The race to design and build a new generation of Royal Navy frigates has been won by a consortium led by Babcock.
The firm has been named preferred bidder for the £1.25bn contract for five Type 31 warships.
The deal secures hundreds of jobs at Rosyth in Fife, where the ships will be assembled, with construction work spread between yards across the UK.
Work is to begin by the end of 2019, with the first ships delivered in 2023.
The Type 31 is a smaller, cheaper frigate than the Type 26 warships currently being built at the Upper Clyde shipyards.
With a price ceiling of £250m per ship, the aim is to maintain the size of the Navy’s surface fleet and generate export orders.
Ahead of the preferred bidder being announced to the stock exchange, Prime Minister Boris Johnson said the modular construction method would support 2,500 jobs throughout the UK.
He said: “This is an industry with a deep and visceral connection to so many parts of the UK and to the union itself.
“My government will do all it can to develop this aspect of our heritage and the men and women who make up its workforce – from apprentices embarking on a long career, to those families who have worked in shipyards for generations.”
Scottish Secretary Alister Jack said Scotland was at the “forefront of a renaissance in UK shipbuilding”.
“This is a clear show of support for the UK defence sector, the role it plays in keeping the United Kingdom secure, and its contribution to Scotland’s prosperity through high-skilled employment and investment,” he added.
The Babcock team’s Arrowhead 140 design beat off competition from a Cammell Laird/BAE Systems consortium and a third bid led by Atlas Elektronik UK.
The winning consortium also includes Thales, BMT as well as Ferguson Marine, based in Port Glasgow and Harland and Wolff in Belfast – both of which are currently in administration.
Last month, Babcock insisted these firms’ financial difficulties would not affect its bid because its “flexible build approach” could accommodate “a range of delivery sites”.
Type 31 – the ‘Lidl frigate’
Three different designs were in the running for the Type 31 contract but they all have something in common – they’re cheap.
The price cap of £250m per ship might sound a lot of money but, to put it in context, the bill for the eight Type 26 frigates currently under construction comes to about £8bn.
The extremely tight cost constraints on the new ship have led some critics to describe it as “the Lidl frigate”.
Each bidder has tried to keep the price down by basing their designs on successful existing ships rather than starting from scratch.
Babcock’s “Team 31” design is derived from the Iver Hutfeldt frigates developed for the Danish navy.
Plenty of flexibility has been factored in – equipment can be upgraded or reconfigured to increase operational flexibility.
The ship is sometimes referred to as the Type 31e – the “e” standing for exportability.
The hope is that this “bargain basement ship” will prove its worth and orders from foreign navies will lead to economies of scale that will drive down costs.
Such value for money, some argue, might even tempt the Royal Navy to bolster its surface fleet by increasing the order.
The last big frigate order – for the Type 26 – was announced in the summer of 2014, just months before the Scottish independence referendum, with the work going to the BAE Systems yards in Glasgow.
While the government insisted this was a value-for-money decision, many pro-union campaigners argued it demonstrated the benefits of being part of the UK.
The 2015 Strategic Defence and Security Review scaled back the expected size of the Type 26 fleet from 13 to eight ships – and instead proposed building “at least five” new general purpose frigates, at a much lower cost.
With no guarantee this work would come to Scotland, pro-independence campaigners condemned this as a broken promise.
In 2017, the government’s new National Shipbuilding Strategy, based on Sir John Parker’s independent review, sought to encourage competition in naval procurement, with an emphasis on supporting shipyards across the UK.
The choice of Babcock – with its Rosyth site playing a key role in construction but with work spread across various UK sites – is in line with this strategy.
It also reduces the government’s reliance on BAE Systems, which has long been the dominant force in naval shipbuilding.
The rival BAE systems bid would have seen the company providing design expertise but the bulk of construction would have taken place at the Cammell Laird in Merseyside.