LONDON — Until last week the likely cost of the Royal Navy's new Type 26 frigate was a closely held number known only to a few at the Ministry of Defence and shipbuilder BAE Systems.
That changed Sept 16 when a top military officer gave the first hint of the likely huge cost of the Type 26 program during a speech to an audience at the DSEI defense exhibition in London.
Defense News wasn't present at the speech but one industry official who was said the number popped out when Rear Adm Alex Burton, the Assistant Chief of Naval Staff, (Ships) was comparing the magnitude of the Type 26 to other programs.
Burton put a price tag of £12 billion on what is currently a 13 frigate program aimed at replacing the Royal Navy's aging Type 23 anti-submarine/general purpose fleet starting 2023 when HMS Argyll is retired.
The figure is not the exact cost for the program but was meant to give the audience a feel for the size of the program versus other projects, said a MoD source.
The figure had been rounded up by Burton and the true cost was closer to £11.5 billion, they said.
The source said the figure was an outturn price for a program expected to run into the 2030's and not the cost at current prices.
The MoD doesn't dispute Burton used the figure.
Asked to give more details. a MoD spokeswoman said: "The MoD has adopted an incremental approach to financial commitment on the Type 26 Global Combat Ship program. The program entered its demonstration phase in April 2015. The program's cost will be subject to future investment decisions."
Building the Type 26 is part of an expected huge upcoming investment in Royal Navy platforms.
In the 10-year equipment program rolled out last year, the MoD said it would spend £18.2 billion buying and maintaining surface ships over the next decade and around £40 billion on submarines.
The total 10 year equipment and support plan is costed at £163 billion.
BAE has been under intense scrutiny from the MoD. The ministry appointed consultants McKinsey to help drive costs on what is a big and expensive platform.
Making the program affordable has resulted in a number of capability — cost trade off's, although that process is at an end, BAE executives said earlier this year.
BAE and the MoD remain locked in negotiations over a contract to build the first three frigates at it's naval shipyards on the Clyde, Scotland.
The strategic defence and security review, scheduled to be published around the end of November, could confirm the issue of how many, and when, the new warships will be delivered.
A spokesman for the company declined to talk about program costs, but said BAE is "working closely with the Ministry of Defence and our partners in the supply chain to mature the design as we progress to the manufacturing phase, which is expected to start in Glasgow next year. Our joint focus is to ensure the Royal Navy has the capability it needs to protect national interests, while ensuring the best value for money for UK taxpayers."
BAE executives have voiced concerns over the drumbeat of production beyond the first three warships.
A new naval shipbuilding strategy which could be part of the SDSR could answer some of those questions.
The company is expected to cut the metal on the Type 26 next year with the first warship delivered in 2021 or 2022.
The construction deal is not expected to be signed until after a 12 month , £859 million, demonstration contract comes to a close at the end of March, 2016.
The government committed cash in February for a demonstration phase that includes money to build test facilities and the start of purchasing long-lead items like gas turbine engines from Rolls-Royce, gear boxes from David Brown Gear Systems and communications equipment from Rohde & Schwarz.
Andrew Chuter is the United Kingdom correspondent for Defense News.
