UK Eurofighter Bill Goes Up By £4 Billion?

[ORAC]

Eurofighter To Cost Several More Billion Euros (http://www.defensenews.com/story.php?F=3334533&C=europe)

BERLIN — The bill for the Eurofighter combat jets developed by a consortium of four European countries is going to cost over 10 billion euros more than expected, the German magazine Focus has reported.

For the countries involved in developing the Eurofighter, Britain will have to spend an additional 5.8 billion euros (8.2 billion dollars), Italy 2.16 billion, Germany 1.97 billion and Spain 820 million, the weekly reported in its edition to appear Jan. 28.

Focus cited a letter from Eurofighter-GmbH, the German branch of the consortium, addressed to Germany’s defense ministry.

“Other clients” for the Eurofighter will also have to pay more, the magazine said.

The cost of developing the military jet has increased due to certain “systems” and other modernization, Focus said........

[You Sir, Name!]

Why will we (the UK) "have" to pay more?
Have we not already signed all the contracts?
Who is asking for more money?
Will this be tagged onto the bill for the next tranche?
Is this not subsidising the Saudi deal?

[Jackonicko]

I wonder how much of the figure represents industry clawing back the inevitable extra costs caused when the politicians have delayed the project, failing to sign contracts on time, messing about changing their minds on particular capabilities, etc.

German procrastination in the early days was once estimated to have cost £5 Bn - and since then HMG has been responsible for a delay of almost a year in signing Tranche 2. You can't slam the brakes on like that without incurring costs.

[Oggin Aviator]

Makes 2 CVF look cheap as chips in comparison .............

Ready for the inevitable Jacko ...........

[Jackonicko]

Sorry Oggs, I'd missed the contractually guaranteed 'hard' price for JSF.....

Oh no, wait a minute, there isn't one.

Nor any sign of a really robust ITAR agreement (as opposed to an ill-defined face saving compromise), either.

[kwachon]

You Sir, Name! wrote,

Is this not subsidising the Saudi deal?

Kwachon wrote,

Never! :E

[LowObservable]

Two CVFs, cheap.

But then you know what it costs for a fighter slower and less agile than Typhoon, with less range and a mighty 2,000 pound offensive weapon load...

[BEagle]

And merrily did 't Bungling Baron chortle......

[mr fish]

on the subject of carriers, does anyone know roughly how much the yanks pay for their flattops and if we ask nicely, could they knock us off a couple???

[Navaleye]

Even if they did, we would not have enough CBLFs to crew one. Last I looked a Nimitz had a crew of over 5000.

[Had Enough 77]

Fair point, but we can actually employ a person to do more than one job at a time!!!! We have people who can cook chips and also butter the roles at the same time.

How quaint!!!! :O

[glad rag]

Yes but can they also polish shoes? :ouch:

[Confucius]

But then you know what it costs for a fighter slower and less agile than Typhoon, with less range and a mighty 2,000 pound offensive weapon load...

We're buying the wrong version, should've got the CV - greater payload, stacks of gas. In any case, it's not meant to be a dogfighter, but a strike fighter.

[Uncle Ginsters]

5.8 billion!!!!

....well I guess there go any ideas of C-17 numbers 7 & 8 then! :mad: (Or FSTA, A400M or any other potentially useful projects in the pipeline)

If accurate, I wonder what the true repurcussions of this will be? :sad:

[LowObservable]

In view of the old joke about the statistician and the cat's tail, where do you start measuring? EUR5 billion more than the price when?

[minigundiplomat]

If accurate, I wonder what the true repurcussions of this will be?


CAS will have more zoomy things in his playmobil airport set. Pity half of them are broken beyond repair.

Not a dig at the Typhoon guys, I am sure you'll do a great job. Our priorities are a bit 1950's centric though!

[0497]

I happened to be reading something else today and this coincidently popped up.

http://www.marinecorpstimes.com/news/2007/04/defense_stovl_jsf_070430m/
..... Britain is making an enormous investment — $7.7 billion in ship construction costs alone — in building two 65,000-metric-ton aircraft carriers intended to operate the F-35B......

[Jackonicko]

Not all journalists are the same. There are a handful who confound the PPRuNe received wisdom, who know what's going on, and who tell it exactly like it is.

Two UK aviation journos stand head and shoulders above the rest, in my view. Both write beautifully. Both have massive intellects, great contacts, and enough raw enthusiasm and natural curiosity to keep on top of their respective areas of expertise. Both have incisive and analytical minds, and I view anything that they write as being well worth reading. I count my time well spent, reading a technical or in-depth programme piece by Doug Barrie (Aviation Week, ex-Flight, ex-JDW).

Just as I view anything by Francis Tusa as being just as useful a guide to the more political and personal (how key movers and shakers are thinking) factors that lie behind the news. His newsletter (Defence Analysis) is expensive, but it's always thought provoking, informative and invariably amusing. If you have the cash, you should subscribe, even at £300 per year or so.

Francis told me that it is his understanding, having got an in-depth translation of the original report, that this €5bn extra (or a large part of it, perhaps) is the "cost" of the UK having to "buy" "extra" aircraft to replace those that we are selling to Saudi Arabia.

It is not a net cost, but a gross one, and takes no account of Saudi money coming in in payment for these jets, nor of the lower UPC that will result from the increased production total...

We seem to have utterly forgotten to observe rule *1.

NEVER trust German newspaper reports on defence: they are inevitably riddled with errors!

[siddar]

Story has been out for over 24 hours without a government rebuttal. Silence on matter mean in all likelihood story is true.

Governments are run by politicians and any politician worth the name isn't going to let a false statement about a 5 billion cost overrun stand if the statement is false are there are mitigating factors.

[jwcook]

Eurofighter Denies Price Escalation


(Source: defense-aerospace.com; issued Jan. 28, 2008)


PARIS --- Eurofighter GmbH, prime contractor for the four-nation Eurofighter program, has denied a news report claiming that the cost of the program’s third production batch (Tranche 3) will rise by more than 10 billion euros.

German newsmagazine Focus said in its Jan. 28 issue that Britain would have to spend an additional 5.8 billion euros, Italy 2.16 billion euros, Germany 1.97 billion euros and Spain 820 million euros for the Tranche 3 contract. The report cited a letter from Eurofighter GmbH to Germany’s Ministry of Defense as the source of the figures.

Eurofighter said today by e-mail that:

“Eurofighter GmbH has submitted a proposal for the third Tranche on 14 December 2007 to NETMA (NATO Eurofighter and Tornado Management Agency).

“No proposal has been submitted by Eurofighter GmbH directly to the German MoD.

“The suggested figures will not be commented by Eurofighter GmbH and are rejected as speculation.”


Theres some denial here!!

cheers

[0497]

Ran 'Eurofighter' into a Google News search

http://www.weeklystandard.com/Content/Public/Articles/000/000/014/706lixzd.asp

Eurofighter Meltdown
Struggling against rising costs and American competition.
by Reuben F. Johnson
02/07/2008 12:00:00 AM




Kiev
If you think the United States has problems with the constant price increase of new-generation programs like the Lockheed Martin F-35 Joint Strike Fighter (JSF), take a look at the situation with the four-nation consortium Eurofighter program.

Several news reports, including a January 26 story in the Washington, D.C. based Defense News, state that the bill for the Eurofighter is going to now cost some €10 billion ($15 billion) more than the most recent cost estimates had previously projected. The Defense News report is based on a story from the German magazine Focus, which published its article after having obtained a copy of a letter from Eurofighter GmbH, the German branch of the multinational company that manages the program, with these details. The letter in question was addressed to the German Ministry of Defense (MoD).

The Eurofighter is a multi-role combat aircraft that was designed and built by a four-nation consortium of the UK, Germany, Italy, and Spain. The industrial partners are the UK's BAE Systems, Germany and Spain's EADS and CASA consortiums, and Italy's Finmeccanica.

The rationale for combining the efforts of these partners on the program was that no one nation in Europe had the economies of scale to design and build a new-generation fighter on its own. The numbers to be purchased by the four initial partners plus export orders is around 700 airplanes so far, which is more than any other modern fighter built in the current generation.

According to the Focus report the UK will have to pay an extra €5.8 billion (US $8.2 billion), Italy €2.16 billion (US $3.05 billion), Germany €1.97 billion (US $2.79 billion) and Spain €820 million (US $1.17 billion). The magazine also reports that "other clients" (meaning the current foreign customers of Austria and Saudi Arabia and any other potential future export buyers) will also have to pay additional monies to receive their aircraft.

The main reason for the increase in the program's cost is that the ambitious plans for three production runs--referred to as Tranche 1, 2 and 3--may now have to be scaled back to the point where Tranche 3 will be cancelled all together. No official announcement has been made, but without the additional production of the third Tranche in order to help amortise the R&D costs of the aircraft, the costs for the first two batches must increase accordingly.

As far back as December 2006 the then-UK Defense Procurement Minister, Lord Drayson, said that he would sign no contract to build Tranche 3 airplanes until the program is reformed.

"The area which for 2007 is a big project for me to deliver is further changes in the Typhoon industrial structure," he told the parliamentary committee in testimony on the MoD's 2005 Defence Industrial Strategy. "Before we can go forward on a Tranche 3 decision--and we do not need to take that decision yet--I believe there needs to be a remodeling of the [Eurofighter] Typhoon structure."

But little of this remodeling--or increasing of inefficiency--in the Eurofighter program has taken place. Therefore, expectations that Tranche 3 will be cancelled have risen as the capabilities for the third batch have been dialed back.

Originally, this last, third batch of the production run would have added conformal fuel tanks to increase range to the aircraft, a new, uprated higher-thrust EJ220 engine to replace the current EJ200, and an active electronic scanning array (AESA) radar. These new systems have all been gradually abandoned to the point where Tranche 3's configuration is almost identical to Tranche 2. The advanced capabilities listed above would all have to be retrofitted to the early production batch airplanes, which is another reason for the increase in program costs now being levied on the four partners and export customers.

But another real driver behind the woes of the airplane is the increasing conflict of interest between those Eurofighter consortium nations that are part of the F-35 program and those that are not.

The UK and Italy are both heavily vested in the U.S. program and they now realize that they cannot afford to have the JSF as part of their air force and at the same time procure additional Eurofighters with the advanced systems originally called for in Tranche 3. But Eurofighter is the only new aircraft being procured by the other two partners, Germany and Spain, and they have to stay in to the end and fulfill all of their procurement plans in order to maintain their force levels and replace aging aircraft in their existing fleets.

This puts countries in both categories in a bad spot. The Eurofighter definitely needs all of the future growth capabilities listed above--particularly the AESA radar--in order to remain relevant in any future combat environment. This will come at considerable cost to those "Eurofighter only" nations. For those that are buying the Euro jet and the JSF as well, they are taking a gamble that the US program stays on schedule and that they can afford to stretch out retrofitting of the AESA and other technologies--technologies that the JSF will have on board from day one--sometime down the road.

At the end of the day both airplanes are primarily industrial base program in which the main underlying purpose is to preserve infrastructure and keep jobs from going offshore. The question is which industry is going to be the one that ultimately is "chosen" to survive in the long-term.

JSF promises to preserve industrial capabilities through work share for all of the European partners, plus a host of other nations that stretch as far to the east as Australia, north to Canada and into Israel in the Middle East. Eurofighter has a much smaller number of industrial participants and the inefficiencies in the program structure have become more pronounced over time--calling into question the program's real benefits to industry. Critics have pointed out that Eurofighter, with four assembly lines and flight test centers--one in each consortium member country--and the allocation of work share to each nation being based on the number of aircraft ordered, was destined to be inefficient from Day One.

Sir Peter Spencer, when he was the head of what was then the UK's Defense Procurement Agency, was even less generous when he described Eurofighter as a "charity" program for Europe's aerospace industry.

Not surprisingly, there are plenty of people who want to make sure that this "charity" continues and are rushing to dispel any perception that there is trouble with the program.

The day following the story in Focus, the following E-mail denial was sent by Eurofighter:
"Eurofighter GmbH has submitted a proposal for the third Tranche on 14 December 2007 to NETMA (NATO Eurofighter and Tornado Management Agency).

"No proposal has been submitted by Eurofighter GmbH directly to the German MoD.

"The suggested figures will not be commented by Eurofighter GmbH and are rejected as speculation." This is what is known in the aerospace business as a "non-denial denial." Those that stand to have their rice bowls broken by any truncation of the production line are going to keep up the pressure on the four partner nations to stay committed to a third production batch.

Meanwhile, they feel threatened by the resources being diverted away from the UK and Italian MoDs for the F-35. Therefore, as JSF increases in price (and weight) and other problems develop with the program--as they are destined to do with any new aircraft design--there is likely to be name-calling and other unpleasantness being slung across the globe. What is a real danger is that this current conflict may be yet another wedge between the United States and European governments at a time when the two sides of the Atlantic need more cooperation between each other rather than less.

Reuben F. Johnson is a regular contributor to THE DAILY STANDARD.

[Mick Smith]

Reading the Daily Standard article it sounds like this is just another way of saying what has always been the case: that if we cancel the third tranche we will have to pay for it anyway. So the aircraft in the first two tranches will cost more, but not more than we agreed to pay for all three tranches.