Shipbuilding
An Opposition Day Debate on ‘Shipbuilding’ has been scheduled for Wednesday 11 July 2018 in the Main Chamber.
Fleet Solid Support Ships
The Government’s procurement plans for up to three new support ships for the Royal Fleet Auxiliary are facing opposition from Labour, the SNP and trade unions.
The Government intends to compete the contract internationally. Labour, the SNP and the shipbuilding trade unions argue the contract should be restricted to UK shipyards to support the shipbuilding industry, secure jobs and retain skills. They argue the proposed ships are ‘warships’ and as such, the Government can use the Article 346 exemption to exclude the contract from EU procurement rules on national security grounds.
The Government disagrees, defining warships as ‘destroyers, frigates and aircraft carriers’, and says all other surface vessels should be subject to open competition.
The contract for two ships (with an option for a third) is expected to be awarded in 2020.
What are Fleet Solid Support Ships?
The civilian-manned Royal Fleet Auxiliary provides logistical and operational support to the Royal Navy worldwide. The fleet includes Solid Support Ships, which supply ships at sea with food, ammunition and spares (solid cargo). Fuel (liquid cargo) is carried by dedicated tankers. Equipment and personnel are transported on Landing Ships. Royal Fleet Auxiliary.
The RFA has three Solid Support Ships: RFA Fort Austin, RFA Fort Rosalie and RFA Fort Victoria. Austin and Rosalie will leave service in 2023/24.
What is the Government's position?
Government policy is that defence procurement should be subject to open competition except when the UK judges it needs to protect its operational advantages and freedom of action for reasons of national security.
The Government says all Royal Navy warships (destroyers, frigates and aircraft carriers) will be built in the UK but all surface vessels should be subject to open competition. New tankers are currently being built in South Korea for the RFA. The Government argues the Fleet Solid Support Ships are not warships and "there is no national security interest which requires the design and construct of the FSS ships to be limited to UK companies".
The Government says that Article 346 of the Treaty on the Functioning of the European Union does not apply to the FSS. Article 346 provides for an exemption to procurement rules where a county considers it to be necessary for national security reasons.
What are the arguments for a UK-only competition?
Jeremy Corbyn and the SNP are calling on the Government to build the new ships in UK shipyards. The Chair of the Defence Committee wrote to the Defence Procurement Minister voicing concerns about the chosen procurement process.
Two unions, GMB and the Confederation of Shipbuilding and Engineering Unions, have published reports setting out their arguments for why the FSS should be subject to a UK-only competition.
Briefly, they argue the FSS are warships and therefore Article 346 can apply; the Government should support UK shipbuilding, jobs and skills by placing the order with domestic yards; the UK will benefit financially from returns to the Treasury in the form of taxes and national insurance contributions; and there isn't a level playing field as "many foreign yards are either state owned or receive significant direct or indirect subsidy".
What happens next?
The formal issue of documentation inviting bids for the design and build contract will be given in December 2018 with a view to awarding the contract in 2020.