The UK Ministry of Defence (MoD) has confirmed plans to sign a contract for the construction of the British Royal Navy’s seventh Astute-class submarine.
UK Defence Procurement Minister Guto Bebb informed the Members of Parliament (MPs) in a written ministerial statement that the UK defence ministry has received treasury approval for the Astute Boat 7 ‘Whole Boat’ contract.
Bebb said: “I am pleased to inform the House that I am today laying a Departmental Minute to advise that the MoD has received approval in principle from Her Majesty’s Treasury (HMT) to recognise new contingent liabilities associated with the Astute Boat 7 ‘Whole Boat’ Contract.
“Negotiations are ongoing and the contingent liabilities will come into force on signature of the contract.”
The Departmental Minute describes the contingent liability that the UK MoD will hold following the finalisation of the vessel development contract, which is intended to support the production and testing of the submarine.
The maximum contingent liability against the defence ministry is expected to remain until the Astute-class ship’s out of service date.
According to the contract, the constructing company, BAE Systems Marine, will limit its exposure to product liability to £1bn per incident and £300m in any 12-month period.
The constraint limits the contractor’s exposure for claims by the MoD, as well as provides the defence ministry an exposure to third-party claims against the contractor for losses related to the product either being defective or deficient.
The Royal Navy’s Astute-class Boat 7 contract involves a narrative Shipbuilders Risks Indemnity (SRI) condition rather than Defence Condition (DEFCON) 663, which would provide a standard form of SRI.
Approval for the contract has been granted several months after UK MoD officials and BAE Systems management personnel were put under pressure to call off plans for the development of the vessel in order to reduce the defence equipment funding crisis, reported In-Cumbria.
The navy’s Astute-class nuclear-powered submarines (SSNs) are integrated with advanced sensors, designs and weaponry.
The vessels are claimed to be the largest, most advanced and powerful attack vessels ever operated by the British Royal Navy.