Mod and BAE Systems move closer to a long term partnering
The Ministry of Defence today announced another step forward in delivering the Defence Industrial Strategy (DIS) with the signature of a Foundation Contract for a Long Term Partnering Agreement (LTPA) between MOD and BAE Systems for fixed wing aircraft. The contract is intended to help establish the key elements of the LTPA and inform the detailed negotiations ahead.
(Media-Newswire.com) - The Ministry of Defence today announced another step forward in delivering the Defence Industrial Strategy ( DIS ) with the signature of a Foundation Contract for a Long Term Partnering Agreement ( LTPA ) between MOD and BAE Systems for fixed wing aircraft.
The contract is intended to help establish the key elements of the LTPA and inform the detailed negotiations ahead. It also incentivises BAE Systems to further transform its air sector business to ensure the cost-effective and efficient delivery of key through-life defence industrial capabilities the Armed Forces require.
Lord Drayson, Minister for Defence Procurement, said:
"This contract is a significant step forward towards agreeing a Long Term Partnering Agreement with BAE Systems in the Fixed Wing sector so that it can more efficiently meet the needs of the Armed Forces in the future. We will now be working hard with the Company to negotiate a robust agreement that makes commercial sense to both sides by the end of the year. "
Notes to Editors 1. The DIS Fixed Wing chapter highlighted that MOD and BAE Systems were negotiating a Long Term Partnering Agreement ( LTPA ) in order to help sustain the key industrial skills and capabilities needed to support and upgrade the current and future aircraft fleet.
2. Last year, both sides agreed to work towards an LTPA by the end of 2007 which delivered:
For MOD Capacity reduction leading to cost savings; Sustainment of industrial capabilities and capabilities to support the Front Line; and Cost effective delivery of Industrial Capabilities/Capacities
For BAE Systems Strategic dialogue on potential future orders; A sustainable business with the opportunity to earn profit; and A coherent customer with a strategic business approach delivering the right incentives for optimum behaviour
3. The contract is an important milestone in meeting the above objectives as it means we remain on course to deliver a full and legally binding LTPA by the end of 2007.
4. Specifically, the Foundation contract will help construct the sound 'foundation' elements of an LTPA. It is comparable to a typical CADMID Assessment Phase, helping provide confidence to both parties and pave the way for the detailed negotiation of an LTPA by the end of 2007.
5. The FC will include incentives for BAE Systems to further transform its air sector business and the cost-effective and efficient delivery of the industrial capabilities to the long term benefit of MOD ( and the BAE Systems ). This includes, for example, delivering value from the recent merger of the Company's military aircraft production and support businesses into one BAE Systems' Military Air Solutions business entity focussed on the delivery of through-life capability from cradle to grave, and mirrors transformation steps and organisation changes being implemented within MOD.
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