N-SUB RULES WERE BROKEN
Western Morning News
09:00 - 08 April 2003
Ministry of Defence yesterday admitted it had ignored internal
could have saved the taxpayer hundreds of millions of pounds
when it awarded
the contract to refit Britain's Trident nuclear
submarines to Devonport
Management Limited. Giving evidence to MPs, the
MoD's top civil servant Sir
Kevin Tebbit acknowledged that a "rule of
thumb" used by the department to
prevent major contracts going to
companies that were too small to honour them
had been ignored in the
case of the Trident work.
He said that the
rule "must have slipped through my fingers".
Sir Kevin also admitted that
the Government had been forced to abandon
the prospect of legal action
against DML when costs spiralled out of
control because of the danger it
would have "broken" the Plymouth
company, threatening the vital work to keep
nuclear deterrent afloat.
He said that even if
the MoD had won in court, forcing DML out of
business would have proved a
"Pyrrhic victory" that would not have been
in the taxpayers' interests.
Although DML is owned by the American
defence giant Halliburton, MPs heard
that the US firm had only limited
liabilities on the Trident contract,
leaving the British taxpayer to
pick up an additional costs bill running into
hundreds of millions of
Sir Kevin's evidence came as the
Commons Public Accounts Committee
launched an inquiry into why the cost of
building facilities at
Devonport to refit the Trident fleet had risen from an
original bid of
#237 million to almost #1 billion.
Alan Williams, the
deputy chairman of the committee, said the decision
to award a contract to
DML that was 28 times over the limit suggested by
MoD rules, had left the
Government "massively exposed" to extra costs
when things went
MPs on the committee, which monitors Government spending, were
critical of both DML and the MoD at yesterday's hearing.
former Labour Defence Minister George Howarth described the handling
Trident refit contract as a "monumental failure".
Tory MP Richard Bacon
said that costs on the contract appeared to have
been "unmanaged and out of
And the left-wing Labour MP Ian Davidson said DML had proved to
"incompetent". He said the work should have gone to the rival yard
Rosyth, in Scotland.
But Sir Kevin said there was "no evidence"
that the project would have
been cheaper if it had been carried out anywhere
else. And he insisted
that the MoD had not given DML an "easy ride" as the
firm had been
forced to forego its profit and pay back #43 million. "This is
quite a tough result for the company," he said.
executive chairman of DML, defended the handling of the
Pryor said the completion of the "complex" project on time last year
"an outstanding achievement". He said that mistakes by DML had
only a small amount to the final cost.
A report last year by the National
Audit Office found that DML and the
MoD blamed each other for the huge cost
overruns. The difficulty of
building a facility to meet civilian nuclear
standards was also singled
out as a major contributor to costs.
Laurence Williams, chief inspector of nuclear installations at the
Safety Executive, yesterday said that the standards required
did not change
during the course of the contract.
Sir Kevin said the difficulty had come
with applying those standards in
practice. He said that with hindsight, the
MoD should have established
the likely cost of the design work before letting
the contract. And he
admitted that the MoD should have intervened more
quickly when things
started to go wrong in the late