A £1.4bn contract for the latest Astute-class attack submarine has been agreed by the Ministry of Defence and BAE Systems.
The FTSE 100 defence group is leading the construction of the nuclear-powered HMS Agamemnon at its Barrow-in Furness shipyard in Cumbria.
Work on the 300ft long, 7,400-tonne submarine began five years ago but the latest agreement involves a new contract with BAE and its partners that rewards them for delivering on time and budget, but punishes them for failing to hit targets, limiting the taxpayers exposure to over-runs.
Agamemnon is the sixth of the seven-boat Astute fleet, with the first three – HMS Astute, Ambush and Artful – having already been handed over to the Navy, and the others in late-stage construction.
However, the Astute programme has run into trouble previously. A break in the UK building submarines meant vital skills and experience were lost, resulting in HMS Astute, the first boat in the class, arriving four years late and £2bn over budget.
Problems with the vessel included the nuclear reactor provided by Rolls-Royce – which has supplied the power plants for all of Britain’s atomic submarines – and issues with the quality of work and equipment overseen by BAE.
Will Blamey, managing director of BAE’s submarine division, said: “Securing the contract for the sixth Astute class submarine is a significant milestone for BAE Systems and the result of many years of hard work by our highly skilled workforce.”
BAE employs about 8,400 people in its submarines unit, where they are simultaneously working on the £41bn Dreadnought programme to build the Trident replacement submarine. Thousands more positions around the UK are supported in the supply chain.
Each year the defence group spends more than £300m with more than 1,000 suppliers on acquiring parts for submarines.
Rear Admiral Paul Methven, director of submarines acquisition, said: “The signature of this contract secures another world-class nuclear submarine for the Royal Navy. These are the most technologically advanced submarines we have ever operated, offering much greater firepower, better communications and more advanced stealth technology than their predecessors.
“Today marks another significant milestone for the Astute programme, that demonstrates the UK’s ability to deliver complex engineering projects, providing a fleet of submarines which will protect the UK’s interests around the globe.”