To ask the Secretary of State for Defence what the original agreed contract price in relation to the contract with Swan Hunter (Tyneside) for the construction of Landing Ship Logistics (LSL) Largs Bay and Lyme Bay was; what the latest anticipated cost is; how much BAE Systems will be able to claim from the Department by reason of the failure of Swan Hunter to deliver design information to BAE Systems in relation to the two LSLs that that company is to build; whether his Department will claim from Swan Hunter in respect of its lateness in delivering design information on the LSLs; and which party under the terms of the original Swan Hunter contract undertook to accept the risk of the engineering requirements being greater than anticipated.
The original contract price for the design and construction cost of the two Swan Hunter Landing Ship Dock (Auxiliary) ships, Largs Bay and Lyme Bay, was £148 million and the anticipated cost is now £235 million. The Ministry of Defence has made a provision of £40 million in the 2003–04 Accounts for delay and dislocation costs in respect to the two LSD(A)s that BAE Systems are building and has already paid £16 million as an initial payment. Negotiations continue on the final settlement figure with the company. As further disclosure could prejudice these negotiations I am withholding further information under the commercial interests exemption of the Freedom of Information Act 2000. The MOD will not be pursuing a claim from Swan Hunter in respect of providing information to BAE Systems as this would seriously jeopardise company's ability to delivery the Landing Ship Dock Auxiliary capability. The Swan Hunter undertook the engineering risk in delivering against the original contract. However, in September 2003, when the company announced that it could not absorb the risk and complete the contract at the agreed price and timescale, both financial and timescale risks were in effect transferred to the MOD.
This new Landing Ship Dock Auxiliary class will provide a significantly enhanced capability that will enable the faster deployment of troops, vehicles and stores into operational and front line areas, at a safer distance and in worse sea conditions than the Landing Ships they will replace. The construction of Largs Bay and Lyme Bay is virtually complete and the retention of Swan Hunter as the lead yard offers MOD and the taxpayer the best value for money solution for delivering this new capability.