Halliburton wins MoD vote for £4bn Royal Navy deal

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The Independent Online

A senior procurement official within the Ministry of Defence is understood to have recommended that the contract to oversee the £4bn construction of two aircraft carriers for the Royal Navy is given to Halliburton, the controversial American company once headed by the US vice-president Dick Cheney.

A senior procurement official within the Ministry of Defence is understood to have recommended that the contract to oversee the £4bn construction of two aircraft carriers for the Royal Navy is given to Halliburton, the controversial American company once headed by the US vice-president Dick Cheney.

Professor Roy Anderson, the MoD's chief scientific officer and chairman of its Investment Approvals Board (IAB), is understood to have written to colleagues backing the bid submitted by the Halliburton subsidiary Kellogg Brown & Root (KBR).

Provided the full IAB endorses Professor Anderson, a formal recommendation will go to ministers before Christmas to make Halliburton the so-called "physical integrator" on the carrier project.

This could have serious repercussions for the Rosyth shipyard in Fife, close to Gordon Brown's constituency, because Halliburton is expected to press for final assembly of the ships to be carried out at Nigg, a disused oil platform yard. More than 1,000 jobs at Rosyth, which is owned by Babcock, could be under threat.

KBR is one of a number of companies which have submitted bids for the Royal Navy contract. The others are Amec of the UK and the California-based Bechtel.

The "physical integrator" role on the carrier programme involves overseeing the construction process. The two ships, intended to be the most powerful warships built in the UK, are due to enter service in 2012 and 2015.

As well as fears of swingeing job losses in Fife, critics of Halliburton believe it is inappropriate to allow the US company to carry out such a high-profile government project.

Halliburton is being investigated in the US for alleged accounting fraud involving millions of dollars. However, the MoD's procurement department in Bristol is understood to be strongly in favour of Halliburton's proposition.

A spokesman for KBR said: "It is KBR policy not to comment on specific projects during the bidding phase."

The carrier project has been beset by delays since the Government announced in January last year that it was to be built by a partnership of BAE Systems and Thales, the French defence group, with BAE acting as prime contractor but using a Thales design.

That plan was subsequently scrapped in favour of an "alliance approach" led by the MoD and involving all of the UK's warship builders, including VT on the south coast and Babcock.

BAE and VT had originally considered bidding for the physical integrator role but dropped out. The MoD and industry are still at loggerheads over the costing and design weight of the two ships.

Industry sources say that the weight has now been fixed at 60,000 tonnes - close to the original design plan - but the MoD still wants the cost of the contract to remain nearer £3bn.

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