The MoD has announced the award of Competitive Procurement Phase (CPP) contracts to bidders to enable them to develop their design and construction proposals for the £1.5Bn Fleet Solid Support ship project.
In line with the competition that was re-launched in May this year, four consortia have been awarded £5M each to refine their bids. Each consortium’s proposals will be evaluated in two phases that focus on Design/Feasibility and then Deliverability/Social Value (expenditure and employment in the UK) respectively. Assuming there is a viable bid, the winner is likely to be awarded the manufacturing contract around May 2023 with the intention that all three ships will be delivered by 2032.
The four consortia awarded CPP contracts include just one fully British entity, the others are heavily reliant on overseas expertise or shipyards. The MoD stipulates the contract will only be awarded to a UK company acting either solely or as part of a consortium.
Larsen & Toubro and Leidos Innovations
Larsen & Toubro are an Indian company based in Mumbai with experience in naval construction, including naval auxiliaries. Leidos Innovations is a subsidiary of a US-owned consultancy and employs 1,100 people in Britain. It is mainly known for the provision of managed IT services which includes contracts with the MoD.
Serco / Damen
Serco is a British FTSE 100 company providing large contract services to the government. In naval circles, they are best known for the provision of maritime services in the naval ports which is considered an example of a successful PFI, although their track record elsewhere is very mixed. Damen is a Dutch shipbuilder, primarily of tugs and small vessels but have built warships and auxiliaries for the Netherlands Navy and exported warships worldwide. Many of their vessels are constructed in eastern European yards where labour is cheaper.
Details of Team Resolute are already well publicised. Harland & Wolff, Belfast and UK naval architecture house, BMT provide British leadership. In reality, their proposal would be very reliant on their Spanish partner Navantia, to provide expertise, given H&W’s small workforce and lack of any recent shipbuilding experience. The first ship would probably be built in Spain with technology and skills transferred to Belfast to enable the construction of the later ships.
Team UK has made no public announcement about their bid but the team includes UK defence primes, BAE Systems and Babcock, allied with Cammell Laird shipbuilders. On paper, they would have strong public and political backing but there are question marks around available yard capacity and whether there are sufficient skilled workers ready to construct these 3 large ships entirely in the UK.
The addition of two ‘new’ bidders will certainly help the MoD present the process as properly competitive. The Serco and Leidos options would appear to rely exclusively on foreign shipyards with the domestic companies providing a British ‘figleaf’ to meet the MoD criteria. There could be some UK shipyard participation, but only if one or more is willing to hedge their bets and work with more than one consortium. Beyond the actual ship construction, there is also a significant value in the contract for the supply chain and UK industrial input may also be emphasised.
The MoD says a substantial amount of work on FSS must be done in the UK but refuse to say exactly the percentage of the contract they consider “substantial”. The unions and some politicians continue to be concerned that much of the work will be done overseas.
From the Navy’s perspective, delivery of the first vessel cannot come fast enough as the carrier strike group is dependent on the availability and reliability of a single ageing vessel, RFA Fort Victoria. Even if there was a willingness to license a foreign design, there are no FSS options that can be used off the shelf that would meet the very specific requirements of the RN and RFA. FSS must therefore be designed from scratch which explains why the bidders require time and funding for the development work and why construction will not commence for nearly two years.
This situation could have been avoided if the MoD had been able and prepared to award the FSS contract to the Aircraft Carrier Alliance so work could have commenced as soon as the aircraft carriers neared completion. The workforce and capacity would have been already largely been in place to build the ships, providing continuity as well as delivering the FSS when it was needed. The refreshed National Shipbuilding Strategy has not yet been published (possibly another announcement for DSEI 2021) but it will surely further emphasise the benefits of a continuous drumbeat of construction.