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Navy's cut-price frigate contract runs aground because of 'lack of competition'

The competition to build “budget” frigates for the Royal Navy has been halted by the Ministry of Defence, which said there were “insufficient compliant bids” to run a competition.
It is thought only two serious bidders engaged in the competition to build the “Type 31e” warships.
These are stripped-down frigates designed to boost the number of ships in service at a low cost. The MoD wants five of the ships, and has set a ?250m per ship price cap, along with a tight deadline of the first one going into service in 2023.
Merseyside shipbuilder Cammell Laird was leading a bid called “Leander” in partnership with defence giant BAE Systems. Also in contention was a the Arrowhead 140 design from a consortium headed by Babcock and working with  Thales, OMT, BMT, Harland and Wolff and Ferguson Marine.
Navy's cut-price frigate contract runs aground because of 'lack of competition'

How the Babcock-led consortium envisages the new ship will look
However, the MoD confirmed that it had stopped the current process because it had not received enough bids to run “an effective and robust competition”.
However, naval sources described the terms of the contract set by the MoD as “too rigid and inflexible”, potentially deterring more companies from offering their own proposals.
The price cap has also raised questions in naval circles about how capable a ship could be created for ?250m, though the budget is understood to be only one of a series of problems with the contract.
Navy's cut-price frigate contract runs aground because of 'lack of competition'

Another of the Type 31e proposals
Defence spending watchdog the SSRO - which scrutinises contracts and has set a ‘baseline” maximum profit rate of 6.81pc on deals where there is only a single provider of equipment - could also have been a factor in the bid process being halted.
“The pressures on industry have never been greater and it could be that bidders couldn’t make enough profit on the contract under the current terms,” said independent defence analyst Howard Wheeldon.
An MoD spokesman said: “There have been no changes in our plans to procure a first batch of five new Type 31e frigates. We still want the first ship delivered by 2023 and are confident industry will meet the challenge of providing them for the price tag we’ve set.”
He added that starting a new bid process “was the right thing to do to deliver the best outcome” and that lessons from the original competition would be applied to it.
Navy's cut-price frigate contract runs aground because of 'lack of competition'

BAE will build right Type 26 frigates, which are more capable - and expensive than the Type 31e

Credit:
PA
The Type 31e was conceived when the Navy’s hopes of receiving 13 of the highly capable - and more expensive - Type 26 frigates were dashed by pressures on the defence budget. Instead it was decided the Navy would get eight Type 26s and five cheaper Type 31e ships, with hopes of marketing the cut-price vessel to foreign navies.
Last summer, BAE signed a ?3.7bn contract with the Government to build the first three Type 26s.
A spokesman for the Cammell Laird partnership said it was “fully committed” to the Type 31e, adding: “Cammell Laird will deliver a world-class frigate if we win the T31e competition in due course.”
Babcock declined to comment.
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