Royal Fleet Auxiliary

Wednesday 22nd February 2012 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

Hon. Members will wish to be aware of the progress being made with the Military Afloat Reach and Sustainability (MARS) programme. I am pleased to announce that after running an international competition, the Department has selected Daewoo Shipbuilding and Marine Engineering (DSME) as the preferred bidder for the MARS tanker project and intends to place a contract worth £452 million for the procurement of four double hulled MARS tankers, to be operated by the Royal Fleet Auxiliary (RFA). This contract will include two years’ initial provisioning for capital spares, training and training systems. The MARS tankers, which are planned to enter service at yearly intervals from 2016, will replace the existing single hulled Fleet tankers and allow the RFA and Royal Navy to continue to deliver maritime operational support capability worldwide.

The MARS tankers will maintain the Royal Navy’s dedicated replenishment at sea capabilities, operating individually and supporting specific warships or seamlessly integrated as part of a naval task group, including carrier strike and Littoral Manoeuvre operations, thereby helping to meet our aspirations for the Future Force 2020. They will supply aviation and ship fuel to the full range of surface ships worldwide, unrestricted by seasonal variations from tropical to Arctic regions. They will be easily adaptable to incorporate new technologies to meet future operational challenges and have been designed for increased reliability and ease of maintenance. They will meet extant and anticipated maritime safety and environmental legislation while also fulfilling MOD’s commitment to operating vessels to the highest environmental standards possible.

The support to be provided by the MARS tankers is vital to Royal Navy operations, but, they are, in essence, simple auxiliaries. As such, the design, build and integration requirements are not as military specific as complex warship procurements. The competition for the MARS tankers was therefore run internationally and involved leaders in the commercial shipbuilding industry, such as foreign companies in Europe and South Korea. I can confirm that a number of UK companies participated in the competition; however, none submitted a final bid for the build contract. The build contract has been awarded to DSME whose bid demonstrated best value for money proving that, in this case, the best outcome for defence and the UK taxpayer will be met by procuring the MARS tankers from overseas.

I would like to assure hon. Members that UK industry will have an important role in delivering the overall MARS tanker capability. First I am pleased to confirm that the winning design for the MARS tankers has been provided by a UK company BMT Defence Services. I am also pleased to confirm that the UK work content of the main contract is estimated to be up to 20% equating to approximately £90 million, money which DSME will be spending in the UK on contracts for the provision of key equipment, systems, design and support services.

There will be further opportunities for UK industry to be involved in the customisation package of work, to take place in the UK after the MARS tankers have been built, that will provide essential classified features required for deployment and capability assessment trials. All of this is good news for UK industry, particularly small and medium enterprises, who provide specialist skills in our supply chain as this, along with trials and specialist engineering support, will represent up to a further £60 million investment in the UK.

I would also like to challenge any suggestion that this contract signals a change in our commitment to the UK’s shipbuilding industry. The MARS tankers are part of a multi-billion pound investment programme underway for the Royal Navy. This includes Type 45 destroyers, Queen Elizabeth aircraft carriers and Astute Class attack submarines all of which are being built in the UK. Subject to approvals, we continue to work towards delivering a fleet of more modern and versatile Type 26 frigates as well as a class of successor submarines. Together these programmes will help to showcase UK industry at its best; sustain skills and specialist capabilities at home for several decades to come; and ensure that we have the skills base on which we can maximise export opportunities.

The MARS tanker procurement strategy of open and fair competition in the global market is fully aligned with the recently published “National Security Through Technology: Technology, Equipment and Support for UK Defence and Security” White Paper.