Aircraft Carrier Procurement (Hansard, 21 November 2001)

§ Lord Bach

Assessment work on the new carrier project began in November 1999 when contracts were awarded to two competing consortia headed by BAE Systems and Thales Naval Ltd. The first stage of the assessment was completed in June this year.

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Since then officials have been working to determine the most efficient and cost-effective way forward for the remainder of the Assessment Phase, taking into account the views of both consortia about the amount of work required to minimise the level of risk in the CVF programme.

On the basis of that work, contracts have been signed today for both BAE Systems and Thales Naval Ltd to proceed to Stage 2 of the CVF assessment phase.

For the next 12 months, until November 2002, the competing consortia will concentrate on refining their designs and on taking key trade-off decisions. During this period, there will be a continuous assessment of the two consortia's work, leading to an announcement of a single preferred prime contractor in early 2003.

The preferred consortia will then continue assessment work through the summer of 2003 in order to provide the robust cost, time and performance information needed to make the main investment decision. This will allow us to make a decision to place a formal build contract in early 2004. The selected prime contractor will be expected to maintain the time, cost and performance proposals agreed at the end of the assessment phase. Following the announcement of a preferred contractor, there will be maximum competition at the sub-contractor level to ensure that robust prices are achieved.

This approach reflects a sensible revision to the original procurement approach envisaged for the future carrier project. By applying smart procurement principles, it will help to ensure the maximum potential for competition throughout the remainder of the assessment phase. It will ensure that we achieve best value for money for the taxpayer. As part of the new approach, we will make around a further £20 million available to the contractors during the assessment phase.

The in-service dates of the two new carriers remain unchanged at 2012 and 2015.

Both BAE Systems and Thales have welcomed this new approach which demonstrates innovative thinking to deliver value for money. It re-affirms in the strongest possible terms this Government's commitment to ensuring that our Armed Forces are equipped with battle-winning equipment. Combined with the future joint combat aircraft, the carriers will provide the UK with a formidable force projection capability.