Brown blocks Halliburton's carrier plan

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The Independent Online

Gordon Brown has intervened to prevent the American company Halliburton from switching final assembly of the Royal Navy's two new aircraft carriers away from the Rosyth yard in Scotland - a move which would have threatened 1,000 jobs in the Chancellor's constituency.

The Halliburton subsidiary Kellogg Brown & Root (KBR) is due to be appointed next week to the key job of overseeing construction on the £4bn carrier contract. KBR had wanted final assembly of the two vessels to be undertaken at its Nigg offshore oil platform yard on the north-east coast of Scotland.

But the Chancellor has insisted that the work must be carried out at the Rosyth yard, which is owned by Babcock and lies next door to his Dunfermline East constituency, as a pre-condition of KBR being selected for the role of "physical integrator" on the programme.

Halliburton was formerly chaired by Dick Cheney, the US Vice-President, and is a controversial choice for such a key role on a prestige programme - the two carriers will be the biggest warships ever built in Britain.

The other members of the carrier team - BAE Systems and VT Group - are thought to be bemused at the selection of Halliburton in preference to Amec, the British candidate for the physical integrator role, given that KBR is in Chapter 11 bankruptcy protection in the US and has encountered difficulties in running its other UK warship facility, Devonport dockyard in Plymouth.

Senior industry sources say it is still unclear how the physical integrator will function. KBR is thought to have given the Ministry of Defence a guarantee that it will do the job for a fixed fee before its role has been properly defined.

The Nigg facility on the Cromarty Firth has not been used for years, has no workforce and no experience of building naval vessels. KBR is thought to have been keen to have final assembly carried out there so it could avoid the costs of closing down and decommissioning the site.

But this would have entailed creating considerable additional warship-building capacity in the UK when its existing yards are having difficulty filling their order books. In parallel with negotiations on the carrier contract, the Ministry of Defence is also discussing a new approach to naval procurement. This could result in BAE's Clydeside yards being merged with VT's Portsmouth yard and Rosyth into one joint company in return for guaranteed workload over the next 10 to 15 years.