Select Committee on Defence First Special Report


Annex A

Memorandum to the Committee from the Royal Ordnance Trade Unions

MINISTRY OF DEFENCE COMMENTS

1.  GENERAL

  "If Bishopton closes, a common indigenous supplier of propellants will no longer be available to the UK Armed Forces." This is already the case. Although the component nitrocellulose is made in Bishopton, the actual propellant for small arms and medium-calibre ammunition is manufactured in the Netherlands by RO's subsidiary Muiden Chemie.

2.  GUN PROPELLANTS

  "Somchem remains an option, but one that would only become viable if there was no risk that political instability might put that risk at option." The MoD's view on contractual arrangements with South African companies has not changed since the last HCDC report in 1999.

3.  ROCKET PROPELLANTS

  "No clear alternative source of supply has been identified for the propellants used in aircraft ejection seats." The ejection seat manufacturer (Martin Baker) identified a suitable alternative UK supplier (Nobel Ardeer) some years ago. Qualification trials are now underway with this manufacturer and are proceeding satisfactorily.

4.  SMALL ARMS PROPELLANTS

  "The company is now contemplating in future procuring all its small arms nitrocelluloses from the Czech Republic." Provided the final product is properly qualified and meets UK MoD requirements, the MoD would have no objections to RO sourcing the nitrocelluloses fro the Czech Republic. Not only have the Czechs a long tradition of manufacturing world-class small arms ammunition, they also obtain the raw cotton used in the nitrocellulose manufacture from the same German company currently used by RO Bishopton.

5.  SAFETY, PERFORMANCE AND RELIABILITY

  ". . . serious difficulties have been experienced with the safety and performance of the alternative propellants." This is incorrect. RO have confirmed that the initial trials of propellant samples provided by WNC-Nitrochemie indicated the need for changes to be made, but they considered this is in no way unusual for qualifying a new source of manufacture. RO have assured us that the development programmes in question remain on course for successful completion and that the problem referred to by Mr Dromey has already been resolved. We understand that there is a remaining issue concerning a minor amount of soot deposit left in the barrel after firing, but the cause has been identified, and work is in hand to eliminate the problem. RO are also aware that all relevant trials data will have to be provided to the Ordnance Safety Group in order for the propellants to be approved for use by the UK Armed Services.

6.  SUPPLIER AVAILABILITY AND STRATEGIC ASSESSMENT

  ". . . the only source of propellant being considered as the possible sole alternative to Bishopton is the German company, Nitrochemie." RO have conducted a vigorous market survey in order to identify potential propellant suppliers. Evidence from this survey presented to the HCDC indicated some five potential options. As a result of the company's stringent selection process, and in line with RO's current strategy to procure from a single source, it is understood that a suitable supplier has now been identified.

7.  COSTS

  (a)  ". . . the prices being quoted by Nitrochemie exceed those of Bishopton." The MoD cannot comment in detail on the price agreed by RO with one of its suppliers. However, RO have confirmed that the prices quoted by their preferred supplier are very much lower than the costs at which the propellants can be made at Bishopton at the volume envisaged.

  (b)  ". . . It would appear that an increase in price of some 12.5% has been agreed between the company and the MoD to offset the re-qualification costs associated with the Blackcap and Redstart motor propellants for the Sea Wolf and Sea Skua missile systems."

    (1)  Blackcap. Re-qualification costs are estimated to be some £5 million for the Blackcap Rocket Motor propellant. However, there would have been re-qualification costs whether Bishopton closed or not, since RO had already made the decision to discontinue the factory's capability to manufacture double base extruded rocket motor propellant and nitro-glycerine. The increase in cost for the new motor for Sea Wolf Block 2 is less than 10%. This reflects the work and risk involved in redesigning the motor. These costs are not connected with re-qualification and would be incurred regardless of where manufacture took place.

    (2)  Redstart. The MoD has agreed no additional costs to re-qualify the Redstart Rocket Motor propellant anywhere other than RO Bishopton. The MoD's total Redstart requirement is expected to be met by RO Bishopton before closure, and there are no plans to procure additional Redstart rocket motors beyond this.

  (c)  ". . . it would appear that the MoD is effectively prepared to invest £7.9 million in either Franc or Germany to ensure that the contract for Sea Wolf can be fulfilled." The MoD is unsure where the figure of £7.9 million has been arrived at. Nevertheless, there is no question that the MoD has given any undertaking to invest £7.9 million or any other amount in either French or German companies to satisfy the Sea Wolf Block 2 contract requirements. Payment for the Sea Wolf Block 2 would have to be made, wherever the items were manufactured.


 
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Prepared 5 February 2001