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MINISTRY OF DEFENCE 052/96 April 2, 1996 THE FUTURE OF THE ROYAL DOCKYARDS James Arbuthnot, Minister of State for Defence Procurement, today announced that Heads of Agreement have been signed with Devonport Management Limited for the Devonport Royal Dockyard. The negotiations with Babcock International Group on the proposed sale of Rosyth Royal Dockyard are also at an advanced stage. In answer to a Parliamentary Question from Sir James Spicer MP (Dorset West), Mr Arbuthnot said: "Since the announcement in October 1993 of the Government's intention to sell the Royal Dockyards, a series of separate negotiations has been conducted with Babcock International Group for the proposed sale of Rosyth Royal Dockyard PLC (RRD) and with Devonport Management Limited (DML) for the proposed sale of Devonport Royal Dockyard PLC (DRD). Negotiations have also proceeded with DML on the related issue of the construction of facilities at Devonport for the refitting and refuelling of nuclear submarines, Project D154. "I am pleased to say that today my Department signed two Heads of Agreement with DML and its shareholders. The first in respect of the proposed sale of DRD PLC, covers the general principles which would apply to a sale agreement. The second, for the provision of nuclear refuelling and refitting facilities at Devonport, places on the contractor whose project manager will be Brown & Root (UK) Ltd, the responsibility for delivery of facilities that are licensable, operable and fit for purpose, whilst providing ample opportunity for industry to compete for work at the sub-contract level. A key issue in the negotiations has been the risk transfer and the contractor has accepted to bear an unprecedented proportion of the risk. The Agreements must now be converted into binding contracts. "My Department is today issuing a Memorandum of Information to the Trades Unions about the position as regards the future management arrangements for Devonport Royal Dockyard, and will then initiate a formal process of information and consultation. "Negotiations are at an advanced stage with Babcock International Group on the proposed sale of Rosyth Royal Dockyard PLC. The outcome will be announced as soon as possible. Short term extensions to the current contracts in operation at both Rosyth and Devonport Dockyards, which would otherwise expire on 5 April 1996, are being arranged to cover the period of further negotiations. The Government has confirmed, subject to reasonable prices, a programme of refitting work for Rosyth for Royal Navy vessels stretching to the year 2006, and to include two aircraft carriers and a substantial number of other major war vessels".