HMS Sheffield Sinking Report

However, the Guardian has heard claims that the MoD had previously developed
an electronic countermeasure that could switch off the Exocet’s fusing
mechanism once the missile’s radar locked on to a warship. This would explain a
failure to detonate, but would have required the installation of a signal-receiving
mechanism while the missiles were under construction at Aérospatiale’s factory
in Toulouse.

Some RF/Proximity fuze defeat mechanism?
 
I somehow doubt there was an Excocet-specific bit of kit.
It's possible they meant the Type 675 anti-targeting jammer. I'm not sure however if these were fitted to the Type 42s in 1982. It was fitted to the Batch 2 Broadswords.
The older Type 670 'Bexley' though would still have been fitted to the Type 42 at that time.
 
Yikes, that's pretty damning about the command staff. Bar the speculation, I think most of the rest of it was known, certainly the damage control issues. In fact there was no point in the RN trying to cover up something that was being openly discussed at the time. Showing the issues were being addressed was much more likely to improve sales prospects.
 

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