MINISTRY OF DEFENCE
052/96 April 2, 1996
THE FUTURE OF THE ROYAL DOCKYARDS
James Arbuthnot, Minister of State for Defence Procurement, today
announced that Heads of Agreement have been signed with Devonport
Management Limited for the Devonport Royal Dockyard. The
negotiations with Babcock International Group on the proposed sale of
Rosyth Royal Dockyard are also at an advanced stage.
In answer to a Parliamentary Question from Sir James Spicer MP
(Dorset West), Mr Arbuthnot said:
"Since the announcement in October 1993 of the Government's intention
to sell the Royal Dockyards, a series of separate negotiations has
been conducted with Babcock International Group for the proposed sale
of Rosyth Royal Dockyard PLC (RRD) and with Devonport Management
Limited (DML) for the proposed sale of Devonport Royal Dockyard PLC
(DRD). Negotiations have also proceeded with DML on the related
issue of the construction of facilities at Devonport for the
refitting and refuelling of nuclear submarines, Project D154.
"I am pleased to say that today my Department signed two Heads of
Agreement with DML and its shareholders. The first in respect of the
proposed sale of DRD PLC, covers the general principles which would
apply to a sale agreement. The second, for the provision of nuclear
refuelling and refitting facilities at Devonport, places on the
contractor whose project manager will be Brown & Root (UK) Ltd, the
responsibility for delivery of facilities that are licensable,
operable and fit for purpose, whilst providing ample opportunity for
industry to compete for work at the sub-contract level. A key issue
in the negotiations has been the risk transfer and the contractor has
accepted to bear an unprecedented proportion of the risk. The
Agreements must now be converted into binding contracts.
"My Department is today issuing a Memorandum of Information to the
Trades Unions about the position as regards the future management
arrangements for Devonport Royal Dockyard, and will then initiate a
formal process of information and consultation.
"Negotiations are at an advanced stage with Babcock International
Group on the proposed sale of Rosyth Royal Dockyard PLC. The outcome
will be announced as soon as possible. Short term extensions to the
current contracts in operation at both Rosyth and Devonport
Dockyards, which would otherwise expire on 5 April 1996, are being
arranged to cover the period of further negotiations. The Government
has confirmed, subject to reasonable prices, a programme of refitting
work for Rosyth for Royal Navy vessels stretching to the year 2006,
and to include two aircraft carriers and a substantial number of
other major war vessels".
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