The Secretary of State for Defence (Des Browne): The
House will wish to be aware of an update to the alternative
contracting arrangements for surface warship maintenance and
repair. These arrangements were signalled as part of the wider
defence industrial strategy and today's announcement is an
important step towards ensuring that the capability requirements
of the Royal Navy continue to be met now and in the
future.
In
2004, the Ministry of Defence (MOD), in consultation with
industry, launched a study (the Surface Ship Support Study) to
identify the optimum approach for the future maintenance and
repair of surface warships (aircraft carriers, major amphibious
vessels, destroyers, frigates and mine warfare vessels) that
would deliver the most efficient, effective and sustainable
support policy and offer best value for money for defence as well
as to taxpayers. Previously, surface warship upkeep contracts had
been awarded following competition while operational (or fleet)
time support was delivered through partnering arrangements under
the Warship Support Modernisation Initiative. While these
arrangements have delivered value for money to the MOD, force
level reductions coupled with over-capacity in the surface ship
repair market prompted a review.
In
2005, the study concluded that the option best able to meet the
needs of both the Department and industry would be the formation
of a surface warship support alliance, which would include
current providers of surface warship upkeep and fleet time
support. To take this forward, the MOD entered into detailed
dialogue with industry to explore the feasibility of delivering
such support through an alliance. My predecessor's written
ministerial statement of 14 February 2006, Official
Report, column 72–73 WS, announced this exploratory phase.
During this time, competition policy would be suspended to enable
the alliance concept to be developed and tested progressively in
a controlled manner.
An
order was made by the then Secretary of State for Trade and
Industry (now Business Enterprise and Regulatory Reform)
excluding the maintenance and repair of surface warships from the
UK Competition Act 1998. While good progress has been made on
exploration of the options, it has been necessary to review these
in the light of emerging findings from the naval base review and
the formation of Babcock Marine and the Joint Venture between BAE
Systems and VT. As a consequence, the exploratory phase has been
extended for up to one year. This extension will have no impact
on current and future support of complex warships.
An
MOD project team will continue to take this work forward with the
clear objective of identifying the optimum solution that would
provide effective, affordable and sustainable support to Royal
Navy surface warships.
The
new contracting arrangements promote a sustainable industrial
base that retains key operational support and system upgrade
capabilities within the UK, and are therefore vital to our
ability to maintain and support the Royal Navy. We will continue
to work closely with industry in a spirit of transparency and
trust to improve the delivery of surface ship support, securing
the capabilities of the Royal Navy into the future.
