Select Committee on Defence Appendices to the Minutes of Evidence


APPENDIX 2

Letter from the Secretary of State for Defence—Modernisation of current arrangements for warship repair and maintenance (21 January 2001)

  I wrote to you on 18 April about the start of negotiations with Devonport Management Ltd (DML), Babcock Rosyth Defence Ltd (BRDL) and with Fleet Support Ltd (FSL) about how we can modernise current arrangements for warship repair and maintenance. The purpose of this letter is to bring you up to date on how the initiative is progressing.

  Over recent months we have been working closely with the Trades Unions and they have now submitted proposals for alternative ways of approaching this initiative. I welcome their positive approach and shall continue to work with them over the coming months to assess their proposal in detail.

  In parallel, we are signing non-binding Memoranda of Understanding with the Dockyard Companies to explore in more detail the indicative proposals we received from them last year. The purpose of the MOU is to define the scope of the proposed package of work for discussion at each of the sites to determine the potential for contractor involvement. For Devonport and Clyde Naval Bases, this would include the possibility of entering partnering arrangements with DML and BRDL covering waterfront engineering and logistics services to the Fleet together with property and facilities management.

  The aim would be to build upon the synergies between the Naval Bases and the Dockyards, to implement rationalisation and produce efficiencies in the support to the Royal Navy. As part of this, the companies have also indicated a willingness to renegotiate current contracts placed with them, to allow the early introduction of competition for all surface ship repair.

  At Portsmouth, the discussions also include the proposed move of Vosper Thornycroft's steel warship building facility from Woolston, Southampton to Portsmouth Naval Base, to a site currently occupied by FSL. Discussions with FSL will focus on possible renegotiation of the current contract. This should allow them to restructure their business to become a more fully competitive repair enterprise and to expand their role in the provision of facilities management. There is also a possibility of partnering arrangement with Naval Base for the provision of fleet maintenance and support.

  Issues such as operational capability, safety and nuclear authorisation will all be carefully considered and any new arrangements will have to satisfy both MoD and external parties, that these will not be compromised. A key objective of our strategy is to maximise competition in the warship repair market, thereby encouraging the existing companies to improve productivity. Our proposed approach supports this aim and should maintain the commercial viability of the companies against a reducing volume of warship repair. Withdrawal from the market by any of the existing players would be detrimental to competition and could jeopardise MoD achieving value for money in the longer-term.

  These proposals are likely to affect staff employed at the Naval Bases and could involve transfers to the private companies. Their future employment and terms and conditions of service would be covered by the Transfer of Undertakings (Protection of Employment) Regulations, known as TUPE. We have involved the Trades Unions closely in our discussions through the establishment of a joint Working Party, and we shall, of course, continue this as we move forward with both the Trades Unions and the company proposals.

  Although there are difficult issues still to consider, I hope that our work to modernise warship maintenance and support will help to secure the long term future of the dockyards and Naval Bases.


 
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