§ Mr. Hancock
To ask the Secretary of State for Defence (1) what assessment he has made of the effect of the collapse of the Common New-Generation Frigate programme on future European collaborative naval projects; 
(2) what he estimates the typical cost of the Type-45 destroyer will be. 
§ Mr. Hoon
This is a matter for the Chief Executive of the Defence Procurement Agency. I have asked the Chief Executive to write to the Hon. Member.
Letter from Sir Robert Walmsley to Mr. Mike Hancock, dated 15 December 1999:I am replying to your questions to the Secretary of State for Defence about the Type 45 Project. This matter falls to me to answer within my area of responsibility as Chief of Defence Procurement and Chief Executive of the Defence Procurement Agency.The total programme cost for the 12 currently planned Type 45 warships including their missiles is approximately £6Bn. This includes approximately £1.2Bn for the development, design and build of the first of class ship and £1Bn for the development and initial production of the Principal Anti Air Missile System (PAAMS). The balance of £3.8Bn contains funding for further missile procurement, allows for the incremental acquisition of the combat system. The ship design will incorporate significant growth margins to allow for this incremental capability development. A typical cost per ship is thus difficult to asses but the average is expected to be within a target cost of about £270M, excluding missiles.You also asked what assessment had been made of the effect of the collapse of the Common New Generation (CNGF) Programme. The tri-national project office, before it closed on 29 October 1999, provided an assessment of the lessons learned to each of the three partner nations. These reported lessons are being carefully considered and we will be compiling our own UK national lessons learned paper in order to ensure that they are applied appropriately to other collaborative projects. At this stage, I would assess the key lessons to be:
- a. The operational requirement should be agreed in detail, and be confirmed as affordable against agreed budgets. This information (on requirement and cost) should be communicated to Industry at an early stage to avoid over-ambitious performance specifications being set at the outset that have subsequently to be adjusted (with consequent delay) as financial realities are brought to bear;
- b. early in the programme, a credible industrial organisation must be established which meets the requirements of industry and of all particular governments. For the UK, this means the appointment of an effective prime contractor not a joint venture company;
- c. work share arrangements should not be allowed to distort industrial management of the programme. The involvement of trans-national companies and OCCAR are likely to be helpful in ensuring work share issues are resolved efficiently and economically.
Applying these principles proved intractable in the context of HORIZON but was possible with the PAAMS Anti-Air Warfare missile component of the CNGF programme and you will be aware that a Development and Production contract for PAAMS was successfully placed last August on behalf of the three nations. This illustrates that the HORIZON outcome need not inhibit successful collaboration in Europe in future.