30 May 06. The decision By the MoD to mark time on its decision to award BAE SYSTEMS the right to preside over Land Systems contracts in the U.K. appears to be paying off. In the Defence Industrial Strategy, where sources suggest that BAE wanted the FRES PSI role included, the MoD held off and kept ABRO’s independence intact, pending the ‘approval process’ of BAE to perform in Land Systems, a new area of expertise for the company.
The purchase of AlvisVickers for a reputed £320m give or take the already discounted shareholding by BAE, was regarded as the trump card to shut out previous bidder, General Dynamics from the UK Armoured Vehicle market. The subsequent multi-billion dollar purchase of United Defense appeared to cement BAE’s role in Land Systems from a standing start in the U.K. and international markets. From a stated $350m of Bradley contracts, the Reset Program has now earned BAE a staggering $3bn in revenues from a purchase which some said the company had overpaid.
Three factors have hampered BAE’s drive in the U.K. to establish precedence in Land Systems; one, the perceived lack of due diligence to establish the voracity of forecasts made by the previous management in the future order book, saved by Hägglunds, two, the lack of capability to build the Warrior APC at Telford as the majority of the equipment had been pre-sold due to loss making contracts for Airbus spars in particular and third, the delay in the final FRES requirement to be set in stone.
BAE has admitted to BATTLESPACE that it had problems at its U.K. operations following acquisition from the Editor last year. In addition the Vickers plant at Newcastle is established for building 60+ tonne vehicles and at the end of 2009 has little or now work after Terrier and Trojan.
Another factor has caused the resurgence of ABRo and it in-house ability to maintain and manage the fleet – Iraq. As in the U.S. with its Bradley fleet and current huge multi-billion dollar reset programme, the U.K. Warriors are to quote a source. ‘knackered’ and require a huge upgrade and reset programme.
The WLIP, Warrior Upgrade Programme was divided into two sections, the turret requirement, discussed later and the electronic architecture and HUMS Programmes. Originally slated as two different requirements, the DPA is now considering merging the two so that the work can be carried out simultaneously.
ABRO is already the leader in the servicing of the fleet and thus has the required expertise to carry out this work, albeit under sub-contract from BAE which has the Design Authority. Given that ABRO would perform the majority of the engineering work, as it is doing on the FV430 upgrade, what is the true worth of the BAE added value?
BATTLESPACE understands that there is an internal split at BAE as to the way forward, the Telford workforce is lobbying for Telford to be the FRES Centre of Excellence, given its Warrior expertise, albeit without the required machine tools and the Newcastle Vickers workforce say that Newcastle is the uncrowned king of tank production in the UK and therefore impervious to shut-down, the fact that it is close to the Prime Minister’s Sedgefield constituency is another factor to be taken into account given that the current work runs out in 2009, the forecast election year!
The WLIP, Warrior Improvement Programme, and the new turret in particular should have saved Newcastle from layoffs, but, the decision by the MoD to freeze all Warrior funding for 2006 and the rise of ABRO as a ‘contractor of choice’ for Armoured Vehicles in the U.K., creates a problem for BAE; they cannot do the 430 contract without ABRO and thus in doing so automatically advertise ABRO’s considerable expertise in this area. Indeed sources suggest that ABRO should have been awarded the FV430 upgrade contract at least two years ago at a considerable discount to BAE’ bid, but political pressure prevented this.
BAE officials declined to be quoted was prepared to offe