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Armed Forces: BAES LSM

My honourable friend the Parliamentary Under-Secretary of State for Defence (Derek Twigg) has made the following Written Ministerial Statement. I am pleased to announce that on 20 August we signed a 15-year partnering agreement with BAE Systems Land Systems Munitions (BAES LSM) for the future supply of general munitions to the Armed Forces. This is the first opportunity since contract signature to inform the House. The new contractual arrangements have been developed under the umbrella of Project MASS (Munitions Acquisition—The Supply Solution), which is a key strand for delivering the defence industrial strategy (DIS) within the general munitions field.  The contractual partnering agreement is underpinned by a broader non-contractual strategic partnering arrangement between BAES LSM and the MoD for the longer-term delivery of joint objectives in the munitions sector. At present, 80 per cent, by value, of the general munitions used by the Armed Forces for front-line operations and training are procured from BAES LSM under a contract due to end in 2010.  The new, innovative partnering agreement will continue to cover about 80 per cent of the general munitions requirement, including small arms and medium calibre ammunition, mortar shells and artillery shells and will ensure continuing security of supply for a minimum of 15 years.  The new agreement, which is worth at least £2 billion and, depending on the level of demand, potentially in excess of £3 billion, also incentivises BAES LSM to deliver a modern, world-class industrial base.  This is excellent news for defence. Not only will the new arrangements deliver a long-term, secure supply of battle-winning munitions for our Armed Forces, it will ensure that the UK retains an important sovereign capability, directly sustaining some 1,700 UK jobs. It is also excellent news for BAES LSM and for its highly skilled work force in the north of England and south Wales, who are to be commended for their continued commitment and contribution to our efforts in Afghanistan and Iraq, under the current arrangements. During this period of high demand, the company has stepped up production to meet the challenge, providing up to one million rounds of small arms ammunition a day from their manufacturing facility at Radway Green, near Crewe.  Our new partnering agreement with BAES LSM is an important milestone in the implementation of the defence industrial strategy, which is providing a framework for real change in the defence industry and its relationships with the MoD.