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Five key points from MOD's Trade, Industry and Contracts Bulletin

techUK has summarised the key statistics from MOD's recently updated Trade Industry and Contracts Bulletin.

These are:

1. UK companies are expected to export £14bn of defence equipment

This represents a 50% increase on last year and UK companies account for 19% of the global defence export market. Particularly, growth was driven by a £5.2bn increase in air sector exports, notably Typhoon and F35 in the Middle East and United States respectively. The statistics suggest that the Middle East continues to be the most important regional export market for the UK Defence sector, representing 77% of all orders in 2018.

2. MOD Core Department Expenditure has increased to £24.8bn

The department’s core expenditure has remained at a similar level to 2017, with only a slight increase of 2.1%, from £24.3bn to £24.8bn. Contracts let are split between those awarded on a competitive basis following a bidding process, and those awarded on a single source basis, due to lack of alternative providers or through a need to maintain sovereign capability. The total expenditure on competitive contracts was £10.7bn (43% of the total spend), while non-competitive contracts accounted for £8.6bn (35% of the total spend). The remaining expenditure had no competition marker recorded.

3. MOD has paid 53 companies over £50m during 2018/19

BAE Systems remains the largest recipient of MOD expenditure, accounting for 14% of the total, worth £3.4bn. Other companies accounting for a significant proportion of the expenditure include Babcock, Rolls-Royce, Airbus, Lockheed Martin, General Dynamics, Leonardo and QinetiQ. Over 43% of total MOD’s total procurement spend was with 10 suppliers, and payments to these 10 increased by over £500m over 2018/19. Dependency on MOD business various significantly between these contractors.

4. Lightning II (F35) was the most expensive equipment project

Total current forecast of the 17 projects in the MOD’s Project Performance Summary Table 2018 is £54.3bn, with Lighting II being the most expensive post-Main Gate equipment project, with a forecast cost of £8.4bn. The forecasted cost of Lightning II increased by £309m compared with 2017, with most of this increase occurring because of a weaker exchange rate against the US dollar. Other projects with expected costs above £5bn include the Dreadnought programme, which represents the future of the UK’s strategic Nuclear Deterrent, the Astute Boats 4-7 due to replace the Trafalgar Class of submarines, the Queen Elizabeth Class Carriers and AJAX platforms.

5. The MOD spent £2.5bn on existing PFI projects in 2018/19

Allenby/Connaught was the PFI in receipt of the highest amount of MOD expenditure in 2018/19 with expenditure of £585m in 2018/19. This was followed by the Future Strategic Tanker Aircraft which received £439m and Skynet 5 which received £365m. In total there were 9 PFI projects which received over £50m and a further 6 which received between £25-50m.

If you would like to read the full report it can be found here.

 

Channel website: http://www.techuk.org/

Original article link: https://www.techuk.org/insights/news/item/16240-five-key-points-from-mod-s-trade-industry-and-contracts-bulletin

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