Franco-Italian FREMM Frigate Program in Trouble, Again
DID has noted past issues with the bi-national Franco-Italian FREMM (Fregate Europeene Multi-Mission) program, a variant of the Horizon Class air defense frigate. Now the FREMM program has its Memorandum of Understanding delayed again, and may even risk cancellation over the Italian government’s failure to include the necessary funding in its draft 2006 budget. Worse, the budget cannot be modified after its recent approval by Cabinet on Sept. 29, 2005 and pending submission to Parliament. Defense-Aerospace notes that according to Italian press reports, the financial shortfall amounts to about EUR 400 million for 2006.
Italian officials are scrambling to find a legal way to appropriate the additional funds without re-opening the domestic budget debate, before FREMM begins to stand for Failure to Reliably Execute on Monetary Matters. The secondary impacts of failure on this front are widespread, and include:
- France’s ability to move the program forward. The French have sent signals to the effect that unless the Italians fix these problems, they may proceed alone with DCN. Given the program’s costs and France’s own budgetary leeway, it is not clear how serious this threat really is.
- The FREMM program had anticipated the potential for wider European and global sales. Continuing delays or difficulties in the program will affect the likelihood of additional sales.
- The Italian Avio group’s Brindisi factory, which may be closed without production of its cheaper but less-capable LM2500 enhanced gas turbines for the FREMM program. The wrangling and final selection of the LM2500 over the Rolls Royce MT30 turbine delayed the FREMM project for a full year.
- Italy’s state-controlled Fincantieri’s Muggiano and Riva Trigoso shipyards may face significant layoffs in 2007 without new construction contracts. The unions are becoming increasingly concerned and restive.
The FREMM program calls for a total of 17 French frigates and 10 Italian frigates, at a total cost of about EUR 11 billion euros with equipment, weapons and initial support thrown in. Italy’s share of the FREMM program is estimated at about EUR 4 billion over ten years, or EUR 400 million ($483.3 million) per vessel.
Current plans call for Italy’s Industry ministry to fund the program until 2008, and the defense ministry to take over from 2009. Defense-Aerospace.com reports that the lead ships are “now due to be commissioned in 2011 (France) and 2012 (Italy), four to five years later than initially planned when the preliminary agreement between the two countries was signed in 2003 and confirmed in October 2004.”
Part of the problem here is the divergent incentives created by the contracts scheduling. Defense-Aerospace reports that the joint contract, due to be signed at the same time as the inter-government MoU, covers construction of the first eight frigates for France, but only part of Italy’s lead ship. Italian production orders are to follow between 2008 and 2015. The predictable result is a French side that wishes to get on with the contract, while the Italian government that would pay immediately but would only see most of the visible benefits during its successor’s term of office (in Italy, possibly even several successor administrations later).
DID covered this issue back on March 15, and noted the statement of an Italian defense official that funds for the program would be found before fall 2005. The kindest thing DID can say to that at this point, is that the fall season is not yet over.
UPDATE: Which was a good way of putting it. Defense-Aerospace.com and Defense News describe how the circle was squared, and the deal saved.
Additional Readings & Sources
- See all DID FREMM coverage
- Wikipedia – FREMM Multipurpose frigate
- GlobalSecurity.org – (FREMM) European Multi-Mission Frigate
- DCN – Batiments Surface: FREMM (in English).
- Defense-Aerospace (Oct. 11/05) – Franco-Ialian Frigate Program Hit by Italian Funding Row
- DID (March 15/05) – FREMM Frigate In Trouble?
- DID (March 14/05) – France, Italy Launch First Horizon Class Frigate. The Franco-Italian Horizon Class is a EUR 3 billion program; Britain withdrew in 1999 to pursue its Type 45 anti-air warfare destroyer, which benefits from some of the Horizon’s systems and development work.
- Industry Canada, Strategis (June 29/04) – International Market Insights: Franco-Italian FREMM Multimission Frigates. Discusses subcontractor opportunities at the time.
