Pressure grows on EU nations to suspend defence sales to Saudi Arabia
According to Defense News, Pressure is growing on western nations to halt defence equipment sales to Saudi Arabia following the alleged murder of Saudi journalist Jamal Khashoggi. Turkish officials believe Mr Khashoggi was murdered by Saudi agents in the Saudi consulate in Istanbul, though the Saudis have denied this. An arms embargo has been proposed in a new resolution by the European Parliament, though no such collective action has been imposed. Even before the disappearance of Mr Khashoggi, both Germany and Spain have said they will no longer sell defence equipment to parties fighting in Yemen. An EU-wide ban on sales to Saudi Arabia would impact heavily those member nations with close defence ties to Riyadh. The two EU nations with the deepest defence relationship, UK and France, have yet to impose any restrictions. In the UK, such action would have significant impact on the UK defence manufacturing base. According to the Department for International Trade, in 2017, 67% of the UK’s £9Bn worth of defence exports went to the Middle East, with Saudi Arabia presumed to be the dominant destination.
MOD pressed to justify non-competitive selection of next-generation early warning aircraft
Defence Secretary Gavin Williamson appeared before the House of Commons Defence Committee this week, ostensibly to answer questions about July’s NATO summit, but instead was quizzed on the decision by MOD to purchase Boeing E-7 Wedgetail airborne early warning aircraft without a competition. In particular, Mr Williamson was pressured to justify why a rival proposal from Airbus and Saab had not been given a chance to meet the RAF requirement. Mr Williamson said that no alternative solution was able to compete with Wedgetail in terms of delivering operational capability at the earliest possible opportunity. However, Saab-UK head Andrew Walton rejected Mr Williamson’s argument in a letter made public by Committee Chairman Julian Lewis. MOD policy is that, to ensure best value for money, new contracts should be competitive wherever possible.
MOD forced to deny claims RAF Marham will close
The MOD was this week forced to deny claims in the Daily Mail that Gavin Williamson threatened to close RAF Marham after a row with Chief Secretary to the Treasury Liz Truss, who is also the local MP for the Norfolk airbase. Mr Williamson was said to have told his fellow Minister that the press would be banned from the base when she visited and that he could close down the base all together. As the future home of the RAF’s F-35 Lightening fleet, the likelihood of such an outcome seems remote. An MOD spokesperson said in response that there has been £250m invested in upgrading RAF Marham to make it ready to receive the new aircraft and there are no plans to shut it down. However, that the story could be given any credence at all is an indication of just how fractious relations between the MOD and the Treasury have become as they battle to agree a budget to fund the Modernising Defence Programme. With the Budget two weeks away it remains to be seen if the ten-year £178Bn defence equipment budget will be increased. The Public Accounts Committee claims MOD needs up to £20Bn more to meet its programme ambitions.
NAVAL SHIPBUILDING: In a written statement to the House of Commons on 15 October, Defence Procurement Minister Stuart Andrew MP responded to July’s House Resolution that naval shipbuilding should be done in the UK. In the statement, Mr Andrew stated that:
“All Royal Navy warships, by which we mean destroyers, frigates and aircraft carriers, will have a UK-owned design, and will be built and integrated in the UK.…All other naval vessels, including Royal Fleet Auxiliaries, will be procured through international competition to secure the best designs and value for money for the UK taxpayer…This does not mean that other naval vessels cannot be built in the UK, rather, it means the UK shipbuilding industry has an opportunity to put forward internationally competitive and innovative bids. We have actively engaged UK shipyards to take part in the Fleet Solid Support ships competition. It is in the Government’s and the taxpayers’ interests to have a robust competition and we anticipate receiving strong bids from UK shipyards…We will continue to work closely with the defence industry to energise this crucial sector of our economy to achieve our strategic aim – to have a modern, innovative, internationally competitive sector capable of meeting the country’s defence and security needs, both now and in the future.”
BREXIT: Asked how much Government funding has been allocated to MOD programmes, administration and staffing in preparation for BREXIT, Defence Secretary Gavin Williamson MP replied that “The Ministry of Defence was allocated £12.7 million for costs arising as the UK leaves the EU in the Government's Spring Statement 2018. The final breakdown between programme and administration spend will be confirmed in the Supplementary Estimates.”
BREXIT: Asked whether MOD plans to publish its preparations for a no deal BREXIT, Armed Forces Minister Mark Lancaster MP replied that “MOD officials are working closely with colleagues from across Government to manage the consequences of exiting the EU under a 'no deal' scenario. We firmly believe it is in the interests of both the EU and the UK to strike a deal. That remains the goal on both sides and we are confident that this will be achieved. But it is the job of a responsible Government to prepare for all scenarios, so we have already carried out very significant 'no deal' preparations for the unlikely event that we reach March 2019 without agreeing a deal. The Government have already published over 100 technical notices so that businesses and citizens have time to prepare in the event of a 'no deal' scenario.”
Currency fluctuation planning: Asked for the value of the exposure of MOD to fluctuations in the value of both the euro and the US dollar against the sterling and how much of that exposure is hedged externally, Defence Minister for the House of Lords, Earl Howe replied that “At 1 April 2018 the Department expected to use 11.5 billion Euros in the 10 years from 2018-19 and had placed forward contracts for the value of 2.1 billion Euros in the three years from 2018-19 using services provided by the Bank of England.” With regards to the US dollar, Earl Howe said that, at the same date, “The Department expected to use 34 billion US Dollars in the 10 years from 2018-19 and had placed forward contracts for the value of 5.6 billion US Dollars in the three years from 2018-19 using services provided by the Bank of England.”
Airborne Warning and Control System: Regarding the programme to replace the RAF’s Airborne Warning and Control System, asked whether MOD plans to provide information on the industrial and economic effect of a final procurement decision later in the procurement process, Defence Procurement Minister, Stuart Andrew MP replied that “In accordance with our industrial policy, the Ministry of Defence will take into account, where applicable, the industrial and economic benefits when making a final investment decision. The rationale behind any final decision will of course be fully explained at the appropriate point.”
Airborne Warning and Control System: Asked how many E-7 Wegetail’s MOD plans to purchase, Mr Andrew replied that “The current procurement approach enables the Ministry of Defence to undertake detailed discussions with the Boeing Company about the E-7 Wedgetail aircraft. This will include the specifics of its design, the likely numbers required and the timeline for delivery. The outcome of these discussions will help inform an Initial Gate Business Case, which will then determine the following stages. A robust timeline is being developed, but no details can be given at this stage.”
Airborne Warning and Control System: Asked when the decision was taken to pursue single source discussions with Boeing on the E-7 Wedgtail, Mr Andrew replied that “The decision to begin single source discussions with Boeing was taken following the analysis of possible options available on the matter. This next step will enable us to more thoroughly evaluate whether the E-7 not only meets our requirements, but also offers value for money. I should, however, emphasise that no final decision has been taken, and that any procurement will be subject to the Ministry of Defence's usual stringent acquisition approvals process.”
Type 31e Frigate: Asked what anti-submarine warfare capability MOD plans to include on the Type 31e Frigates, Mr Andrew replied that “The new ship, submarine and aircraft procurement programme has included the continual review of our anti-submarine warfare capabilities. As part of this process the Royal Air Force expect to receive the first P-8A POSEIDON Maritime Patrol Aircraft towards the end of 2019, with the Type 26 ships, not the Type 31e, providing the primary anti-submarine warfare capability for the Royal Navy.”
Landing Platform Docks: Asked what the timetable is for the replacements for landing platform docks Albion and Bulwark, Mr Andrew answered that “The Royal Navy are considering the options available for replacing HMS Albion and HMS Bulwark as part of the routine business for future maritime capabilities. At this time no specific dates have been set for any replacement of these vessels and their Out of Service dates remain as 2033 and 2034 respectively.”
AJAX: Asked when MOD plans to take delivery of the AJAX vehicles, Mr Andrew replied that “The AJAX programme is currently in its low-rate initial production phase, with the Army expected to take formal delivery of the ARES variant later this year. Negotiations are ongoing to confirm the delivery and manufacture timelines, with the aim of achieving the Initial Operating Capability in 2020, and Full Operating Capability in 2025.”
Multi-Role Vehicles (Protected): Asked what discussions he has had with General Dynamics and Oshkosh on the procurement of Multi-Role Vehicles (Protected), Mr Andrew replied that “The Multi-Role Vehicle - Protected programme is being delivered in two packages. For package One, Command, Liaison and Logistic vehicles, the Joint Light Tactical Vehicle manufactured by Oshkosh has been identified as the preferred option. No final decisions have yet been made. For package Two, Troop Carrying Vehicles and Future Protected Battlefield Ambulances, a competition is on-going which includes General Dynamics UK Ltd and Thales UK Ltd. We have regular discussions with industry about this programme. For both of these packages, it is still too early in the procurement process to comment on potential UK jobs.”
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