The revelation on 24th July that the Type 31e frigate programme had been abruptly halted has given rise to intense and largely inaccurate speculation about why this has happened. Further investigation strongly suggests the hold up is purely a technicality in the bidding procedure, rather than anything more serious.
Consultation with both naval and industry sources confirms that the Type 31e bidding process is likely to be restarted shortly, with the competitors asked to resubmit their tenders in a slightly different manner. To run a fair competition where margins are very tight and differentiation between the bids is small, demands a very thorough, fair and by-the-book process.
This is more a case of “computer says no” than “Chancellor says no”.
When the news that the bidding process has been stopped became public, the Ministry of Defence stated the bald facts that there were “insufficient compliant bids for an effective and robust competition”. When asked to provide more detail, they refused, citing “Commercial sensitivity”. Unfortunately, this opaque approach has lead to open season for journalists and commentators up and down the land to indulge in all kinds of guesswork and theorising. A lack of openness and a track record of procurement failures leaves few people willing to trust the MoD anymore when they say the “process will begin again as soon as possible”, even if true.
There is no doubt the delay is unfortunate and unwelcome but there has been considerable over-reaction. Unions are calling it “a body blow to many members”. The particular political insanity surrounding Scottish shipbuilding has seen apoplectic SNP MPs calling it “utterly shocking”.
We have always maintained an open mind about the Type 31e, recognising the merits of a cheaper ship procured outside the normal channels with export potential. We also recognise the very tight timeline and rock bottom price is an immense challenge. Despite the concerns, the people who matter in the RN and British industry consider it a credible and attainable proposition and have devoted a great deal of time and effort in the bidding process.
Some of the cynicism about the project’s suspension has led to comments that include:
- There is no money so technicalities have been used as an excuse to axe the project.
- The timing was deliberate political decision so it would emerge just when Parliament went into recess for the summer to minimise the fallout.
- BAE Systems/Cammell Laird are incapable of building affordable warships, wanted more money and their Leander bid was too expensive.
- Leander is just a smokescreen for BAE Systems who want the project to fail and have used influence in government to undermine the process.
- No one can make any profit or a credible ship for the £250M price cap so there were no bids.
- The MDP review is in chaos and the MoD is too incompetent to manage the tendering process.
None of this is true.
It should be noted that the National Shipbuilding Strategy (NSbS) is not being considered as part of the MDP review and is a government-wide initiative that goes beyond just the MoD and the Navy. Some may point out that the MoD is more than happy to run single source procurements when it suits them but Type 31e is a pathfinder project for the NSbS, with its emphasis on competition.
The contract to build the five ships is due to be awarded by 31 March 2019. The clock is ticking down but there still remains 8 months for the process to be restarted, the new bids to be assessed and the decision to be made. The RN remains optimistic that new ships will be ready to replace the first Type 23s when they go out of service. Type 31e has just encountered its first choppy seas but perhaps not the catastrophic storm that has been reported.