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With permission, Mr. Speaker, I would like to make a statement on the Bowman communications programme.
This project will provide the armed forces with a modern, highly capable tactical combat radio communications system to replace Clansman. It will provide secure, reliable communications to our land forces and selected elements of the Royal Navy and Royal Air Force. In addition to voice communications, the system provides a tactical internet and automatic position location, navigation and reporting. Delivery will include more than 48,000 radios, 30,000 computers, conversion of more than 30,000 existing platforms and training for more than 100,000 members of the armed forces.
Until recently, the history of the Bowman project has been a saga of difficulties. The requirement for the system was originally endorsed as long ago as 1988, but the initial attempt at competition collapsed in 1996. The following year, in March 1997, it was decided to pursue a single source procurement with Archer Communications Systems Ltd.
Last summer, in the light of continuing major problems with the programme, the Government decided that the competition for the Bowman combat radio would have to be relaunched. That decision has now been vindicated. Over the past year, we have made impressive progress on the project. There has been a vigorous competition, with three strong bids submitted by Thales, TRW and CDC, a subsidiary of General Dynamics already operating in the United Kingdom. Following careful analysis of the bids, I am pleased to announce today that CDC has been selected as the Department's preferred supplier of the Bowman system.
We evaluated a wide range of issues. Given the project's chequered past and the continuing operational need, the priority has been to deliver a successful and low-risk solution that will fill this capability gap at the earliest possible opportunity: CDC offers just that. Its solution is the clear winner of the competition. It provides the best value-for-money solution, fully meeting our military requirements. I am confident that it will meet our demanding timetable for getting the system into service. It is based on experience of developing a proven system, and includes best-of-class radios and a very efficient approach to rolling out and supporting the equipment.
The Ministry of Defence and CDC will now work together on the programme to bring Bowman into service. We aim to be in a position to let a contract in late summer this year, to achieve an in-service date of early 2004. The contract is valued at about £1.8 billion. It will cover the supply of the Bowman system and the first five years of support up to the year 2009. It will use the ITT VHF radio sub-system and the Cogent cryptographic system.
CDC's solution provides employment opportunities in the UK in a broad range of system areas, including design, development, manufacture and project management. Ninety per cent. of the work content of the CDC bid will be based in the UK—the highest proportion of any of the three bids. About 1,600 jobs will be secured across the UK, including 400 new high-technology and support posts at the company's headquarters, which CDC plans to establish in south Wales.
The company has also earmarked south Wales for a new Army communications technology research and development centre, to be staffed by about 65 leading scientists. Other regions will benefit as well. We expect subcontract work to secure more than 100 jobs in Scotland, more than 300 jobs in south-west England and about 75 jobs in the south-east, centred on Hastings. Major United Kingdom subcontractors include Alvis and Westland.
This is excellent news for British industry, and not just in terms of job opportunities. The high-quality jobs that it brings will allow for the continuation of this country's defence communications capability. In particular, there will be significant technology transfer to the UK. The Ministry of Defence will hold appropriate intellectual property rights, available for use by other companies working on linked projects. Industry has committed itself to maintain a development and production facility as a UK concern. All this will mean that we will maintain a strong UK strategic capability.
This month will also see the first deliveries, ahead of schedule, of the personal role radios. This is a new capability, separated from the main Bowman requirement in 1999 to ensure early delivery to the front line. The radios will provide short-range communications for dismounted infantry, and will transform the way in which they are able to operate.
The progress that we have made, and this announcement today, draw a clear line under the problems of the past. They confirm that the Bowman programme is on track for success and show that our commitment to smart acquisition—to best practice—is delivering tangible results for the armed forces. Selection of the preferred supplier, just one year after we re-opened the competition, underlines our determination to deliver this battle-winning capability to our service men and women. Our armed forces can now look forward to receiving the most modern and integrated secure communications system available anywhere in the world.
I recognise that today's announcement will be a disappointment to the other two bidders. Thales and TRW have invested considerable time and effort in their respective solutions. Both submitted proposals that were substantially better than the one that we rejected last year. Their involvement has ensured a hard-fought and successful competition. As a result, their reputations as credible prime contractors will have been enhanced. I want to stress how much we have valued the significant Thales presence in the UK defence sector.
For this project, however, CDC offers the best solution to meet our military requirements to the right time scale. As I have outlined, it does so with an excellent package of work in the UK. I am confident that we have made the right decision both for the armed forces and for UK industry. I commend it to the House.
The Liberal Democrats welcome the procurement of Bowman for the armed forces, coming as it does after nine years. I thank the Secretary of the State for coming to the House. Although he said that he wanted to do so, it is a matter of fact that he wanted to make his answer in response to a written question and not as a statement.
Is it true that a hastily convened press conference at the Ministry of Defence this morning had to be abandoned, and that press releases had to be taken back after news of your decision, Mr. Speaker, to grant my private notice question?
Will the Secretary of State tell the House why CDC clearly knew well in advance that it had won this contract? When I checked the company's website at 10 o'clock this morning, it was advertising jobs in Calgary, in Canada, to manage the prime contractor job—the posting had been placed on the website on
Has CDC guaranteed that the Bowman contract will be delivered on time and to specification? What is the Government's assessment of job losses and job gains, not in Canada but in the United Kingdom? We certainly welcome the job gains, for example at Westland in Yeovil, but we want to know more about the quality of the jobs that will be created.
Is it true that there was an intervention by Lord Levene, who offered a factory in south Wales to employ former steel workers? Are those jobs being created at the expense of other high-quality jobs that will be lost throughout the United Kingdom? Are the rumours true that some kind of deal is being offered on the carrier projects as a sop to Thales?
Finally, if this means the end of secure military communications capability for the United Kingdom, what export orders can CDC of Canada look forward to as a result of today's announcement by the British Government?
As usual, it is difficult to tell whether the Liberal Democrats are for or against any proposal. They have taken the full opportunity to criticise our proposals without indicating whether they are genuinely concerned about the quality and the quantity of the jobs that will be created.
I have dealt with all the hon. Gentleman's points about the quality and the quantity of jobs. In my statement, I pointed out that, of the three companies that made excellent offers to the Ministry of Defence, CDC proposed the largest proportion of jobs in the UK. I emphasise that the overriding need was to provide both value for money and the most secure system available in the right time scale for our armed forces. More than anything, that was why we chose the CDC offer, which built on the company's experience of supplying similar equipment that could be developed to the Canadian armed forces.
I can certainly assure the hon. Gentleman that CDC was not informed on
Of course we welcome the decision for our own defence forces, but may I express disappointment on behalf of those of my constituents who are employed by Thales and will inevitably be concerned about the future of their jobs? Such concerns for constituents are shared by other Members. What feedback will the unsuccessful bidders be given to ensure that they are able to look to the future for more British contracts?
I am grateful to my hon. Friend. Obviously, there are losers when such important contracts are awarded. I made clear in my statement the importance that we attach to the contribution that Thales has made in the UK since its foundation. The company already has defence work worth about £2.7 billion. That is not to say that it is not eminently capable of winning far more work in future. The company is excellent and we very much value its presence in the UK—a point that I shall make directly to the company.
It is all too characteristic of the Government that they make a statement after the news has been all over the press: in the Financial Times this morning, on the "Today" programme and, as Mr. Keetch pointed out, on the internet. Once again, Parliament has been treated—on the last day before the recess—with characteristic levity by the Government.
It is also characteristic, and typical of new Labour spin, that the Secretary of State should set out the positive job news without mentioning the negative job news. Is it not a fact that Thales will have to lay off several hundred people in its former Racal subsidiary?
The Conservative party unreservedly welcomes the fact that a decision has now been taken on this important matter. Never again must the British Army go into battle, as it did in Kosovo, with such an unreliable communications system: soldiers were forced to use their personal mobile telephones, which were insecure. That was utterly disgraceful. There is no doubt that the Government have a mixed record on this matter, having spent three years being taken for a terrible ride by the Archer consortium. If they thought that they could do better than us, and our record on this matter is far from exemplary, they might have done so without waiting three years.
One or two things were clearly missing from the statement. I did not hear any mention of an in-service date. Will the Secretary of State tell the House, precisely and unambiguously, the in-service date for the system? In what respects have the specifications, which CDC will be working to, been altered from those to which the Archer consortium was asked to work? In other words, to what extent have the specifications been set back in the past year?
How much public money will the Government have to write off because of the Archer fiasco? [Interruption.] Yes, it was a fiasco, and it was entirely a fiasco of this Government. Labour Members are misinformed: the Archer fiasco lasted from 1997 to 2000. The National Audit Office says that between £35 million and £102 million of public money will have to be written off. Will the Secretary of State tell us the correct figure?
Will the Secretary of State give us an unambiguous assurance that the full source codes will be made available to this country, and that in future we will have total control of this important software?
I have heard some astonishing performances by the hon. Gentleman recently, but today he probably wants to outdo himself before he goes off for a well-earned rest for the summer.
On the responsibility of the previous Government, I can only remind the hon. Gentleman of the dates that I set out to the House. The requirement for the system was originally endorsed as long ago as 1988, and the House does not need reminding which Government were in power at that time. It also does not need reminding about the collapse of the competition in 1996 and the decision in March 1997—we all know when the general election was held that year—to pursue a single source procurement with Archer Communications Systems Ltd. All those are matters of fact, and I find it astonishing that the hon. Gentleman should choose to comment on them when he lives in a very large greenhouse—[Interruption.]
Perhaps I have dwelt on the hon. Gentleman's discomfort for long enough, save to say that this Government tried hard to make the single source procurement system work. I recognise that we failed to do so. That may have had something to do with the way in which the contract was originally placed, but I will pass over that. We took a difficult decision to abandon that programme, and we have now been rewarded by the fact that we have had a vigorous competition involving three very successful companies.
The in-service date should be early 2004. Specifications have been adjusted in certain areas, but not with any great significance. I will write to the hon. Gentleman with precise details if he requires them. There will be some write-off. The final figure has still to be determined, but we judge that the great majority of the write-off will benefit the existing procurement because the work that has been done will not be wasted. We will not waste significant sums as a result of abandoning the previous process. If the hon. Gentleman requires assistance with other matters, I will pass him the relevant information.
The Secretary of State will be aware that the headquarters of the Signals and the Royal School of Signals are located at Blandford in my constituency. He mentioned the creation of 1,600 jobs. There has been considerable speculation in the Blandford area about the three bidders and how many jobs will be based there. Can the right hon. Gentleman give us an idea of the establishment which the winning contractor will locate at Blandford for implementation, training and support purposes?
As I have already said, and as I must make clear, some 1,600 jobs will be secured. I mentioned the range of detailed technical equipment that will be required, from radios and computers to equipment that will be fitted inside helicopters. Although there are early indications across the country of the numbers of jobs that are likely to be created in each place where the subcontractors are currently located, it would not be sensible to give out precise details of the proposals because of the nature of the contract. It has only just been placed and still needs to be signed up to, which we hope will happen later this summer. It would not be right to create expectations unless we are absolutely confident about where the jobs will be located. However, I shall ensure that the details are sent to the hon. Gentleman as soon as I have them.
I have had discussions with Thales about the contract's implications, and it is right that those remain confidential for the moment. It is obviously for the company to determine how it organises itself in light of the decision.
Each of the three companies would have established new facilities rather than continuing at existing facilities had they been successful, and the percentage of work in relation to each company's bid would have been roughly the same in the UK.
The developments in communications for the armed forces are important. In those circumstances, had the decision been in favour of Thales, I doubt whether the precise number of jobs created would have differed significantly. If there are job losses as a result of the decision, it will not be the direct consequence of Thales failing to win the contract; rather, it will be the result of its reorganisation of its business across the UK.
I want to congratulate those parts of the UK which have benefited from the contract, but the decision will be a major disappointment to my constituents who work for Thales in the Govan area at a company previously called Barr and Stroud, which was tremendously well known. However, when making such announcements, the Secretary of State should talk not just of job gain, but about the overall situation. Thales certainly thinks that 400 jobs will be going as a consequence of the decision. It is also worried that its ability to tender for very important contracts on aircraft carriers will be damaged by the award of this contract to CDC. Will he comment on that?
As I said to my hon. Friend Fiona Mactaggart, it is for Thales to determine how best it organises its work force across the country in light of the decision. I well understand the disappointment to which my hon. Friend refers. Had the contract gone to Thales, it would have been able to create a significant number of new jobs across the UK, but the percentage would have been slightly less than the percentage work-share that CDC has proposed. That is not, however, the basis of the decision. There is absolutely no reason why Thales should not continue with the excellent programme on which it has been working for the design of future aircraft carriers. Indeed, as I said in my opening statement, we very much value Thales's presence in the United Kingdom. It is has a substantial amount of defence work already, and we look forward to its winning more defence work and creating still more jobs in the United Kingdom in future.
The key to the announcement is that, at last, our armed forces may get a secure communications system, and I agree with my hon. Friend Mr. Davies that that is absolutely crucial in battlefield conditions. Let us hope that the Secretary of State has chosen the right winner of the competition and that the contract succeeds this time. He will know from shadowing me when I was the Minister for Science and Technology that the technology is vital, and it is essential that it is kept within his power, as Secretary of State for Defence. Will he tell us a little more about his reference to intellectual property and about the research centre, because the United Kingdom will suffer if British industry is denied full access to the technological developments in the Bowman contract?
The position on technology is as I set out, and it would not be appropriate for me to go into the detail of the technology that will be available to the Ministry of Defence, which can then be passed on to other companies. Clearly, whichever company had been successful, there would have had to be precisely the same kinds of intellectual property arrangements between the company involved and the MOD on behalf of the Government. We are entirely satisfied that the arrangements in the CDC bid will allow this country the opportunity to exploit and develop the work that we have required for Bowman, both overseas, where appropriate, and in further enhancing the system.
That is why we welcome the creation of a research centre, which is likely to be located in south Wales. It will allow us to do further work in training and development towards the full digitisation of the system in the future. That is an important development; it will further enhance the communications equipment available to our armed forces, and that is why we judge overall that CDC provides the appropriate value for money solution, as well as a platform that can be effectively developed in future. I anticipate that that will involve a wide range of suppliers of such equipment.
I thank my right hon. Friend for today's enormously positive statement, which is good news for the United Kingdom and, of course, the armed forces. It is particularly good news for the Caerphilly county borough in south Wales—an area with objective 1 status because of its very low gross domestic product, which has suffered a large number of job losses in recent months. The 400 new jobs that will come to the borough will be high-quality and well paid—precisely the kind of jobs that we need. Can my right hon. Friend say how the contract might help the greater south Wales economy?
I am grateful to my hon. Friend for his observations. Certainly, the announcement will be good news for south Wales. I have already mentioned CDC, which will develop a number of jobs in south Wales. Cogent Cryptographics at Newport will also be an important supplier of cryptographic equipment under the contract. Several other companies are likely to benefit—this is only the first tier of the contract. We anticipate that there may be a further 300 jobs in second-tier contracts, which have yet to be identified. As I said, it is not entirely appropriate to give the precise details, but I can give my hon. Friend details relevant to his constituency, and I will do so for other hon. Members' constituencies.
I greatly welcome today's announcement, which is not only long overdue, as the Secretary of State said, but will be extremely important in my constituency, not least at Westland Helicopters. Can the Secretary of State confirm that about 120 jobs at Westland will be secured over the next five years and that such work will provide the foundation for future orders? Will he make a commitment to continue to work alongside Westland to help to secure future orders, not just in the domestic market, but in the export markets?
I am grateful to the hon. Gentleman for his observations. As I said in my statement, Westland will be an important subcontractor and its work on converting helicopters to incorporate the Bowman system will secure at least the number of jobs that he mentioned.
Although it is obviously welcome that the contract has been awarded and that the future of armed forces communications looks in better shape, what can I say to my constituents who are employed by Thales, some of whom will lose their jobs immediately according to the company, which expects 400 jobs to go straight away, initially at Harrow and Bracknell—both places where my constituents are employed? It is clear that south Wales has greater need of new jobs than the Thames valley, but none the less my constituents are real people with real homes and real families. What can I say to them?
I entirely understand the disappointment felt by those who work for Thales. I had the opportunity in recent weeks of visiting a Thales facility that provides some of the most advanced optical equipment available anywhere in the world for the United Kingdom. Thales is a very high-quality, successful company, employing highly skilled people. Although I cannot in any way substitute the decision that we have made—on the grounds of best value for money and the most effective in-service date for the armed forces—I understand the concerns that my hon. Friend has raised. All I can say to her—perhaps this message can be passed on to her constituents—is that a large number of jobs will be created across the country as contractors and subcontractors secure work under the overall Bowman programme. I anticipate that some of that work may well go to her part of the world.
The hon. Members for Reading, East (Jane Griffiths) and for Slough (Fiona Mactaggart) have emphasised the fact that Thales already employs 14,500 people in many constituencies all over the United Kingdom. The Secretary of State understandably stresses the new jobs to be created, but what about those to be lost, such as at the former Racal factory, now Thales, in my constituency? How many people does CDC currently employ in the United Kingdom?
In a sense, I have dealt with that point. All three companies, had they been successful, would have been developing solutions that would have required an increase of up to 90 per cent. in the UK work force. I would not want the hon. Gentleman to leave the House with the impression that somehow the 14,500 people employed by Thales in the UK are all engaged in such communications work. That is far from the case. Indeed, Thales would have created a significant number of jobs had it been successful. As I said in reply to my hon. Friend Jane Griffiths, Thales is a diverse company. It makes available a range of high technology in defence work to the UK and other countries. I see absolutely no reason why that successful high-technology work will not continue.
No. Indeed, I anticipate that, as the effect of the contract spreads across the country, there will be a great number of contracts and subcontracts for which Thales and other unsuccessful companies may bid successfully.
I would be grateful if the Secretary of State informed the House whether there have been any job losses in the senior management of the MOD over the bungled and incompetent handling of the contract—or, as normal, have they been rewarded with promotions and decorations? Will he substantiate his response to Mr. Davies that there would be only minor downgrading of the specification? In evidence to the Select Committee on Defence last year, those from his Department said that the original spec would be downgraded significantly to the one now on order. Could he also give a figure for the compensation that will have to be paid? He alluded earlier to the existing contractors involved in the contract. How much money has the Ministry spent to date on the project?
Let me make it clear that, as I said when I talked about specification changes, there were adjustments. There are constant adjustments in the specification of complex pieces of equipment; I gave the House an idea of the nature of that equipment in my statement. Adjustments in a contract that takes this length of time are inevitable and are part of the process.
As for compensation, in a sense the hon. Gentleman is asking the same questions that were asked earlier. The amount that is likely to be written off has yet to be determined precisely, but I am confident that a great majority of the work done under the previous contract will be relevant to the work that has been awarded to CDC, so the money that has been spent will not be wasted.
May I congratulate my right hon. Friend on the wisdom of his decision, not least because it is a true British decision and a true British solution which employs the greatest number of British workers? In particular, it provides some 75 jobs in my constituency of Hastings and Rye. Following the rather sad news last week about the bypass, it is good news that jobs are to be created in an area where there is a weak economy. Is the announcement likely to result in export opportunities and therefore on-going jobs after the period of the contract has ended?
My hon. Friend tempts me, but it is fair to say that none of the three bids were entirely British. It is in the nature of modern high technology for defence purposes that that is increasingly unlikely. Much as I would like to agree with my hon. Friend, it is important to tell the House that these are multinational bids by companies based in several different locations.
As for the potential for export, the prospects for the future are very good. Such equipment will put Britain's armed forces at the head of countries that invest in secure battlefield communications. I am confident that the research and development investment that is likely to be located in south Wales will mean that our lead can be extended. Clearly, that experience will mean that other countries will look to our expertise and the manufacturing capability established in the United Kingdom with a view to securing export orders. I am confident that the decision gives us an appropriate platform for export.
"Thales Acoustics in Harrow remain a potential sub-contractor to CDC."
Is that a sop to my many constituents who work at Thales, or has CDC given positive indication to that effect to the Ministry? Why cannot the Minister give positive, clear news about the actual costs involved? He quoted a figure of £1.8 billion as the overall cost of acquisition, training and support. Could that not be broken down between the bid from Thales and CDC's winning bid? Is it not time for open government in defence procurement?
Clearly there is some extremely sensitive commercial information, but none of the companies would welcome costs being published, as the hon. Gentleman suggests, as the result of such competition. That has never been the practice and I do not anticipate changing that today. As I told the House, this is a prime contract; it is an overall contract for securing a particular service to the armed forces. I indicated that the contract was for 48,000 radios, 30,000 computers, a conversion of some 30,000 platforms and, most importantly, training for more than 100,000 members of the armed forces. As a result of the placing of the prime contract, there will be a cascade of further contracts across the country and we are confident that those companies that did not successfully secure the winning order will nevertheless benefit from that cascade.
Does my right hon. Friend recall that during the Bosnian conflict our systems were so insecure that using the Welsh language was the only method of ensuring that no one could interfere? Although today's news will be disappointing to those who teach Welsh in the Balkan states, it is welcome for my constituency. It means 80 new jobs at Cogent Cryptographics in Newport. It is a small consolation in view of the thousands of jobs that have been lost a few miles away from the plant, but it emphasises that Cogent provides a world-class service and that south Wales is a natural home for high tech. The plant is cheek by jowl with that temple of intellectual property in Britain, the Patent Office in my constituency.
I am grateful for my hon. Friend's later comments. Initially, I wondered whether he was suggesting that the Ministry of Defence might save money by compulsory training in Welsh for the armed forces. I agree with his further comments because we are pleased with the work that is conducted in his constituency. It adds to the security of the system and I am delighted that the announcement means jobs for his constituency.
The Secretary of State knows the significance of the AEA Technology Batteries factory in Thurso. It is well placed to provide the batteries through its links with ITT. Is nominating ITT as supplier good news for Thurso? He mentioned an estimated 100 jobs for Scotland. Do they include jobs in battery provision in Thurso?
Earlier, I referred to a cascade of contracts. I understand that the company to which the hon. Gentleman refers is well placed to take advantage of the decision that we announced and that it has some exciting technology, which could make a significant contribution. However, the Government will not examine every contract that results from the main decision. I therefore cannot answer his question specifically, but I am confident that the factory is in a good position to take advantage of today's announcement.
I declare an interest because, as a trade union official, I have been involved in discussions with all three bidders about their future activities as corporate citizens. I welcome today's announcement.
I share Caerphilly borough council with my hon. Friend the Under-Secretary of State for Wales, and my hon. Friend Mr. David. We have been involved in discussions about not only manufacturing work but quality research and development. Perhaps my right hon. Friend can confirm that approximately £25 million could be invested in research and development projects in that area with the local universities. The area is in great need of such activity.
My right hon. Friend should take note that no nationalist Members have bothered to be present for today's announcement although Caerphilly council is a nationalist authority.
I am grateful that I do not have to comment on the absence of hon. Members. Nevertheless, I confirm that there will be substantial investment in south Wales. As I said in my opening statement, we attach great importance to providing training and research to take the equipment to a new level of digitisation and security.
Is the equipment compatible with the equipment that we shall use in Europe? We know that it is compatible with Canada and north America, but is it interoperable with that of European forces?
Compatibility is a tricky word in this context. We do not want the equipment to be easily understandable because the purpose of secure equipment is to be secure. My hon. Friend is right to emphasise the need for interoperability, which may be a better word than compatibility.
I very much welcome the news today: anyone who has any connection with the armed forces will want to see the beginning of the end of this particular project. Does my right hon. Friend agree that there is a particular need in the United Kingdom to bolster the role of small subcontractors, and will he do everything that he can as part of the further negotiations that will undoubtedly ensue to ensure that small subcontractors have a fair wind and are not discriminated against?
I wholeheartedly agree with my hon. Friend on the importance of seeing the end of this particular saga, and I do not think that the Government can claim that the overall process has been particularly successful. In those circumstances, I am grateful to my hon. Friend for his comments. I also agree with him entirely that it is important that, as the contracts that will be placed following the decision develop, smaller subcontractors have that opportunity. We have estimated that at least another 300 new jobs could be created as a result of those second-tier contracts, which are likely to be with smaller companies, adding to the total that I have already indicated.