MOD pause Type 31e Frigate procurement
In a surprise move on Tuesday, MOD announced that it has halted the Type 31e general purpose frigate programme launched last year. MOD cited the fact that it had received insufficient compliant bids in order to proceed and that the process would be paused pending internal review. The highly ambitious timetable committed MOD to announcing the two winners of a competitive design phase no later than the end of June, with a winning contractor announced by the end of March 2019. MOD have insisted that this latest development does not does not change the timing or scope of programme delivery, which envisages a first ship delivered by 2023. The competition to build five frigates for the Royal Navy at no-more-than £250m per ship was the flagship programme of the National Shipbuilding Strategy, launched in September last year and this development will be the cause of some internal embarrassment for the department. The competitive design phase was the first point that MOD would have committed any significant budget to the programme and the delay raises questions about how this align with the non-delayed Modernising Defence Programme, which is reviewing defence spending in the round.
Prime Minister and Defence Secretary visit North East
The Prime Minister took her Cabinet to the North East on Monday, when she visited Reece Group in Newcastle, which includes two NDI Member companies, Pearson Engineering and Responsive Engineering. Regional investments in transport and science were announced, while the Defence Secretary Gavin Williamson headed to Rubb in Gateshead to outline the benefits of defence to local jobs and industry. Echoing some of the sentiments from his Modernising Defence Programme update last week, Mr Williamson said that ‘A strong defence industry throughout the four corners of the UK is crucial to our economy as well as our national security, and Rubb UK are an outstanding example of our world-leading homegrown engineers in the North East…with this region benefitting from £100m of defence investment and in line for more business, it is playing a key role in ensuring our Armed Forces have what they need to protect our country from intensifying threats.’
Government publish National Security and Investment White Paper
On Tuesday the Government published the White Paper ‘National Security and Investment’, which sets out how risks arising from hostile actors acquiring ownership of, or control over, businesses or other entities and assets that have national security implications will be managed in future. This follows the National Security and Infrastructure Investment Review Green Paper, published in the autumn. While this covers only a small number of investment activities in the UK, for these cases the Government has set out its plan to allow for intervention as follows:
- That the Government will encourage parties to submit ‘valid notifications’ of transactions and other events that may give rise to national security risks.
- The ability for the Government to ‘call in’ investments and other events which may raise national security concerns in whichever sector they occur, including those events which have not been notified.
- If the ‘call-in’ power is used, the Government will undertake a full national security assessment which can take up to 30 working days, with the option of extending for a further 45 working days, or longer by agreement.
- At the end of the full national security assessment, if the Government concludes that national security is at risk, it has the power to impose necessary and proportionate remedies. This could include, in rare circumstances, blocking or unwinding a deal.
Recognising that certain national security considerations must be taken into account when considering foreign investment in strategic national assets, NDI’s response to the Green Paper was to urge the government to make sure that the resulting legislation did not overburden business or act as a disincentive to potential investors. NDI will again be responding on behalf of our members in due course to the White Paper consultation, which closes on 16 October. Members are invited to provide thoughts and feedback on the proposals before then in order to inform our response, which will be made available in due course.
MODERNISING DEFENCE PROGRAMME: Asked why only headline conclusions from the MDP have been published, Secretary of State for Defence, Gavin Williamson replied that ‘The MOD has consistently committed to sharing headline conclusions of the MDP before the summer. The Written Ministerial Statement I released on 19 July sets out those conclusions, and records the good progress that has been made since the launch of the program in July. As planned, the MDP will now move into a period of more detailed analysis and cross-Government discussion. During this period, we will consider how and where to adjust our policies and plans in response to our initial findings. We will then share more detailed conclusions.’
MODERNISING DEFENCE PROGRAMME: Asked how many phases he intends the MDP to have, Mr Williamson answered that ‘The MDP is an ongoing programme of work. It aims to deliver better military capability and value for money, so that Defence is configured to address the more complex threats we face, as well as achieving enduring affordability. Since its launch we have made good progress, as set out in the headline conclusions in the Written Statement published on 19 July. We are aiming to share more detailed conclusions following a further period of analysis and cross-Government discussion.’
MODERNISING DEFENCE PROGRAMME: Asked, with regard to the MDP, how much financial headroom MOD plans to find for additional modernisation, Mr Williamson answered that ‘…we are currently considering how to build on our already strong record, and drive greater efficiency through business modernisation. Only once we have done so will we be able to estimate the financial headroom that this will generate.’
DEFENCE TECHNOLOGY FRAMEWORK: Asked when MOD plans to publish a defence technology framework, Mr Williamson replied that ‘The Defence Technology Framework will be central to the MOD’s modernisation effort. It will set out the Department's key technology priorities and drive a more coherent approach to technology experimentation and exploitation that will inform strategy, investment and planning decisions across Defence.
The Department aims to publish the Framework in 2019 following appropriate consultation with our allies, national security partners across Government, and key suppliers in industry and academia.
COMBAT AIR STRATEGY : Asked how much investment his Department plans to provide to key UK design engineering skills and a means to generate UK Intellectual Property, Mr Williamson replied that ‘The Combat Air Strategy makes clear that Government is investing nearly £2 billion over 10 years in the Future Combat Air Systems Technology Initiative. This will mature the technologies of the future, develop UK Intellectual Property and will include those skills necessary to sustain UK operational advantage and freedom of action.’
COMBAT AIR STRATEGY : Asked whether there are any SMEs in Team Tempest, Mr Williamson replied that ‘The industrial prime contractors who form Team Tempest, alongside Government, are working closely with the UK's small and medium enterprises (and associated subject matter experts), academia and the supply chain to maximise the values laid out in the Combat Air Strategy. The Strategy makes clear that industry must leverage the best processes and technologies wherever they are found in the global supply chain and this includes small and medium enterprises.’
DEFENCE EQUIPMENT PLAN: Asked what steps MOD is taking to ensure the Defence equipment plan is affordable, Minister for Defence Procurement, Stuart Andrew replied that ‘We are committed to delivering large, complex and technologically challenging defence programmes to give our military the very best equipment. We recognise the financial risks in the equipment plan and are working to incorporate the recommendations of the National Audit Office and Public Accounts Committee's reviews of the Equipment Plan 2017 into our management of the Plan. Going forward, the Modernising Defence Programme aims to deliver better military capability and value for money in a sustainable and affordable way.’
DEFENCE EQUIPMENT PLAN: Asked what assessment he has made of MOD’s ability to make the remaining £8.1 billion saving from its equipment plan by 2027, Mr Andrew replied that ‘As the National Audit Office reported in January 2018, the Department had achieved £7.9 billion of a £16 billion savings target between 2010 and 2027, and had also identified potential savings to meet all but £0.5 billion of the remaining £8.1 billion over the next nine years. As such, we remain confident and committed to delivering this as agreed, and will report on progress in the Equipment Plan 2018 financial summary due to be published in the autumn.’
QE CLASS AIRCRAFT CARRIERS: Asked what recent assessment he has made of the ability of MOD to deliver the re-baselined cost of £6.2 billion for production of the two new aircraft carriers, Mr Andrew answered that ‘The Ministry of Defence keeps costs within the Queen Elizabeth Class Aircraft Carrier programme under very close scrutiny. The final cost of the programme will be subject to commercial negotiations with the Aircraft Carrier Alliance. The overall impact will only be clear once we have concluded our talks.’
MARITIME RADAR: Asked if MOD is assessing the feasibility of fitting the Australian CEAFAR radar on future British warships, Mr Andrew replied that ‘The Royal Navy and Royal Australian Navy, supported by their respective science and technology organisations (Dstl and Defence Science and Technology Group) completed a collaborative capability study this year into Active Electronically Scanned Array Radar technology (including CEAFAR). The study concluded that both Navies field world class Radar capabilities with exciting opportunities for science and technology collaboration.’
AIRBORNE EARLY WARNING AIRCRAFT: Asked what the status is of negotiations between MOD and Boeing over a possible contract to replace its six RAF E-3D Sentry airborne early warning aircraft with a fleet of Boeing E-7 Wedgetail aircraft, Mr Andrew replied that ‘The Ministry of Defence is considering options to meet its future Airborne Warning and Control capability requirements. No investment decisions have yet been taken and it would be inappropriate to comment further at this stage.’