HC Deb 21 December 2000 vol 360 cc250-1W
Mr. Chidgey

To ask the Secretary of State for Defence when he expects to place the Design for Manufacture contract for the Type 45 Destroyer programme with BAE Systems; how many companies capable of bidding for the follow-on ships of the class have made representations to his Department on the subject; and what steps he has taken to ensure that this contract will contain adequate safeguards to ensure an equitable basis for competition for the follow-on ships. [143035]

Dr. Moonie

[holding answer 15 December 2000]: The contract for the Demonstration and First-of-Class Manufacture (DFM) was placed with BAE Systems Electronics, the nominated Prime Contractor for the Type 45 programme, on 20 December. As I announced on 11 July 2000, Official Report, column 701, the design will be capable of evolutionary improvement through an incremental acquisition plan. This will enable the required capability to be inserted during the class build and provide growth paths to enable future capability insertion over the life of the class.

Prices for changes to specification will be negotiated in the usual way and be subject to affordability criteria. The contractual Maximum price represents the limit of our cost exposure and the contract contains strong incentives for the contractor to deliver at a lower price. The hon. Member will be pleased to note that the SMART approach adopted by the MOD provides the best opportunity to deliver additional capability into the programme without increasing the price.

The DFM contract covers the construction of the first three ships of the class only. Sub-contractors must now reach satisfactory agreements with the Prime Contractor to secure the opportunities offered to them under the contract; the MOD will—through its involvement in the Integrated Project Team—ensure that these negotiations are conducted fairly. MOD agreement to all significant sub-contracts will be required.

The BAE Systems Type 45 Prime Contractor and MOD have received an unsolicited proposal from BAE Systems Marine concerning the procurement approach to the Type 45 programme. The proposal will be evaluated and the MOD will consult with other interested Departments before coming to a conclusion.

Plans are to seek bids for the next batch of three ships around 2004. BAE Systems Marine and Vosper Thornycroft have expressed an interest in bidding for this work. Bids for work on the follow-on ships should be made to the Prime Contractor at the appropriate time.