MoD to ask Halliburton to bid for £3bn project

Halliburton, the firm formerly run by the US Vice-President, Dick Cheney, will be invited this week to bid for a contract to sort out one of the British Government's most troubled defence projects.

Halliburton subsidiary Kellogg Brown & Root will be one of six companies to receive an invitation to tender from the Ministry of Defence to manage the building of two aircraft carriers for the Royal Navy.

Rows over who is in charge, cost overruns and delays have already bedevilled the £3bn project, headed by Britain's BAE Systems and France's Thales.

The first task of whoever wins the "physical integrator" contract will be to rebuild bridges between the warring parties and keep a cap on costs.

But a bid from Halliburton could fan the flames of controversy. The company has strong links with the Bush administration and won the lion's share of the contracts to rebuild Iraq. It was plunged into fresh controversy on Thursday when Nigeria's parliament ruled that it should receive no new business until the results of a bribery investigation involving a Halliburton subsidiary is complete.

Besides Halliburton, the MoD will ask support services company Amec, shipbuilder VT Group, BAE and French industrial conglomerate Alstom to tender. Well-placed sources said that the MoD also plans to invite a sixth and as yet unknown firm from outside the defence industry to bid.

The Government has delayed the aircraft carrier project by a year in an attempt to iron out some of the problems. Ministers, however, insist that the ships' in-service dates remain unchanged at 2012 and 2015.

One of the biggest sticking points is the price of the 60,000- ton vessels. The MoD originally said that the two ships would cost under £3bn. But when BAE and Thales received the specifications from the Royal Navy, they told the ministry that the project costs would soar to £4bn. The MoD has since stated that the ships would cost "around" £3bn.

Comments