publicly funded project to building Britain's biggest ever warships.

The BBC has seen a memorandum from the lead contractors for the construction of two 65,000 tonne aircraft carriers, HMS Queen Elizabeth and HMS Price of Wales, known as QE Class carriers.

Written earlier this month, the memo says:

"The MOD [Ministry of Defence] will publish its annual report and accounts in July; these will show c£1 billion of QE Class cost growth and the project will come under severe pressure through the opposition and the media".

It continues: "this is a very real fight for the programme's survival".

The original budget for the two carriers was £3.9bn. That was the price when the MoD signed the contract for the project with the Aircraft Carrier Alliance last July.

In other words, in just 12 months the cost of these enormous ships - which will be 280m long and 70m wide, or the size of almost three full-size football pitches - has risen by 25% to around £5bn.

This massive inflation in costs will be widely seen as alarming, especially at a time when there are intense pressures on the government to cut public spending.

The memo, written for the chief executives of companies participating in the project - who are collectively called the Alliance Management Board or AMB - attributes the cost increase to "a combination of direct costs, inflation and accounting adjustments".

The paper then discusses possible measures to reduce costs, including the possibility of "substantial redundancies", of the order of 400 to 500. It also says that the future of the Appledore shipyard [which is in Devon and is owned by Babcock] would be under threat.

The Aircraft Carrier Alliance is a consortium consisting of BVT Surface fleet, which is itself a joint venture between BAE and VT Group, together with Babcock, Thales and the MoD (which describes itself as a partner and a client).

In December, the MoD announced a delay of up to two years in the schedule for bringing the new carriers into service. That has caused much of the increase in costs, according to an executive at one of the companies involved in the project.

However work has continued, and the first steel for the ships is scheduled to be cut in Govan on the Clyde on 7 July.

If the worst fears of the Aircraft Carrier Alliance's board were realised and the project was scrapped, the knock-ons would be serious.

For example, some 80,000 tonnes of steel worth £65m has been ordered from Corus, the beleaguered Anglo-Dutch steelmaker.

And it could also put in jeopardy plans for BAE to acquire VT Group's stake in BVT, which employs over 7,000 and was created to be a near-monopoly in the construction of warships in the UK.

However official sources say there is little prospect of the project being dropped, because 40% of contracts relating to the carriers have already been placed and ministers are said to be impressed with the way it has been managed so far.

Update, 18:35:

Here is a statement from the MoD in response to my story:

"The MoD took the decision to delay the two future aircraft carriers in December 2008. We did this in order to reprioritise investment to meet current operational priorities and to better align the programme with the Joint Strike Fighter aircraft. We acknowledged at the time that there would be a cost increase as a result.

"We are currently re-costing the programme. The MOD accounts published next month will present an initial estimate and the formal costing will be available later in the year."

If you where writing a farce you couldn't have picked a better name could you, QE Class. :lol::lol::lol:

So yet again another govt estimate and yet again they prove they can't make anything stick.

It's like they just make up a figure and say this is how much it will cost before actually getting any quotes.

I bet private industry can't wait for this quality to be out of office to employ them.

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Who are we planning to invade now? Jersey, the Isle of Man, Iceland, they are all skint..................

I would suggest the USA but they have feck all left to steal. How about Iraq, oh wait...............

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I'm actually in favour of building the Carriers... it's about time we Brits had something to be proud of...

Except they're really French designed with Italian electronics and will fly mostly American or German Aircraft...

And be crewed by gutless morons like this chap...

Mr Bean...

Christ on a crutch it's enough to make me weep... Cancel the bloody things.

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These defence contracts are always a nightmare and everyone involved with them knows it.

The carriers will almost certainly more than pay for themselves through their assistance to doing deals with easily impressed tin pot third world countries. A dirty but unavoidable reality.

The Russians, Chinese and Indians won't have anything half as good.

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How about Iraq, oh wait...............

Iraq makes sense, you could charge them the cost of the war and place a burden of debt on

any government you installed to cover it. Then they pay through the newly emplaced government

just like Kuwait want money for the Iraq invasion, for all the trouble they have caused they have

enough oil to cover the debt.

The only difference between me and a conspiracy nut is I don't really care what happens to Iraq

;but making them pay a bullet tax is just genius.

1991

UN Chronicle | December 1, 1991 | COPYRIGHT 1991 United Nations Publications. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information) Copyright

The Security Council on 15 August partially lifted a ban on the sale of Iraqi oil and set compensation payments for damage inflicted on Kuwait during the war at 30 per cent of Iraq's annual oil exports. It also demanded Iraq's compliance with diarmament measures imposed following the Gulf war. It did so in adopting three more resolutions related to the situation between Iraq and Kuwait.

http://www.encyclopedia.com/doc/1G1-11715563.html

By SINAN SALAHEDDIN , 06.29.09, 11:46 AM EDT

BAGHDAD -- Iraq's Sunni vice president said Monday he would not attend the country's first international oil licensing round, becoming the highest ranking official to express opposition a day before the country opens some of its vast oil and gas reserves to international companies for the first time in over 30 years.

More than 30 international oil companies are to compete Tuesday to secure a stake in developing six oil and two gas fields. Iraq is counting on the foreign firms' participation to revive its struggling oil sector and boost production of a resource that accounts for 90 percent of the government's budget.

But some lawmakers have objected to the bidding round, complaining that the oil ministry is seeking to circumvent parliament by having the contracts approved solely by the cabinet of ministers. Critics say that could render the contracts invalid - or declared unconstitutional - once another government is elected in Iraq.

In a statement posted on his Web site, Tariq al-Hashimi, one of Iraq's two vice presidents, said he would boycott the televised bidding ceremony and urged the oil ministry to "give the people's representatives at the parliament enough time to study these deals from the legal, economic and technical aspects," before awarding them.

http://www.forbes.com/feeds/ap/2009/06/29/ap6598186.html

Ghost of invasions past

Al-Ahram Weekly - Jun 19, 2009‎

http://weekly.ahram.org.eg/2009/952/re2.htm

Kuwaiti officials said Iraq should pay the oil-rich country $25.5 billion to compensate for damages caused by the seven-month Iraqi occupation of Kuwait

* Reuters, Thursday June 25 2009

http://www.guardian.co.uk/business/feedarticle/8576621

* First tender since 2003 invasion

* Fraught with controversy

* Do rewards outweigh risks?

By Ahmed Rasheed

BAGHDAD, June 25 (Reuters) - For the first time since the U.S. invasion to topple Saddam Hussein, global oil firms will have a run at Iraq's vast oil resources when Baghdad auctions off contracts in its biggest fields this month.

The June 29-30 tender for service contracts in six already producing oilfields and two undeveloped gas fields is fraught with risk following a revolt in the state-run oil industry, and amid violence and political uncertainty.

Oil companies say they have no choice but to bid -- the allure of the world's third largest oil reserves, and of greater riches down the road from Iraq's under-exploited and under-explored oil resources is just too great.

"These fields are the jewels of the Iraqi oil industry," a senior executive at an international oil company planning to bid told Reuters. "Of course we'll be there. But it's a big risk to take. We can win the contract, but can we execute it? Who will approve the deals? Will the local partners cooperate?"

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I'm actually in favour of building the Carriers... it's about time we Brits had something to be proud of...

Except they're really French designed with Italian electronics and will fly mostly American or German Aircraft...

And be crewed by gutless morons like this chap...

Mr Bean...

Christ on a crutch it's enough to make me weep... Cancel the bloody things.

The Italians aren't exactly renowned for their electronics are they?

alfa_romeo_logo.jpg

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What do submarines and banks in The City have in common?

For the most part they lurk unseen but occasionally surface to inflict armageddon from their conning towers.

Edited by Dave Spart

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Except they're really French designed with Italian electronics and will fly mostly American or German Aircraft...

Project cost exposed to dollar and euro rates, then? Would be interesting to know how much of the over-run is due to sterling weakness.

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I bet private industry can't wait for this quality to be out of office to employ them.

They already do.

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Is that before the price goes up further, perhaps we could buy them and then let them out for a profit?

Yes lets lend them out to Iran.

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The only thing in favour of building these ships is we should be able to sell them on when we realise we can't afford a navy to protect them! If I was an establishment leader in Argentina I'd be monitoring the economic collapse of the UK very closely. Not that they can afford much, but at some point they'll be able to walk in, as our capability to afford more than a 10 man task force will soon be over. If we were smart, we'd sell those islands to the Chinese!!! Lol.

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http://www.bbc.co.uk/blogs/thereporters/ro...sts_soar_1.html

If you where writing a farce you couldn't have picked a better name could you, QE Class. :lol::lol::lol:

So yet again another govt estimate and yet again they prove they can't make anything stick.

It's like they just make up a figure and say this is how much it will cost before actually getting any quotes.

I bet private industry can't wait for this quality to be out of office to employ them.

In part I understand the cost overruns when they develop some of this technology... its a new type of ship with new electronics etc.... the first two are bound to be expensive due to the development costs and those costs are difficult to be absolutely precise on... I suspect though that most of this cost increase is becasue the govt decided it couldn't afford to build them as quickly as planned so they deliberately spread the project out ... this would have resulted in that level of overrun on costs..... they would have known this when the announced the go slow, but will act horrified when the news is public.

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