Rewritten – May 2001 HOT NEWS: August 2001

Moray Class Submarine

Program Status: Planned -- likely. The US Government is currently evaluating a scheme whereby Northrop Grumman Ingalls Shipbuilding will build two Moray 1400 class submarines designed by Rotterdam Dockyard Company Submarines (RDMS) and Nevesbu BV for the Egyptian Navy (EN).

Operational Requirement: The EN has a requirement for a modern submarine force to conduct anti-submarine and anti-surface warfare (ASW/ASuW) patrols in the Mediterranean and Red Seas. Additionally, the submarines are needed to counter the newer submarines being acquired by Iran (three Kilo class) and Israel (three Dolphin/Type 800 class).

Program Background: Since the early 1990s, the EN has been attempting to acquire Western submarines to replace the four Improved Romeo (Type 033) class that were transferred from China in the early 1980s. As recently as 1989, Egypt had a submarine force of 12 Romeo and Whiskey class submarines but age has reduced that number to the current four. The four Romeo class currently in service were modernized with Western weapons and sensor systems from 1993 through 1996. However, these units were built in the 1960s, and will need replacement within the next several years.

Egypt issued a Request for Proposal (RfP) for new submarines in September 1991, and since that time the program has been bedeviled by financial and diplomatic obstacles. The heart of Egypt’s difficulties stem from the fact that most of Egypt’s military procurements are financed by the US$1.3B it receives in US foreign military assistance (FMA), and the US is unwilling to allow these funds to pay for the purchase of non-American military equipment. Unfortunately for Egypt’s submarine acquisition efforts, US shipyards have not produced diesel-electric submarines since the 1960s. Egypt spent most of the past decade trying to obtain an affordable acquisition package that satisfies US content requirements. Listed below were some of the options that were initially considered by the EN:

1. Type 209 class: Under this proposal, Ingalls Shipbuilding (now Northrop Grumman) would purchase kits for two Type 209 submarines from Howaldtswerft Deutsche Werke (HDW), ship them to the US, and assemble the submarines in Pascagoula, Mississippi. Under this arrangement, approximately 60% of the effort would come through US content and be eligible for FMA funding, the remainder would require Egyptian National Defense Budget funding. In April of 1994, the US State Department granted Ingalls an export license for two Type 209 submarines, indicating that the shipyard was fairly far along in its planning. However, in June of 1997, Ingalls announced that it had withdrawn its bid from consideration. The value of the Ingalls Type 209 proposal was reported to be US$800M.

2. Scorpene class: In April 1997, Southwest Marine of San Diego, CA, teamed with Empresa Nacional Bazan (now IZAR) of Spain, visited Egypt to present their proposal to build two Scorpene class submarines fitted with US-made internals provided by Lockheed Martin Systems and EDO. The Southwest Marine offer was extremely attractive in that it involved a US content of between 80-86%; presumably achieved by conducting most of the hull construction in the US. On the other hand, the Southwest Marine/IZAR offer carried significant risk with an untried design and a new team in the submarine construction business. The Southwest Marine/IZAR proposal was reportedly valued at between US$600-700M.

3. Kilo class: Loral (now part of Lockheed Martin Naval Electronics & Surveillance Systems) and Rockwell (now Boeing) investigated teaming with Krasnoye Sormovo Shipyard in Nihzhny Novogorod, Russia to present an offer that would produce two Kilo class submarines fitted with US-made internals. The effort met early and strong resistance from the US Congress and State Department, and was never seriously considered.

4. Agosta B class: There were several reports that Pakistan offered its Agosta B design to the EN for a total of US$119M for two units.

5. Zwaardvis class: The Royal Netherlands Navy decommissioned its two Zwaardvis class submarines in 1995 after 23 years of service, and in 1996 they transferred the submarines to Rotterdam Dockyard Company (RDM) for re-sale. In 1998, the press reported that Egypt, the Netherlands, and the US were involved in advanced negotiations to put together a deal for US FMA funding to purchase, refit, and modernize the two Zwaardvis class submarines for Egyptian service. Reportedly, the two submarines would have been refit and modernized by Ingalls with combat systems supplied by Lockheed Martin. This proposal probably did not have the level of US content needed to be financially feasible and, the EN was more interested in new submarines.

6. Moray class: Nevesbu BV and Rotterdam Dockyard Company Submarines (RDMS), developed the Moray design in the early 1990s, and have had no success in finding prospective customers. At IMDEX ASIA-99, held in Singapore in May of 1999, RDMS teamed with Lockheed Martin Undersea Systems (with its SUBICS 900 combat system) and Ingalls Shipbuilding to address the Egyptian requirement. At IMDEX, members of the team were optimistic that this was the best solution, however, had major political hurdles to cross for final approval.

Of the six proposals received by the EN, only the Moray and the Zwaardvis classes were seriously considered. The biggest detractor for the Zaardvis class was its relative age. The EN did not want to buy more used submarines to face a similar obsolescence problem a decade later. By late 1999, the EN decided that the Moray design constructed in US would be the best solution. Weapon systems availability, crew training, and program financing appear to have convinced the EN that the Moray is the most logical choice for the new submarine.

Program Acquisition Plan: The program acquisition plan for the Moray submarine is entirely dependent on acquiring necessary funding, RDMS design guarantees, and US Government releasability for technology transfers to the EN. The financing hurdle has apparently already been cleared, as funding will be reportedly be available by October 2002. On 15 September 2000, Egypt signed a letter of intent to procure two Moray 1400 class submarines from Ingalls Shipbuilding. The EN is now free to sign a Memorandum of Agreement (MoA) with RDMS for design and performance guarantees. RDMS has been reluctant in the past to guarantee a design that has never been used, however, considerable pressure will probably be applied by Litton Ingalls Shipbuilding and Lockheed Martin Naval Electronic & Surveillance Systems (NE&SS) to reach some type of guarantee. More than likely, some type of quality assurance issues will be guaranteed for the EN in order to complete this deal.

Currently, the technology releasability issue (for export license) is being examined by the US Government (primarily by the US Navy and the Defense Security and Cooperation Agency {DSCA}) to ensure there is no inadvertent technology transfer to the EN. It also must be noted that the US Navy is reluctant to allow US shipbuilders to produce diesel submarines, and the Ingalls technology compliance plan must be agreed upon by US Navy officials for final approval. However, US Navy reluctance will probably be overcome by diplomatic and industrial pressure, and program approval is anticipated by mid-2002, with a construction contract by the end of the year. The first unit (Batch I) will probably start construction in 2003, with delivery to the EN in 2006, and unit two (Batch I) delivering in 2008.

Two additional units (Batch II) will probably be ordered around 2008, with construction commencing in 2010. Batch II will also consist of two units and be delivered by 2013 and 2014. All four units are expected to replace the four Improved Romeo class on a one-for-one basis.

Estimates are that the first two submarines will cost around US$400M each, and as of 1999, only US$300M from its US FMA allowance was destined for the submarine acquisition. Additional funding for units one and two will be obtained in 2002 by reprioritizing the existing budget. Funding for units three and four is not anticipated until around 2008. The following acquisition plan, for a buy of four units valued at an estimated US$400M each, is projected:

• Contract Design 1999

• Construction Contract RfP 1999

• Construction Contract Award (Batch I) 2002

• First of Class Commissions 2006

• Hull Two Commissions 2008

• Construction Contract Award (Batch II) 2008

• Hull Three Commissions 2010

• Hull Four Commissions 2011

Design and Construction Considerations: When the EN released its RfP in September 1991, it listed specific capabilities and financing terms as identified below:

• The design would have at least three years of proven operational experience.

• The submarines will be able to fire the Boeing Harpoon surface-to-surface missiles (SSMs) and the Raytheon Mk-37 torpedoes.

• Support would be provided in crew training, spares, and documentation.

• Program financing.

The RDMS Moray design appears to meet the criteria as specified by the EN, with the exception of the three years of operational experience. This is primarily the reason the EN is insisting on design and performance guarantees. More than likely, the new submarine will have the following systems installed:

• Six 21-inch (533mm) torpedo tubes for the Boeing Harpoon and Raytheon Mk 37 torpedoes.

• Lockheed Martin NE&SS- Undersea Systems SUBICS 900 Combat Management System (CMS).

• Litton Marine Systems BPS-15 surface search radar.

• Condor Systems AR-900 Electronic Support Measures (ESM) suite.

• An undetermined bow-mounted cylindrical and flank arrays; intercept and mine avoidance sonar.

• Kollmorgen Model 76 Attack and Search periscopes.

Key Personnel:

Vice Admiral Ahmed Saber Selim

Commander, Naval Forces

Ras El-Tin Naval Base

Alexandria, Egypt

Mr. Grant Corcoran

Manager, International Business Development

Lockheed Martin NE&SS – Undersea Systems

9500 Godwin Drive

Manassas, Virginia 20110-4157

United States

Tel: + 1 703 367 3505

Fax: +1 703 367 5239

E-mail: grant.corcoran@lmco.com

Website: http://www.lockheedmartin.com/manassas

Captain P. J. Weisfelt, RNlN (Ret.)

Manager, Special Submarine Projects

RDM Submarines b.v.

Heijplaatstraat 21

P.O. Box 801

3000 AV Rotterdam

The Netherlands

Tel: + 31 10 487 2832

Fax: + 31 19 487 2391

E-mail: p.weisfelt@rdmsubmarines.com

Website: http://www.euronet.nl/users/rdm-sec/

Mr. Joe D. May

Director, International Programs

Northrop Grumman Ingalls Shipbuilding

P.O. Box 149

Pascagoula, Mississippi 39568-0149

United States

Tel: + 1 228 935 4662

Fax: + 1 228 935 5710

E-mail: MayJD@ingalls.com

Website: http://www.ingalls.com

Mr. Vern Dale

Vice President, Business Development & Product Support

Condor Systems

2133 Samaritan Drive

San Jose, California 95124

Tel: + 1 408 879 2735

Fax: + 1 408 558 3818

E-mail: vernd@condorsys.com

Website: http://www.condorsys.com

Miss Karen A. Bedell

Director of International Programs Navy Missile Systems

Boeing Information, Space and Defense Systems

M/C S598-2041

St. Louis, Missouri 63166

Tel: + 1 636 947 2706

Fax : + 1 636 925 5775

E-mail: Karen.a.Bedell@boeing.com

Website: http://www.boeing.com

Mr. Doug Jones

Marketing Manager

Electro-Optical Division

Kollmorgen Corporation

347 King Street

Northampton, Massachusetts 01060-2390

United States

Tel: + 1 413 586 2330

Fax: + 1 413 586 1324

Website: http://www.eo.kollmorgen.com/