In two of the first contracts preparatory to a project expected to ultimately cost it billions of dollars, the U.K. Ministry of Defence announced Monday that it has awarded local defense contractor BAE Systems (NASDAQOTH: BAESY ) (LSE: BA ) $128.8 million to begin making "long-lead" purchases of parts needed to build the Royal Navy's next generation of nuclear powered ballistic missile submarines.
BAE will begin accumulating structural fittings, electrical equipment, castings, and forgings necessary to build the new Successor-class "boomers." The submarines are not expected to begin entering into service before 2028, however.
MOD says that its next-gen submarines will be "some of the stealthiest in the world and are expected to see operational service from the late 2020s right up to the 2060s." DefenseNews.com, meanwhile, reports that MOD will ultimately spend some $869 million in long-lead purchases -- and as much as $4.9 billion just "assessing" the vessels' feasibility, before ultimately deciding sometime in 2016, whether to proceed with the project.
If MOD gives the go-ahead, Britain could ultimately build as many as four of the new boats, at a total cost of between $17.9 billion and $22.8 billion.