Rauma Marine Constructions and Saab to be main contract partners for Pohjanmaa-class vessels

At its plenary session on 19 September 2019, the Government authorised the Defence Forces Logistics Command to make a contract on the procurement of Pohjanmaa-class vessels and a combat system for the Navy.

Rauma Marine Constructions (RMC Oy and RMC Defence Oy) based in Rauma will construct the vessels for the Squadron 2020 project. Following the invitation to tender, the Swedish Saab AB was selected as the supplier of the vessel's combat system. In addition to concluding an industrial cooperation contract with Saab AB, Minister of Defence Antti Kaikkonen decided on the procurement of ship-class propellers and propeller shafts from the Finnish company Aker Arctic Technology Oy.

The agreements on the construction of vessels, the supply and integration of the combat system and the supply of propellers and propeller shafts will be signed in Turku on 26 September 2019.

Finland's maritime defence to be based on Pohjanmaa-class vessels

The Navy will decommission seven vessels and these will be replaced by four multi-role corvettes, capable of engaging in warfare with surface combatants and submarines, taking anti-aircraft measures and commanding maritime operations. The Navy's new vessels will play an important role in Finland's defence system with core tasks until the end of the 2050s.

While the starting point has been that Pohjanmaa-class vessels will be built in Finland for reasons of security of supply the contracts will, for their part, ensure the preservation of Finnish shipbuilding expertise, particularly in terms of surface combatants and state vessels. The domestic employment effect of the contract will be about 3600 person-years. The domestic employment effect of industrial cooperation is about 75 person-years.

Pohjanmaa-class vessels to be built in Rauma

Since 2016, the Defence Forces have negotiated with Rauma Marine Constructions Oy (RMC) on the construction of Pohjanmaa-class vessels at RMC shipyard in Rauma. Before the construction contract, a letter of intent and a design contract were concluded with RMC.

The contract to construct surface combatants will include the final design and construction of four seaworthy vessels. According to the contract, RMC and its subsidiary RMC Defence Oy will build hulls of four Pohjanmaa-class vessels and integrate systems in them in cooperation with the system suppliers.

The vessels will be designed and constructed in Rauma, and Finnish and foreign companies will be subsystem suppliers and subcontractors. While the actual construction phase will be staggered over 2022-2025 the class will be fully operational by 2028.

A prerequisite for concluding the construction contract was comprehensive risk mapping and risk management work as well as cooperation at the Government level when the contract package was prepared. The stability of the yard's ownership base will be ensured and risk factors related to the ownership of the company will be managed through an agreement with the yard's owners. The completion of the ship class will be closely followed from the perspective of military performance and the yard's operational capacity.

Saab will supply the combat system

Saab was selected as the supplier of the combat systems for Pohjanmaa-class vessels. The contract includes four integrated combat systems installed on board ships, consisting of sensors, weapons and command systems. The combat system supplier also undertakes to integrate the systems which will be supplied by the Defence Forces.

At the end of 2016, the Finnish Defence Forces' Logistics Command sent requests to 12 companies to participate in the tender procedure to deliver a combat system for the Squadron 2020 vessels. Eight companies sent a request for participation; of these, Atlas Elektronik from Germany, Lockheed Martin Canada and the Swedish Saab were selected for the next stage. The Finnish Defence Forces' Logistics Command sent to these three companies a preliminary invitation to tender in 2017. Saab performed best in the comparison of the tenders.

In addition to the package to be procured from Saab, Pohjanmaa-class vessels will be equipped with a surface-to-air missile system, surface-to-surface missile system and a torpedo weapon system. Naval guns and decoy launchers will be removed from Hamina-class fast attack missile crafts and installed on the new vessels.

Propellers and propeller shafts from a domestic supplier

Minister of Defence Kaikkonen authorised the Defence Forces Logistics Command to make a contract with the Finnish company Aker Arctic Technology Oy on the design, supply and integration of propellers and propeller shafts for Pohjanmaa-class vessels. Aker Arctic Technology Oy has been developing propellers under the Defence Forces' leadership since 2015.

Costs of constructing Pohjanmaa-class vessels

A total of EUR 1 232 million was allocated to the Squadron 2020 project in the 2018 budget. The share of the construction contract to be concluded with Rauma Marine Constructions Oy is EUR 647.6 million and the share of the propeller shaft contract with Aker Arctic Technology Oy is EUR 27 million. Price of the Saab combat system is EUR 412 million.

The total cost of the Squadron 2020 project is EUR 1 325.48 million, which includes the EUR 22 million risk reserve for joint acquisitions and the EUR 83 million for the ITO20 anti-aircraft missile system already purchased for the ship class. The total costs are influenced by the increased price of the construction contract, the additional costs caused by the preparation and prolongation of the contract, the narrowing content of the contract, and the price reduction already taken into account but not achieved in the budget. In order to provide sufficient resources for product support and spare parts necessary for implementing the project, alterations during construction, ammunition, and project costs, the procurement authorisation needs to be increased by EUR 93.48 million in the third supplementary budget for 2019 to ensure the implementation of the Squadron 2020 Project.

The life cycle costs of Pohjanmaa-class vessels are similar to those of the vessels scheduled for decommissioning. They will be covered by the annual operating cost funding of the Defence Forces.

Finland will have service and maintenance capabilities

Minister of Defence Kaikkonen has decided to conclude an industrial cooperation agreement with Saab. The obligation of industrial cooperation for the Squadron 2020 combat system was imposed in June 2017, corresponding to at least 30 per cent of the combat system's procurement value. Establishing service and maintenance capabilities for vessels and their systems in Finland, industrial cooperation involves six domestic companies and the Defence Forces.

Inquiries:

Project Coordinator Lauri Puranen, the Ministry of Defence, tel. +358 295 140 403;

Captain (Navy) and Planning Officer Janne Muurinen, Navy Command, tel. +358 299 800 (switchboard).

Major General (Eng.) Kari Renko, Deputy Director at Defence Forces Logistics Command, tel. +358 299 800 (switchboard).