2nd June 2021
You may think that after that botched ferry contract that the government would steer clear from further Brext-related maritime procurements.
‘The Department for Transport waited until September 2018 to start thinking about the risks to freight transport across these important routes and entered into a £13.8m contract with Seaborne Freight despite it being a new operation, owning no ferries, and not having binding contracts to use the specified ports.
‘We will be pressing the Department for answers on how it awarded its three new ferry contracts, what it is doing to manage risks and exactly what it intends to do now it has axed the contract with Seaborne.’
You would be wrong, for the government has now announced a new procurement exercise, the cost of which is reported to be currently set at £200 million – that is about fifteen times more expensive than those non-existent ferries.
It is a curiously worded announcement – and should be read carefully in full.
Here are five observations about what the announcement says – and does not say – about this prestige project – from my perspective as a former central government public procurement lawyer.
There is no mention of the royalty in the announcement.
The "national flagship" announcement has no mention of the Royals. This would appear to be a direct result of Royal agnosticism and concern at the potential reputational damage to the Royal family of this proposal at this time.https://t.co/Azfh5DwlY0— Sunder Katwala (@sundersays) May 31, 2021
Given previous attempts at such a flagship have said that it would be a new ‘royal yacht’, this must be a deliberate omission.
One would not accidentally fail to mention that the new ship was to be a royal yacht and have royal blessing if such things were true.
Indeed, the glaring omission in the announcement indicates that the announcement is a negotiated document, where the wording has been subject to intense consideration and internal discussions and approvals.
And so, although the Crown is prevalent in the polity of the United Kingdom – from underpinning the executive, the legislature and the judiciary, royal charter bodies, the maintenance of the queen’s peace and the armed services – there appears to be one thing the royalty does not want to be connected with, and that is this ship.
The second omission is that the announcement does not say – expressly – which government department will be responsible for procuring (and/or commissioning) and – as importantly – maintaining the ship.
The announcement hints that it may be the Ministry of Defence – and there is mention that ‘the ship will be crewed by the Royal Navy’.
And given that the MoD is the one government department with the experience and resources to procure and maintain such a ship then this would be its natural administrative berth.
But the announcement does not say – expressly – that it will be under the MoD, and the purpose of the vessel does not appear to be a military one.
And there is no particular reason why the MoD – with its own budget constraints – would want to be given the costs of procuring and maintaining a ship with no obvious military purpose or value.
If – and it is an ‘if’ – the ship is to be procured and maintained by another government department, but with an agreement with the MoD for the use of the Royal Navy for crewing the ship, then we have the prospect of Whitehall (ahem) surf-wars over which department will be responsible in the event of any problems.
And prestige procurement projects do tend to have problems.
A third omission from the announcement is about which suppliers will be responsible for the whole-life maintenance of the ship.
The announcement states that a ‘tendering process for the design and construction of the ship will launch shortly’ – but there is no mention of any similar tender exercise for the upkeep and repairs to the ship over its expected thirty-year service.
Given that this ship is (intended to be) a bespoke construction, the question of ensuring that there are sufficient arrangements for its ongoing maintenance is just as important as the initial design and construction.
A plausible scenario is that a bespoke ship is designed and constructed but its service life is severely limited as no thought had been put into what happens next with such a bespoke construction.
Another plausible scenario is that the costs of maintenance and repair over thirty years come to be far higher than the costs of the initial design and construction.
A fourth omission is any evidence that the practicalities of this procurement exercise have been thought-through.
For instance, there is no explanation as to why it would not be more cost-effective to refit or to purchase an existing off-the-wharf (ahem) ship and to convert that ship for the envisaged purpose.
Indeed, there is no mention of any business case at all for this specially designed and constructed flagship.
There is also no mention of the role, if any, of private finance – and if there is to be a private sector element, who will bear the risk of any commercial problems.
And this, of all projects, will be too big a project to sink.
There is also no mention of what would happen if (which is conceivable) it would be cost-effective for the ship to be designed by a United Kingdom company but (which is also conceivable) it would not be cost-effective for that ship to be constructed in the United Kingdom.
Could we have a repeat of the (for some) embarrassing ‘blue passports’ situation – where a tender for another prestige Brexit project was awarded to a foreign company?
Although the announcement waxes lyrically about the procurement in that the ‘intention is to build the ship in the UK … help drive a renaissance in the UK’s shipbuilding industry and showcase the best of British engineering around the world’ the government does not know – and cannot know – at this stage whether any value for money tender would result in the ship being constructed in the United Kingdom.
(And as this would seem to be a civil rather than a defence procurement, there are also potential issues about excluding external suppliers from this high-value tender exercise.)
The envisaged timings also seem rather ambitious.
Although carefully worded, this announcement is currently more of a press release than any serious public procurement proposal.
Finally: £200 million pounds is, for this purpose, not that much – even if whole-life costs are excluded.
Indeed, one could imagine a considerable amount of such a budget being taken up by the to-and-fro of getting instructions and approvals for the design of this bespoke vessel.
Imagine: ‘the prime minister’s office thinks the wallpaper for the main conference room looks too cheap’ and so on.
And the recently reported ‘super-yacht’ of Amazon founder Jeff Bezos is estimated to be costing $500 million – which in sterling would be considerably more than the reported £200 million.
This new flagship may end up being the smallest ship in a harbour, with dot-com billionaires, oil-wealthy rulers and assorted oligarchs waving down at it from their super-duper yachts.
It may well be that to really impress the international business community, we are going to need a bigger boat.
Prestige public procurement projects often fail – because they are commenced for non-commercial purposes and without thinking foreseeable risks through, and when those foreseeable problems do arise, too much political capital has been invested for the project to then be seen to fail.
The better way, of course, for the United Kingdom to ‘showcase’ here its post-Brexit seriousness about trade and business would be to have a sensible and realistic procurement exercise – including showing that the government is unafraid to pull a project if it does not make commercial sense.
A project that instead ‘showcases’ the commercial ineptitude of the United Kingdom will not help but will hinder our post-Brexit trading future.
But this sort of constructive criticism will be dismissed as doomstering and gloomstering and that voters do not want such negativity.
So those of us who want a more sensible and realistic approach from the United Kingdom to its post-Brexit future are going to need a bigger vote.
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