Yahoo Finance Rivals line up to take £1.6bn Navy contract from Titanic shipyard
Britain’s biggest defence companies are lining up to take over a £1.6bn Royal Navy supply ship contract amid fears the business tasked with delivering it could collapse.
On Thursday, a Government defence source said rival companies would be asked to step in and manufacture three Fleet Solid Support (FSS) warships should Harland & Wolff, the Belfast-based yard that built the Titanic, be unable to deliver.
It is understood the project could be split among members of the former “Team UK” consortium, including BAE Systems, Babcock, A&P Group and Cammell Laird – all of which previously bid for the work unsuccessfully.
Sources close to Team UK confirmed they had capacity to take on the work and “stood ready” to help if asked, depending on the terms.
However, the Government source added that talks were still focused on helping to secure Harland & Wolff’s future, adding that contingency plans would only be looked at in a “worst-case scenario”.
They said: “We are not reliant on the fate of one shipbuilder.”
It came as urgent discussions over a £200m support package for the Northern Ireland company continued, with Whitehall officials said to be looking at “all options”.
Harland & Wolff was plunged into uncertainty earlier this week after it emerged a loan guarantee promised by the Government was in doubt amid legal concerns it could breach state aid rules.
In the company’s most recent annual report, auditors warned the business would struggle to survive without the support.
Jeremy Hunt, the Chancellor, is expected to make a final decision on whether to approve the guarantee within days.
The issue has reportedly pitched the Treasury against the defence, business and Northern Ireland departments, with Grant Shapps, the Defence Secretary, lobbying the Chancellor to wave the deal through.
Despite the turmoil, Harland & Wolff said it was “business as usual”, stressing that “nothing had changed” in relation to ongoing talks.
On Thursday, a spokesman added: “Only yesterday we accepted four of our new burning machines, which is a multimillion-pound investment.
“We have many other projects across all of our facilities that are in full production.”
The £1.6bn contract to build three FSS ships for the Royal Fleet Auxiliary, a civilian branch of the Royal Navy, was awarded to Harland & Wolff and Spanish shipbuilding giant Navantia following a fraught bidding process in 2022.
That decision was criticised by some MPs because it will see certain sections of the ships – known as blocks – built at Navantia’s shipyard in Cadiz.
However, ministers have insisted the warships, which will have a crucial role in supplying Royal Navy aircraft carriers and other vessels with munitions and stores, will mostly be built in the UK.
Under current plans, seven rear-end blocks will be produced by Navantia in Cadiz.
These will then be shipped to Belfast, where Harland & Wolff will make the remaining 14 front and middle blocks before assembling the ships.
A source at Navantia on Thursday refused to comment on Harland & Wolff’s future but said: “The FSS programme is progressing, with contracts being awarded to different suppliers, the engineering advancing and the transfer of knowledge, modernisation and preparation of Harland & Wolff shipyards underway.”
