05 January 2007 | Paul Snell
The Ministry of Defence (MoD) will save £8.1 million by renewing a contract for Royal Navy ships early.
The MoD said that because it is extending its leasing contract for three fishery protection vessels, defence contractor VT Group has agreed to cut 20 per cent from the cost of the deal with the department. The ships, HMS Tyne, HMS Mersey and HMS Severn, patrol the UK coastline and enforce fishing limits.
The deal will save £1.62 million annually between 2008 and 2013. The contract is worth £52 million.
When the leasing contract was originally signed in 2001, it was the first time the organisation had procured Royal Navy ships from a private company under a leasing contract. The ships are built, maintained and owned by VT Group and then rented to the MoD.
A spokesman for the MoD told Supplymanagement.com that the saving "illustrates how successful the procurement strategy has been."
Its success has prompted the MoD to draw up similar contracts, including one for patrol boats in the Falkland Islands.