§ Mr. FrenchTo ask the Secretary of State for Defence if he will make a statement about his Department's proposals for the introduction of a defence fixed telecommunications system. [3033]
522W
§ Mr. PortilloGood communications are crucial to the efficient and effective operation of the armed forces. The defence fixed telecommunications system—DFTS—will provide, in a single UK-wide network, the telecommunications link and exchanges required by all defence users. It will integrate and rationalise the five existing UK networks, and provide connections to commercial networks and to those of allies. It will also reduce current equipment and manpower costs while achieving important operational benefits.
The invitation to tender invited bidders to consider solutions based on the principles of the Government's private finance initiative to enable the MOD to transfer to the private sector the ownership, operation and maintenance of the network and thus relieve the MOD of the economic risks associated with changing technology and patterns of usage. The contractor will therefore assume responsibility for providing services at the required levels of performance. Two consortia submitted best and final offers.
I am now able to announce that, subject to the satisfactory conclusion of contractual negotiations, I have approved the implementation and commercial management of DFTS services, under a 10-year contract with the INCA consortium, led by British Telecommunications plc, in conjunction with Lockheed Martin, OASIS and GEC-Marconi.
Under the PFI arrangements, INCA will make maximum use of the infrastructure serving other customers. The contract will be worth in the region of £700 million, which makes it the MOD's biggest PFI deal so far. Taut contractual arrangements will be negotiated to provide incentives for INCA to meet required levels of performance. We estimate that this will result in savings to the MOD well in excess of £100 million.
The implementation of the DFTS will entail placing under commercial management the work currently undertaken by staff in some 1,200 military and civilian posts at about 100 defence establishments throughout the UK. Detailed arrangements for this will be agreed during contracts negotiations.