PFI Hospitals going bust, what are the implications for the future of MoD & AirTanker

[salad-dodger]

The procurement of an AAR capability through PFI never seemed like a particularly good piece of business by the MoD. Now we have it confirmed that hospitals provided under PFI are unaffordable.

Blair defends PFI as NHS trusts face bankruptcy - Telegraph (http://www.telegraph.co.uk/health/healthnews/9356942/Blair-defends-PFI-as-NHS-trusts-face-bankruptcy.html)

How long will it be before the MoD's buy now pay later strategy lands us in the poo?

S-D

[air pig]

I suspect that the Rt Hon member for Kirkcaldy has you so delicately put has left the UK deeply in the poo, not just the NHS but as you assert AirTanker as well. If the deal has been as badly negotiated as the NHS PFI deals you will need to pray if we go to war again, but as usual HM Forces will set to and deal with it. Pity he can't be charged with Treason for the ultimate penalty but I want to see his entrails hanging on a pike on London Bridge.

[Rosevidney1]

Those civil servants involved in drawing up these contracts must be either utterly inept or criminal. :mad:

[MG23]

Those civil servants involved in drawing up these contracts must be either utterly inept or criminal. :mad:

PFI was a brilliant scam. It let politicians pretend they were buying lots of new stuff while offloading the cost onto future governments so they didn't have to raise taxes to pay for it. No criminal intent required, just a desire to get re-elected combined with no concern about the long-term consequences.

[The B Word]

MG23

^^^^^ well said, Sir or Ma'am...:D

[Pontius Navigator]

Like contractorisation too.

They look at the in-house cost, decide that if they can save £Xm then contractor provision is the way to go. Contract let and for 5 years sunshine and light. Contractor grins and bares it. Come contract renewal contractor makes realistic bid. He is either undercut through ignorance or his bid is way above the budget line entry. MOD grins and bares it.

Come the third review, MOD ability to return in-house is zero, contractor grins, MOD bares it.

[Kengineer-130]

Well, Cobham aviation could be in trouble now having lost the tanker contract :sad:

[Ken Scott]

Purely out of interest is anybody aware what the implications are under the PFI for the loss of an airframe, whether by accident or enemy action? Who exactly is required to replace the asset? Does the MOD have to replace it for Air Tanker for losing them their aircraft?

Just interested.

[Scuttled]

A valid question.

I understand that in future conflicts the 1st (Duke of Wellington's) Kings Defence Contract Enforcing Battalion are to be in the vanguard of our war plans. Not until the appropriate paperwork, with liability and risk assessments, has been signed by our potential foe shall the aircraft be sent into danger.

In the event of the enemy objecting to this, we shall threaten to ignore European working time directives and threaten to fight at weekends, evenings and on public holidays thus scuppering their own financial plans. They'll sign.

It's a fantastic and clever calculated strategy that makes me proud to be British. Both our soldiers, the sailor and the airman that are left in 2020 shall have a strategy fit for purpose.

[salad-dodger]

Purely out of interest is anybody aware what the implications are under the PFI for the loss of an airframe, whether by accident or enemy action? Who exactly is required to replace the asset? Does the MOD have to replace it for Air Tanker for losing them their aircraft?
one way or another, the MoD will pay for it!

S-D

[tucumseh]

Those civil servants involved in drawing up these contracts must be either utterly inept or criminal.


What about the Civil Servants who, when the Tories introduced PFI and imposed it upon MoD, immediately spotted it for the waste it was and took the time to spend 5 minutes filling in the PFI Waiver form? I don't recall getting any support from non-Civil Servants.

The inept/criminal act was the orders from above to knowingly waste money.

It is an offence for anyone in MoD to refuse such a direct order to waste money, but not an offence to issue that order.

Now put yourself in the shoes of those who had to let the contracts. Damned if you do, and disciplined if you don't.

[sbdorset]

Don't understand why everyone winges about Air Tanker. When you have no money but are desperate for new capability (remember the A330 is fully equipped for trooping, cargo and AAR) lease it. That is in essence what AT is so for circa £400M per year for the duration (25 years), you get airplane, training, support, infrastructure, etc and can start retiring VC10's and Tristars that should have gone years ago.

The problem, that few focus on, is you have now taken on a fixed annual cost for the pleasure of new capability and no cash. Don't blame the contractor!:ugh:

[DeaconBlue]

Couple of points from a very experienced Industry bod who had no involvement in AirTanker at all (but was central to some other big deals)...

1) Loss of airframe. Under all normal operations this is covered by insurance. You have to ensure the asset as the end of the day, the banks want the money back that they have loaned... Otherwise you would never get the loan. My understanding is that in certain circumstances (eg. all out shooting war), the Government takes on the risk of replacing the asset or paying back the bank.

2) (Financially) IT'S A MORTGAGE.... of course it's going to cost more than buying the equipment but we'd all buy our own houses if we could outright. The balance has to be made for affordability

3) (operationally) IT'S BETTER THAN A MORTGAGE... You get assurance the equipment / service will operate or you withhold payment until it works... try doing that with your mortgage payment when the bolier breaks down and see how far it gets you

It's not a perfect system, mainly because the process around the procurement is so long, drawn out and impractical that the requirement has changed before the system is contracted for. Also the Government needs to implement more flexibility so the systems / service can change without huge cost deltas. These are all fixable problems. We sort them out on a business to business basis all the time. But the bottom line is, we never had the cash to buy the Tankers anyway so unless you want to keep flying VC-10, Tristar and wasting HUGE amounts leasing AT, I suggest (respectfully) you get behind the program.

Also one final point. I have civilian troops in harms way, every day in the sandy places of the world. They are no less dedicated to the cause than their military counterparts and to suggest they are does them a grave injustice. Most of us in the defence industry have the same values that you do, that's what makes us proud to do the job of supporting you.

[just another jocky]

Good post DeaconBlue. :ok:

[Pontius Navigator]

You get assurance the equipment / service will operate or you withhold payment until it works

This is the stick.

Unfortunately (maybe) the Ministry view is that it is not in the business of driving a contractor to the wall.

If it doesn't work you can, to a point, tell the contractor to fix it. If the problem becomes really large then the contractor can go in to administration or the Ministry has to stump up more cash, usually under the guise of a contract variation.

[salad-dodger]

That's it sorted then, AirTanker is a great deal because DeaconBlue has told us so and he's also told us that he knows a lot.
1) Loss of airframe. Under all normal operations this is covered by insurance.
Well let's hope we manage to keep Voyager in a better state than we've kept other aircraft. That is meeting all of the relevant standards, legislators requirements etc.
2) (Financially) IT'S A MORTGAGE
No it's not.
3) (operationally) IT'S BETTER THAN A MORTGAGE... You get assurance the equipment / service will operate or you withhold payment until it works... try doing that with your mortgage payment when the bolier breaks down and see how far it gets you
And we've all seen over the years how well the MoD has held industry to account haven't we?
It's not a perfect system
You got that one right! Any other countries queueing up to follow the UK's procurement examples?

S-D

[Roland Pulfrew]

3) (operationally) IT'S BETTER THAN A MORTGAGE... You get assurance the equipment / service will operate or you withhold payment until it works...

No it isn't. If the equipment/service doesn't work (how are the refuelling pods coming along by the way?) then the operational risk stays with the MOD. Slightly more important than being able to withhold payment (Lockheed Martin and C130J) is having the tanker where you want it, when you want it.

If the MOD have to run on Tristar (and VC10?) to cover the late arrival of Voyager AAR, it will be very interesting to see who picks up the tab. I'm guessing that the costs involved would cause AirTanker some interesting financial dilemmas right now. :rolleyes:

[teeteringhead]

the 1st (Duke of Wellington's) Kings Defence Contract Enforcing Battalion Heaven forefend that we should sully the name of the Iron Duke by associating it with a bunch of pen-pushers.

We must always remember his robust views on admin niff naff and trivia ........
Gentlemen,

Whilst marching from Portugal to a position which commands the approach to Madrid and the French forces, my officers have been diligently complying with your requests which have been sent by H.M. ship from London to Lisbon and thence by dispatch to our headquarters.

We have enumerated our saddles, bridles, tents and tent poles, and all manner of sundry items for which His Majesty’s Government holds me accountable. I have dispatched reports on the character, wit, and spleen of every officer. Each item and every farthing has been accounted for, with two regrettable exceptions for which I beg your indulgence.

Unfortunately the sum of one shilling and ninepence remains unaccounted for in one infantry battalion’s petty cash and there has been a hideous confusion as the the number of jars of raspberry jam issued to one cavalry regiment during a sandstorm in western Spain. This reprehensible carelessness may be related to the pressure of circumstance, since we are war with France, a fact which may come as a bit of a surprise to you gentlemen in Whitehall.

This brings me to my present purpose, which is to request elucidation of my instructions from His Majesty’s Government so that I may better understand why I am dragging an army over these barren plains. I construe that perforce it must be one of two alternative duties, as given below. I shall pursue either one with the best of my ability, but I cannot do both:

1. To train an army of uniformed British clerks in Spain for the benefit of the accountants and copy-boys in London or perchance.

2. To see to it that the forces of Napoleon are driven out of Spain.

Your most obedient servant,

Wellington

[sbdorset]

Operational risk will always be with the MOD, quite rightly.

I was involved in the AT bid and negotiation phase as a Dir of one of the partners. It is a carefully constructed deal which gets inaccurate press most of the time. As I said before, if you have no money and desperately need capability then this is what you get - pluses and minuses!!!!

[Willard Whyte]

There is, or rather was, money.

It just got sent to the wrong people: feckless wasters and foreign nations with nuclear and/or space programs.

[mr snow]

AirTanker bashing seems to be reaching new levels here. I'm surprised that this summer's crap weather has not been pinned on ATrS yet.

[lj101]

Oh come on Mr. Snow,

All the operators want is an Airtanker that is capable of successfully passing fuel to its receiver. It's not much to ask is it?

[Wander00]

Or even carry the odd item of SLF.

[lj101]

To be fair, they are doing AT.

Nairobi run this weekend.....

[Arty Fufkin]

I'm in general agreement with Mr Snow on this one.

The aircraft has had snags with its AAR equipment. The same fault would have manifested itself even if the RAF owned the aircraft. If anything, the financial imperative to get the capability up and running for contractural reasons may well mean a faster rectification than if the problem was being worked by ...... BAe or another contractor who is paid by the hour regardless of sucess as would otherwise be the case.
The aircraft is carrying passengers on live tasking, crews are qualified on type and more aircraft are on the way. This is what, 4 years after signing the contract?
Yes, as with anything where payments are spread rather than made upfront, the overall cost will be way more than if the MOD had the means to purchase than aircraft outright. But do you really think that the RAF could have got it up and running any quicker? I reckon they'd still be working out what colour to paint the hangar or working out how to put all 3 FMS heads under the exclusive control of a navigator.

I will of course stand by to be amazed by shining examples of MOD aircraft procurement and introduction to service.

Standing by.

Arty

[downsizer]

So it is carrying troops into theatre....

Oh wait....:\