MoD GUARANTEES 15 YEARS WORK FOR BRITISH SHIPBUILDING
21 Jul 09. A fifteen year contract that will help sustain the UKâ€™s ship building and support industry has been signed between the MOD and BVT Surface Fleet Ltd. (BVT) Minister for Defence Equipment and Support, Quentin Davies, announced today.
The Terms of Business Agreement provides a guarantee that BVT will receive a minimum level of MOD work over the next 15 years, worth around £230M each year in order to sustain key skills. The long term agreement is designed to help secure key maritime industry skills in the UK, after the Queen Elizabeth Class Aircraft Carriers have been completed later in the next decade and will also save the MOD hundreds of millions of pounds.
Minister for Defence Equipment and Support, Quentin Davies, said, “This agreement will help BVT to build a world-class, sustainable business, balancing the supply of its services to future MOD demand while the long term view of our minimum requirements will also help the company to plan its development of other markets such as exports. The guarantee of fifteen years’ worth of work is especially pleasing to announce in the current economic climate.
“We have invested heavily in modernising the Royal Navy and currently have substantial contracts for the two Queen Elizabeth Class aircraft carriers and six Type 45 destroyers with BVT. The contract we have announced today will help industry preserve a valuable skills base as the sector restructures to meet our future needs and will lead to significant financial benefits for the MOD and the Royal Navy.”
In return, BVT has committed to the transformation of the sector into a sustainable entity for the future. This will generate a minimum of £350M of financial benefits, with an aim to double this figure, over the duration of the contract.
BVT Chief Executive, Alan Johnston, said: “Completion of the TOBA and the partnership that it creates between BVT and the MOD is a hugely significant event for the UK maritime sector.
“It will ensure that we can affordably deliver key capability to the Royal Navy in this country for many years to come, strengthen our competitiveness in the international market and deliver security to the shipyards that has not been known for decades.”
The MOD expects this new commercial agreement to provide a strong foundation for BVT to compete for non-MOD commercial work, both in the UK and oversees. It will be for BVT, however, to retain the capacity it deems necessary in order to meet the demands made of it and to transform the sector.
BVT has a strong order book with the building of the six Type 45 Destroyers and an integral role in the huge construction project for the two Queen Elizabeth Class Aircraft Carriers worth more than Â£4Bn. These programmes are sustaining thousands of jobs across the Defence Sector.
The TOBA is a key initiative of the Maritime Change Programme (MCP) which provides an overarching framework for the major maritime change programmes in the DE&S. The MCP aims to enable the development of an enduring maritime enterprise, in line with the Defence Industrial Strategy, that delivers affordable, sustainable and efficient ship and submarine building, equipment and through-life support to meet the long-term operational needs of the Royal Navy. Activity covers improvements to the acquisition of equipment and its management on a through-life basis.
BVT Surface Fleet, the maritime joint venture between BAE Systems and VT Group, and the Ministry of Defence have today signed a legally binding 15 year Terms of Business Agreement (ToBA), that will reduce the cost of warship building and support for the Royal Navy, secure the long-term sustainable future of the UK warship building industry and deliver efficiency savings for the UK taxpayer.
Nigel Whitehead, Group Managing Director, Programmes & Support commented: “This is an important mileston