BRITAIN’s biggest defence contractor, BAE Systems, has teamed up with Carlyle, the controversial American private-equity house, to launch a joint bid for control of Britain’s nuclear submarine industry.

If successful, the pair will be in prime position to benefit from the UK’s proposed £25 billion programme to build a new fleet of missile submarines.

The move could also lead to the creation of a single “super-contractor” that would build and maintain all of Britain’s warships, both submarines and surface vessels.

The two groups plan a joint offer to take over the Devonport yard in Plymouth, the only site in Britain equipped to refit, refuel and “defuel” nuclear submarines.

The current owners — KBR, the American firm recently spun off from Halliburton, Balfour Beatty and Weir Group — have appointed the investment bank UBS to sell the company. Defence analysts said the facility was difficult to value, but expected it to fetch up to £200m.

The sale was triggered by a falling out between the Ministry of Defence and KBR, the majority shareholder. KBR ignored MoD demands to postpone its float last year.

If the bid succeeds, BAE will put its submarine business into a joint venture with Carlyle alongside the Devonport assets. BAE owns the submarine yard at Barrow, Britain’s only submarine building facility, which built the vessels now in service.

Defence sources said negotitations on the sale were at an early stage. But experts believe the combination of the Barrow and Devonport yards might deliver much-needed savings to the MoD.

The pair could face a rival bid from Babcock International, the support-services company. Babcock owns the Rosyth naval dockyard on the Firth of Forth, and runs the Royal Navy’s submarine base at Faslane on the Clyde. Senior sources at Babcock said the company had not yet decided whether to join the fray, but that it was watching developments closely.

Carlyle declined to comment.

BAE said: “We are fully supportive of the government’s aims to achieve maritime consolidation. We are talking to a number of parties in the submarine sector. Combining front-end design and build capabilities with through-life support is fully in line with the government’s aspirations.”

Carlyle has a track record in defence deals, and was the government’s partner in the privatisation of Qinetiq, the defence research agency.

But the private-equity group has also attracted criticism for the profits it made from Qinetiq, and for its penchant for hiring powerful former politicians as advisers. In the past it has employed, among others, John Major, George Bush Sr and James Baker.

BAE is also pursuing a separate deal with VT Group that would combine most of Britain’s surface shipbuilding assets. Defence executives said it could eventually be brought together with the combined submarine company to create a single British naval contractor.

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