08:36 GMT, November 3, 2008 The UK Ministry of Defence may reorganise a £16billion (€20 billion / $26billion) programme to buy a new generation of armoured vehicles for the Army after mounting delays to the project. Six months after selecting General Dynamics United Kingdom Ltd. to provide the design for the first variant of the new Future Rapid Effects System (FRES) vehicles (see: http://www.defpro.com/news/details/589/), the UK MoD has been unable to agree final contractual terms with the U.S. mother group General Dynamics.

The MoD has to launch a new contract before the next step in the development of this vehicle can be done.

The FRES is the UK Ministry of Defence’s programme to deliver a fleet of more than 3,000 armoured vehicles for the British Army that is rapidly deployable, network-enabled, capable of operating across the spectrum of operations; and protected against the most likely threats. The total FRES fleet is expected to comprise five families of vehicles: Utility, Reconnaissance, Medium Armour, Manoeuvre Support and a family of simpler variants known as the ‘Basic Capability Utility’ and will replace a myriad different vehicles operated by the army, including the Saxon, FV 430 and CVR(T).

As Financial Times reported today, the MoD was discussing revisiting the acquisition process. Sources close to the process stressed FRES was unlikely to be canceled as the capability is highly required by the army, but elements of it could be delayed or the acquisition process revamped entirely. “This has been the worst procurement programme ever,” admitted one source. “The entire procurement strategy has been bonkers,” said another source.

The lack of clarity on the programme, coupled with the delays, has led to increased concern in the industry. Some fear the MoD’s chronic shortage of cash and last week’s announcement it was buying new vehicles for forces in Afghanistan (http://www.defpro.com/news/details/3466/ ) mean it is unlikely FRES will remain in its present form.

On 6 February 2008, the MOD announced that a Thales (UK) and Boeing team had been appointed for the System of Systems Integrator (SOSI) role.

In May, it selected General Dynamics as the “preferred bidder” and the Piranha 5 as the preferred design for the FRES Utility Vehicle, the first of the Army's programme. However the two parties have been unable to agree certain elements of the final contract. The protracted negotiations have also delayed the competition for the vehicle integrator involving companies such as BAE Systems, General Dynamics, Lockheed Martin and Finmeccanica.

The UK MoD said to Financial Times that it remained “committed to the FRES programme”.