Letter from the Secretary of State for
Defence to the Chairman (30 January 2003)
FUTURE AIRCRFT CARRIER
I will be announcing today the decision on the
outcome of the competition process for the Prime Contract for
the Future Aircraft Carrier (CVF) programme. It follows on from
my announcment last September concerning the selection of the
Short Take Off Vertical Landing variant of the Joint Strike Fighter
as our preferred option to deploy on an adaptable Carrier design.
I have decided that, subject to further discussions
with all parties, the best means of delivering the carrier programme
is through an alliance approach in which BAE SYSTEMS is the preferred
Prime Contractor and Thales UK assumes a major role as the Key
Supplier. The Ministry of Defence will also engage in this alliance
to manage risks, contingency and provide assets for which we
are rightly responsible—such as the provision of suitably
trained manpower and the JSF aircraft.
I believe that this innovative approach allows
us to combine and exploit the resources and strengths of both
companies along with the skills and expertise of the MoD project
team to the maximum extent. The competition process has been highly
effective in encouraging innovation from both companies. It has
also provided a wealth of detailed analysis that underpins our
decision.
A programme of this complexity and scale necessarily
involves intensive scrutiny of technical specification, value
for money and the wider industrial benefits. I have reached this
decision based on two key results from the Continuous Assessment
process. First, to meet the required in Service Dates for the
Carriers, extra design resources will be required to carry out
the further work necessary before we the manufacturing stage can
begin. To achieve this objective in the timescale required, both
BAE SYSTEMS and Thales UK would need to augment substantially
their available design resources or capability.
Second, both BAE SYSTEMS and Thales UK have
performed to a very high standard. BAE SYSTEMS has displayed a
good understanding of the complexities of the project, in terms
of project management and prime contracting and have developed
a good relationship with all of the key shipyards, Thales UK meanwhile
provided a robust technical solution that offers good design flexibility.
To deliver value for money and provide the best capability in
the future, it is therefore essential that we harness the strengths
of both contractors. I believe that the alliance approach will
provide an effective and innovative way forward. The Alliance
will have both customer and suppliers working collaboratively
to achieve challenging targets, whilst sharing the risks and rewards
of the programm. BAE SYSTEMS and Thales UK have indicated their
willingness, in principle, to participate in an Alliance, and
further work will now begin with both companies to establish the
contractual details of how such an arrangement would operate.
The programme will now move forward to the next stage of the Assessment
phase, which will take CVF through the main investment decision
and the award of the build contract, as originally planned, in
Spring 2004. If, at that point, the alliance structure is judged
to be operating successfully, the Alliance will be permitted to
move into the demonstration and manufacture phase—and possibly
beyond for the through life support of the vessels. We remain
fully committed to achieving the declared in-service dates for
both ships, namely 2012 and 2015 respectively.
In terms of the shipbuilding element of the
carrier programme, we have concluded that the Carriers should
be built by a combination of four yards, namely: BAE SYSTEMS Marine
at Govan, Vosper Thornycroft at Portsmouth, Swan Hunter on Tyneside
and Babcock BES at Rosyth. However, we would not, at this stage
rule out the potential involvement of other yards. The precise
arrangements will need to be the subject of discussions with the
yards to determine value for money and workload capacity before
we are able to commit to a build contract in April 2004. Nonetheless,
the benefits for the UK shipbuilding industry and its related
supplier chain across the country are enormous. This project represents
a vast programme of work and should create or sustain up to 10,000
jobs in the UK.
I am confident that this approach represents
the best route to providing our Armed Forces with the impressive
and much enhanced capabilities they need.
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