CONSERVATIVE
New Forest East

‘MoD FACES PRESSURE OVER TENDER FOR £1bn NAVY CONTRACT’

By Sylvia Pfeifer and Jim Pickard

Financial Times – 11 February 2019

The Ministry of Defence has come under renewed pressure over its decision to put out to international tender a £1bn contract to build support vessels for the Royal Navy amid fears of job losses at British shipyards. Julian Lewis, a Conservative MP and chairman of the Commons Defence Select Committee, has written to Stuart Andrew, the Minister for Defence Procurement, asking why the government did not classify the three auxiliary vessels as warships.

Unions and shipbuilders have repeatedly pushed for the vessels, known as fleet solid support ships, to be considered as complex warships, which would exempt them from EU laws preventing protectionism. Mr Lewis pointed out in his letter that Italy and France classified their equivalent ships as warships and used a singlesource procurement process.

"We should be grateful if you could explain what the potential benefits were that led to ministers' apparently perverse decision, which is to the detriment of UK companies and workers,"

he wrote.

The three ships will support Britain's aircraft carrier fleet with provisions and munitions. The £1bn contract could be a bridging programme for UK yards between the end of the carrier programme and the first overhaul of the HMS Queen Elizabeth. Gavin Williamson, the Defence Secretary, is to confirm today that the carrier will be deployed to the Pacific as part of a policy to stand up to those who "flout international law" and "may lead us to intervene".

However, the MoD has stuck by its decision to put the contract out to international tender as a way of reducing costs. Four international shipbuilders, along with a British consortium comprising BAE Systems and Babcock International, were shortlisted in December to compete for the contract. The other companies are Italy's Fincantieri, Spain's Navantia, Japan Marine United Corporation, and Daewoo Shipbuilding and Marine Engineering of South Korea.

Unions have repeatedly called on the department to reconsider. Babcock said last week it was cutting 150 jobs at its yard at Rosyth in Fife as work on the aircraft carriers starts to wind down. Steve Turner, the assistant general secretary of the Unite union, said it would be:

"a gross betrayal of a skilled workforce and British manufacturing if the government continued with its obsession to award such work to overseas shipyards".

The Defence department said:

"We are required by law to procure the fleet solid support ships through open international competition ... The final decision regarding the winning bid will be made in 2020."