British MoD Reconsiders Assembling Scout in UK

LONDON — General Dynamics has been asked by the Ministry of Defence to look again at the cost of assembling most of the vehicles under a major armored vehicle contract locally rather than in Spain, according to British procurement minister Philip Dunne.

The UK arm of General Dynamics landed a £3.5 billion (US $5.7 billion) deal Sept. 3 to manufacture 589 Scout specialist vehicles for the British Army starting in 2017 in what is the biggest armored vehicle order the UK has signed since the 1980s.

“The first 100 vehicles are being assembled in Spain. We have an option to assemble the rest in the UK and we have asked General Dynamics to scrub the numbers and look at that,” said Dunne.

General Dynamics UK declined to comment on the government request.

Under the original plan, sufficient vehicles to meet an initial operating capability would be built at the General Dynamics European Land Systems plant at Santa Barbara Sistemas in Spain. Full-rate production would then move to British state-owned Defence Support Group (DSG).

The full-rate manufacturing strategy envisaged the hull fabricated and painted in Spain with the remaining platform build, integration and testing taking place at DSG.

“The original pricing differential meant it was best value for UK taxpayers [for the vehicles to be built in Spain] but we have asked what they can do to scrub that,” said the procurement minister during an interview with Defense News.

Trevor Taylor, a professorial fellow at the Royal United Services Institute in London, said that with defense spending remaining under pressure paying a premium to have UK assembly would not be welcomed at the MoD.

“This is an expensive program, some of the variants cost more than a main battle tank, so you can imagine that any further cost increase as a result of moving assembly to the UK would put the MoD under some stress,” he said.

Dunne hinted that if assembly did end up in the UK it wouldn’t necessarily be done by DSG.

Asked whether there remained a possibility assembly work could come to DSG, Dunne replied, “Well, it’s still a possibility it could happen in the UK.”

Final proposals for the selloff of DSG to the private sector were lodged with the government Sept. 12. Babcock, Carillion, DynCorp International and KBR are the shortlisted contenders.

The winning bidder is expected to be announced in November.

The procurement minister said the decision not to have the specialist vehicle work undertaken at DSG would not impact the sale process.

“It was never part of the DSG business plan put together for its sale, it’s a future opportunity,” he said.

One analyst said several members of Parliament had voiced disquiet over the prospect of offshore integration and testing of vehicles.

The UK specialist vehicle program is based on a chassis derived from the Austrian/Spanish ASCOD platform built by Santa Barbara. The most important of the British Army variants is a reconnaissance and strike vehicle that features a Lockheed Martin UK integrated turret housing a unique 40mm case telescoped cannon.

Lockheed Martin had planned to have the turret systems integrated by DSG but that plan has been quietly dropped and the work taken in-house at the company’s Ampthill site in southern England.

“We have invested in our facilities at Ampthill where the turret will be integrated and tested,” said a Lockheed spokeswoman.

She declined to say whether a second turret being supplied as part of a Warrior infantry fighting vehicle update contract the company secured in 2011 would also switch to Ampthill, rather than go to DSG as expected.

Regardless of final assembly, the procurement minister said that 60 percent of the platform’s systems and sensors will be UK manufactured.

The order for 589 vehicles in six variants will create or secure more than 1,300 jobs at General Dynamics UK and the wider UK supply chain, the government said in its Sept. 3 announcement.

The company originally promised more than 10,000 jobs would be secured in the UK as part of its campaign to win a £500 million Scout demonstration contract awarded in 2010. BAE was the losing bidder.

Some industry executives here expressed surprise the government had signed the production deal when so many of the variants, including the complex reconnaissance version, hadn’t passed their critical design review.

A spokesman for General Dynamics said the reconnaissance variant critical design review will be held later this year and the first prototype unveiled in 2015.

Dunne defended the contract timing, saying all the major elements of the reconnaissance vehicle had been tested individually although full integration hadn’t taken place yet.

“Each element is well tested, it’s the full integration that hasn’t been done. ... This is not an immature design, we have further milestones to make but we are confident we have a piece of kit the components of which work. We have contractual safeguards for them [General Dynamics] to deliver according to the milestones,” he said.

Deliveries are due to start with the Protected Mobility Recce Support version. The first brigade should be ready to deploy in 2020. Deliveries will run to 2025.

The procurement minister said there are options for further purchases, but unless a future strategic defense and security review changes Army requirements to equip three brigades, the order numbers would not increase.

“Sitting here today it’s three brigades and 589 vehicles. That’s it. While it’s prudent to build in some options in the contract, at the moment we don’t have any intent to exercise them,” he said.

The Scout program to replace the aging Combat Vehicle Reconnaissance (Tracked) is one of several large armored fighting vehicle projects being pursued by the British.

The Warrior update is already underway and Dunne said a wheeled utility vehicle would be the next new armored vehicle priority. An update of the Challenger II tank is also in its early stages.

Figures released by the government in a parliamentary answer showed the MoD is planning to spend over £12 billion on armored vehicle program during the 10-year equipment plan up to 2025.

Although spending could be subject to cuts following the next government review for 2016 onwards, current plans see armored vehicle spending rise from £496 million next year to peak at £1.71 billion in 2022 before tailing off slightly to £1.29 in 2024. ■