BAE Systems wins £348 million contract for new UK patrol ships

LONDON (Reuters) - BAE Systems, Europe’s largest defence firm, has been awarded a 348 million-pound contract by the British government to build three new Offshore Patrol Vessels, formalising an initial deal agreed last year.

A union flag flies over the entrance to the naval dockyards, where BAE Systems are also located, in Portsmouth, southern England November 6, 2013. REUTERS/Stefan Wermuth

The vessels, which will be used in counter-terrorism, counter-piracy and anti-smuggling operations, will be built at BAE Systems’ shipyards on the Clyde in Scotland, safeguarding 800 jobs, Britain’s Ministry of Defence (MOD) said on Tuesday.

The shipbuilders who will work on the new vessels are currently involved in manufacturing the second of two aircraft carriers which Britain has ordered.

“UK warships are only built in UK shipyards. This multi-million pound contract shows our commitment to investing in new ships for the Royal Navy and maintaining in the UK the expertise needed to build the warships of the future,” Defence Secretary Michael Fallon said in a statement.

Securing hundreds of jobs in Scotland comes as the country prepares to vote on whether to break away from the United Kingdom on Sept. 18. The campaign against Scottish independence has been keen to remind Scots of how many Scottish jobs are underpinned by Britain’s defence industry.

Plans for new military equipment in Britain have come under scrutiny in recent years, after four years of government cuts to defence spending to reduce the country’s budget deficit, and after some controversy connected to current projects such as the 6.2 billion-pound aircraft carrier project.

HMS Queen Elizabeth is meant to be the first of two aircraft carriers. But the fate of the second ship is unclear.

It is already being built, by BAE Systems and partner companies, but the government won’t decide whether Britain will use it until a defence spending review in the second half of next year. It could still be mothballed or sold.

The new Offshore Patrol Vessels are being built under a deal between BAE Systems and the MOD struck in 2009 which stated that the MOD would have been liable to pay for any periods when there was no work taking place at UK shipyards.

“The cost of building the ships is funded from money that would have been used to pay for idle capacity, finance redundancies and meet the cost of industrial restructuring,” the MOD said last November when the plan for the three new vessels was first announced.

Reporting by Sarah Young; Editing by Greg Mahlich