Royal Navy’s ‘bargain’ frigate contract scuppered by lack of bid competition

THE competition to build “budget” frigates for the Royal Navy has been halted by the Ministry of Defence, which said there were “insufficient compliant bids” to finish the process.

It is thought only two serious bidders engaged in the competition to build the “Type 31e” warships.

These are stripped-down frigates designed to boost the number of ships in service at a low cost. The MOD wants five of the ships, and has set a £250m per ship price cap, along with a tight deadline of the first one going into service in 2023. Merseyside shipbuilder Cammell Laird was leading a bid called “Leander” in partnership with defence giant BAE Systems. Also in contention was a the Arrowhead 140 design from a consortium headed by Babcock and working with Thales, OMT, BMT, Harland and Wolff, and Ferguson Marine.

The MOD confirmed that it had stopped the current process because it had not received enough bids to run “an effective and robust competition”.

However, naval sources described the terms of the contract set by the MOD as “too rigid and inflexible”, potentially deterring more companies from offering their own proposals.

The price cap has also raised questions in naval circles about how capable a ship could be created for £250m, though the budget is understood to be only one of a series of problems.

“The pressures on industry have never been greater and it could be that bidders couldn’t make enough profit on the contract under the current terms,” said independent defence analyst Howard Wheeldon.

An MOD spokesman said that starting a new bid process “was the right thing to do to deliver the best outcome”.