Type 26 wins the Australian frigate competition – why it matters to the navy and Great Britain

Today it became clear that the BAE Systems Type 26 design has won the Australian SEA 5000 frigate competition. As we argued in a previous article, Type 26 was the best of the three candidates for the ASW needs of the Australian navy and any potential obstacles to selection would only be political and industrial. Victory in this competition is significant for the Royal Navy, industry and the UK as a whole and here we look at why.

The first 3 ships will be named HMAS Hunter, HMAS Flinders, and HMAS Tasman, the Hunter class will begin to enter service with the Royal Australian Navy (RAN) in the late 2020s. They will be built by ASC Shipbuilding at Osborne Shipyard in Adelaide, South Australia who will become a subsidiary of BAES for the duration of the project. BAES will be ultimately responsible for the delivery of the vessels, are expected to create up to 4,000 new jobs and enhance Australia’s domestic warship design and build capability for future projects.

The first steel will be cut in Australia in 2020 for the prototyping phase, designed to prove the processes and new production facilities. Full production will commence in 2022 with the first ship due to be delivered around 2027. Contrary to claims that the Hunters will be “the first of class prototype” the schedule will see HMS Glasgow, Cardiff and Belfast in production in the UK ahead of the first Australian ship, making the first Hunter the 4th of the class, with the Royal Navy taking the lead in understanding the design, developing its capabilities and addressing any snags.

For more than two decades UK shipbuilders have looked on enviously as Spanish, Italian, French and German shipyards have won export construction and licensing orders. Many believed the days of UK involvement in the naval export business were over. Winning the SEA 5000 competition is quite a change in fortunes and has to potential to revive UK naval exports. It is the culmination of much hard work and lobbying but also an unintended benefit of delays to the Royal Navy’s frigate programme. The RN’s insistence on a very high-end anti-submarine frigate has been cause for criticism as cost soared and delays mounted. In the early days of the programme there had been high hopes the Type 26 could be sold for export but expectation had rather faded with the delays and price increases. Rather fortuitously the delay and the high specification of the Type 26 fitted well with Australian SEA5000 timing and requirements.

The Australians are very serious about countering the submarine threat in the Pacific region and are clearly determined to obtain the best platforms for the job, investing in a new generation of 12 x (French-designed) Submarines, 12 x (US-made) P-8A Poseidon Maritime Patrol aircraft and 6 x MQ-4C Triton UAVs.

It may appear that a multi-national corporation based in the UK has merely licensed its design for a frigate to be built in overseas but this would be to wholly underestimate the benefits to the nation which will be felt in 3 particular ways;

Across the supply chain

BAE Systems will immediately benefit from the payment for the intellectual property they have developed for the Type 26. Many years of expensive research and development have already gone into the design of the ship and some of this cost can be offset. As a result, the RN should see some modest reduction in the unit cost of the next batch of 5 ships.

The Sea 5000 programme is the world’s biggest naval export contract signed in a decade, worth Aus$ 35Bn (£19.5Bn) over the 30-year lifetime of the ships. This will not hurt BAES share price as well as adding to its muscle and potential to win other major foreign defence contracts. Although not loved by many in the UK, it should be recognised BAES paid £2.5Bn to the Exchequer in corporation tax last year and was responsible for 0.9% of all UK exports.

It is expected about 65% of the equipment fitted to the Hunters will be domestically sourced as the Australians naturally want to maximise the benefits to their own industry. BAES will now have to conduct an extensive round of negotiations with many potential suppliers in Australia and globally. The exact break down of benefits to UK manufacturers is obviously not yet available but the Rolls Royce prime movers and the David Brown gearboxes will be UK-made. Overall economies of scale across the supply chain will help reduce both construction and through-life costs for both nations.

Naval co-operation

For the RN, apart from cost saving on its own procurement, commonality with the RAN frigates will offer opportunities for joint training and co-operation. If the RN is to operate more frequently in the Pacific region then some of the logistic support for Type 26 would be available in Australia.

The RAN has conducted personnel exchanges with the RN going back to the founding of the navy and this mutually beneficial cooperation will only increase. For RN personnel, deployments and time in Australia would offer an exciting variation from more commonplace Gulf and North Atlantic trips. Operating doctrine and experience gained with the vessels can be shared and the exchange of sensitive ASW tactical information and experience will also flow naturally from joint GCS ownership.

Strategic change for post-Brexit Britain

The RN and the RAN have always had a close relationship and until the 1970s the equipment, procedures and philosophy were very closely aligned. A focus on the Cold War Russian threat and closer integration with Europe saw the UK’s relationship with its Commonwealth allies become more distant, but Brexit and the growing importance of the Pacific region have seen a renewed strengthening of ties. Britain is likely to commit to buying some Australian equipment in return for the Type 26, this could potentially include the E7-A Wedge Tail surveillance (ISTAR) aircraft for the RAF and the CEAFAR 3D naval radar.

In the last year, the British government has mounted a considerable diplomatic effort. The Australians were treated to visits by Boris Johnson and former Defence Secretary, Michael Fallon. Many other industry and government figures have worked hard behind the scenes to make the deal happen and should be congratulated.

In return for closer trade and defence cooperation, the UK is promising more stanch support against Chinese attempts to militarise the South China Sea which directly threatens Australia and its neighbours. A tangible demonstration was the visit of HMS Sutherland to Australia and HMS Albion and Argyll deployed to the region this year.

As the UK government struggles with Brexit negotiations and tries to understand the shape of future trading relationships, this will be a rare piece of good news for Number 10. It gives credibility to government efforts to promote Global Britain and counter perceptions that withdrawal from Europe amounts to a withdrawal from world affairs. Australia is also likely to be one of the first countries to sign a new free-trade agreement (FTA) after the UK leaves the EU.

Canada Type 26 Frigate

The Type 26 is one of three potential candidates in the Canadian Surface Combatant (CSC) competition to build 15 ships to replace the Halifax and Iroquois class vessels. Winning the Australian competition adds further credibility and momentum to the bid. A Canadian buy of Type 26 would see a Global fleet totalling 30 ships. (Unfortunately, the price and very high end capability is unlikely to suit New Zealand’s budget for 2 new frigates)