Navy's pounds 5bn new frigate faces delays and overspend

The Royal Navy's new pounds 5bn frigate, designed to take the service into the next century, may be late coming into operation and could spiral in price, warns a report published today.

A study from the National Audit Office, the public finance watchdog, concludes that the planned deadline for the frigate, intended to be the navy's main line of defence against missile and aircraft attack, "may be overly optimistic". The 2,002 date "will require careful management if it is to be achieved", the NAO said.

Being developed jointly by Britain, France and Italy, the frigate will replace the navy's Type 42 destroyers. Until now, the delivery date for the ship - known as the Common New Generation Frigate - has remained secret. Its building programme, said the report, "is likely to be one of the most complex warship procurements ever undertaken by the Ministry of Defence".

This is the second time the MoD has tried to collaborate with overseas partners on a new frigate. In the 1980s, the UK was a member of the Nato Frigate For the Nineties project, which broke down because of disagreements over individual country's requirements.

That failure and the experience of other joint venture projects such as the Eurofighter, which have also been the subject of scrutiny from the NAO and MPs on the Commons Public Accounts committee, do not augur well for the new 21st century vessel.

Ultimately, the UK is expected to purchase 12 of the frigates compared with Italy's five and France's three. In theory, that should mean plenty of work for UK shipbuilders, as almost two-thirds of the production will take place in Britain.

Already, though, it is falling behind. The next phase in the development scheme was due to be signed in March. It was then delayed until July and is not now scheduled to be signed until the autumn. MoD officials have admitted that discussions are taking place with France and Italy to try and set a more realistic in-service date.

As with the earlier, doomed Nato project, differences are emerging among the partners. The vessel's main anti-air missile system was supposed to have been developed uniformly by all three countries but MoD concerns have led to each country including its own radar.

The NAO report warns of a real danger of soaring costs because of each of the three partner countries seeking to secure a large percentage of the work for their own hard-pressed defence industries.

"It is essential that industry and the collaborative partners work together to ensure work share arrangements are addressed at the broadest level so a pragmatic mechanism which recognises the political realities and achieves value for money is agreed," said the NAO.