MOD Halts Frigate Procurement – Lack of Compliant Bids Or Lack of Cash?
Another one of the announcements made just before the UK parliament went into summer recess was around a major Ministry of Defence procurement for Royal Navy Type 31e frigates. The procurement was halted, with the MOD claiming that there were “insufficient complaint bids for an effective and robust competition”.
Some industry websites disputed that explanation – as the “Save the Royal Navy” site said, “this seems difficult to reconcile as there are at least two strong industry teams offering alternative options. As recently as 13 July, the Babcock “Team 31” were issuing invites to industry delegates to their Bristol Suppliers’ Conference with the clear assumption that the project was on track. Citing commercial sensitivity, the MoD will not give the specifics behind the failure to meet their requirements.no compliant bids were received”. Experts reckoned that a BAE Systems led consortium was also expected to bid.
Going back to the announcement of the procurement last September, minister Harriett Baldwin released plans for the procurement, saying that “the competition, unveiled by senior leaders from the Ministry of Defence, Royal Navy and Defence Equipment & Support (DE&S), will boost the UK shipbuilding industry and provide the route to grow the Royal Navy fleet”.
Interestingly, the announcement also said that a “price cap has been set of no more than £250M each for the first batch of five frigates. In line with standing UK policy on warships, they will be built in the UK. They could be built in a way which could see them shared between yards and assembled at a central hub”.
The timeframe was also defined. “The first ships are set to be in service by 2023. Shipyards will be encouraged to work with global partners to ensure the vessel is competitive on the export market”.
But the recent and sudden MOD announcement from DE&S took most by surprise. Others disputed the “compliance” justification, suggesting that in reality, Gavin Williamson, the nakedly ambitious defence secretary, had failed to get enough new money from Treasury to support all the equipment contracts that are needed and wanted by the military.
The Ministry then said that there were “no changes in our plans to procure a first batch of five new Type 31e frigates to grow our Royal Navy. We still want the first ship delivered by 2023 and are confident that industry will meet the challenge of providing them for the price tag we’ve set. This is an early contract in a wider procurement process, and we will incorporate the lessons learned and begin again as soon as possible so the programme can continue at pace.”
It may well be that the suppliers could not meet the £250 million target, and thought that as has happened many times in the past, MOD would find a bit more cash. But perhaps this time MOD is calling industry’s bluff, and showing that they are serious about the cost constraints? That wouldn’t be a bad thing in the long run. Anyway, the evidence will come when we see if and when the procurement process restarts. The delay can’t be very long we suspect if the 2023 target is a serious intent.
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