Select Committee on Defence Appendices to the Minutes of Evidence


Letter to the Clerk of the Committee from the Ministry of Defence on Royal Ordnance (25 February 2002)

  I refer to your letter of 11 January concerning Royal Ordnance and apologise for the delay in replying.

  The Committee will be aware of the issues surrounding the closure of the Royal Ordnance Defence (ROD) facilities at both Bishopton and Nottingham. MOD considered then the issues surrounding security of supply and value for money and concluded that the additional cost of retaining these sites at taxpayers' expense could not be justified on strategic industrial grounds.

  In early 2001 ROD informed the Department that, as part of their company restructuring programme, they intended to close the Royal Ordnance Special Metals (ROSM) Facility at Featherstone. After internal consultation, we confirmed that once current requirements for Depleted Uranium (DU) munitions had been met, we had no reason to object to their intention to dispense with this industrial capability.

  The Committee will know that in 1999 the Department entered into a legally binding Framework Partnering Agreement (FPA) with ROD. In signing the Agreement both parties recognised that whilst continuing to meet the Department's contractual requirements, ROD would need to review their business and restructure the company facilities to deliver efficiencies, reduce overhead costs and thus meet the world benchmark prices that the Department expects to pay for munitions. Such reviews are, and remain, a matter for the Company. As you would expect, ROD has kept the MOD appraised of developments in its general thinking over the past two years, and we are aware that ROD is now conducting a further review of its manufacturing strategy, but we are not aware of any detailed findings and recommendations that they may come to. We understand that joint TU/ROD Management Working Groups are considering various options for the Birtley, Bridgwater and Chorley sites. The Department views this activity as a matter for the company, and does not intend to become involved at this stage.

  ROD has informed us that they are entering into an arrangement with Nitrochemie of Germany for the supply of propellant consequent upon the company's decision to close Bishopton. Again, the Department sees no reason to intervene with this decision.

  We have been notified by ROD that they are also closing their facility in Blackburn during 2002. We understand that the fuzing business carried out at Blackburn will transfer to the plant at Glascoed, South Wales.

  The Department has always considered value for money and security of supply to be key benefits of the FPA. The sourcing of raw materials and components for the munitions manufactured by ROD is a matter for the company, and they are fully aware of the requirement for a secure source of supply of components.

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