Halliburton/KBR

Oral Answers to Questions — Defence – in the House of Commons at 2:30 pm on 7th February 2005.

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Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer 2:30 pm, 7th February 2005

If he will make a statement on the role to be played by Halliburton/KBR in the new aircraft carrier project.

Photo of Geoff Hoon Geoff Hoon Secretary of State, Ministry of Defence

I am pleased to confirm the selection of Kellogg Brown and Root Ltd. as the preferred physical integrator for the future aircraft carrier project. Further discussions will take place with all alliance participants, including the Ministry of Defence, building on progress to date and to develop the build strategy for the carriers. I have today written to Mr. Soames explaining that in detail and I will place a copy of the letter in the Library.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer

I thank the Secretary of State for his courtesy in giving me advance notice of his announcement. However, is not it the case that KBR's parent company, Halliburton, has an abysmal track record of cost overruns on British naval contracts, notably the Devonport shipyards; is being investigated for corruption in several countries, including Iraq; has spent the past year in chapter XI bankruptcy, and has a chief executive who is trying to sell it to an unknown purchaser? Does not giving responsibility for such a key contract to a company with that sort of track record suggest a lack of wisdom?

Photo of Geoff Hoon Geoff Hoon Secretary of State, Ministry of Defence

The contract has been given to KBR. Perhaps I can assist the hon. Gentleman in his deliberations on that company by suggesting that he raises it with several Liberal Democrat Members of Parliament, who repeatedly write or attend my office to urge me to give it more work.

Photo of Mr Syd Rapson Mr Syd Rapson PPS (Team PPS), Ministry of Defence

The Secretary of State knows that there is considerable disquiet about BAE Systems' posturing about the choice of company to act as the physical integrator. Will the introduction of the physical integrator and that company increase or delay the chances of the ships' being built on time?

Photo of Geoff Hoon Geoff Hoon Secretary of State, Ministry of Defence

It is important that all those with an interest in the future carriers work co-operatively and effectively. I pay tribute to those who worked long and hard through the weekend to reach an agreement that allows me to make the announcement today.

Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence)

Will the Secretary of State accept that the unseemly wrangling of recent months that has characterised the Government's management of the project has done nothing to instil confidence in the prospect of the critically important contract's being completed to the Government's stated time scale? In the panel of four, who will take charge of contract—Thales, BAE, KBR or the Ministry of Defence? Who is ultimately accountable for managing the project? Have Ministers kept a veto on the location for the final assembly of the carriers as a pre-electionitis bung for the Chancellor of the Exchequer, whose constituency adjoins the possible site and who has been no friend of Her Majesty's armed forces?

Photo of Geoff Hoon Geoff Hoon Secretary of State, Ministry of Defence

I am accountable for the management of the project to the House, as I am for all Ministry of Defence expenditure. I could not help but notice the hon. Gentleman's solution to the problem over the weekend. It was back to the future—back to the way in which previous Conservative Governments presided over massive cost overruns in major defence expenditure. That appears to be the hon. Gentleman's solution—to spend more and more public money and get less and less for it.