BAE Systems secures key contract wins

BAE Systems yesterday won a £127m four-year contract to produce the specification for development and manufacture of a new class of British warship.

Defence secretary Bob Ainsworth said he had also agreed for BAE to start building the fifth of a planned seven Astute class submarines in Barrow-in-Furness in northwest England, and begin procurement for the sixth, at a cost of over £300m.

The warship contract was awarded after the government decided to proceed with the assessment phase for the Type 26 Combat ship, the Royal Navy’s next generation surface warship, Ainsworth said in a statement.

“It will examine whole life costs, consider the potential for international export, develop tailored logistic support arrangements and produce a full ship specification for consideration prior to the main investment decision,” Ainsworth said.

The wins are a boost for BAE, particularly as it comes just days after it lost out to General Dynamics, a US rival, in a competition to build a new reconnaissance vehicle for the army.

The move however infuriated the opposition, which had warned against procurement contracts being placed so close to the election.

Dr Liam Fox, shadow defence secretary told CityAM: “Labour should stop playing politics with our defence industry. Labour has cut the surface fleet to the bone. The proper place to address this is in a full defence review.”

The wins will also safeguard jobs at BAE’s submarine yard at Barrow-in-Furness in Cumbria.

BAE Systems pleaded guilty in the US to conspiracy to defraud and was fined $400m (£270m), earlier this month.

● The Type 26 fighting ships will replace older Type 22 and Type 23 frigates.