Defence bosses are more sanguine. One describes the deal as big in tonnage but not profitability because of the ships’ lack of weaponry.
The contract is being closely watched because shipbuilding is seen as a talismanic industry in the UK, says Stuart Young, Visiting Fellow at Cranfield University and an expert in defence procurement. This could give a UK-focused bidder the edge, he says.
“I think in the current circumstances for building overseas the optics aren’t too good.”
But there are bigger trends in military spending which need to be observed to make the right decision in any defence contract other than simply who offers the cheaper bid, he says.
When it comes to defence spending, moving from 2.2pc of Britain’s economic output to 3pc is not the leap it might first seem to be, he explains.
The ever-increasing technical demands of big purchases like submarines and attack aircraft lead to larger sticker price increases over time.
“Historically, defence inflation has run at one and a half to two times the normal inflation rate.” He says a 30pc larger budget does not mean double the number of jet fighters or ships – it is more like 10-15pc.
The Government, he adds, could opt in future programmes to be more conservative in the capability it demands rather than asking for products that can do everything, everywhere.
“We tend to go for the gold-plated solution. And you could quite easily get 80pc of the capabilities you need for 50pc of the price.”
Babcock, Serco and Leidos declined to comment. A government spokesman said: “The contract for the Fleet Solid Support competition will be awarded to a UK business, either solely or as part of a consortium, promoting growth across the UK shipbuilding sector.”
