MoD set to overhaul Trident subs

Senior defence mandarin seeks private-sector help to cut costs of warhead-carrying vessels

The Ministry of Defence is looking at radical changes to a deal that includes the next £15bn wave of Trident nuclear warhead-carrying submarines as part of cost saving plans.

It is understood that Bernard Gray, who is charged with slashing procurement and maintenance costs as the chief of defence materiel, is considering bringing in a commercial partner to help the MoD with the Submarine Enterprise Performance Programme (Sepp).

Under this programme, listed defence groups BAE Systems, Rolls-Royce and Babcock International work in collaboration with the MoD to ensure £900m of cost savings to build and maintain submarines. They are the UK's biggest suppliers for the vessels, which include seven Tomahawk missile-carrying boats and four nuclear warhead-stocked subs that are not expected until 2028.

However, Mr Gray is said to believe that the deal requires a commercial partner with no existing contractual ties to keep those savings on track.

He is overseeing the introduction of private-sector expertise to a number of programmes in Defence Equipment & Support, which will be announced over the coming months. The MoD has also started a process to find a commericial partner for its £23bn land and property estate.

Sepp could end up with a similar structure to the London 2012 Olympics, where a private-sector team has successfully worked with the Olympic Delivery Authority to keep the Games within the revisedconstruction budget.

It is understood that a team led by Rear Admiral Simon Lister has spoken to a number of private-sector parties about the idea.

A defence industry source said: "The MoD is looking to optimise the submarine programme, to provide some commercial acumen."

The move comes as a surprise because both the Government and Opposition have been supportive of Sepp. Last year, international security strategy minister Gerald Howarth said "joint MoD-industry project teams have been pooling skills and expertise to ensure that the submarine programme is managed effectively".

The model also has industry support, which believes Sepp has encouraged collaboration between the sector's bigger and smaller players.

An MoD spokeswoman said the department "remains confident that it is on track to make the savings outlined" adding "Sepp continues as planned".

A coalition defence source said: "With monopoly suppliers and purchasers it makes sense to bring in a commercial partner to drive efficiencies."

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