The Piranha 5. (GENERAL DYNAMICS UK VIA MOD SITE) In a written Dec. 11 statement to Parliament outlining changes to the equipment program, Defence Secretary John Hutton said he was withdrawing the company's provisional preferred bidder status as the two sides had been unable to reach commercial agreement on a deal to supply the Piranha V design under the current procurement strategy. In other major developments, Hutton also announced the MoD is to delay delivery of two aircraft carriers for the Royal Navy by between one and two years pushing back the in-service dates of the first vessel to no earlier than 2015 and 2017. The British have been reviewing their equipment program commitments in the face of a yawning gap in the defense budget particularly in the early years of the spending plans for the next 10 years. Hutton, who has only been in his job since early October, also revealed that he had ordered a review of the progress in implementing the MoD's 2006 acquisition change program in order to seek recommendations to "secure better value for money in delivery of major acquisition programs." On the armored vehicle front, the defence secretary said the government now intends to restructure the FRES program to give priority to the introduction of a new tracked scout vehicle and the upgrade of the in-service Warrior infantry fighting vehicle. "We have concluded that, in the context of current operations, and bearing in mind the considerable recent investment in protected mobility, the highest priority should be accorded to delivering the Warrior Capability Sustainment Programme and the FRES scout vehicle as quickly as possible," he said. The scout vehicle program is currently in the assessment phase to replace the aging CVR (T) vehicle. An in-service date is not expected until 2013 at the earliest. No vehicle has yet been selected, although MoD officials have looked at potential contenders from BAE Systems and General Dynamics. The British have acquired hundreds of heavily armored MRAP-type vehicles from the United States over the last two years to better protect British troops fighting in Afghanistan. The MoD and the Treasury reckon the purchases reduce the immediate need for a mobile, highly protected, vehicle like Piranha V. The minister said they were now looking at the best way to take the utility procurement forward. "General Dynamics [UK] will have an opportunity to compete in any future utility vehicle competition," he said. The British Army had intended to field the Piranha V in 2012 or 2013. General Dynamics was appointed as provisionally preferred bidder in May and has been in negotiations ever since to meet the terms of a complex MoD acquisition strategy that required the company to hand over the Piranha V design to a third-party vehicle integrator to complete development work and build the vehicle. From the outset, the company refused to hand over its design to potential rivals unless it received a continuing substantial role in the program. Rival companies BAE Systems and Lockheed Martin were vying with a General Dynamics team for the integrator role. In a statement, BAE, Britain's biggest land systems supplier, said the FRES move posed questions about the future size of its armored vehicle business here. "We are disappointed that the FRES utility vehicle will not be going ahead as planned and that we and our partners will not now have the opportunity to perform the integration and manufacturing roles," the company said. "We will clearly have to consider what this means for the size and shape of the Land Systems business in the near future, and we will want to engage with MoD to understand their plans for the armored vehicle sector in the longer term. We wish to achieve a mutual understanding with MoD about a coherent strategy for the sector, so we can deliver the capability our customer requires and sustain a profitable business in the sector for the long term." Last month, the company's land systems operation here laid off 200 people. Other Delays, Cuts As for the aircraft carriers, industry executives have been saying for months that the agreed in-service dates of 2014 and 2016 were hopelessly optimistic anyway. Hutton said the delays were being implemented to better bring into line the introduction of the aircraft carriers with the yet-to-be-purchased Joint Strike Fighters that are scheduled to deploy on them. He said it would have minimal impact on industry and jobs in the warship-building sector. BVT Surface Fleet, the lead company in the alliance created to build the two 65,000-ton warships, said the delay would not affect jobs at the company's yards in Glasgow and Portsmouth. Rather than stop work on the 3.9 billion pound ($5.8 billion) program, it seems the alliance will spin out construction to meet the new dates. It's also likely that plans to recruit large numbers of shipyard workers to meet carrier-building requirements will be put to one side. In a second change in naval procurement plans, Hutton announced that the MARS program to build a fleet of new tankers for the Royal Fleet Auxiliary have been deferred while the MoD looks at alternatives. BAE, along with design partners BMT Defence Services and the South Korean yard Daewoo Shipbuilding, had been competing with overseas yards to build a new fleet of tankers. Other changes included a cut of eight helicopters in the AgustaWestland program to build 70 Future Lynxes for the Army and the Navy. Those minor cuts are being offset by a 70 million pound urgent operational requirement program to upgrade 12 Mk9 Lynxes with a new engine to improve hot-and-high-altitude performance of the helicopter in Afghanistan. The first four upgraded Mk9s will be delivered in 2009 and the remainder in 2010. The British government has been criticized for its lack of helicopter lift in Afghanistan. Hutton said he was further boosting resources by moving AgustaWestland Merlins to Afghanistan once they had completed their mission in Iraq. The MoD announced earlier this week it expected to have substantially withdrawn its forces from Iraq by midyear. General Dynamics officials were unable to comment by press time.
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