Bent over a barrel

CVF Aircraft Carrier Royal Navy Joint Combat Aircraft F35

Interesting news on the CVF front.

The Treasury has released a letter from the Chief Executive Officer of BAE Systems addressed to David Cameron on the issue of military shipbuilding and CVF in particular.

In defence of BAE, they are a commercial organisation that has a legal duty to their shareholders, they are not a charity.

The MoD was, as usual, trying to dabble in private markets and drafted a Frankenstein agreement, smashing together two competitors into a happy smiley consortium. The Defence Industrial Strategy tried to achieve some public sector husbandry of the private-sector defence industry. In light of this, one really has to question the approach and the competency of the MoD legal team that sleepwalked into this agreement.

I also have to question the Governments position in accepting at face value the obvious and not even veiled threats so obvious in the letter.

The day industrial concerns directly impinge on the ability of our armed forces to execute their tasks is a day we must seriously question the value of maintaining defence skills and industrial capacity as a strategic capability.

It is also worth noting that the seeds of this dismal affair were sown in the Conservative government of Mrs Margaret Thatcher. De-nationalisation in the mid-1980s resulted in only two producers, BAE and VT, who between them owned the three remaining construction yards. Subsequent initiatives like smart acquisition, the defence industrial strategy, through-life management, integrated project teams and a defence acquisition change programme have all resulted in more heat than light but a small mountain of PowerPoint’s! Driven by the Defence Industrial Strategy, the MoD insisted that a condition of the CVF contract was that the two competitors, BAE and VT, formed a joint venture to build them. BVT Surface Fleet was the resulting organisation but VT subsequently sold its share to BAE. In return for significant investment by BAE, it negotiated a long term workstream, 15 years to be precise. Having had its fingers burned by the MoD several times (FRES for example) the board of BAE will have quite rightly requested a quid quo pro from the MoD.

I also see a spot of public relations spinning at hand here, the letter is obviously confidential, did BAE agree to its publication?

If not, there is a serious issue of trust in the customer/supplier relationship with the Government clearly looking to embarrass BAE and the previous Government. There has been too much ‘it was them big boys over there that made me do it’ this week. It is time for the Government to call BAE’s bluff and realise who is the customer in this customer-supplier relationship.

Maintaining industrial capacity and skills is one thing, but this is clearly another.

Remember those sacred cows we were going to cull, it’s about time we sharpened the knife and took it to the DIS.

We can’t blame BAE, it’s the MoD and previous Government that brokered this ridiculous deal and the current Government that has a backbone made of jelly.

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