Ministry of Defence

Providing Anti-Air Warfare Capability:
the Type 45 Destroyer
REPORT BY THE COMPTROLLER AND AUDITOR GENERAL | HC 295 Session 2008-2009 | 13 March 2009

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Ministry of Defence

Providing Anti-Air Warfare Capability:
the Type 45 Destroyer

LONDON: The Stationery Office£14.35

Ordered by theHouse of Commons
to be printed on 11 March 2009

REPORT BY THE COMPTROLLER AND AUDITOR GENERAL | HC 295 Session 2008-2009 | 13 March 2009

This report has been prepared under Section 6of the National Audit Act 1983 for presentation
to the House of Commons in accordance with
Section 9 of the Act.
Tim Burr
Comptroller and Auditor General
National Audit Office
10 March 2009
The National Audit Officestudy team consisted of:Marisa Chambers, Andrew Makin,Paul Mills, Michael Ralph,
Duncan Richmond and Martin Wheatley,
under the direction of Tim Banfield
This report can be found on the National Audit
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CONTENTS
sUMMAry4

PArt one

Providing the new capability required9

PArt tWo

Procuring the new capability

17

PArt three

Risks to achieving the new capability

23

APPenDiX

1 methodology

27

GLossAry

29

Photographs on front cover and page four courtesy of the National Audit Office.
Photograph on contents page courtesy of MBDA UK Ltd.

SummARy1
The Ministry of Defence (the Department) is
procuring a fleet of six Type 45 destroyers to replace
the ageing Type 42 destroyers. The Type 45 destroyers
will be fitted with the new Principal Anti-Air Missile
System (PAAMS) able to engage multiple hostile aircraftor missiles simultaneously and, compared with theType 42 destroyers, will have better accommodation for
personnel, more fuel efficient engines, and be able tooperate Lynx, Merlin and Chinook helicopters. Figure 1
outlines its key equipments. The Type 45 destroyers
anti-air warfare capability allows the ship to operate
in a hostile environment, either to provide a protective
umbrella over a force of landing ships, an aircraft carrier
or a group of merchant ships, or to conduct a wide rangeof other tasks such as maintaining a United Kingdom
presence, embargoes or supporting forces ashore.

4

PROvIDING ANTI-AIR WARFARE CAPABILITy: THE TyPE 45 DESTROyER

2
In July 2000 Defence Ministers approved
expenditure of £5 billion (with a maximum acceptable
cost of £5.47 billion) to procure six (out of a plannedclass of 12) Type 45 destroyers with the first ship to enter
service in November 2007. The project has experienced
significant cost increases and delays. The current forecast
cost for the procurement of six ships is £6.46 billion(a 29 per cent increase compared with the most likely
approved cost of £5 billion). The Major Projects Report
records that the destroyer is now expected to enter service
in November 2010 (36 months later than planned).
The Department however, is working towards a morechallenging “target” date for delivery of December 2009.
We use this “target” date throughout the report. The
contract was renegotiated in 2007 and managementof the project is now much improved and no delays or
cost increases have been reported since. The first of class
Daring successfully completed contractor led sea trials
in September 2008, and the fourth destroyer Dragon was
launched two months later. The launch dates of the Type45 destroyers are detailed in Figure 2.

summary3
Our report examines the impact of the problemson the project on the provision of anti-air warfare
capability, the causes of the procurement difficulties, how
the Department has overcome these, and whether the
Department is managing all of the other elements – suchas support and training – necessary for it to make full useof the equipment capability. It is a detailed case study
examination of a project that features annually in our
Major Projects Report and as such allows us to examine
procurement and capability issues in much greater detail.
Specifically we considered:1awhat capability has been available to the
Department during the procurement of the Type 45
destroyers, and how it has set about managing thetransition to the new class of ships;b

how the Department has managed the procurement
to date, including its ability to meet the original
requirements for time, cost and capability, andwhat action it has taken to deal with problems
where these have occurred;c

how well prepared the Department is to support theclass of Type 45 destroyers through their operational
life as they come into service.

The Type 45 destroyer and its equipment
Communications
Mast

SAMPSON Radar –unique to the Type 45.
Multi-function radar for
Anti-Air Missile System

Long Range Radar
Helicopter Landing
Deck – for Merlin,
Lynx or Chinook

Sylver Launchers for
PAAMS – hold theAster Missiles

WR21 Gas Engines
4.5 inch Mark 8 Gun

Source: National Audit Office/Ministry of Defence

		
The Type 45 destroyers and their launch dates

2

DaringDiamond

DragonDuncan1 January 2006

27 November 200717 November 2008

October 2010

2006

2007

2008

2009

Dauntless

Defender23 January 2007

October 20092010

Source: National Audit Office/Ministry of Defence

Providing Anti-Air Warfare Capability: the Type 45 destroyer5summary

The provision of anti-air capability
4
The delays on the Type 45 destroyer project meanthat the Department is still actively operating five Type 42
destroyers which offer a much more limited capability.
Even allowing for the success of a number of cost
reduction measures undertaken by the Department, we
calculate that extending the life of the Type 42 destroyers
to cover the delays to the Type 45s is costing a total ofsome £195 million. This is not an additional cost to the
Department because operating costs for the Type 45
destroyers would have been incurred instead had they
been delivered to their original timescales. The Department
cannot yet estimate these operating costs with confidence.
5
The Department plans to introduce the Type 45
destroyers into service between 2009 and 2013. The
Department has always intended to introduce capabilities
incrementally on ships after they have come into service.
On current plans Daring, the first ship of class, willenter into service with the Anti‑Air Warfare performance
having been tested but before the missile is first fired
from a destroyer and before the full on-board PAAMS
training package is complete in mid 2011 (although
the missiles will have been tested elsewhere). The
Department believes that, if necessary, it could deploy
Daring and make use of PAAMS when the ship entersservice in 2009. It was always planned that several
other equipments that contribute to providing the fullcapability envisaged for the Type 45 destroyers would beinstalled incrementally after Daring enters service. These
equipments include communications and the UnitedStates’ developed Co-operative Engagement Capability(CEC) which can provide a clearer picture of the battle
space and improve the ability of a task force to undertake
anti-air warfare operations, particularly in coalition with
the United States. The current target date to install CEC
is 2014 – five years after Daring enters service but before
the new Carriers, which Type 45 destroyer will protect,are planned to be ready.
6
The UK’s current Aircraft Carrier capability isprovided by the Invincible Class of Carriers HMS Ark Royaland HMS Illustrious which are planned to be retired in2012 and 2015 respectively. This class, originally designed
for Cold War anti-submarine warfare, operates helicoptersand Harrier aircraft. In 2008, the Department confirmedthat it will procure two new Aircraft Carriers. Part of theType 45’s role will be to protect the new Carriers.

6

Providing Anti-Air Warfare Capability: the Type 45 destroyer

7
When the Type 45 destroyer project was approvedin 2000, the Department planned to buy 12 ships.
A reduction from 12 to eight ships was announced in
2004 and was attributed to a reduced threat, revisedplanning assumptions and a planned improved network
capability (the intended introduction of CEC in 2014).
In 2008, the Department decided not to procure a further
two ships and instead to conclude the Type 45 build
programme before the major Carrier build programme.
Once the carriers are completed, the intention is to
procure a new class of ships, with an air defence
capability, called the Future Surface Combatant. This
new project is in the early stages of procurement and isplanned to come into service between 2018 and 2020.
The Department’s policy requirement is to have five ships
available for tasking at any time. It will be challenging tomeet this requirement, established when the Department
intended to buy eight ships, with the reduced numberof destroyers being procured. The Department judges
however that the benefits of new technology andimproved efficiency mean that it will be able to deliver thenecessary capabilities with fewer ships. The Department
is looking to optimise the way it supports the destroyers tomaximise the time “at sea” and aims to have five available
at varying states of readiness.

Procurement
8
In 1999 the Department signed a contract with
MDBA to procure the PAAMS weapons system for the
proposed fleet of destroyers. The following year the
Department committed to procure six Type 45 destroyers
from BVT (formerly BAE Systems). When the shipbuilding
project was established, the Department’s estimates of theextent of the work needed to complete the ship designand development, and of the initial costs and timescales
involved were over-optimistic. The associated commercial
arrangements did not reflect the risks and uncertainty
remaining, project control and decision making were poor,
governance structures were ineffective, and relationships
between the Department and BVT broke down.
9
In 2006, the Department undertook a far reaching
review of the project and in 2007 the Department
renegotiated the ship contract with BVT and establishednew, more effective ways of working with industry,including more extensive co-location. The Department
also strengthened its governance arrangements.

summary

10 Early evidence suggests these actions have helped the
project to progress more smoothly, and there have been
no cost increases or further delays since the contract was
renegotiated. Some risks to the project remain. Notably, theDepartment has separated responsibility for the deliveryof the ships and PAAMS. These are now being managed
by separate teams which specialise in destroyers andweapons respectively whereas before they were managed
within one team. This separation aims to bring benefits to
the Department through more coherent management of
weapons, but could increase the difficulties of managing
all aspects of the delivery and support of the Type 45
destroyer capability. The Department is aware of this risk
and has developed a strategy to manage both projects
coherently as two separate but aligned projects with asingle senior champion.
11 The Department is working to a detailed timetable
for the delivery of the ships. This timetable has challenging“target” dates for all milestones, such as the destroyers
entering into service. Corporate reporting, externalreports such as the Major Projects Report and long term
financial planning use later dates based on a “most likely”
timescale calculated using a quantified analysis of the risks
remaining to the project. The Department accepts thatusing two different dates could cause confusion, which
we saw to a limited extent in the early stages of our work.
The Department also monitors progress on the project andits ability to meet successfully the “target” or the “mostlikely” date. These dates are under review and will berevised according to how much risk remains in the project.

Support and training
12 The Department is developing support arrangements
for when the Type 45 destroyers come into service.
Learning from other defence projects, it intends to use
BVT and MBDA to provide the bulk of the support using
a commercial arrangement in which the Department
specifies a level of availability it needs and pays industry
to deliver it. The support arrangements are planned to
be introduced in two phases reflecting the complexityof the ship and that 80 per cent of its systems arenew. The Department is putting these arrangements
in place later than originally planned, partly becauseof delays and difficulties with the procurement and aneed to realign the level of funding to meet the ship’s
introduction to operations. The Department has put
interim arrangements in place to support the first ship
Daring during its sea trials. These interim activities
could be extended to provide support for the destroyers
for operational use if the main support solution is latealthough such an extension would likely be costly andtherefore used only as a fallback position.

13 The Department is bringing in the capability taking
into account the Defence Lines of Development. Thisapproach aims to ensure that all elements of the capability
such as the necessary training and infrastructure, notjust the ships themselves, are introduced coherently.
The Department has responded flexibly to the delays inthe delivery of some training facilities, in particular byplanning to run more training on board Daring during
sea trials. Training more personnel on the ship creates arisk that there may not be enough room or time available
on board the ship to train fully the companies for Daring
and the second destroyer, Dauntless. The Department isinvestigating alternative training solutions.

Conclusion on value for money
14 The existing Type 42 destroyers provide only alimited capability. The replacement, the Type 45 destroyeris planned to offer a much greater capability but has
experienced considerable delays of over two years andcost increases of £1.5 billion because of over-optimism
about what could be achieved, inappropriate commercial
arrangements and, in the early stages, poor project
management. The Department has taken action to resolvethese problems and the project is now more mature andmaking better progress. As the Department had always
planned, several pieces of equipment will be fitted tothe destroyers incrementally after they come into service
meaning that the full capability will not be available
until the middle of the next decade. The developmentof the long term support solution is running later thanplanned and the Department may have to extend interim
support measures as a fall back measure which could
have operational and cost implications. Taken together,
these factors mean that, although the programme is on
course to meet all Key User Requirements when the firstof class enters into service, the Department has not yet
demonstrated that it will be able to achieve the full rangeof benefits that the Department originally envisaged could
be achieved from spending £6.5 billion procuring theType 45 destroyer.

Providing Anti-Air Warfare Capability: the Type 45 destroyer7summary

Recommendations
In managing the project to a
successful conclusion
15 The Type 45 destroyer Programme Board
formally assesses progress on the Defence Linesof Development. Progress on the overarching DefenceLine of Development – inter-operability between theservices and with other nations – is not specificallyreported. The Department should report progressagainst the inter‑operability Line of Development to
the Programme Board.

On designing support arrangements which
deliver the required levels of ship availability
cost-effectively
16 The Department aims to deliver cost-effective
solutions and avoid becoming trapped in costly andinflexible arrangements. Its phased approach to theintroduction of long-term support is intended to exploit
its growing understanding of the relevant factors affecting
cost and availability as the ships enter service. To makethe most of this approach the Department should routinely
communicate to all stakeholders the responsibilities,
behaviours, motivations and expected contributions of
the different parts of the Department and its industry
partners involved in delivering and sustaining thecapabilities offered by the Type 45 destroyer.
17 The Department will need accurate and reliabledata if it is to model effectively the trade-off between
the different ways to sustain or enhance the capability
and availability of the destroyers throughout their life.
Learning from its experience with the existing Type 42
destroyers, where it has a limited understanding of the
combined costs of maintaining and operating the ships,
the Department and its industry partners should develop
a standardised method to gather this data.
18 Many of the problems encountered during
the Type 45 destroyer project stemmed from the
Department’s poor working relationship with industry.
The re-basing of the project in 2007 helped address
the underlying issues and the relationship is now on amuch firmer footing. The project team has already begun
work to develop stronger relationships informally as the
project enters into the support stage. The Department
and its industry partners should build on this work, andundertake regular surveys to measure the strengths andweaknesses of the relationships between various parts of
the Department involved and the industrial partners.

8

Providing Anti-Air Warfare Capability: the Type 45 destroyer

Managing projects on a corporate level
19 The Department is managing the project to aset of challenging “target” dates. These dates assume
no risks will materialise and are earlier than thosereported corporately. Corporate reporting, externalreports such as the Major Projects Report and longterm financial planning uses later dates based on “mostlikely” timescales calculated using a quantified analysisof the risks remaining to the project. The use of twotimelines can create a mismatch between planned
timescales for the activity and the provision of funds
for that activity. When project teams make use of “target”
and “most likely” dates the Department should:aregularly review the risks outstanding on its
procurement projects and assess whether any
variance between challenging “target” dates
and those reported corporately remains valid;bmanage all aspects of the delivery of a given
capability to a single consistent timeline andcommunicate it to all responsible parties within
the Department;cexplicitly include in corporate reports progressagainst any “target” dates used by teams in addition
to corporately approved dates so that senior
management have the fullest and most accurate
information available about target dates; anddcorporate assurance processes and senior
management reviews should focus on the success,or otherwise, of teams in mitigating risks andconverging “target” and corporate management
dates as projects mature.

Providing the newcapability required

Part One1.1 The Type 45 destroyer is intended to form the
backbone of the Royal Navy’s air defence capability
for the next thirty years. This section of the reportexamines the declining effectiveness of the existingType 42 destroyers. It also describes the improvementin capability that the Type 45 destroyer aims to provide
compared to the ageing Type 42s.

Existing Anti-Air Warfare capability
1.2 To operate safely at sea, the Royal Navy must protect
its ships from attacks from the air. The United Kingdom’s
current air defence capability is provided primarily by
the Type 42 destroyers. These ships were designed in the
1960s and came into service during the 1970s and 1980s.
Each ship was intended to be in service for 25 years. The
main weapon on board the Type 42 destroyer is Sea Dart
which is capable of protecting a task force.
1.3 The Type 42 destroyers are mainly used as Atlantic
Patrol Ships, on exercises and occasionally as part of the
Joint Rapid Reaction Force. The Department believes thatwhile the Type 42 destroyers are capable of performing air
defence tasks, they cannot cope with a large number ofsophisticated threats simultaneously. Since the mid 1980s

3

the Department has initiated three separate projects
to replace the Type 42 destroyers. Two projects, which
preceded the current Type 45 destroyer project, wereboth cancelled before completion. Figure 3 provides
more details. The first attempt to procure a replacement
was a multinational programme called the NATO Frigate
Replacement for the 1990s. The second, known as
Horizon, was a collaborative project with France and Italy.
Horizon comprised not only the ship but also its major
air defence capability in the form of the Principal Anti-Air
Missile System. The project had an original in-service dateof 2002, but it later slipped to 2004 and then to 2007 andwas accompanied by escalation in cost. Each Navy had
different requirements. The United Kingdom withdrew
from the Horizon project in 1999 because costs were notacceptable to the United Kingdom and industry could notagree a Prime Contractor framework.
1.4 The United Kingdom continued to collaborate with
the French and Italians on the procurement of PAAMS. The
result was two variants of the same PAAMS system: theUnited Kingdom variant uses the more powerful SAMPSON
radar while the French and Italian version uses the EMPAR
radar. The PAAMS system will provide the key anti-air
warfare capability to be fitted on to the Type 45 destroyers.

Previous attempts to procure Anti-Air Warfare capability

Name of projects

Date

Procurement route

Reason for cancellation

NATO Frigate Replacement
for the 1990s

1985 to 1989

Multinational: United Kingdom,
United States, Canada,
France, Germany, Italy, Spainand Netherlands

Different national requirements,
spending limitations and timescales
made consensus impossible

Horizon1992 to 1999

United Kingdom, France
and Italy

Industry unable to agree a Prime
Contractor Structure to manage
the programme and costs were
unacceptable to the United Kingdom

Source: National Audit Office

Providing Anti-Air Warfare Capability: the Type 45 destroyer9part oneThe cost of extending the lifeof the Type 42 destroyers

The reducing capabilityof the Type 42 destroyers

1.5 When the Type 45 project began in 2000 theRoyal Navy was still operating eleven Type 42 destroyers.
The intention was to retire the Type 42s progressively as
the Type 45s entered service from 2007. The delays on theType 45 project have meant that the Department has had
to extend the life of some of the Type 42 destroyers withthe last one now planned to retire in 2013.

1.8 Today there are five active Type 42 destroyers
currently in service from an original Fleet of 14, in 2008,
a further three have been removed from active service
early. These three could be made ready at a considerable
but un-quantified cost if required. The age of theremaining destroyers and the scaled back maintenanceregime means that the capability they provide is lessrobust and reducing against an increased level of threat
compared with that faced when the Type 42s came into
service in the 1970s and 1980s. The Type 42 destroyers
will not be able to carry out their main role of an anti-air
warfare capability beyond mid 2013 because the life of
the Sea Dart missile system cannot be extended beyond
this date. The following paragraphs explore each of theseissues in more detail.

1.6 We analysed the additional costs the Department
has incurred by delaying the retirement of the Type 42
destroyers. The results are detailed in Figure 4 and show
the cost of extending the life of the Type 42 destroyers to
be a total of some £195 million. This is not an additional
cost to the Department because operating costs for theType 45 destroyers would have been incurred instead
had they been delivered to their original timescales.
The Department cannot yet estimate these operating costswith confidence.

Cost reduction measureson the Type 42 destroyers
1.7 Without a number of cost cutting measures
undertaken by the Department the costs would
have exceeded £400 million. The cost reduction
measures included:
a

b

10

early retirement of three ships in 2005. These
ships were not scheduled to go out of service
until 2006 and 2007. Their retirement reduced
the number of destroyers in the Navy to eight andsaved £119 million. This figure includes savings inroutine maintenance. The early retirement has also
created a greater pool of spares. Increasingly, spareparts have been used from the growing numberof other Type 42 destroyers that have been retiredor taken out of service. This recycling has enabled
further reductions in the costs of running on theremaining Type 42 destroyers;
cancelling some aspects of deep maintenance,saving £93 million. This rundown helps to ensurethat there is little or no useful life left in the ships
when they are finally retired.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

Availability
1.9 The Department measures the performance of theType 42 destroyers by looking at whether the ships which
are meant to be ready for operations are actually available
to do so and are capable of carrying out their assigned
tasks. The Department also measures how quickly ships
are made ready to perform specific tasks (known as its
readiness level). These measures are used to manage theoverall availability of the fleet. This is important if the Royal
Navy is to be able to plan effectively for tasking ships andmanaging manpower to meet operational requirements.

4

Costs of maintaining Type 42 destroyers beyond
the expected retirement dates
Cost (£m)

Deep maintenance

6.3

Planned maintenance

9.3

Casual – Unplanned maintenance

1.9

Manpower

73.7

Spares59.2

Equipment

44.3

Total

194.7

Source: National Audit Office analysis of Ministry of Defence data

part one

1.10 Figure 5 shows that the availability of the Type 42
destroyers which are meant to be ready for operations
has decreased slightly since 2000, while readinesslevels have decreased much more. Both availability
and readiness levels are very variable. Performance
has improved since mid 2008, particularly with levelsof readiness. This improvement reflects, in part, thatthree ships have been removed from active service atthis time, creating additional spares.

entered service in the early 1970s and was designed
to fight a Cold War threat of high diving missiles.
Sea Dart is now approaching the end of its operational
life, and the intention is that the system will be retired
when the final Type 42 destroyer is retired. To save costs
that would be otherwise incurred to support the system,
Sea Dart was removed from two destroyers a year before
they were taken out of service. Without their primaryweapons systems these Type 42s could not be deployedin an air defence role.

The number of defects reported
1.11 The overall decline in performance reflects the ageof the ships, their increasing obsolescence, reducing
reliability and reduced funding for maintenance. A good
indication of the effect of these problems is that the
number of defects reported on board the destroyers, hasbeen steadily increasing since 2000. There was a marked
increase in defects reported between October 2006
and December 2008 from an average all time low of
190 defects reported per ship to a high of 399 defects
per ship although this figure remained below 300 since
September 2008.

Sea Dart
1.12 The Sea Dart weapons system is the principal
anti-air warfare system fitted on the Type 42 destroyer.
Sea Dart is a medium range air defence missile which

5

The capability provided by
the new Type 45 destroyer
1.13 The introduction of the Type 45 destroyer isplanned to provide a much superior capability to thatof the Type 42. The Type 45 destroyers’ anti-air warfare
capability allows the ship to operate in a hostileenvironment, either to provide a protective umbrella
over a force of amphibious ships, an aircraft carrier ora group of merchant ships, or to conduct a wide rangeof other tasks such as maintaining a United Kingdom
presence, embargo operations or supporting forces ashore.
In particular, the SAMPSON radar being procured aspart of PAAMS project can track over 1,000 airborne
objects out to 250 kilometres and can engage several
targets simultaneously. The capabilities of the Type 45
destroyer are compared with those of the older Type 42s
in Figure 6 overleaf.

Trends in availability and readiness of the Type 42 destroyers since 2000

Percentage (%)
100
90
80
70
60
50
40
30
20
10
0
Apr
00

Oct
00

Apr
01

Oct
01

Apr
02

Oct
02

Apr
03

Oct
03

Apr
04

Availability

Oct
04

Apr
05

Oct
05

Apr
06

Oct
06

Apr
07

Oct
07

Apr
08

Oct
08

Readiness

Source: Ministry of Defence

Providing Anti-Air Warfare Capability: the Type 45 destroyer

11part one

Risks to the Type 45 destroyer capability
1.14 The Type 45 destroyers are planned to enter service
between 2009 and 2013. The Department has always
intended to introduce capabilities incrementally on
ships after they have come into service. On current
plans, Daring, the first of class will enter service inDecember 2009, when it will meet all its defined Key
User Requirements. There are, however, a number ofrisks both to achieving these dates and to delivering
the full capability in the longer term. In the short term
these include integrating the destroyer and PAAMS; andtrialling and operating the Combat Management System.
The Department and industry have taken a numberof additional steps to mitigate these risks including
constructing test facilities for the many elements of
PAAMS. These are detailed in Figure 7.

1.15 The first firing of PAAMS from a Type 45 destroyer
is due to take place on Dauntless, second of class, inlate 2010, nearly one year after Daring, the first of classdestroyer has entered service. Daring is not scheduled
to fire PAAMS until 2011. This timing is because theDepartment is using Daring to test the destroyer and its
systems while Dauntless is subsequently used to test
PAAMS. Once the final elements of PAAMS are delivered
and the system tested the destroyer should obtain its
Full Operating Capability in mid 2011. The Department
believes that, if necessary, it could however deploy Daring
and make use of PAAMS when the ship enters service
in 2009. MBDA and the Department have tested theoperational capability of PAAMS by test firing the missiles
from a barge on firing ranges off the South of France.
However, it has yet to be tested from the destroyer itself.

						
A comparison of Type 45 and Type 42 destroyers

6

Element

Type 45 destroyer

Type 42 destroyer

Efficiency

Greater fuel efficiency and operating range without
being replenished meaning that it can cross the Atlantic
and back without refuelling. This gives flexibility andpermits a faster response in urgent situations.

At full power the Type 45 destroyer is nearly
two and a half times more fuel efficient than
the Type 42.

Defensive capability

Can extend its protective air-defence shield over British
Forces engaged in a land battle.

Provides a protective shield which is optimised
for maritime operations.

Weapons system

In an intensive attack, a Type 45 destroyer would
be able to simultaneously track, engage and destroy
more targets than the remaining Type 42 destroyers
operating together.

Sea Dart system which will be retired in 2013.

Troop carrying capacity

Capacity to carry a maritime battle staff as well as
putting troops ashore using its own boats or helicopter.

The Type 42 has no additional accommodationand has half the carrying capacity provided by
the Type 45 destroyer’s boats.

Helicopters

Can independently operate the Lynx, and Merlin andhas flight deck space for a Chinook to land. The Merlin
provides the anti-submarine warfare capability,
thereby enhancing the Type 45’s ability to deter orneutralise submarines.

Can operate the Lynx helicopter only. The Lynx
entered service in the 1970s and is primarily
used in anti-submarine warfare but can also
deploy air to sea missiles.

Potential to upgrade

Designed to be more easily adapted and upgradedthroughout its life to meet new, as yet unknown
requirements and to counter emerging threats.

Reduced margins and an inflexible design makeadding extra capabilities difficult.

Accommodation

Six-man cabins instead of large mess decks, more spacefor recreation and a purpose-built fitness centre.

The Type 42 destroyers suffer from cramped
accommodation and few electrical points
causing problems for safety and comfort.

Ship’s Company

191

269

Source: Ministry of Defence

12

Providing Anti-Air Warfare Capability: the Type 45 destroyer

part one

1.16 There are seven specific pieces of equipment that
contribute to providing the full capability envisaged
for the Type 45 destroyers which are planned to be
fitted incrementally after Daring is scheduled to enter
service in December 2009. These include the Skynet 5
and Bowman communications systems.1 The initialcost of integrating these seven equipments is estimatedto be some £55 million. The Department is refining thefull cost of installation, which is in addition to the Type45 budget, though the Department judges that sufficient
funds are available. The time it will take to integrate is
uncertain until the Department completes its detailed
assessment of how these capabilities will be installed.
Without this equipment the destroyer will be less able
to share information effectively with other military units.
The Department will also need to support obsolete
technologies increasing through-life costs.

1.17 In the longer term, the destroyers will have a numberof additional capabilities installed. Figure 8 overleaf
provides a timeline detailing when key capabilities will
be added to the destroyer to bring about full use. The
Department is procuring the United States’ developed
Co-operative Engagement Capability (CEC). This project
should link the combat systems and sensors on anumber of ships to provide a clearer picture of the battle
space, and aims to improve the ability of a task force
to undertake anti‑air warfare operations particularly incoalition with the United States. The enhanced capability
provided by CEC mitigates in part the decrease in numbersof Type 45 destroyers. CEC will be fitted to all six Type 45
destroyers as well as ten Type 23 Frigates.

						
De-risking activities

7

Facility

De-risking activity

PAAMS Integration Facility at MBDA Bristol

This facility brings together a detailed representation of the complete PAAMS system with
the Type 45 Combat Management System to prove all the interfaces in a systematic way.
The integration activities enabled the system to be brought together earlier than plannedin the development programme, helping to solve many complex interfacing issues earlier
than would otherwise have been the case. The facility remains in use as a venue to help
demonstrate that the software updates resulting from further developments are effective.

Contractor Development Facility

This facility at Eskmeals, Cumbria is a sea level site featuring a complete PAAMS system
and Type 45 Command System. The SAMPSON radar is sited on a tower at the sameheight above sea level as on the Type 45 to provide a representative test environment.
The facility has been in use since January 2007 to conduct radar and PAAMS systemlevel trials against aircraft and towed targets.

Sea Trials Platform – Longbow

The Sea Trials Platform, (known as Longbow) is the trials platform for the missile firings
intended to prove the performance of PAAMS. Longbow is currently in the Mediterranean
where it is undertaking the PAAMS firing trial programme.
One of the three PAAMS system firings was successfully carried out at the end ofJune 2008 and two more are scheduled to follow. The Longbow trials contribute to thede-risking of the integration of PAAMS on board the Type 45.

Maritime Integration Support Centre

The Maritime Integration Support Centre at Portsdown contains a representation of theentire Type 45 Combat System and includes a full PAAMS system, Long Range Radar,
Type 45 Combat Management System and other Combat System equipment.
The main purpose of the facility has been to integrate all of the Type 45 combat systemequipments in a controlled environment. The trials carried out to date have helped toprogress the final stage of combat system integration on board Daring.

Type 45 First of Class Daring

The integration of the PAAMS system onto the Type 45 First of Class – Daring, and under
the revised Six Ship Contract, a two phase process for this integration has been adopted.
The first of these phases was completed to schedule in July 2008 as a result of all of thede‑risking activities described above and MBDA intends to complete the second phaseas planned at the end of September 2009.

Source: National Audit Office1

The other five are Warship Automatic Identification System (WAIS); Warship Electronic Charting and Information System (WECDIS); Defence Information
Infrastructure (DII); Joint Command & Control Support Programme (JC2SP); and HF 4KMA (Enhancements to a high frequency radio system).
Providing Anti-Air Warfare Capability: the Type 45 destroyer

13part one

		Time line to full use of the Type 45 destroyers

8

Acceptance off
Contract
Acceptance off
contract when
Defence Equipment
and Support takeownership of the shipfrom industry

In Service Date

Full Operational Capability

Daring enters
operational service

The planned date for Daring to have Full Systems
Acceptance for all Systems including PAAMS
and all environmental testing is complete

All remaining
KURs met

1st PAAMS firingfrom a Type 45
aboard Dauntless

KURs 7, 8, 9 met

Dec 2008

Apr 2009

Dec 2009

Transfer of Asset
Daring transfers from the
project team’s accountbooks to those of FrontLine Command

Early 2010

Late 2010

Fitting of Communication
Information System

KURs 2, 4, 5 met

This system enables
Type 45 destroyers tocommunicate and share
information effectively
with other military units

Early 2011

Jul 2011

Future Carrierplanned toenter service
The future aircraft
Carriers which theType 45 destroyers
are intended toprotect enter service

2014

2016

1st PAAMS firing
aboard Daring

Cooperative Engagement
Capability (CEC) fitted

1st Operational Deployment

Type 45 destroyers will beequipped with the US CEC
increasing its capability
and interoperability withcoalition forces

Daring’s first mission

Key User Requirements (KURs)
KUR 1

KUR 2

KUR 3

Type 45, utilising PAAMS, shall beable to protect with a probability ofescaping hit of X per cent all units
operating within 6.5km against
specified airborne threats

Type 45 shall be capable of providing
anti-air warfare situational awarenesscovering 1000 airborne objects
against a departure/arrival rate of
500/hourType 45 shall be able to provide close
tactical control to at least four, fixed
wing or groups of, aircraft

KUR 4

KUR 5

KUR 6

Type 45 shall be able to operate both
one Merlin and Lynx Mk8 helicopter,
although not simultaneouslyType 45 shall be able to operate anembarked military force of at least
30 deployable troops

Type 45 shall carry a Medium Calibre
Gun System of at least 114mm

KUR 7

KUR 8

KUR 9

Type 45 shall be able to travel atleast 3,000 nautical miles, operate
for three days and return within 20
days unsupported

Type 45 shall be able to be upgradedto incorporate new capabilities or
expand extant capabilities

Type 45 shall have a 70 per centavailability to contribute to operations
over a period of at least 25 years atleast 35 per cent of which must be
spent at sea

Source: National Audit Office/Ministry of Defence
NOTES
1 All dates specific to Type 45 are “target” dates.
2 Some elements of KUR 1 are classified.

14

Providing Anti-Air Warfare Capability: the Type 45 destroyer

part one

1.18 The Co-operative Engagement Capability has
been delayed and the current target date for it to beinstalled onto the Type 45 destroyer is 2014, five years
after Daring enters service. This date is before the new
Carriers, which the Type 45 destroyer will protect, areplanned to be ready. The estimated cost of procuring the
CEC for the Type 45 destroyers will be in the range of£85 million to £125 million, and to support CEC on theType 45 destroyers will cost approximately £80 million
to £120 million throughout its life. The Department has
allocated funding for the CEC project.
1.19 The United Kingdom’s current aircraft carriercapability is provided by the Invincible Class of Carriers
HMS Ark Royal and HMS Illustrious which are planned
to be retired in 2012 and 2015 respectively. This class,originally designed for Cold War anti-submarine warfare,operates helicopters and Harrier aircraft. In 2008, theDepartment confirmed that it will procure two new
Aircraft Carriers as replacements for the Invincible class.
The new Carriers and its aircraft are planned to be capableof operating in all weathers, day and night, flying strike
missions, conducting offensive support for ground forces
ashore and where necessary, providing force protection
to the fleet. The Aircraft Carrier will also be capable ofsupporting the operation of helicopters in a wide varietyof roles including land attack and ground support. Part of
the Type 45 destroyer’s role will be to provide a protective
umbrella for the new Carriers.
1.20 When it is in service, each Type 45 destroyer shouldhave met all of its key user requirements and, subject toa number of improvements to its communication andinformation systems and PAAMS being fully operational,
will be deployable across the full range of maritime
operations, from maritime security or policing throughto more demanding high intensity war-fighting missions.
Examples of current and recent operations for which
the Type 45 destroyer should be able to deal with whenit comes into service include maritime security in the
Northern Arabian Gulf, anti-piracy patrols off the coastof North-East Africa, post-hurricane disaster relief andsupport in the Caribbean, or the evacuation of British
nationals from a deteriorating situation (as seen in Lebanonin 2006). Additionally, Joint Operations such as small
scale Counter Terrorism operations can be conductedfrom the Type 45 destroyer. The installation of CEC will
enhance the Type 45 destroyer’s air warfare capability
through improved situational awareness, enabling it tooperate with other CEC fitted units (most notably from theUnited States) in more demanding threat environments.

Reductions in numbers of Type 45 destroyers
being procured
1.21 When the Type 45 destroyer project was approved in
2000, the Department planned to buy 12 ships, althoughfunding was based on six initially. Four years later, theDepartment reduced the number of destroyers to be
procured from 12 to eight because of a reduced threat,
revised planning assumptions and a planned improved
network capability. This improvement is intended to
be provided by CEC in 2014. In 2008, the Department
decided not to buy a further two ships beyond thesix already on contract, and instead to conclude theType 45 programme before the major Carrier programme.
Once the Carriers are completed, the intention is to
procure a new class of ships, called the Future Surface
Combatant. This new project is still in the early stagesof its procurement and is planned to come into service
in between 2018 and 2020. Figure 9 overleaf shows thetiming of the relevant decisions. The Department’s policy
requirement to have five Type 45 destroyers available
for operational use remains unchanged. It will be morechallenging to meet this requirement with the reduced
number of destroyers being procured. But the Department
judges that the benefits of new technology and improved
efficiency mean that it will be able to deliver the necessary
capability with fewer ships. It has prescribed that eachship must be available to go to sea at least 35 per centof the time, and be ready to go to sea for a further
35 per cent. The Department is looking to optimise
the way it supports the destroyers to maximise the time
“at sea” and aims to have five available at varying statesof readiness.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

15part one		
Timeline showing the events leading to the reduction in number of ships to be procured from twelve to six

9

Departmental
analysis concluded
that a minimum of
14 Type 45s wererequired to meet
Fleet requirements.
The acceptance ofa degree of militaryrisk reduced theminimum acceptableclass to 12

Early 2000

Approval forsix ships withan intention to
procure a fleet
of 12

Department
decided that six
ships would be
procured with
an option for afurther twoJune 2000

Type 45 projectapproved

2004

Type 45 projectexperiencing
significant timeoverruns andcost delays

Source: National Audit Office/Ministry of Defence

16

Providing Anti-Air Warfare Capability: the Type 45 destroyer

Government
announces that it
will not procure
two further ships

2007

Renegotiation ofship contract

June 2008

Part two
2.1 In 2000 the Department placed a contract forthe design, development, manufacture, integrationand delivery of six Type 45 destroyers (to be fitted withPAAMS). The approved cost for the six ships and PAAMS
was £5 billion (with a maximum acceptable cost of£5.47 billion) with the first ship due to enter service inNovember 2007. As successive Major Projects Reports
have recorded, the project has experienced significant
cost increases and delays with the current forecast cost
being £6.46 billion (a 29 per cent increase comparedwith the most likely approved cost of £5 billion) and thefirst ship now planned to enter service in December 2009
(some 24 months later than originally planned). Figure 10
outlines the cost increases and delays.

10 Cost increases and delays on the Type 45

Procuring the
new capability
2.2 Recognising these problems, the Department
re‑assessed the project in 2006. As a result, theship contract was renegotiated in 2007 and project
management is now much improved. There havebeen no delays or cost increases reported since theDepartment took this action. The delivery of the ships is
progressing well, with key milestones such as completionof sea trials, having been met. Most recently, the fourth
destroyer Dragon was launched in November 2008 andin December 2008 ownership of Daring transferredfrom BVT to the Department and Dauntless completed
her initial sea trials. This part of our report examines
the causes underlying the poor cost and timescale
performance of the procurement; whether the Department
and its commercial partners have taken reasonable action
to address the problems; and what risks remain.

destroyer project (based on procuring six ships)

Year

In Service Date Cost for six ships
for first ship(£m)

Main Gate Approval

November 2007

5,000

MPR 2002

No change+279

MPR 2003

No change+267

MPR 2004+ 18 months+282

MPR 2005

No change+125

MPR 2006+ 7 months+157

MPR 2007+ 11 months+354

MPR 2008

No change

No change

Change since Approval+ 36 months+1,464

November 20101

6,464

Current Forecast

Source: National Audit Office Major Projects Report 2000 to 2008
Note
1 This date is the corporately reported “most likely” date which appears
in the Major Projects Report. The Department is planning its delivery to amore challenging “target” date of December 2009.

The commercial arrangements
2.3 The current industrial arrangements for the
procurement of the Type 45 destroyer are born out of
the exit from the Horizon project in 1999. The United
Kingdom withdrew from the project to pursue a larger
destroyer programme and took control over the design
and build of the Type 45 platform. The United Kingdom
remained a member of the collaborative missile systemprocurement project (PAAMS) with the French and Italians.
2.4 BVT – known as BAE Systems in 2000 – wascontracted to be the design authority, and is responsible
for the design, build and fit-out of the Type 45 ships.
PAAMS is provided by the Department to BVT whowill install the equipment. Integration of the PAAMS
equipment remains the responsibility of MBDA. BVT
builds each Type 45 destroyer in six blocks. Under theoriginal arrangements, VT Group build and integrate theforward two blocks and the mast structures while BAE
Systems build and integrate the four middle and rear
blocks. The forward and rear halves are then integrated
by BAE at Govan, near Glasgow.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

17part two

2.5 In 2008, BAE Systems and VT Group came together
in a joint venture to form BVT Surface Fleet Ltd whichbrings together BAE, VT Group, and their Fleet Support Ltd
operation which provides ship repair, maintenance andengineering to the Royal Navy fleet. The procurement of theType 45 destroyers has not been affected by this change.
2.6 PAAMS is designed and built by MBDA under atri‑national agreement with the French, Italians and United
Kingdom governments contracted through the French
Defence Armaments Agency. The various contractual
partners, their role in the Type 45 destroyer project and theirgeneral role in the defence industry are outlined in Figure 11.

Over optimism when the maininvestment decision was made2.7 The timetable approved in 2000 to deliver theType 45 destroyer project was based on the timeframe
set out on the Horizon project from which the
Department had earlier withdrawn, and was driven
by the need to replace the ageing Type 42 destroyers(see Part One). Industrial partners needed early
assurance that the project would proceed, so thatthey could begin to make the necessary investments
in order to meet the planned timescales. We assessed		Contracting partners

11Type 45 destroyer

Type 45 ShipPAAMS

BVT Surface Fleet

MBDA Missile Systems

BVT was established in 2008 and brings together the surface
warship building and through-life support operations of
BAE Systems and VT Group, including their joint venture,
Fleet Support Limited.

MBDA is an integrated European defence contractor withover 10,000 employees in France, the United Kingdom,
Italy and Germany. MBDA has three major aeronautical anddefence shareholders – BAE Systems (37.5 per cent), EADS
(37.5 per cent) and Finmeccanica (25 per cent).

BVT is responsible for the design and production of the shipand systems (excluding PAAMS).

Raytheon Systems
Limited (RSL)
Navigation
SystemRaytheon Systems
Ltd (RSL) is a UK
Subsidiary of
the US Raytheon
Company
supplying hightechnology
aerospace,defence andcivil electronics
solutions and is a
Tier One supplierto the UK Ministryof Defence

Rolls Royce

ThalesBAE Insyte

Gas Turbine
EngineCommunication System andLong Range RadarLong Range Radar andMulti-Function Radar

Rolls-Royce
provides awide rangeof power
systems andservices foruse on land,
at sea andin the air tocompanies
and armed
forcesworldwide

Thales, one of the main
suppliers to the Ministryof Defence, is a supplierof advanced electronics
including system engineering,system integration and thedelivery of mission criticalsystems in both defence andcivil areas. Thales’ expertisecovers a diverse range ofelectronics applications fromretail video display systems
and chip ‘n’ PIN technology
to flight simulators, unmanned
aircraft and warship design

BAE Systems Integrated
System Technologies(Insyte) is a divisionof major Ministry of
Defence supplier BAE
Systems, specialisingin providing networked
systems with particularfocus in the areas ofbattle-space management
and command, control,
communications,computers, intelligence,
surveillance andreconnaissance

Source: National Audit Office18

MBDA is responsible for production of the UK element of PAAMS.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

MBDA France, MBDA
Italy and MBDA UK
Command andControl System,
Missile Launcher andAster Missiles
MBDA is a multinational group basedin France, the United
Kingdom, Italy andGermany. MBDA
designs and produces
missiles and missile
systems for the three
UK armed forces(Army, Royal Navy
& Royal Air Force)and over 90 armed
forces worldwide

part two

whether the Type 45 destroyers were being procured fora reasonable price and which would be typical for suchcomplex warships.
2.8 This assessment was based on Historical Cost Trend
Analysis. This technique uses historical outturn data to
generate cost trends for specific classes of equipment,
which allows an estimate to be compared with the trend
in outturn cost of similar past projects. Recognising thedifficulties inherent in estimating costs and timescales oncomplex defence equipment projects, the Department
has, since 2005, required major equipment projects toinclude historical cost trend analysis to act as a check on
the realism of cost estimates when the main investment
decision is taken on projects.
2.9 Our analysis of Type 45 destroyers shows that theactual cost of a Type 45 destroyer, excluding development
costs, is broadly in line with what could be expected
for similar types of destroyer. If development costs areincluded, the cost of the Type 45 is over £100 million
more per ship than would be expected as shown in
Figure 12. One particular issue affecting development
costs is that the Department is now only procuring half
the number of ships originally planned, meaning thatthe costs associated with the extensive development of awide range of new systems, such as PAAMS, are not being
spread as widely as expected.
compared
12 Cost per Type 45 destroyer
1
to independent estimates

Excluding
Development
Costs (£m)

Including
Development
Costs (£m)

Actual Cost (adjusted for
purposes of comparison)1

649

948

Independent cost analysis
of a similar type of destroyer

643

813

Difference

+6

+135

Costs Per Ship

The original project arrangements
and subsequent improvements
2.10 The Department and its commercial partners
were over-optimistic in their predictions of the time andresources required to procure the first six ships, and did notestablish the project on a suitable basis given the levels ofrisk and uncertainty and the immaturity of the design of theships and the PAAMS missile system. There were particular
problems with the commercial arrangements, inadequate
project controls and ineffective governance arrangements.
2.11 The problems are explored in more detail in
Figure 13 overleaf. One key issue is that the original ship
contract was for a fixed price but had many undefinedelements. The contract also enabled industry to recover
costs through claims for compensation. There were issues
with the project management arrangements which had
key processes missing and insufficient assurance overdata, undermining the credibility of progress reports andrisk analysis. Joint governance arrangements between the
Department and industry were not sufficiently effective toresolve project difficulties on a timely basis. Recognising
the difficulties on the project, the Department undertooka far-reaching review in 2006, which identified a way
forward to reform the project, and the ship contract wasconsequently renegotiated in 2007. The Department
elected to continue PAAMS contractual arrangements
which are being re-aligned to the new ship contract.
Figure 13 details the changes made to the commercial
basis of the project, including the so-called “six ship
contract” and the project control and the governancearrangements. Particular improvements were:
®®

®®

®®

Source: National Audit Office®®

Note
1 Figures adjusted from that reported in the Major Projects Report toensure comparability.

greater use of incentivisation in the contract
between the Department and BVT;
more pragmatic sharing of risk between the
Department and industry which gave the Department
more control over trading time, cost and capability;
the strengthening of the project management
function, which led to improved project reporting
and better use of information;better joint governance arrangements at all levelsof the project, helping to foster an improved
joint working culture. These new governancearrangements are mapped in Figure 14 on page 22.

2.12 The revised arrangements reflect the increasing
understanding of the project, certainty of the number ofships to be procured (which had fallen from a class of
12 ships to six) and an emphasis on collaborative working
with risks allocated to those best able to manage them.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

19part two

13 How weaknesses in the procurement framework impacted on the Type 45 Project, and how the Department has responded
Weakness

impact on Projectcommercial Arrangements
The original contract was placed before
commercial structures to support it
had been built. There was uncertainty
about the procurement strategy andnumbers of ships to be built.

The Department intended to share design and construction work for the first three ships
between two ship builders, BAE Systems marine and vosper Thorneycroft, who were to form
an Alliance to undertake this work. The companies did not agree to form the alliance, and as
a result the Department took on more responsibility for design than intended. This introduced
delays into the project at an early stage and removed competition from the procurement.

The pricing arrangements for the first
three ships placed the majority of risks
on to the contractor, increasing thepossibility of price growth.

The Department set a fixed price for the first three ships, with a profit margin of under five
per cent for BvT. many requirements had not been specified or priced when the contract wasplaced. This left BvT at risk of cost growth.

The Department was responsible fordelivering key equipment which left
it open to claims for compensation
if these were delayed.

BvT could claim compensation for delays on equipment such as the Gas Turbine Engines
and PAAmS for which the Department was responsible. These and other equipments were
delayed because of technical problems and BvT consequently made claims of £300 million.

Project control
The Department was unable to verify
the accuracy of key data and senior
management did not have confidence
in its accuracy.

The Department relied on BvT to provide data on project progress, cost and risks. BvTcontinued to be optimistic about project progress and the Department was therefore
not well placed to challenge BvT’s assumptions. The Department’s accounting system
contributed to errors in forecasting of costs.

The Department and industry did not havea common understanding of the project.

The Department did not have a single, high level overview of the whole project (including
on and off-contract industry work). This increased the risk that decision making would
not take into account the overall project status and objectives.

There were inadequate levels of staff
within the Department’s project team.

The Department’s project management team lacked suitably qualified staff and reliedon consultants.

The Department’s internal communication
was weak.

The Department’s project management team was not able to communicate problems with the
project effectively to senior management. It was unable to convince senior management thatits proposals for revised cost and time limits were sufficiently robust for approval, leading todelays before the contract with the BvT could be renegotiated.

Governance
The joint management procedures
between the Department and industry
were seen as ineffective.

The inconsistent reporting between the Department and BvT undermined the role of the Joint
management Board attended by their senior staff. BvT believed that the Joint management
Board was “ineffective”.

Source: National Audit Office20

Providing Anti-Air Warfare Capability: the Type 45 destroyer

part two

how the Department has addressed the problem

The Department recognised that the original contract was not providing an appropriate
framework for success and in 2007 agreed a new contract for six ships (the Six Ship
Contract). This has set the project on a more sound commercial footing. The Department hasrevised the delivery arrangements and will now receive the ships from the Prime Contractor
before they have been fully trialled and integrated, conducting these finals stages withindustry support. This change has allowed the Department to manage project risk better,bring forward the point of delivery of the ships and has contributed to a saving of £93 million.
The Six Ship Contract has reduced the risk on industry through the “measure and Decide”
approach. This allows the Department to trade certain capabilities (which have already been
identified) for time and cost advantages. under the arrangements BvT “measures” the timeand cost of providing the full capability of these specified items and the Department “decides”
whether the capability is worth the cost in time and money. This has transferred more of therisk to the Department but has controlled the cost of the project.
The new contract incentivises industry to deliver on time and to help reduce the risk of further
delays. If delays occur, then BvT/the Department can jointly use a £90 million fund to pay
for the cost of delays. If the ships are delivered on time, then payments from the £90 million– which decline per ship – are made to the contractor as a reward. The renegotiated contract,
however, still allows BvT to claim for dislocation.

The Department has better access to BvT’s project information. The Department has people
co-located with BvT who are able to report on progress. monthly progress meetings between
BvT and the Department are also held.
There is now agreement with industry on the assumptions for the project and key project
documents, such as the master planning document for support arrangements, are kept
updated and reviewed regularly. Senior management have access to project plans thatcover all relevant aspects of the project.
The project team has better technically qualified staff. The team responsible for managing the
procurement of PAAmS continues to have staff shortages.
There is evidence of good quality reports based on consistent information being provided
at appropriate levels throughout the project and management teams, providing regular
updates of project progress and clear markers for decisions and actions required.

The Department and BvT appear to be working well together and the increasing use of
co-location, particularly at senior levels, has helped to develop a positive joint working
culture which could reduce the risk of further impacts on the time and cost of the project.
The Department has put a coherent governance structure in place for of the project andintroduced a Strategic Programme Review attended by the Department, BvT and mBDA.
BvT and mBDA have also attended the more recent meetings of the Programme Board
indicating improved communication.
The joint working arrangements with mBDA in relation to the PAAmS contract haveremained similar throughout the project. There is no joint working or information sharing
although mBDA attends the Strategic Programme Review. Historically the Department haveenjoyed a good relationship with mBDA; more benefits may arise from building on thisand from monitoring the strengths and weaknesses of the relationship on an ongoing basis.
Finally, the Department have implemented a more joined-up and coherent strategy for
managing and reducing claims made by BvT against the Department.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

21part two		New governance and communication arrangements for management of the ship-building project

14

Defence Equipment & Support

MBDA

Departmental Project Meetings

Strategic Programme Review

Clear purpose for meetings at
various levels with consistentreporting mechanisms

Quarterly meeting involving seniorstaff from all parties to make/agree key project decisions

Principal Anti-Air
Missile System
BVT
Ship Build

Commercial Manager
Finance Manager
Programme Manager

Contract Performance Review
Monthly meeting involving key
project staff from Department
and industry – based on
structured reporting

Commercial Manager
Finance Manager
Programme Manager

Technical Meetings
Detailed discussions of progress

Project andTechnical Staff

Co-location and joint
working arrangements
involving key Department
and BVT employees

Source: National Audit Office

22

Providing Anti-Air Warfare Capability: the Type 45 destroyer

Project andTechnical Staff

Part three
3.1 Introducing a major enhancement to the armed
forces’ capability such as the Type 45 destroyer involves
considerably more than acquiring new equipment.
The Department has therefore adopted an approachto ensure that all the elements required to deliver agiven capability are put in place known as the “Lines ofDevelopment”. The Lines of Development and progressagainst them are described in Figure 15 overleaf. Thispart of our report examines in detail the key logistics andtraining risks that could impact on the future capability ofthe destroyers as well as other risks to the project.

Risks to achieving
the new capability
The strategy allocates roles and responsibilities
within both teams, and establishes areas where
joint working is needed. There is also one single
accountable senior person. It is too early to assess
the effectiveness of these arrangements.
®®

3.2 Currently, the Department considers that all of the
Defence Lines of Development will be ready to support
the destroyers as required. There are, however, some issues
with the first four of the Defence Lines of Development in
Figure 15 that may limit the deployable capability if the
Department’s mitigating actions are not successful. The
Defence Lines of Development are explored below.
®®

Equipment
3.3 The changes made to the project following the 2006
review have placed it on a firmer footing than before.
Paragraphs 1.14 to 1.18 outlined a number of technicaland integration issues and the actions that the Department
and industry have taken to mitigate them, but there arealso a number of issues affecting the management of the
project which could adversely affect delivery.
®®

In April 2008 the Department separated the Type45 integrated project team and re-located the staff
members responsible for managing PAAMS to theComplex Weapons group. This move brings greater
coherence to the development, procurement andsupport of complex weapons such as missiles in linewith the Defence Industrial Strategy, but it could
increase the difficulties of managing all aspects ofthe delivery and support of the Type 45 destroyers
as a whole. The Department is aware of this risk andhas developed a strategy to manage both projects
coherently as two separate but aligned projects.

The two PAAMS contracts for development andproduction still need to be adjusted to mirror the
new delivery schedule under the Six Ship Contract.
Achieving this change is made more complicatedby the fact that PAAMS is a collaborative project,
the commercial aspects of which are contracted
through the French Defence Armaments Agency.
Terms have been agreed for the changes needed tothe development contract and discussions over the
production contract are on‑going. The Department
does not expect these costs to exceed £15 million to£30 million and has allocated sufficient funding aspart of the move to six ships.
The Department is working to deliver the Type 45
destroyer capability to challenging “target” dates
for all milestones, such as the destroyers entering
into service. Corporate reporting, external reports
such as the Major Projects Reports and long term
financial planning use later dates based on “mostlikely” timescales, based on quantified analysis of
the risks remaining to the project. The Department isaware that as the project milestones have a “target”
and “most likely” date which are sometimes several
months apart, there is a risk of confusion and of
having to manage the funding profile across financial
years. During our work some staff told us that they
are planning to deliver support activities to the “mostlikely” date, although the majority are using the earlier“target” date. The Department is now confident thatall staff are planning to the more optimistic date. The
Department monitors the likelihood of achieving
both the “target” and “most likely” date, and willrevise them according to the amount of risk left in the
project. The Department, has however, successfully
met the earlier “target” date of Acceptance off Contract
in December 2008.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

23part three

Logistics and support
3.4 Traditionally, the Department has supported
equipments by buying spare parts and other services
from industry as required. Increasingly the Department ismoving away from this model to contract with industry
to provide a specified level of equipment availability, theintention being to incentivise industry to minimise thecost of support by, for example, developing more reliableequipments which are easier to maintain. The Type 45
destroyers will be the first major type of warship to adopt
this contracting for availability approach, which will mean
the Department will only be directly responsible for about
15 per cent of support costs with the remainder managed
by BVT (about 60 per cent) and MBDA (about 25 per cent).

						The Defence Lines of Development and their function

15

Defence Line ofDevelopment

Function

Defence Lines of Development status

Equipment andInformation

The ship, PAAMS, and all other systems
on board.

As Part One shows, the project is making progress. Risks remainin the delivery of full capability (paragraphs 1.14 to 1.18).
Key risks remaining to the delivery of the equipment DefenceLine of Development are mainly related to PAAMS testing andintegration; and the installation of the Communications andInformation Systems (paragraphs 3.3).

Logistics

Design and development, acquisition andstorage, transport, maintenance, evacuation,transport of personnel, and medical and healthrelated support associated with Type 45. Muchof this work will be contracted out to industry.

Key risk remaining: late development of the main support solution.
Paragraphs 3.7 to 3.8

Infrastructure

Acquisition, development, management anddisposal of all buildings, land, utilities andfacility management required for the Type 45.
These services are mainly provided by
Defence Estates.

Key risk remaining: the development of an Aster capable loading
facility at Portsmouth has still to be agreed and funded. It is
expected to cost approximately £25 million and be ready in
mid 2012. However, the project to build this new facility has
not yet been approved or funding secured. In the short term,
Dauntless, the first Type 45 to test fire an Aster missile, will
have to use facilities at either Marchwood Military Port near
Southampton or Glen Mallan near Glasgow. Marchwood has
been close to or at full capacity although this may change as aresult of the drawdown from Iraq, and using the alternative facility
at Glen Mallan requires additional travel.

Training

Provides the means to practice and develop
the effective use of the Type 45 platformby personnel.

Key risk remaining: the late delivery of some training packages
for Dauntless and the later destroyers.
Paragraphs 3.11 to 3.14

Personnel

The timely provision of sufficient, capable andmotivated personnel by the Type 45 Manning
Acceptance Committee and the Royal Navy.

Not rated to be at risk but there is a Naval Service wide riskcreated by an overall staffing shortfall. If manning of the ships
goes as planned, however, all Type 45 destroyers will have a fullon-board crew.

Concepts anddoctrine

To design tactics and procedures toenable the Type 45 destroyer to undertake
assigned operations.

Not rated to be at risk: draft guidance was issued November
2006, with a final version planned to be available nearer toDaring’s entry into service. Modelling on the use of PAAMS
will not be completed until after Daring enters service. It is underconstant review as part of a continuous improvement exercise.

Organisation

How the operational and non-operationalorganisational relationships should be managed.
Includes military force structures, MoD civilian
organisational structures and Defence contractors
providing support to the Type 45 platform.

Not rated to be at risk as organisational relationships arewell understood.

Interoperability(an overarching theme)

The ability of United Kingdom Forces and,
when appropriate, other nations to train,
exercise and operate together effectively.

Not reported by the Type 45 project but potentially at risk
because of the late delivery of CEC (which will help to deliver
the maximum level of inter-operability with the United States).

Source: Ministry of Defence

24

Providing Anti-Air Warfare Capability: the Type 45 destroyer

part three

3.5 Past experience of introducing new types of warships
suggests it is difficult to predict accurately before they
enter service how much they will cost to support. For theType 45 destroyers this difficulty is compounded by
the complexity of the ships themselves and PAAMS,
the number of new equipments being introduced –80 per cent of the systems are new – and the adoptionof a new commercial model. The Department has
therefore adopted a staged approach which will enable
it to gather data on cost and performance on the basisof early operational experience before putting long-term
contracting for availability arrangements in place in 2013.
3.6 Ahead of the two stage support arrangements, andreflecting the new commercial arrangements agreed in
the Six Ship Contract, the Department will take ownershipof Daring from BVT earlier during the trials process thanpreviously planned. The revised arrangements wereagreed to save time and cost for the Department by giving
it greater control of management of risk to capability.
The Department and its commercial partners have agreed
interim support contracts worth £22 million for Daring
and PAAMS lasting for one year.

Development of long term
support arrangements
3.7 The Department faces a challenging timetable if
it is to deliver its proposed strategy and have in place
suitable arrangements to support Daring when it entersservice. The challenges reflect a number of factors:®®

®®

The Department was focusing its efforts on
resolving the difficulties with the procurementof the warship, and so was later in concentratingon support than planned.
The Department needed to ensure that the support
arrangements for the Type 45 destroyer wereconsistent with new arrangements being introduced
over broadly similar timescales to support bothother parts of the surface ship fleet (known as theSurface Ship Support Solution) and other complex
weapons (known as the Complex Weapons
Pipeline). The Surface Ship Support Solution is now
becoming more mature, although there is now someuncertainty about how PAAMS will fit in with the restof the Complex Weapons Pipeline. The Department’s
intention is that it will learn lessons from theintroduction of the Type 45 destroyer which it
can apply to its wider support initiatives.

®®

The achievability of support cost targets is uncertain.
When the main investment decision was taken
in 2000, the Department estimated that the costof supporting each Type 45 destroyer should be£10 million per destroyer per annum less than thecost of supporting an existing Type 42 destroyer.
This assessment was confirmed by further analysis
in 2005. The differences between the Type 42
and Type 45 destroyers in terms of capability andcomplexity nevertheless suggest that the support
costs of the older Type 42 may not be a wholly
reliable indicator of these costs for the Type 45.

3.8 The Department’s intention is to start negotiations
with industry for the support contracts for the Type 45
destroyer by the end of March 2009, to enable Daring to
be properly supported if it enters operational service inDecember 2009. This is a challenging timetable based on
the Department’s “target” date. The availability of funding
for support is based on the later “most likely” planning
date. The Department is aware that if it meets the earlier
date for delivery it will have to provide the necessary
funding early to pay for the support solution.
3.9 Alternatively, the Department could continue to use
the existing interim support arrangements at a potential
cost of £1 million per ship per month. The interim
arrangements are only designed to support activities
during trials. They would be able to provide a level of
support for the ships for operational use, using the current
contractual format, but doing so is likely to be costly. The
Department considers the risk is manageable, particularly
as Daring and subsequent ships will be alongside inPortsmouth for several months when they first enter
service while equipments such as Bowman and Skynet are
installed (see paragraph 1.16).
3.10 Support cost data is held in an Integrated Cost Model
operated by BVT, with the Department having access tothe model as required. At present the Department has only
limited resources available to enable it to fully understandand, if necessary, challenge the costs produced by themodel. For example, from the analysis it has been able toundertake, the Department has raised concerns about thelack of formal validation and verification of the model.
The majority of the costs from BVT have now been
confirmed, but cost data on PAAMS is over a year old
and will be updated in Spring 2009. The Department hasrecognised that it needs to commit more resource in thisarea and is recruiting a specialist.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

25part three

Training
3.11 Having suitably trained personnel to operate andsupport the Type 45 destroyers from the time Daring
enters service will be crucial to making the most of thecapability they offer. As with any new type of warship,
and particularly one as complex as the Type 45 destroyer
with a significant number of new equipments, delivering
training for the company of the first ship to enter service iscomplicated as the training must necessarily be designed
while the ships and equipments are still being procured.
3.12 Despite the steps taken by the Department, somerisks remain to the availability of sufficient trained
personnel as each of the six destroyers enters service
between 2009 and 2013. These risks may be aggravatedas some staff, though not all, told us in the summer of2008 that they are planning to deliver training to thelater “most likely” reported date rather than the morechallenging “target” date being used by the Integrated
Project Team (explained in paragraph 3.3). If the ships
are delivered against these earlier dates (between 2009
and 2013) there is a risk that personnel may not havereceived their full training. The Department is, however,confident that all staff are now aware that training must
be delivered to the earlier “target” date and our later work
showed a much better understanding of the “target” datethroughout the Department.
3.13 In parallel with the planned use of existing training
facilities, the Department has responded flexibly to thedelays in the delivery of some of the training facilities,
and has sought to mitigate the initial training risk by
undertaking much of the training of the company for
Daring and the second ship to enter service, Dauntless,on the ships themselves. Training on board ship is not
unusual, although the Department intends to use cheaper
synthetic training facilities, when ready, for the majorityof the training for the Type 45 destroyers. Changing toon‑board training in the interim creates a risk that therevised approach may not be wholly successful.

26

Providing Anti-Air Warfare Capability: the Type 45 destroyer

3.14 A number of training risks have been
identified including:
®®

®®

®®

the Maritime Composite Training System which will
provide training for the weapons system operators(including using PAAMS) has been delayed by
one year and is not now expected to be available
until July 2010. The delay means that weapons
training for the companies of Daring and Dauntless
will have to be provided at existing facilities,
and that suitably qualified and experienced staff
will have to be made available to certify andendorse warfare operators following training
on‑board Daring.
The training package for mechanical engineering
has also been delayed. The Department is using
similar fallback arrangements to weapons training.
Training for personnel who will be responsible
for maintaining PAAMS has been delayed while
the Department decided whether to provide thetraining on simulators or using real equipment.
The Department has now decided to use a mainly
synthetic solution but, until these are on contract
and can be developed, all training is carried out
on board ship.

3.15 Until the Department takes delivery of Daring,training for its company is being provided mainly by
BVT as part of the six ship contract with a joint teamcomprising Royal Navy and industry. Our discussions
with Royal Navy personnel indicate that this joint
approach is working well. The Department is also
forming a “super-squad” of trained personnel to provide
flexibility in crewing between ships as each of the six
ships are introduced into service and new crews trained
and subsequently to cover for shortages. By mid 2009
the squad is planned to consist of approximately 130
junior ranks, although the Department plans to expand
the squad to include more senior officers in future.

Appendix One
1
The aim of the study was to assess whether the
Department was making good progress in renewing
its sea-based anti-air warfare capability through theprocurement of a class of Type 45 destroyers. Within
this scope we considered:
®®

®®

®®

what capability has been available to the
Department during the procurement of theType 45 destroyers, and how it has set about
managing the transition to the new class of ships;
how the Department has managed the procurement
to date, including its ability to meet the original
requirements for time, cost and capability, andwhat action it has taken to deal with problems
where these have occurred;
how well prepared the Department is to support
the Type 45 destroyers through their operational
life as they come into service.

Methodology
Analysis of the Department’s
use of Type 42 destroyers
4
The Department has continued to operate a number
of Type 42 destroyers longer than originally planned.
We analysed the Department’s data to determine the costof extending the life of these ships. We also reviewed
Departmental information on availability and readinesslevels for the Type 42 destroyers that are still in operation.

Evaluation of costs of procuring
Type 45 destroyer
5
We commissioned Decision Analysis Services Ltd(DAS) to undertake a cost analysis of the original andrevised estimates for the cost for the Type 45 destroyers
to assess their realism. DAS undertook two separate
exercises for this purpose:®®

Interviews and visits
2
In order to assess the current state of the Type 45
project we conducted a number of interviews withstakeholders within the Department’s Defence Equipment
and Support unit, Royal Navy Headquarters, andindustry partners (BVT Surface Fleet and MBDA).
3
During our visits in Summer 2008 we conductedsemi-structured interviews with senior management,
project and commercial managers, staff responsible
for putting in place the support solution for the class ofType 45 destroyers, and Royal Navy personnel involvedin supporting or operating the new ships. We examinedstrategy and policy documentation related to the Type45 capability, as well as the regular reports used by
the Department’s Integrated Project Team for project
management and governance procedures, and internal
reviews relevant to the performance of the project.

®®

A historical cost trend analysis – using historical
data for costs and displacement to provide a rangeof costs within which a programme of this scaleat this time would be expected to fall;
Independent cost forecast – this technique uses amodelling technique based on input values related
to Quantity, Weight, Volume, Platform, Complexity
and Date. Appropriate factors are calculated andthen input into a model based on historical data
to produce an expected cost figure for the project.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

27

appendix One

Type 45 Stakeholders

28

Organisation

Role

Director Equipment Capability(Above Water Effect)

Project sponsor and single responsible owner for the Type 45 capability, involved in capability
planning and overall programme direction

Destroyers Directorate

Project team responsible for managing the procurement and support of the Type 45 destroyers

Principal Anti-Air Missile System
Integrated Project Team

Project team responsible for managing the procurement of the Principal Anti-Air Missile System
to be installed on the Type 45 destroyers

Defence Lines ofDevelopment owners

Individuals responsible for putting in place arrangements that will provide through life capability
for the Type 45 ships

BVT

Contractor responsible for production of six Type 45 destroyers

MBDA

Contractor responsible for production of UK element of Principal Anti-Air Missile System for
installation onto the Type 45 destroyers

Capital Ships Integrated
Project Team

Project team responsible for the continued operation of the Type 42 destroyers

Royal Navy

End users of the Type 42 and Type 45 destroyers

Providing Anti-Air Warfare Capability: the Type 45 destroyerglossary
Aster

Aster 15 and Aster 30 surface to air anti-aircraft and anti-missile missiles firedby the PAAMS system designed to be capable of intercepting a range of airborne
targets including aircraft and supersonic sea skimming anti-ship missiles.

Availability level

A Department performance measure looking at whether the ships which aremeant to be ready for operations are actually available to do so and are capableof carrying out their assigned tasks.

BowmanBowman is a tactical communications system designed to replace the existing
Clansman family of radios used by the British armed forces, integrating digital
voice and data technology to provide secure radio, telephone, intercom andtactical internet services in a modular and fully integrated system.

BVT Surface Fleet

The contractor responsible for production of the six Type 45 destroyers.
BVT was established in early 2008 and brings together the surface warshipbuilding and through-life support operations of BAE Systems and VT Group,
including their joint venture, Fleet Support Limited.

Complex Weapons group

Team responsible for managing the procurement and support of weapons
including PAAMS.

Complex Weapons Pipeline

Envisaged procurement route for complex weapons.

Contracting for availability

A contract with industry to provide a specified level of equipment availability,
the intention being to incentivise industry to minimise the cost of support by,for example, developing more reliable equipments which are easier to maintain.

Co-operative
Engagement Capability

The United States’ developed Co-operative Engagement Capability enables the
combat systems and sensors on a number of ships to be linked to provide a clearer
picture of the battle space and aims to improve the ability of a task force.

Defence Lines of Development

The Department has adopted an approach known as the ”Lines of Development”
to ensure that all the elements required to deliver a given capability are put inplace. The lines of development are: Equipment, Logistics, Infrastructure, Training,
Personnel, Concepts and Doctrine, Organisation and Interoperability.

Historic Trend Analysis

This type of analysis uses historical outturn data to generate cost trends for
specific pieces of equipment, which allows an estimate to be plotted against similar
past projects.

Horizon project

Horizon was a collaborative project with France and Italy to procure a replacement
for the Royal Navy’s Type 42 destroyers. The United Kingdom withdrew from the
Horizon project in 1999.

Integrated Project Team

Each major project the Department enters into has its own Integrated Project
Team that manages the funding of the project and engages with industry in orderto develop solutions to the necessary capability requirements and to drive theprogramme forward.

Providing Anti-Air Warfare Capability: the Type 45 destroyer

29glossary

Key User Requirements

These outline the requirements which the Department considers to be key to theachievement of Type 45’s mission and are used to measure project performance.

Main Gate Approval

The point when the decision to proceed with the project is made.

Maritime Composite
Training System

Synthetic training system which will provide training for the Type 45’s weaponssystem operators (including using PAAMS).

MBDA

The contractor responsible for production of the UK element of PAAMS for
installation onto the Type 45 destroyers.

“Most likely” date

The date by which it is most probable that a project milestone will be met
as reported corporately and in the Major Projects Report. Also referred toas the 50 per cent date.

Principal Anti-Air Missile System(PAAMS)

The anti-air missile system being procured jointly by the UK, France and Italy
consisting of the SAMPSON Radar, the command and control sub-system, themissile launching system and the Aster 15 and 30 Missiles. A Long Range Radaris also being procured under the umbrella of the PAAMS project.

Readiness level

A Department performance measure indicating whether ships are madeready for certain tasks within set timescales.

SAMPSON

The SAMPSON multi-function radar is being procured as part of the
PAAMS project.

Sea Dart

A medium range area defence supersonic anti-aircraft missile used on theType 42 destroyers.

Six Ship Contract

The revised contract for procurement of the Type 45 destroyers.

Skynet 5

The secure satellite communications system for the UK's armed forces worldwide.

Surface Ship Support Solution

The approach for the future maintenance and repair of surface warships.

Synthetic Training Facilities

Simulated training environments often involving computer-based training.

“Target” date

The intended date for a project milestone to be met.

Task GroupA group of fleet ships of varying types operating collectively to complete a mission.

Tasking

Allocation of missions to military units.

Type 42 Destroyer

The current destroyer that will be replaced by the Type 45s.

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Providing Anti-Air Warfare Capability: the Type 45 Destroyer
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