SIR STEPHEN LOVEGROVE, KCB

MINISTRY OF DEFENCE
FLOOR 5, ZONE D, MAIN BUILDING, WHITEHALL
LONDON SW1A 2HB
Telephone: 020 7218 7975
Fax:
020 7218 3048
E-mail:
PUS-PrivateOffice@mod.gov.uk

PERMANENT SECRETARY

D/PUS/11/7/1(300)

16 October 2019

Meg Hillier MP
Chair of the Public Accounts Committee
Sent electronically

Dear Chair,
ASTUTE CLASS SUBMARINES BOAT 4 ACCOUNTING OFFICER ASSESSMENT
It is normal practice for Accounting Officers to scrutinise significant policy proposals, or
plans to start, or vary major projects, and then assess whether they measure up to the
standards set out in Managing Public Money. From April 2017, the government has
committed to make a summary of the key points from these assessments available to
Parliament when an Accounting Officer has agreed an assessment of projects within the
Governments Major Projects Portfolio.
This Accounting Officer Assessment considers the forecast delay in meeting the approved
Operational Handover date for Boat 4 of the ASTUTE class submarine programme.
Background
The ASTUTE programme, valued at over £11Bn, will deliver seven nuclear attack
submarines, replacing the previous TRAFALGAR class. Currently, three boats (ASTUTE,
AMBUSH & ARTFUL) are in service. The remaining four boats (AUDACIOUS, ANSON,
AGAMEMNON and AGINCOURT) are at varying stages of completion, with final delivery
expected by November 2026. The Astute programme is being procured through single
source contracts and are being built at the lead suppliers’ shipyard in Barrow-in-Furness.
An Astute Whole Programme Approval was secured in March 2018, which allowed for an
Operational Handover date for AUDACIOUS of August 2019. This Accounting Officer
Assessment is necessary because this date has been breached, following emergent
technical issues within the build programme. The emergent issues have required
unplanned repair and rework to facilitate the submarine proceeding forward with the
normal commissioning process. The Operational handover for AUDACIOUS is now
planned for January 2021.

1

 The delays to the build have not currently caused the programme to overrun in cost terms
given that the financial approval is at the programme level (rather than by individual boat)
and includes contingency. However, there has been a knock-on schedule delay to
ANSON and further schedule challenges with the remaining build. Consequently, the level
of schedule risk provision is being reviewed and, longer term, it may be necessary to seek
to increase this.
Regularity
The ASTUTE programme continues to comply with Parliamentary requirements for the
control of expenditure, with programme funds being applied only to the extent and for the
purposes authorised by Parliament. HMT Regularity standards continue to be satisfied.
Propriety
Although the programme is forecasting a delay to AUDACIOUS, it remains a high priority
to enable the Royal Navy to meet Defence strategic objectives. It is governed effectively in
accordance with GMPP requirements. It is assessed therefore that Parliament’s intention
for the ASTUTE programme authorised expenditure continues to be met properly, despite
this delay. The programme’s funds are being managed with impartiality, honesty, and with
the avoidance of personal gain, waste or extravagance.
The costs of the ASTUTE programme remain inside its extant financial approval, and
longer term financial commitments are sustainable.
Value for Money
AUDACIOUS is due to commence sea trials shortly, and as such it’s build programme is
largely complete, with 96.2% of the total cost already sunk. Therefore, the assessment is
that completing the build of AUDACIOUS provides the best approach to achieve value for
money. The costs incurred on the programme are subject to review and challenge by the
MoD Cost Assurance and Analysis Service (CAAS) to ensure they are appropriate and
represent value for money.
Feasibility
Collaboration with and investment in our lead supplier has been key in improving the
operational management of the AUDACIOUS build. The key repair has successfully
completed and AUDACIOUS has re-entered the normal commissioning process for a new
build nuclear submarine. As with any programme of this complexity, there remains a
susceptibility to low probability, high impact events and MOD staff continue to work with
the BAES Systems to ensure these are effectively mitigated.
Conclusion
It is concluded that the ASTUTE programme in general, including AUDACIOUS remains a
satisfactory use of public resources and that the programme should proceed. The
2

 ASTUTE programme is essential to the maintenance of Continuous at Sea Deterrence
and the nation’s strategic nuclear capability. The continued build of AUDACIOUS is
considered essential as the ageing TRAFALGAR class submarines are decommissioned.
As the MOD Accounting Officer, I considered this assessment of AUDACIOUS and
approved it on 16 October 2019.
I have prepared this summary to set out the key points which informed my decision. If any
of these factors change materially during the lifetime of this programme, I undertake to
prepare a revised summary, setting out my assessment of those factors.
This summary will be published on the government’s website (www.gov.uk). Copies will
be deposited in the library of the House of Commons and sent to the Comptroller and
Auditor General and Treasury Officer of Accounts.

Yours sincerely,

STEPHEN LOVEGROVE

3