• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • COMTECH banner

BATTLESPACE Updates

   +44 (0)77689 54766
   

  • Home
  • Features
  • News Updates
  • Defence Engage
  • Company Directory
  • About
  • Subscribe
  • Contact
  • Media Pack 2023

DOES DPA INVOLVEMENT IN CVF INDICATE A RETURN OF COST-PLUS

March 26, 2004 by

DOES POSSIBLE DPA INVOLVEMENT IN CVF INDICATE A RETURN OF COST-PLUS CONTRACTS?

19 Mar 04. Two announcements last week may give indications as to the UK’s defence industrial base increasing its resistance to the current fixed price contracting regime. The FT reported below that BAE is expected to lose the Prime Contractorship for CVF and Lockheed Martin (UK) Ltd announced its withdrawal from the DII competition citing shareholder priorities. But do these announcements also indicate the arrival of the inflation spectre in the overall economy. For BAE to be expected to keep its fixed price on CVF when, due to Chinese influences, the price of steel alone has risen by as much as 30% over the past three months – 65000 tonnes represents a lot of steel. At the Commercial Vehicle Show in Birmingham this week, there were indications that European producers such as MAN were poised to raise their commercial vehicle prices in the Uk by as much as 15% in the coming months, how will this affect the company’s bid for the Support Vehicle Contract, it certainly leaves little room for maneuver when the U.S. competitors currency movements have gone the other way from 1.66 at time of bid to 1.82 pound to the dollar today.

If the DPA takes over the Prime for the carrier supported by AMEC this will certainly suit BAE who has already told the DPA that the budget for the carriers is too low for the tonnage required. They would then be freed from the shackles of a fixed price Prime Contractorship, with all the risks that entails and get a market price for the shipbuilding activities. But, the question must be posed, if the DPA Prime goes over budget, there is only one organisation meeting the bill, the UK taxpayer, not this time, industry’s shareholders.

The UK’s Ministry of Defence is expected to finalise the make-up of the industry team that will build the Royal Navy’s two new aircraft carriers next week – a structure that will leave BAE Systems out of the role of prime contractor, people familiar with the decision said on Friday.

When the ministry announced the winner of the carrier competition last year, BAE was named as the “preferred prime contractor” in a partnership with the UK arm of French defence contractor Thales. But in a decision expected to be published in a letter to the industrial partners next week, neither Thales nor BAE will be named as prime. The exact structure of the team is still being ironed out, and, according to people close to the industry, it is the subject of internal disagreement within the MoD. Some senior officials within the MoD’s defence procurement agency (DPA) are pushing for the prime contracting role to be taken in-house, with the government managing the project on its own, industry sources said.

Alternatively, a third company with expertise in large project management could be brought in to take over the lead role. Under such a scenario, the contract could be broken up into pieces, with one company taking the lead on shipbuilding and another taking on the ship’s internal systems.

“They believe this is such a large, complex programme, that they feel uneasy about it and they need a new way to go about doing it,” said one person familiar with the MoD’s thinking. Talks over the carrier contract have dragged on for a year and a half. There has been a struggle between the RN and the DPA, with the RN pushing for additional capabilities and the DPA warning that costs could balloon well over the original £2.8bn ($5.1bn) budgeted for the ships. Industry officials say carriers with the RN’s desired capabilities could cost £3.5bn.

A BAE spokesman declined to comment, and an MoD spokesman would not discuss the decision-making process.

Primary Sidebar

Advertisers

  • qioptiq.com
  • Exensor
  • TCI
  • Visit the Oxley website
  • Visit the Viasat website
  • Blighter
  • SPECTRA
  • Britbots logo
  • Faun Trackway
  • Systematic
  • CISION logo
  • ProTEK logo
  • businesswire logo
  • ProTEK logo
  • ssafa logo
  • AtkinsRealis logo
  • IEE
  • EXFOR logo
  • sibylline logo
  • Team Thunder logo
  • Commando Spirit - Blended Scoth Whisy
  • Comtech logo
  • GoExporting logo
  • ECHODYNE logo
  • Supercat logo
  • Galvion logo
  • Leonardo DRS logo
  • MTC logo
  • IDC logo
  • IDC logo
  • DVD2024 logo
Hilux Military Raceday Novemeber 2023 Chepstow

Contact Us

BATTLESPACE Publications
Old Charlock
Abthorpe Road
Silverstone
Towcester NN12 8TW

+44 (0)77689 54766

BATTLESPACE Technologies

An international defence electronics news service providing our readers with up to date developments in the defence electronics industry.

Recent News

  • Congress Avoids Government Shutdown

    October 1, 2023
    Read more
  • UK Forces Deployed to Kosovo

    October 1, 2023
    Read more
  • RAF Fighter Jets Deploy To Poland

    October 1, 2023
    Read more

Copyright BATTLESPACE Publications © 2002–2023.

This website uses cookies to improve your experience. If you continue to use the website, we'll assume you're ok with this.   Read More  Accept
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT