Aircraft Carrier contracts and submarine ahoy…

The Times from behind their paywall reports that the reason the second UK aircraft carrier is going ahead is that the contract was 'unbreakable' - it guaranteed the shipyards 15 years work.  Therefore cancelling the second carrier would have cost more than completing it!  That is a pretty unusual thing to do in contracting and procurement terms to say the least; reserving capacity I suppose, but over a very long period.

The Times says,

BAE signed a draft terms of business agreement three years ago with the Labour Government that would cover 15 years of unspecified shipbuilding work.  The contract was signed officially last year.

I would love to know how MOD procurement people felt about this.  Was it a case of (in their eyes) a solid and sensible commercial deal, locking in a supplier long-term in a market with limited supply options?  Or did they sign though gritted teeth, having made sure they covered themselves by getting ministers to tell them formally to contract in this unusual manner?  If I could employ a few investigative journalists I'd be onto that one....

Perhaps in future, if Government contracts are published (although the Coalition is backing off from this promise, as we reported here), we may at least know sooner when this sort of thing is going on, although I guess this may have come under national security constraints anyway.

And on a different but related note, my late Father in Law will be turning in his grave as our nuclear submarine runs aground - he was the UK's top submarine designer / engineer for many years and wrote the standard textbook on the topic.  I thought it was particularly amusing that the method of getting the sub free eventually was basically 'tie a rope around her and pull' - very high tech!

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  1. Christine Morton:

    That boggles the mind, from a whole-lifecycle cost perspective, that someone thought it was more expensive not to cancel it. What about storage? Fuel? Eventual disposal costs? Staffing? What about the cost to the environment of creating something *not needed*? Oh the irony in saying “I don’t buy it” – when as taxpayers, we just did…

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