LONDON Dec 10 Britain said on Tuesday it had
abandoned plans to engage a private contractor to run a
multi-billion dollar defence procurement programme plagued by
spending overshoots, delays and technical problems.
Britain's Conservative-led government had earlier this year
trumpeted a reform of the way it buys equipment for its armed
forces to help rein in public spending.
The plan hit problems when one of two bidders for the
contract pulled out on Nov. 19, leaving only a consortium led by
U.S. engineering group Bechtel, and with PA Consulting and
PricewaterhouseCoopers, in the competition.
"We do not have a competitive process. I have therefore
concluded that the risks of proceeding with a single bidder are
too great to be acceptable," Defence Secretary Philip Hammond
said, confirming earlier reports of the cancellation.
Britain has been heavily criticised for its sometimes
chaotic weapons programme. The costs of two new aircraft
carriers, one of the biggest British defence projects ever, has
risen dramatically and the project has been bedevilled by
construction and design problems.
Major defence equipment projects that the MoD is planning to
finance include 35.8 billion pounds on seven BAE Systems
built Astute-class submarines and a replacement for
Britain's Trident submarine nuclear deterrent, as well as 18.5
billion pounds on fighter jets and drones including Lockheed
Martin's F-35 stealth jet.
Bechtel, which was leading the remaining consortium in the
running, said it was disappointed the other team's withdrawal at
this late stage had caused the competition's collapse, and said
it would have helped Britain save billions of pounds.
"It's another embarrassing U-turn for the government,"
Labour defence spokesman Vernon Coaker told parliament. "His
flagship policy on defence procurement has come crashing down
In April this year the government launched a review of the
Defence Equipment & Support (DE&S) unit, which accounted for
almost half of the Ministry of Defence's (MoD) 34.4 billion
pound budget last year. Britain expects to spend 159 billion
pounds on military equipment between 2012 and 2022.
The government had initially intended to study the remaining
team's proposal and to compare it with an alternative known as
"DE&S" plus, an option which would keep the unit under
Hammond said the government had decided to build on the DE&S
Plus option, which would see the injection of private sector
expertise, and would launch the unit as a "bespoke central
government trading entity" from April 2014.
The entity would have a chairman-led board, and a chief
executive who will also act as accounting officer accountable to
parliament for the organisation's performance. It will also have
significant financial flexibility over its ability to recruit,
retain and reward staff, he said.
However he did not completely rule out the government-owned,
contractor-operated option for the future, saying that it could
still provide taxpayers' with value for money.
Hammond said that the government had spent just under 7.4
million pounds ($12.13 million) on the process and that it was
clear from the start that the bidders would not be entitled to
compensation or reimbursement of bid costs. A Bechtel
spokeswoman declined to comment.