EXCLUSIVE – New tugboats intended to support operations at HM Naval Base Clyde, the UK’s nuclear submarine hub at Faslane, may be constructed in China under a major fleet replacement programme, depending on how the contractor applies its global production model.

The vessels form part of the Defence Maritime Services Next Generation programme, under which Serco is replacing a wide range of Royal Navy harbour and support craft. The programme covers tugs, pilot boats and barges used at naval bases across the UK, including Faslane, which hosts the UK’s continuous at-sea nuclear deterrent.

Under the current arrangements, the Ministry of Defence pays Serco to provide support services at the Royal Navy’s principal bases, and allows Serco, as the prime contractor, to determine its own supply chain for vessel replacement.

Build locations and Damen’s production model

Damen operates a distributed shipbuilding model, with construction spread across a network of yards in Europe and Asia depending on vessel type and production capacity. The company has historically built a range of smaller commercial and support vessels at yards in China and Vietnam, including certain classes of tugboats, while other workboat types are constructed at European facilities in countries such as Poland and Romania. Final outfitting, integration and delivery preparation are often carried out in the Netherlands or at European partner yards, depending on the contract.

Neither Serco nor Damen has publicly confirmed the specific build locations for individual vessels within the programme. However, Damen’s established production model suggests that some tugboats could be built outside Europe, including at shipyards in China that form part of Damen’s wider manufacturing network. The official contract announcement from Damen confirms the delivery of 24 vessels to Serco between 2027 and 2028. The mix includes ASD tugs, reverse stern drive tugs, pilot boats, barges and crane barges. The announcement does not identify individual shipyards or countries responsible for construction, focusing instead on the scale of the programme and delivery timeline.

Ministers ‘blindsided’ by offshore award of naval tug fleet

In the UK, political commentary has often assumed that the vessels would be built in the Netherlands, reflecting Damen’s headquarters and branding. Parliamentary questions and media scrutiny have focused on why UK shipyards were not selected, but have paid less attention to how Damen’s global supply chain may be used under the existing contractual framework. The prospect that vessels supporting infrastructure at Faslane could be built in China has attracted concern in defence and industrial circles, particularly given the strategic sensitivity of the base. While harbour tugs do not handle nuclear material directly, they play a critical role in the safe movement of submarines and surface vessels within confined waters.

Not the first time

A similar issue emerged in Australia in 2025, when the national broadcaster ABC reported that a new fleet of tugboats ordered for the Royal Australian Navy had been built in China under a contract awarded to Dutch shipbuilder Damen. The report said certification documents showed the vessels were constructed at Damen’s Changde shipyard in China, before being delivered to Australia under a civilian-operated support arrangement.

In response to the reporting, Australia’s Department of Defence confirmed that the tugboats had been built in China, while stating that they were not commissioned naval vessels and would be operated by a civilian contractor. Defence officials emphasised that sustainment activity would take place domestically and that the vessels were intended for harbour support roles rather than frontline operations.

While the Australian case relates to a different national programme, it demonstrates that Damen has previously constructed naval support vessels for allied defence customers at Chinese shipyards under commercial contracting models.

Wider security context

In a separate but related context, the Ministry of Defence has in recent months issued internal guidance concerning the use of vehicles containing Chinese-manufactured components, amid broader concerns about information security and connected systems. Media reporting has said warning notices were placed in some MoD-leased vehicles advising personnel not to discuss sensitive matters inside them or connect official devices, and that certain vehicles were restricted from accessing sensitive military sites. The measures were described as precautionary, with no publicly confirmed security breach.

Parliamentary questions have also raised wider issues about reliance on overseas-manufactured systems within defence and government operations. Ministers have acknowledged the need to assess potential vulnerabilities linked to global supply chains, while maintaining that decisions are taken on a case-by-case basis and that there has been no evidence of compromise.

Competing views on cost, transparency and social value

Those defending the programme argue that the arrangements reflect commercial shipbuilding norms rather than a deliberate policy decision. They note that hull construction in Asia can reduce costs and production timelines, with final outfitting, systems integration and acceptance carried out later in Europe under established regulatory oversight. Critics argue that the lack of transparency over build locations risks undermining confidence, especially where vessels operate at nuclear sites. They contend that clearer public disclosure is needed on where vessels are constructed and what safeguards apply during the build process.

Louise Gilmour, secretary of GMB Scotland, said the decision to source the workboats overseas represented a missed opportunity to support domestic shipbuilding capacity, particularly at Ferguson Marine, where the union represents the largest section of the workforce. She said the vessels were well suited to the type of work the yard had carried out for generations and argued that contracts of this scale could play a role in sustaining skills and employment in Scotland.

“These navy workboats are exactly the kind of small ships that Ferguson’s has successfully built for generations and exactly the kind of contract the yard needs to help secure its future,” Gilmour said.

She added that locating construction overseas, rather than close to Faslane, risked undermining local industrial capability at a time when shipyards were seeking to rebuild confidence following recent challenges. Gilmour also said GMB had written to Defence Secretary John Healey and Scotland Secretary Douglas Alexander calling for the contract to be reviewed, with a view to exploring whether work could be shared among UK yards. She argued that greater engagement with domestic industry was needed if long-term industrial capacity and workforce skills were to be maintained.

Paul Sweeney MSP, a former shipyard worker and convener of the Scottish Parliament’s Cross-Party Shipbuilding Group told me tat the award of the contract raised serious concerns about how social value and industrial resilience were being weighed in defence outsourcing. “It is completely unacceptable that this contract was awarded without proper consideration of social value in the UK or the potential for work-sharing with British shipyards,” he said. “Serco now needs to look seriously at options for involving UK yards, whether through outfitting, finishing work or future phases of the programme.”

Sweeney told me that he was seeking meetings with the contractor to press the case for UK participation under later stages of the Defence Maritime Services programme, adding that if contractors want to maintain confidence going forward, they need to demonstrate that UK industrial capability and resilience are being properly valued.

Wider questions over outsourcing and resilience

The row has prompted a broader debate about the long-term effectiveness of outsourcing models that are driven primarily by cost, particularly where they intersect with national industrial capacity and resilience. In recent years, defence and industry figures have increasingly questioned whether such approaches remain fit for purpose, as governments place greater emphasis on securing supply chains and reducing reliance on overseas production for critical infrastructure.

Against that backdrop, there is growing political and institutional pressure for contractors operating in strategically sensitive areas to demonstrate greater flexibility, especially where long-running service contracts include future phases that could allow for domestic involvement or work-sharing. Some analysts see the Faslane case as a potential indicator of whether defence support contracts begin to shift towards a broader assessment of value, one that weighs resilience and national capability alongside commercial considerations.

The Ministry of Defence has previously said that Serco is permitted to determine its own supply chain under the Defence Maritime Services contract, and that the UK Government has no automatic legal grounds to reject Damen as a subcontractor.

Government position and contractual arrangements

A Ministry of Defence spokesperson told the UK Defence Journal:

“The Defence Marine Services Vessel Replacement Programme is one part of a larger In-Port Services Contract, which was awarded to Serco in April 2025 following a competitive tender process. As part of this procurement, Serco selected Damen as its shipbuilding partner to deliver the Vessel Replacement Programme as a sub-contractor. In accordance with the requirements of the procurement, Serco was permitted to select their own supply chain. The vessels will be maintained in the United Kingdom but will be built in shipyards outside the UK.

The UK’s maritime sector continues to thrive, with BAE Systems securing a £10 billion export contract for Type 26 anti-submarine frigates this month – supporting 4,000 jobs across Scotland and the UK until the late 2030s, including 2,000 roles at Glasgow shipyards and opportunities for 103 Scottish businesses.”

UK Defence Journal has contacted both Serco and Damen seeking clarification on where the vessels supporting Faslane will be built, and where final outfitting and delivery preparation will take place. At the time of publication, no response has yet been received, but we’ll update this when they come back to us.