Strategic Sealift (Hansard, 21 October 2002)

§ Dr. Moonie

The reasons for the Ministerial Direction on the Roll-On Roll-Off ferry (RORO) Strategic Sealift are as follows. In October 2000, AWSR Shipping Ltd52W were selected as the preferred bidder in the PFI competition to provide the Ministry of Defence with a strategic sealift service of six ships. Their bid involved subcontracts with the German company Flensburger for four ships and Harland & Wolff for two. The bid had the particular advantage of early delivery. However, as my right hon. Friend the Secretary of State for Defence, (Mr. Hoon) announced on 9 March 2001, Official Report, column 359W, to my hon. Friend the Member for Hendon (Mr. Dismore) difficulties arose in the detailed commercial arrangements which could have threatened the timely completion of the PFI negotiations and early delivery of the service to the MOD. My right hon. Friend, Mr. Hoon, therefore decided that the MOD would take over the commercial shipbuilding contract with H&W, as part of the overall PFI arrangements. The contract would be managed by AWSR and on delivery of the ships to them, AWSR would provide the full six ship service on PFI terms.

This approach was not foreseen as part of the original PFI deal and officials were concerned about the potential risks to the MOD arising from the decision. Ministers judged that, on balance, these risks were outweighed by the risk of losing the benefits of the original AWSR bid involving H&W, including timely delivery.

The procedures surrounding Ministerial Directions and the responsibilities of Accounting Officers in this area are set out in the Accounting Officer Memorandum. The Memorandum requires an Accounting Officer in receipt of a Direction from a Minister to comply with his instructions. The Accounting Officer is then required to inform the Treasury of what has occurred and should communicate the papers to the Comptroller and Auditor General (C&AG) without delay. On receipt of such material it is for the C&AG to determine what action to take. These procedures exist to protect the relationship between Ministers and officials while at the same time enabling the C&AG to consider, on behalf of Parliament, whether further investigation is required.

The circumstances surrounding the RORO Direction were duly communicated to the Comptroller and Auditor General and we understand that the C&AG 53W subsequently conveyed them to the Chairman of the Committee of Public Accounts. As the established procedures have been correctly followed, I am withholding the advice tendered by my Accounting Officer on 8 March 2001 in accordance with Exemption 2 of the Code of Practice on Access to Government Information, relating to internal discussion and advice.