Everything comes to [the prime contractor] who waits

The Times newspaper in London today reported that, "The MoD will hand control of a project to build 2 new aircraft carriers for the Royal Navy to BAE Systems in an attempt to avoid a £700m tax bill as VAT is applied to ships built by multiple companies but not to those built by only one."

Well the former DPA, now DE&S organisation (and certainly former Chief of Defence Procurement, Sir Peter Spencer) must be gagging having spent years trying to fend off BAE Systems control of the CVF project. Efforts to insert Thales, then VT-Group's Peter Macintosh to hold the line against BAES domination of the project have been erroded by, of all ironies, Value Added Tax.

All this has been somewhat bizarre given the basic fact that BAE is the UK's largest defence company. The pogroms following the joint MOD BAE disasters over Nimrod and Astute led to a fanciful notion that you could undertake major procurements and sideline the largest player.

Whilst some feel that BAE has undue influence, it has not led to a happy first five years for the project.

The DE&S team no doubt can take some solace from the fact that by injecting other capabilities and companies they may yet create something special and give a badly needed shot in the arm into the UK naval construction sector.

My own concern is with regard to the, what was, Future Surface Combatant programme to replace the backbone of the Navy - the Type 22 and Type 23 frigates. My suspicion is that a confluence of political fatigue with overseas adventures coupled with the politics of jobs, public spending and unions will lead to the Army being sidelined in favour of more Naval acquisition. Grist for the mill for constructors BAE Systems (BA), VT Group (VTG) and in-service supporters Babcock International Group (BAB).