LONDON and ROME — Italian shipbuilder Fincantieri is reconsidering its decision to exit the bidding process to build up to three logistics ships for Britain’s Royal Navy, according to an industry source in Rome.
The company’s latest review comes after the Ministry of Defence team running the competition revised the terms and conditions of the proposed deal.
Fincantieri halted work on its bid to build the ships, known by the British as fleet solid support ships, several weeks ago. However, shipyard executives are looking again to see whether recent moves by the Defence Equipment and Support arm of the MoD to refine the terms of the deal could reopen the door for a bid, an Italian industry source said.
One of Europe’s leading naval and civil shipbuilders, Fincantieri was one of five companies invited last year by the British MoD to bid to build the logistic supply ships.
Also invited were Navantia of Spain, Japan Marine United Corp., Daewoo Shipbuilding and Marine Engineering of South Korea, and a homemade consortium made up of Babcock International, BAE Systems, Cammell Laird and Rolls-Royce, known as Team UK.
“Fincantieri pulled out, but the MoD then asked the firm to consider new terms and conditions two weeks ago. Those conditions are now being evaluated,” the source said.
“Fincantieri pulled out originally because the U.K. wanted a proposal based on a new design, which involves a good deal of work and a big investment, and there was no funding from the MoD for that,” the source added. “Additionally, the competition appeared tailor-made for the U.K. consortium.”
Fincantieri declined to comment.
The Defence Equipment and Support arm, or DE&S, confirmed it recently changed the terms and conditions of the proposed deal, but said it was normal practice to refine the commercial and technical aspects of the requirement and the move was not connected with any withdrawal.
“It is not unusual to make revisions to terms during the competition phase and these revisions have not been made in reaction to a company withdrawing,” an MoD spokesman said. “The terms and conditions for the Fleet Solid Support competition remain subject to revision until we request ‘best and final offers’ from industry.”
Earlier this year, DE&S scrapped a competition to build five Type 31e frigates after it failed to attract bidders due to concerns over the terms and conditions demanded by the MoD. DE&S revised the terms and restarted the bidding process.
DE&S declined to provide details on the nature of the changes to the terms and conditions for the logistics ships.
Recent media reports said Daewoo had also withdrawn. British Defence Procurement Minister Stuart Andrew last week confirmed the Italian withdrawal but declined to make any announcement about Daewoo’s position.
The competition to build the logistics ships has sparked controversy in the U.K. over whether the contract should have been awarded to a British company rather than opening bidding to international competition.
The MoD affirms the logistic ships are not military vessels and therefore it is bound by European Union regulations to open up the bidding internationally. Politicians disagree with that reasoning, with one member of Parliament calling that position “patently ludicrous.” Some politicians want the MoD to award the deal locally to help sustain the domestic industry.
Bids are due to be lodged with DE&S in July, with a winner announced next year. Britain wants to acquire two logistics ships with an option for a third. The deal could be worth up to £1 billion (U.S. $1.3 billion).
The first ship is due in service in 2026.
The ships, to be operated by the Royal Fleet Auxiliary, are primarily meant to support the Royal Navy’s new Queen Elizabeth-class aircraft carrier.
Andrew Chuter is the United Kingdom correspondent for Defense News.
Tom Kington is the Italy correspondent for Defense News.