Letter from the Secretary of State for
DefenceModernisation of current arrangements for warship
repair and maintenance (21 January 2001)
I wrote to you on 18 April about the start of
negotiations with Devonport Management Ltd (DML), Babcock Rosyth
Defence Ltd (BRDL) and with Fleet Support Ltd (FSL) about how
we can modernise current arrangements for warship repair and maintenance.
The purpose of this letter is to bring you up to date on how the
initiative is progressing.
Over recent months we have been working closely
with the Trades Unions and they have now submitted proposals for
alternative ways of approaching this initiative. I welcome their
positive approach and shall continue to work with them over the
coming months to assess their proposal in detail.
In parallel, we are signing non-binding Memoranda
of Understanding with the Dockyard Companies to explore in more
detail the indicative proposals we received from them last year.
The purpose of the MOU is to define the scope of the proposed
package of work for discussion at each of the sites to determine
the potential for contractor involvement. For Devonport and Clyde
Naval Bases, this would include the possibility of entering partnering
arrangements with DML and BRDL covering waterfront engineering
and logistics services to the Fleet together with property and
The aim would be to build upon the synergies
between the Naval Bases and the Dockyards, to implement rationalisation
and produce efficiencies in the support to the Royal Navy. As
part of this, the companies have also indicated a willingness
to renegotiate current contracts placed with them, to allow the
early introduction of competition for all surface ship repair.
At Portsmouth, the discussions also include
the proposed move of Vosper Thornycroft's steel warship building
facility from Woolston, Southampton to Portsmouth Naval Base,
to a site currently occupied by FSL. Discussions with FSL will
focus on possible renegotiation of the current contract. This
should allow them to restructure their business to become a more
fully competitive repair enterprise and to expand their role in
the provision of facilities management. There is also a possibility
of partnering arrangement with Naval Base for the provision of
fleet maintenance and support.
Issues such as operational capability, safety
and nuclear authorisation will all be carefully considered and
any new arrangements will have to satisfy both MoD and external
parties, that these will not be compromised. A key objective of
our strategy is to maximise competition in the warship repair
market, thereby encouraging the existing companies to improve
productivity. Our proposed approach supports this aim and should
maintain the commercial viability of the companies against a reducing
volume of warship repair. Withdrawal from the market by any of
the existing players would be detrimental to competition and could
jeopardise MoD achieving value for money in the longer-term.
These proposals are likely to affect staff employed
at the Naval Bases and could involve transfers to the private
companies. Their future employment and terms and conditions of
service would be covered by the Transfer of Undertakings (Protection
of Employment) Regulations, known as TUPE. We have involved the
Trades Unions closely in our discussions through the establishment
of a joint Working Party, and we shall, of course, continue this
as we move forward with both the Trades Unions and the company
Although there are difficult issues still to
consider, I hope that our work to modernise warship maintenance
and support will help to secure the long term future of the dockyards
and Naval Bases.