Select Committee on Defence Written Evidence

Annex (continued)


  The Common New Generation Frigate, CNGF, a collaborative programme with France and Italy, was planned to replace the UK's Type 42 destroyers in the early part of the century. CNGF comprised two distinct collaborative programmes: the Principal Anti Air Missile System, PAAMS, and the ship with its other systems, Horizon. Whilst the contract for the development and initial production of PAAMS has been placed, the "Horizon" project did not progress satisfactorily. The three nations agreed on 25 April 1999 that it would not be cost-effective to pursue a single prime contract for the ship and that the tri-national Horizon programme would end upon completion of its Project Definition and Initial Design Phase (Phase1) at the end of October 1999. The UK is now taking forward its ship programme, designated the Type 45 Anti-Air Warfare Destroyer Programme, through a national prime contract, building on the tri-national project work already carried out and pursuing opportunities for co-operative procurement in equipping the ships.


  1.  PAAMS and Horizon both derived from the single Tri-Partite Staff Requirement for CNGF. The requirement was approved by the three participating nations, the UK, France and Italy, in December 1992. The UK requirement was, and continues to be in the national Type 45 programme, for a ship to provide effective area air defence against aircraft and missiles, to replace the Type 42 destroyers. At the start of Project Definition for Horizon in 1995, the intention was that PAAMS would provide an anti-war warfare capability sufficient to meet the most demanding threat foreseen. It was subsequently agreed that the initial capability sought should be sufficient to meet the most demanding threat forecast at the then expected in-services date for CNGF (2004), but that a growth path to provide the capability necessary to address future predicted threats would also be identified as part of this work. This remains the position for the Type 45, and we have revalidated that PAAMS will be able to meet the most demanding threat foreseen for 2007 when the Type 45 is due to enter service.


  2.  The principal cost/capability trade-off in the PAAMS programme has been the acceptance of a capability sufficient to meet the threat at ISD, rather than beyond. Studies into cost/capability and programme/capability trade-offs for Project Horizon to achieve an affordable CNGF were undertaken as part of Phase 1 of its programme which completed on 31 October 1999. This work is being carried forward into the UK's national programme.


  3.  The UK planning assumption is for the acquisition of 12 Type 45s. (The Horizon Memorandum of Understanding assumed French and Italian procurement of four and six ships respectively).


  4.  The requirement to replace the Type 42 destroyers was scrutinised in the Strategic Defence Review. No changes were made to the operational case underpinning Project Horizon, which will now be addressed by a national warship contract.


  5.  Type 45 destroyers equipped with PAAMS will provide area defence against aircraft and missiles, including local area defence against modern anti-ship missiles, to protect lightly armed or unarmed ships. In this role, the warships will support maritime assets across the range, from RoRo vessels through amphibious assault ships to aircraft carriers, in both UK national and allied/coalition operations. In addition, the Type 45—in common with all destroyers and frigates—will be a multi-role, general-purpose platform capable of operations across the spectrum of tasks, from peace support to high intensity warfare.


  6.  The warship and PAAMS are planned to replace the capability currently provided in the Type 42 destroyer with its GWS30 Sea Dart weapon system. The Type 42s are scheduled to be withdrawn from service from the Type 45 first of class in service date and then at intervals staged to match the in service dates of incoming hulls, with the exception of HMS Birmingham, which left service in 1999.

  7.  The ISD for CNGF was defined as the completion of Part IV Trials, which indicate the ship is fit to enter service. The original estimated ISD was December 2002. This slipped, largely owing to the need to synchronise the warship and combat system programmes, and the internationally agreed ISD for CNGF was amended to June 2004. The latest offer from industry pointed to a UK first of class CNGF being further delayed until 2007. We are confident that the Type 45 first of class can be delivered within a similar timescale and the 12 ship build programme is planned to complete in 2014. ISD definition has since been revised to reflect the availability of the Destroyer for operational tasking after sea training. This will normally be two months after the completion of Part IV Trials. There is no effect on the programme as a result of this change.


  8.  Marconi Electronic Systems, MES, was appointed as the prime contractor for the Type 45 Programme on 23 November 1999 when it was also contracted to complete the Preparation for Demonstration, PFD, phase of the programme. This responsibility has passed to BAE Systems now that the merger of MES and British Aerospace has taken place. Appointment of BAE Systems will ensure: the minimum of delay to the overall programme; that maximum benefit is carried forward into the UK national programme from the work already done under the tri-national Horizon programme; and that the prime contractor will own much of the risk associated with that earlier work.

  9.  The MoD's concern is to maintain a competitive base, not only for the Type 45 build programme but also for the downstream Future Surface Combatant. With this in mind, Vosper Thornycroft, VT, is also being involved in the Type 45 PFD contract. Following successful completion of this phase, the next stage will be a contract with the prime contractor for the demonstration and first of class manufacture, DFM, phase ie including the build of the first-of-class ship planned for award later this year. The MOD and the company will then have higher confidence in a programme that can meet the Royal Navy's requirement on time and within budget. Subject to satisfactory progress, the DFM prime contract will also involve VT and Marconi Marine (YSL) Ltd with a view to allowing the efficient construction of Type 45 Destroyers at both yards. The detailed contractual arrangements for the DFM phase remain under consideration and it remains the MoD's intention to oversee the competition for follow-on ships. In line with MoD policy, there are no plans to extend competition for warship construction to yards overseas.

  10.  Collaboration continues with France and Italy on PAAMS, and, on 11 August 1999, France placed a contract on behalf of the three nations for Full Scale Engineering Development and Initial Production, FSED/IP, with the tri-national consortium EUROPAAMS acting as prime contractor. Prime contractor members were nominated by their governments and the UK member is UKAMS which began as jointly owned subsidiary of Siemens Plessey, GEC and BAe SEMA who were selected on their industrial capabilities to provide the equipment required—see paragraph 17 below. Following subsequent restructuring, UKAMS is now a wholly owned subsidiary of Matra BAe Dynamics. FSED/IP sub-contracts have now been let by the prime contractor to all the main equipment suppliers.


  11.  Before the 1996 MOU was signed, the UK considered a number of procurement options, including life extension of Type 42s and acquisition of off-the-shelf alternatives.


  12.  The PAAMS Programme MOU and its FSED/IP Supplement were signed by France, Italy and the UK in March 1996. The UK share of the costs of PAAMS FSED/IP will be higher than those of France and Italy because of the costs of developing the Sampson Radar used only in the UK variant, and because the UK is making a contribution to the cost of the Franco-Italian technology in the FSAF Programme, Family of Future Surface to Air Missile Systems, being used for PAAMS.

  13.  The PAAMS Programme is managed by the tri-national PAAMS Programme Office, PPO, in Paris which reports to a tri-national Steering Committee. The aim is to delegate as much programme management work as possible to the PPO although co-ordination of UK policy on PAAMS remains the responsibility of the Type 45 Integrated Project Team (IPT). A new charter that sets out the arrangements for co-ordinating between PAAMS and the national Type 45 ship-programme has been agreed with France and Italy, in place of the previous PAAMS/Horizon charter, as has a charter between PAAMS and the new Franco/Italian bi-lateral Horizon programme.

  14.  At 1 February 2000, the PPO had 21 full time staff: 10 UK, five Italian and six French; and four part time staff, one Italian and three French. The UK also has one member of staff located with the FSAF Project Office in Paris. The tri-national JPO located in London disbanded on completion of the Project Definition and Initial Design Phase of Project Horizon on 31 October 1999. The Type 45 IPT has an annual running costs budget of £4 million including salaries and expenses of UK staff working in the PPO and FSAF Project Office.

  15.  The reasons for the failure of the tri-national Horizon programme were the subject of analysis by the tri-national Horizon Joint Project Office, JPO, and Horizon Steering Committee. A short paper which synthesised their and others' views into a single national "lessons learned" report which could be used to inform the UK's approach to future potential collaborative ventures has been compiled and a copy is attached at Annex A.

  16.  The potential for achieving economies of scale by co-operation purchasing of common items in the Type45 and Franco-Italian Horizon programmes has been explored without success to date. An opportunity exists later in the year to revisit the question when Type 45 and Horizon equipment selections will have been identified.



Export potential for the system as a whole is constrained by its high technological specification and cost, but elements of the system such as PAAMS—and in particular its associated multi-function radar SAMPSON—may have considerable export prospects to the value of several billion pounds over the next fifteen years. There could be prospects in refit programmes as well as in new build hulls.


  18.  For PAAMS, the Matra BAe Dynamics UKAMS consortium was formed out of the companies possessing the technologies crucial to the programme—notably the existing FSAF contractors and the Sampson supplier Siemens Plessey Systems, now BAe Defence Systems Ltd. PAAMS work share is constrained by existing FSAF arrangements, but the aim is to achieve equitable work share throughout the life of the programme as far as possible, subject to considerations of cost-effectiveness and competition.

  19.  For the national warship programme MES, as part of GEC, was part of the Horizon International Joint Venture Company, IJVC, and was thus heavily involved with the work that was undertaken by the IJVC during the Horizon Project Definition and Initial Design Stage which completed at the end of October 1999. To avoid further delay to the programme to replace the Type 42 destroyers, it was essential that the chosen prime contractor would be able to make maximum use of the outputs of the HORIZON definition work, and demonstrate an ability to resource the programme and the timelines in partnership with the IPT.


  20.  The Type 45 Programme is being undertaken within the principles of the Smart Procurement Initiative, SPI. The Type 45 IPT was formally established in September 1999 with the single Prime Contractor Organisation, PCO, working with the MOD project team at Bristol. A charter to set out the working ethos between the DPA and PCO has been agreed. The MOD is confident that the SPI approach to requirements management, through the development of an initial operating capability, which could be progressively enhanced through a programme of incremental upgrading, will enable the first of class ship to be delivered on time and to cost.

  21.  The principal lessons for the UK learned from the outcome of the Horizon programme covering, procurement strategy, risk reduction, communication with industry at an early stage of the project and affordability, are already built into the Smart Procurement Initiative.


  22.  The PAAMS FSED/IP Phase is now well under way, following contract placement on 11 August 1999. This includes the supply of the systems and associated equipments and spares for the three nations' first of class ships. Systems for follow-on ships will be covered by a second supplement to the PAAMS programme MOU on which formal negotiations with France and Italy have opened.

  23.  For the warship, the prime contractor BAe Systems was contracted in November 1999 to complete the Preparation for Demonstration, PFD, phase. Phase 1, Project Definition and Initial Design, of the aborted tri-national Horizon programme completed on 31 October 1999 and the prime contractor has indicated that he will pull through some 70% of Horizon output into the national Type 45 Programme.

  24.  The PFD contract is planned to complete later this year, following which Main gate approval will be sought for DFM, phase—see paragraph nine above.


  25.  Table 1 below shows the currently planned milestones and approved budget for MPR99 price base.

Table 1


Approved Expenditure
£1,367 million
£1,345 million
September 1996
August 1999
Start of warship assessment phase
July 1999
July 1999
Completion of Horizon Phase 1
July 1998
October 1999
Completion of warship assessment phase
End 2000
End 2000

  26.  Delays in the PAAMS programme were largely related to slow progress in agreeing a procurement strategy with partners, and then in negotiating a satisfactory contract.

  27.  Table 2 below shows expenditure to date, updated to 1999 prices. Forward commitment amounts to £881 million. For the PAAMS FSED/IP and national warship contracts, the total cost is expected to be of the order of £6 billion including £2.2 billion total acquisition costs for PAAMS. The years of peak expenditure are expected to be 2005-06 to 2007-08.

Table 2

Spend to Date

Pre 1996-97 (see Note 1)
£103 million
1996-97—Start of Horizons Phase 1
£8 million
£13 million
£17 million
1999-2000 (forecast)
£116 million

  Note 1: Includes aborted NFR Programme costs, around £7 million.

  28.  Under the terms of the Horizon MOU, the UK carried liabilities in respect of additional expenses associated with winding up the Horizon Joint Project Office/International Joint Venture Company, IJVC. Following completion of the contract, the IJVC has been wound up without any claim on the MoD. The JPO was closed on 31 October 1999, no additional expenses being incurred.


  29.  A common support arrangement for spares and maintenance was proposed for CNGF. Under the national programme, opportunities for co-operative procurement will be pursued, including any opportunities for shared support.

  30.  Ship staff training and spares storage are potential bottlenecks. Increased use of experienced Type 42 crew would reduce the load on pre-joining training, and thus the training bottleneck, when the Type 42 replacement comes into service. Use of computer based training will reduce disruption to operational programmes. "Just In Time" stock management techniques will reduce the volume of spares to be held, thus minimising the need for new storage facilities during the transition period.


  31.  Assuming a class of 12 ships, 9 or 10 would on average be available at any one time to the Commander in Chief Fleet for tasking, while two or three would be undergoing maintenance, including one or two in refit. It is not planned to hold any ships in storage or as in-use reserves.


  32.  Commonality of the majority of PAAMS systems and sub-systems, including in particular the Aster missile, will ensure a good level of interoperability with both France and Italy. In a warship context, the requirement for interoperability will be re-examined under the revised procurement strategy, but given the primary Force Anti-Air Warfare role of the ship this will remain a high priority.


  33.  The sales potential of Type 42s is being considered.


  34.  The Type 45 is planned to have an in-service life of 25 years.


  35.  The Type 45's systems and sub-systems will be updated as appropriate throughout the life of the system to take account of developments in the operational environment. It is likely that the Future Surface Combatant and Future Carrier programmes, currently in the early stages of concept development, will both draw on major elements of the Type 45.


  ASRAAM, Advanced Short Range Air-to-Air Missile, is a highly agile missile which is due to be deployed on the Tornado F3 and Harrier GR7 to replace the Sidewinder AIM-9L missile, and will also be fitted to Eurofighter. Although ASRAAM was originally conceived as a collaborative project, our partners withdrew when the programme encountered difficulties. ASRAAM was re-endorsed as a national programme in 1990. Contracts for Full Development and Production were let in 1992.


  1.  The requirement for a highly agile missile with good infra red counter measure resistance was driven by the need for short-range air superiority in visual combat. Such a missile would provide Eurofighter with a substantial advantage against the forecast threat at the turn of the century, and would be complementary to Skyflash and the Beyond Visual Range Air-to-Air Missile, BVRAAM—see separate memorandum.[5] The missile would, additionally, be an important factor in the overall capability of the Tornado F3 and the ability of offensive air support aircraft, such as Harrier, to defend themselves effectively.

  2.  Initially, the UK sought to meet the national requirement for a short-range air-to-air missile through participation in a collaborative development for a family of weapons. In accordance with a Memorandum of Understanding between the UK, the US and Germany, signed in 1980, a tri-national Staff Requirement was agreed in October 1984. Subsequent budgetary pressures, technical and management problems, and changes to US requirements caused our partners to withdraw from the project. The Staff Requirement was re-endorsed as a UK national programme in 1990 without any significant changes since the original approval.


  3.  Although the programme has encountered some technical difficulties and slippage, the UK's Staff Requirement, as re-endorsed in 1990, has not been altered.


  4.  The original NATO stockpile requirement for *** missiles as at December 1987, was ***, with options on a further *** in September 1990, as a result of changes in the threat assessment and in the Eurofighter programme. Following a review of the operational and training usage of ASRAAM missiles, based on planning assumptions for Eurofighter and Harrier GR7, a second tranche,*** missiles was approved in January 1994. Of these *** missiles on order, *** will be for full operational use and *** will be telemetery missiles for trials firing.


  5.  The Strategic Defence Review did not affect the requirement or existing orders.


  6.  ASRAAM will provide a significant contribution to achieving and maintaining air superiority. It will be employed in the full spectrum of air operations from air policing to peace support through to high intensity conflict.


  7.  ASRAAM will replace Sidewinder AIM-9L on Tornado F3 and Harrier GR7 in a phased programme starting this year. Sidewinder is currently due to remain in service until 2018 on the Tornado GR4, but we are considering whether to integrate ASRAAM on to all combat aircraft in order to rationalise air to air missile stocks. Sidewinder could then be withdrawn from RAF service.

  8.  Details of the In-Service Date are given at Annex.[6]


  9.  Under the provisions of the 1980 MoU, the US was to develop an advanced medium range air-to-air missile, and the UK and Germany, along with Norway and Canada, who had subsequently joined the programme, were to develop the short-range system. The European programme was managed by a joint project office, with Bodenseewerk Geratetechnik GmbH and British Aerospace Dynamics Ltd as the principal contractors. The programme encountered difficulties over the missile configuration, the establishment of effective collaborative arrangements in industry, and the identification of an affordable product. Germany withdrew from the programme in 1989 and the US, Norway and Canada in 1990.

  10.  Once ASRAAM had been re-endorsed as a UK national programme in 1990, an invitation to tender was issued on 1 May 1991. It called for a package deal, covering development, production and associated logistic support of the missile and its associated training variants. We also stipulated the minimum use of Government Furnished Facilities and Equipment, and the earliest possible ISD.

  11.  A number of candidate weapons were considered. British Aerospace Defence Ltd, Raytheon, a consortium of GEC, Marconi and Matra, Bodenseewerk Geratetechnik GmbH, BGT, and Loral Aeronutronic all expressed an interest in the competition. In the event, Raytheon and Loral did not respond to the ITT. The BAe bid of ASRAAM, the GEC Marconi/Matra bid of MICAASRAAM and the BGT AIM9L IRIS were considered as options in early 1992. Other weapons, including a further BGT bid, the AIM 9LI, an improvement over the standard AIM9L, and a number of US options either in service or in development were also considered, but were not assessed as capable of meeting the UK requirement.

  12.  The BAe bid met the Staff Requirement and offered a number of advantages over the BGT and GEC Marconi/Matra bids. BAe Defence Ltd, now Matra BAe Dynamics Ltd, was awarded a fixed price contract on 31 March 1992.


  13.  ASRAAM won its first export order in December 1998 when it was selected for the Royal Australian Air Force. There is also interest from a number of other nations. This type of missile has historically sold in the tens of thousands. Missiles with similar capabilities are being built in the USA, Germany, Russia and Israel.


  14.  The decision on the main development and production contracts took account of the employment implications for the UK. Matra BAe Dynamics estimated that more than 80% of the work in total would be in the UK, securing some 7,000 jobs. The GEC Marconi/Matra bid offered only 50% of work in the UK, although they estimated that this would rise to 70% if potential sales were achieved.


  15.  Matra BAe Dynamics Ltd proposed in September 1998 a number of Smart Procurement "gain sharing" initiatives, including the introduction of a more powerful processor into the missile, and better alignment of missile production deliveries with candidate aircraft platforms leading to a revised ISD of ***. A contract amendment was agreed in September 1999.


  16.  The acquisition phases are shown in the table below:

PhaseDate Activity

Pre-feasibilityJanuary 1981 Endorsement of UK support to NATO operational objectives for ASRAAM & AMRAAM
FeasibilityJune 1982 Systems studies including IR detectors, transparent materials and sub-systems
Project definitionDecember 1984   Design of prototype missile and launcher sub-systems
Project Definition Amendment
—re-definition 1
December 1987Confirmation of image processing algorithms; manufacture of inert safety and arming units and design of strap down software
Project Definition Amendment
—re-definition 2
July 1988Study into detailed proposals for an integrated missile configuration and more efficient management structure
Development & ProductionMarch 1992 Full development and production of ASRAAM starts

  17.  Completion of design and development of the seeker software remains the most critical of the programme risks. Much of this work is dependent on flying and firing trials, conducted at the US Eglin range. The most recent trial, in September 1999, met its primary objectives.


  18.  Approvals for the development stage are listed above. Details of expenditure to 31 March 1999, and of further expenditure to which the MoD is committed, are given at Annex.

  19.  Delays to the programme reached a point where liquidated damages became due and these will be collected in the form of consideration payments totalling some £19 million the amended contract, see paragraph 15, makes provision for further liquidated damages, a maximum of 6% of the value of delivered items, against delivery of the new processor missiles.


  20.  ASRAAM is an industry-supported missile, with the bulk of its maintenance to be undertaken by the prime contractor. Although Eurofighter aircraft delivered to Germany, Spain and Italy will be able to fire ASRAAM, these nations are not committed to buying ASRAAM. At least initially, therefore, in-service support costs will fall to the UK.

  21.  Most of the support equipment and handling procedures for ASRAAM will be the same as for the current AIM-9L weapon. However, there will be a substantial reduction in routine servicing requirements at the front line, since all major servicing will be undertaken by industry. Storage is a potential bottleneck, as ASRAAM stocks are built up without equivalent reductions in AIM-9L stocks. A Weapon Loading and Storage Study is addressing these issues. Since the operational and training missiles both have classified software, unlike the current air-to-air weapons, of which only the operational weapons are classified, modified handling procedures will be needed.


  22.  Current plans for operational missiles require *** to be placed in storage and *** to be allocated to Main Operating Bases. The remainder are telemetered rounds.


  23.  ASRAAM has demonstrated its compatibility with earlier AIM9L launch equipment and interfaces. It is capable of being carried and fired, with minimum modification, by all UK and other allied air forces' aircraft that can carry and employ AIM9L, including Sea Harrier. The system is compatible with the new rail launchers on Harrier GR7 and on Eurofighter. It is also designed to be employed using multiple sensors, such as the infra red search and track systems and helmet-mounted sights planned for Eurofighter, as well as radar.


  24.  Surplus Sidewinders may have potential for resale. Missiles that cannot be sold will have no operational use and will be scrapped.


  25.  ASRAAM is planned to be in service for 25 years.


  26.  It is intended to establish a programme of through-life development, in conjunction with Australia. This will involve the acquisition of emerging technology on an incremental basis.***

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