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Ministry of Defence: saving over £50 million on the procurement of a new Astute-class submarine for the Royal Navy

Royal Navy submarines play a critical role in the defence of the UK. To maintain this capability, the Ministry of Defence (MOD) is developing a new generation of submarines through its Astute-class programme, one of the most complex equipment programmes it has ever run.

As negotiations on procurement of the fifth submarine got underway, the MOD asked PA to develop and agree innovative commercial arrangements with the sole supplier. The arrangements had to meet the requirements of the Single Source Contracting Regulations. These new rules, which cover non-competitive defence contracts, will ensure that UK taxpayers get good value for money and that single-source suppliers are paid a fair price.

Our business analytics experts carried out a detailed analysis of programme risk and opportunity data to identify where savings could be made. This allowed us to develop evidence-based arguments to strengthen the MOD’s position, even in a situation where it had limited commercial leverage. Once we had negotiated the final deal with the supplier, we prepared the business case to secure government sign-off for the deal – the first to be approved under the new regulations.

Our work has helped the MOD negotiate savings of over £50 million on the £1.3 billion contract and secure an agreed build completion date nine months earlier than anticipated to support operational demands. We have also helped position the MOD to enter negotiations for two further submarines from a position of strength, with the potential for additional savings.

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