Government stands to receive $61 million in damages as well as a "significant refund of money" on the Offshore Patrol Vessels (OPVs) which have been cancelled, National Security Minister John Sandy said yesterday. Speaking in the House of Representatives Sandy officially confirmed that a September 16 Cabinet decision agreed that the Ministers of Finance and National Security and Attorney General terminated all contractual arrangements regarding procurement of the three OPVs. His confirmation came in response to questions on the status of the OPVs by PNM MP Colm Imbert. Sandy said Government had determined, based on shipbuilder BAE Systems' "serious and persistent delays and technical deficiencies," that Government's best interests were not being served and therefore it should exercise its contractual rights of cancellation. Notice of cancellation was served on September 17 with a 30 days notice period ahead of cancellation.
The contract value for the OPV project was $2.1 billion. The three vessels were to have been delivered between March 2009 to August 2010. Sandy said in cancelling the contract, Government was exercising contractual rights expressly negotiated and agreed with BAE. "These rights were designed to protect Government in circumstances where the Government is left with no other remedy," Sandy added. He said Government was not "saddled with a $3 billion debt" as reported in some quarters. Sandy said: "If Government were cancelling the contract for its own convenience then it would owe money to BAE but this is not the case. Government is cancelling by reason of BAE's fault. "Because of the delays, damages of over $61 million are already now overdue and payable by BAE to Government. "Additionally when the cancellation notice takes effect, the Government will become entitled, among other things, to a significant refund of moneys paid to BAE for the undelivered vessels,".
Sandy said the decision to terminate the programme was "a difficult one preceded by extensive deliberations among key stakeholders." He said concerns were raised about the OPVs in early 2010, regarding the capabilities of the vessels' combat system. "By then," Sandy said, "the first OPV was already more than nine months late and BAE had announced anticipated delays with the other two." Sandy added: "These concerns crystallised with sea trials for the first OPV in May when it became clear that BAE was unable to demonstrate that the combat system had the required capabilities. "These are capabilities that BAE committed to provide in the contract for all three vessels,". He said BAE proposed that Government take delivery of the defective vessels, despite that the combat system defects would materially prejudice the vessels' operational capabilities. "BAE"s proposals for rectification after delivery did not provide the Government with sufficient assurance that BAE knew with any certainty either how or when it would be able to resolve the problems," Sandy added.
Faced with yet further delayed delivery dates announced by BAE in August, he said Government concluded there was too great a risk that the project would fail to meet its strategic objectives, Sandy said. He said T&T's interests could not be compromised through acceptance of vessels which could not perform to the agreed specification. Sandy said the first breach of contract occurred in 2009 when the former PNM Government began confirming delays for the three vessels. In light of the cancellation, Sandy said Cabinet had undertaken review of the complete range of T&T's naval and aviation assets to determine the mandatory operational needs of the Defence Force and protective services "with a view to supplementing same, if necessary." Asked by Imbert whether the defects in the OPVs were enough to destroy the entire OPV project, Sandy said: "No." However, Sandy added he would not buy a defective car, especially one with a defect that interfered with a firing capacity. "It ought not to be acquired," Sandy added.