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Defence Industrial Strategy and Defence Procurement

Volume 449: debated on Wednesday 19 July 2006

I am pleased to announce progress on the complex weapons sector of the Defence Industrial Strategy (DIS). This sector provides key missile development capabilities to our armed forces.

The DIS identified that it represented a substantial challenge to maintain the industrial capability we wished to retain onshore given that we expect investment in new systems to decrease in the next five years from the current level due to a sharp decline in market size. We undertook to work with UK industry to meet this challenge, and can now announce that we are forming a “Team Complex Weapons (CW)”. “Team CW” is led by MBDA and is centred around, QinetiQ, Thales Air Defence Ltd., Thales Missile Electronics and Roxel. “Team CW” will enable the UK to maintain key skills and technologies through a mixture of directed procurements and open competition, enabling controlled restructuring to take place whilst maintaining on-shore access to the capabilities our armed forces require.

Together we will develop “Team CW” during the second half of this year. We intend to agree a Strategic Partnering Agreement in 2006. This will require contractually binding measures focused on business transformation both within the Ministry of Defence and within industry allowing better-informed-through-life decisions to be made, and a more incremental approach to technology insertion to be adopted.

We intend to use a range of programmes to incentivise the restructuring process. Most significantly, we have changed our procurement strategy for the Loitering Munition Demonstration and Manufacture programme, potentially worth more than £500 million. It will be single-sourced to the MBDA-led “Team CW”, subject to an enduring requirement for this technology, to affordability and to the ability to clearly demonstrate value for money.

We are also announcing four contracts for the development of technologies to contribute to the enhancement of Storm Shadow, and the Future Anti-Surface and Future Rapid Effects programmes, which will offer significant opportunities for collaboration. In the support area, we have placed a “Contract for Availability” known as PROJECT RevISE that covers air-launched weapons designed by MBDA.

Our joint approach with industry will enable us to develop a globally competitive industry that will deliver the technologically advanced missiles our armed forces will need in the future.