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(2005) The Next Grand Fleet: A resource constrained perspective on naval acquisition challenges

(2005) The Next Grand Fleet: A resource constrained perspective on naval acquisition challenges

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Published by Jeffrey Bradford
This article aims to assess the challenges around naval force structure, vessel acquisition and operating costs from a historical perspective, and aims to understand where the most sensitive trade-offs in force structure are (or indeed need) to be taken in the maritime environment.
This article aims to assess the challenges around naval force structure, vessel acquisition and operating costs from a historical perspective, and aims to understand where the most sensitive trade-offs in force structure are (or indeed need) to be taken in the maritime environment.

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Published by: Jeffrey Bradford on Oct 10, 2008
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10/04/2013

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 Dr Bradford is Manager, Group Business Development at Babcock International Groupand was formerly a consultant with Arthur D. Little, specialising in corporate strategy withinthe aerospace and defence sector. In this article,he looks at the continuing decline in fleet sizeand considers the most important questions that have to be answered
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T
he naval shipbuilding portion ofthedefence industrial base has come tothe fore in recent years as nationsacross Europe and North America embark upon major programmes to update thecapabilities oftheir navies. However, themilitary customer is faced with thechallenge ofan industrial capabilityweakened by uneven orders and/or defence budget reductions, leading to a negativespiral where industrial entities are reluctantto prioritise investment in skills andcapabilities over more profitable segmentssuch as aerospace.
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This article aims to assess the challengesaround force structure, vessel acquisitionand operating costs from a historicalperspective, and aims to understandwhere the most sensitive trade-offs inforce structure are (or indeed need) to betaken.
Trends in Fleet Size and Budget
Pugh (1986) proposed a hypothesis basedon research from the mid-1950s through tothe early 1980s concerning cost escalationand its impact on the Royal Navy.
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Over theperiod encompassing the post-World WarTwo years, the withdrawal from East of Suez through to the Falklands conflict,Pugh charted the reduction in numericalstrength ofmajor Royal Navy (RN)platforms against defence budgets andrising unit costs ofequipment.His assessment in the mid-1980s was thatmodern navies faced with constant budgetpressures were choosing to respond by oneofthree methods: reducing the size ofthefleet; stretching the service life of platforms; or fundamentally reconsidering the concepts, force structure andequipment plan underpinning the service.
Reducing the Size of the Fleet
The 1955–1983 Royal Navy datasetidentified that, whilst unit costs of equipment had increased by 9%, defence budgets had only grown by 2% creating a7% shortfall in funding. Pugh’s arithmeticsuggested that to match budget to costswould require a 3.5% annual decrease inthe size offleet – analysis ofthe RoyalNavy in this time period indicated it hadcontracted on average by 2.5% per annum.Extending Pugh’s dataset by some twodecades enhances the picture painted for usand offers some additional insights (seeFigure 1 below).
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RUSIDEFENCESYSTEMS
 SPRING 2005 
The Next Grand Fleet: A Resource-Constrained Perspective onNaval Acquisition Challenges
by 
Dr Jeffrey Bradford 
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Figure 1:Royal Navy active fleet:submarines,frigates and larger vessels (1948/49–2004/5)
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Financial Year
 
MARITIME
 SPRING 2005 
RUSIDEFENCESYSTEMS
103
Considering an enhanced dataset covering the period since World War Two suggestsa trend ofgradual decline from the late1940s which appears to have reached anear ‘steady state’ after the reductionsfollowing the end ofthe Cold War. Themid-to-late 1980s’ data, which bucks thistrend, could relate to a post-Falklands Warsurge in shipbuilding, especially theintroduction ofthe Type-23 ‘Duke class’frigate to the Fleet.The absolute change across the periodcharted above is a little under 70% inreduction in platform numbers – whichcompares well with Pugh’s postulation of a 2.5% decline per annum (which wouldhave translated into a 75% reduction inthe same period). The average percentageannual reduction in the total number of platforms is 1.25% per year.The positive trend identified across amuch longer time frame is the relativelyslower rate ofreduction in RN platformsover the past several years.
Shaping the Future Naval ForceStructure
When looking at naval capability in crudeterms, it would appear that naval forcegeneration is increasingly focused onfewer, but larger, successor platforms toexisting equipment as the favoured wayforward. Table 1 below offers a fewcomparisons in support ofthis hypothesis.Even with the forecast reductions in whole-life cost and crew numbers, do fewerplatforms translate into less cost? Althoughdisclosure ofthe cost ofproducing eachunit in a class ofvessels was classified inthe late 1980s, it is possible to build a basicpicture indicating the costs by class andconverting the costs to uniform 2003 prices(see Figure 2 above).
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The above representation ofcost datasuggests that subsequent generations of equipment experience significant costescalation despite often being procured insimilar numbers (for example in the caseofthe LPD and SSBN classes).Surprisingly, the data suggests that there isobvious benefit to be derived from longerproduction runs in terms ofaverage unitcosts between types ofvessel (e.g. Type42 batches). However, this analysisexcludes the impact on the defenceindustrial base ofsporadic ordering,which has led to the concerns reflected inthe introduction in the US and UK.Having looked at production costs andidentified a clear trend towards fewer,larger vessels in each subsequentgeneration – from the point ofview ostretching the lifespan ofplatforms – some measure ofthrough-life costsrequires consideration. Figure 3 aboveoutlines annual average running costs fora variety ofplatforms. Once again, theserunning costs have been converted intouniform 2003 prices.The above graphic, although lacking indata for some ofthe newer classes of vessel, suggests the reduction in operating costs that will be gained with newerclasses ofvessel. These would be derivedfrom the ‘virtuous circle’ ofapplying newer systems and technologies, which inturn reduce crew requirements.
Fundamental Reconsideration ofConcepts,Force Structure andEquipment Plan
The adoption ofsubmarines by Germanyin World War Two, and small craft withsurface skimming missiles in the early1970s, can be seen as ways by whichnavies will try to change the rules to turnthe weaknesses in their own forcestructure into strengths.Looking at the naval programme in UK,
Table 1: Generational Growth in Platform Size
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Class Displacement Class Displacement Class Displacement
Type 21 Frigate3300 tonnesType 42 Destroyer5200 tonnesTrafalgar SSN5200 tonnes(dived)Type 22 Frigate5300 tonnes (+60%)Type 45 Destroyer7350 tonnes (+40%)Astute SSN7800 tonnes(dived) (+50%)
Class Displacement Class Displacement Class Displacement
Fearless LPD11,582 tonnesIsland Class OPV1260 tonnesResolution SSBN8500 tonnes(dived) Albion LPD18,500 tonnes (+60%)River Class OPV1677 tonnes (+33%)Vanguard SSBN15,980 tonnes(dived) (+90%)
Figure 2:Average cost per platform of major RN Warship Classes
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Figure 3:Average Annual Cost per Platform of Major RN Warship Classes
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Number of platforms in classNumber of platforms in class
246810121416246810121416
£700£600£500£400£300£200£100£35£30£25£20£15£10£5
   A   v   e   r   a   g   e   c   o   s   t   p   e   r   p   l   a   t   f   o   r   m    (   £   m    2   0   0   3   p   r   i   c   e   s   )   A   v   e   r   a   g   e   a   n   n   u   a   l   c   o   s   t   p   e   r   p   l   a   t   f   o   r   m    (   £   m    2   0   0   3   p   r   i   c   e
q
Castle OPV
q
Bird OPV
q
Type 42b1
q
S Class SSN
q
Island OPV
q
T Class SSN
q
Type 21
q
Type 23
q
Castle OPV
q
CVSR Class SSBN
qq
Type 22b1
q
Type 42b3Type 42b2 & Type 22b3
qq
Type 42b2
q
R Class SSBN
q
V Class SSBN
q
Type 22b1 & Type 42b3
q
Fearless LPD
q
LPH
q
Albion LPD
q
CVS
q
Type 42b1
q
Type 22b2
q
S Class SSN
q
Island OPV
q
T Class SSN
q
Type 21
q
Type 23

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