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Norway, Navantia spar over frigate cost, quality


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#1 CV32

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Posted 02 April 2007 - 09:46 AM

From DefenseNews

Posted 04/02/07 16:52
Norway, Navantia Spar Over Frigate Cost, Quality
By GERARD O’DWYER, HELSINKI

Norway’s Ministry of Defense (MoD) says it is hopeful but not “overly optimistic” that it will soon resolve a dispute with Spanish shipyard Navantia over the cost and quality of five Fridtjof Nansen frigates ordered by the Navy, an MoD official said.
At a budgeted cost of $3 billion, the five-frigate project is Norway’s most expensive naval asset contract ever. The delivery schedule, agreed in 2000, calls for Navantia to hand over one new 5,100-ton frigate to the Navy each year from spring 2006 through 2010. Each frigate is designed to accommodate a helipad for an NH90 helicopter. The frigates will replace the Navy’s Oslo-class ships.
Two primary areas of contention remain. The first revolves around $103 million in supplementary expenses added by Navantia for the first frigate, which was delivered in April 2006. The MoD is disputing the additional costs, claiming an inclusive fee had been agreed.
The second area of dispute, quality, follows postdelivery inspections of the ship in July 2006 that revealed evidence of rust on the hull and deck. The MoD has asked Navantia to explain the causes of the rust and guarantee standards for future deliveries.
“The talks under way to resolve the outstanding issues may be resolved in 2007, but they could take longer than this,” said Birgitte Frisch, the spokesperson for the Norwegian Defense Logistics Organization, which is leading the negotiations with Navantia. “We are negotiating to obtain agreement on quality of work and costs. This means that there may be delays to the delivery of future frigates until agreement can be reached among both sides. Delays could be inevitable, and at this point we are unsure how long they may be.”
Norway wants to set an all-inclusive price for each frigate scheduled for delivery, Frisch said.
In communications with Navantia during the final quarter of 2006, the MoD claimed the work Navantia describes as “supplementary undertakings” were fixes to irregularities found in work carried out on the F310 Fridtjof Nansen, and as such are covered by the terms of the original contract.
But Navantia spokesman Miguel Martinez Guerro said that much of those additional costs arose from demands for system and component upgrades in the frigate’s software and hardware.
“The Norwegian MoD demanded higher standards than were in the original contract for the F310 Fridtjof Nansen,” Guerro said. “The upgrades that we did caused other additional costs. Much of the cost came from additional man hours. This explains the additional costs.”
The MoD will look at bringing in a mediator if the current round of talks between the two sides should collapse, an MoD insider said.
“There are problems at various levels with Navantia. There are issues of costs and there are issues of quality,” said the MoD insider. “We would like to think that we are making steady progress in the talks, but there are still areas of contention that could, as a last resort, require mediation. These disputes have continued for almost one year now and we are looking at unknown delays in the delivery of new frigates.”
The first of the class, the F310 Fridtjof Nansen, was built at Navantia’s shipyard at Ferrol, Spain. Navantia’s bid was chosen after an eight-year competition that included bids from German group Blohm+Voss and the Norwegian NorEskort consortium.
While the fifth frigate would have been delivered by 2010 under the original schedule, the MoD-Navantia disputes have made the existing delivery schedule “specula-tive,” said the MoD insider.
“We never anticipated these cost problems and delays when the first of the five frigates, the F310 Fridtjof Nansen, was handed over to the Norwegian Navy on 5 April 2006,” the insider said. “Navantia responded to our concerns about quality by proposing that parts and systems produced by subcontractors here in Norway for the frigates should be quality-control-tested by the Navy before fitting-out in Spain. The frigate contract made no provision for this, which is specific that Navantia conducts all predelivery quality control.”
The MoD and the Royal Norwegian Navy agree that all provisions for quality-control relating to frigate construction are contained in the original contract, said Navy Commander Per Erik Goransson.
“We do not have any contract with the Norwegian subcontractors, only with Navantia,” he said. “It is Navantia’s contractual job to conduct the quality inspections, not ours.”
The main mission of the frigate is anti-submarine warfare, with ships equipped for anti-air and anti-surface warfare roles. The Fridtjof Nansen class is based on Navantia’s 5,800-ton F100 Alvaro de Bazan class multirole Aegis frigates. The Nansen class also uses the Aegis combat system, incorporating the smaller SPY-1F radar as opposed to the standard SPY-1D for other Aegis ships.

[I am not sure of the degree of the rust problems aboard the Nansen frigates, but I do know that rust is a fact of life here in the North Atlantic. If someone can find a way to cure it once and for all, I'd love to hear about it].




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