More UK cost overruns & Delays

[Heathrow Harry]

BBC News - Watchdog warns of defence project delays and overspending (http://www.bbc.co.uk/news/uk-20960050)

Watchdog warns of defence project delays and overspending

(http://www.bbc.co.uk/news/uk-16588436)Major defence projects are being hit by delays and overspend despite government promises to control costs, the Whitehall spending watchdog has warned.


The National Audit Office found costs of the 16 largest projects had risen by £468m and slipped in timescale by 11 years, seven months in the past year.
Labour said "waste and delay" were characteristic of the coalition's equipment programme.
The government said it had got spending on big projects under control.
The overall costs of the projects have risen by a total of £6.6bn and commissions have been delayed overall by 39 years since being ordered, the National Audit Office (NAO)'s annual report on the Ministry of Defence's major equipment projects said.



'Critical shortfalls'
The report warns that delays to new RAF transport and refuelling planes could lead to critical shortfalls until 2017.

ure.


The MoD has already spent £787m in filling gaps caused by delays to the programmes to deliver new air-to-air refuelling and transport aircraft programmes.


It said that officials were considering extending the life of the RAF's VC10s - due to be retired from service in March - then using the Tristar, which goes out of service next year, to meet air-to-air refuelling needs until the new planes are ready to take over.


Delays to the transport aircraft, the A400M, which is due to enter service in March 2015, six years later than planned, have meant the MoD has had to acquire extra aircraft to ease pressure on the RAF's transport fleet.
Meanwhile, delays to a £32m Falcon communications system for Afghanistan mean it will not now be ready until after British troops have withdrawn in 2014.
The spending watchdog did acknowledge early signs of progress in controlling spending, but overall it concludes the MoD needs to do better.
NAO head Amyas Morse said: "The Ministry of Defence faces a difficult task striking a balance between delivering the capabilities it wants and those it can afford.


"There will always be factors over which the department has limited control, but it must do more to learn from previous projects."


Margaret Hodge, chairman of the Commons public accounts committee, which oversees the NAO's work, said: "Yet again, the MoD's annual report card on its 16 largest defence projects has found unacceptable cost increases and delays, making it harder for the ministry to deliver today's capability needs and close tomorrow's capability gaps."

[ORAC]

AirTanker Aims to Distance Itself from British Procurement Spending Hike (http://www.defensenews.com/article/20130109/DEFREG01/301090017/AirTanker-Aims-Distance-Itself-from-British-Procurement-Spending-Hike?odyssey=tab|topnews|text|FRONTPAGE)

Determined not to be labeled as the villain in a report on how the British Ministry of Defence managed its major equipment programs, in-flight refueling contractor AirTanker has released an open letter to the government’s spending watchdog distancing itself from accusations that its Future Strategic Tanker Aircraft program is responsible for a hike in overall procurement spending.

The National Audit Office is scheduled to release its annual report into the cost and timing of Britain’s 16 biggest defense programs Jan 10. The report says that forecasted fuel-cost increases on the private finance initiative FSTA program to provide an in-flight refueling and transport service for the Royal Air Force are primarily responsible for a 468 million pound increase in overall costs of the 16 programs in the financial year 2011-12.

The open letter to NAO boss Amyas Morse from AirTanker chief executive Phill Blundell said the 336 million pound increase in fuel costs to operate the fleet of tankers owned by the EADS-led consortium “sits outside the FSTA program and are funded completely separately by the MoD with no direct bearing on it (FSTA) whatsoever.”

The NAO’s Major Projects Report attracts considerable attention not least from the powerful Parliamentary Public Accounts Committee who will hold hearings into the reports finding later this month.

The EADS-led AirTanker consortium is anxious not to be tagged as responsible for the bulk of MoD program cost increases in part because the PFI scheme is already unpopular in some quarters due to the perceived high cost of the 12 billion Pound cost of providing up to 14 Airbus A330 aircraft along with maintenance and training facilities for the next 24 years. “It is our opinion that the indirect attribution of these costs against the FSTA program significantly distorts perceptions of it performance especially against other programs where those same inflationary costs are not considered,” said Blundell.

The fuel cost increases are largely beyond the control of MoD or for that matter AirTanker.

Three A330s have been delivered to AirTanker so far and the aircraft are undertaking RAF transport duties but are not expected to start its refueling role until 2014. The program has suffered technical problems partly related to the refueling drogues but the program remains on schedule.

Blundell also denied suggestions by the NAO that the MoD is extending the service life of VC10 and Tristar refuelers and transport aircraft due to perceived risk of delays in the program. AirTanker said this was misleading and the aircraft, known as the Voyager in RAF service was on target and had met all contractual targets to date.

[Biggus]

I'm afraid to say that my personal, I repeat personal, opinion of Margaret Hodge is that she is like the fictional chairman of the investigative committee in the film Skyfall - more interested in making a name/reputation for herself, and to be seen to be haranguing the witness, than in actually getting to the truth of the matter.

Once again I must state that this is a purely personal opinion, based on what I have seen of the right honourable member in action.

Unfortunately this opinion tends to make me cautious of anything she may have to say1

Feel free to disagree.

[airsound]

Defence Secretary Philip Hammond was live on Today on BBC Radio 4 this morning, responding to the NAO report that ORAC refers to. In particular, Sarah Montague tackled him on AAR. She suggested there was a “red capability risk” for AAR. He said:
We’re confident we will have a full in-service air-to-air refuelling capability by May 2014. It was the ramp-up that had been delayed, he said. The planned build-up through 2012 and 2013 was now much later because of technical difficulties with refuelling nozzles, he added.
We’ve got the solution now, and we’re implementing it. ….In the meantime, we’re extending by a further six months the life of the VC-10 tankers.That might appear to call into question AirTanker’s claims (above) about extending, or not, the VC-10s.

Hammond also said that (the UK) will continue to have the greatest refuelling capability of the Western world, apart from the US.

Should you want to hear the whole interview
BBC iPlayer - Today: 10/01/2013 (http://www.bbc.co.uk/iplayer/episode/b01pp987/Today_10_01_2013/)
Scroll to time 2hrs 37’56” for the start, or 2hrs 40’11” for the AAR bit.

airsound

[BEagle]

The program has suffered technical problems partly related to the refueling drogues but the program remains on schedule.

The other 'technical problems' being.....??

:\

[Onceapilot]

So, thats it then, VC10 till the autumn at least!

OAP

[dervish]

Biggus

You are right.

[Chris Scott]

Aaah, so there may be a chance of hearing groups of Conways at full-chat for a bit longer. Does anyone know where these beasts can currently be found, and is that info in the public domain? Pity they didn;t make it over Brooklands for the 50th...

[TorqueOfTheDevil]

anyone know where these beasts can currently be found


Unfortunately the remaining fleet has been dispersed to a variety of top secret locations to negate the threat from enemy bombers.

[airsound]

Come to chateau airsound in Bourton sur l'eau - one of the Brize deps brings them right over here with all 80,000lbs-odd of static thrust continuing to demonstrate the Conway longevity.

airsound

[Madbob]

Why is it that we seem so ready to scrap aircraft immediately they go out of service, especially when there are known to be snags or delays with the replacement? I appreciate that we don't have a desert climate or unlimited hangar space but some sort of cocoon ought to keep the "elements" at bay.

Would it not be better to keep them in some open store even if we don't have the resources to maintain them? The US makes good use of AMARC and Davis Monthan AFB and what with the number of redundant MOD airfields parking space ought not to be an issue......Woodbridge/Bentwaters/Wittering to name but a few.

That way we would keep open a fallback option and in time there may even be a market for some of the airframes/engines/parts which could raise some ££££s (even if only from a museum) which would offset the storage costs.

MB

[ColdCollation]

In a word, MadBob, money.

A capability gap is a saving - in the short term at least; don't go looking for any strategic thinking or long-term husbandry. It's all about money.

[Heathrow Harry]

The real problem is that the fact that we can't seem to get military spending or forecasting of spending under any sort of control just plays into the hands of those who would cut spending even further

No-one believes a word that comes out of either the Services or the MoD and so the assumption (regrettably almost always correctly) is that every military procurement program will run way over budget

This is not a good place to have to start from when you are trying to get more kit

[WhiteOvies]

MadBob,

It always used to be done up at Cosford or Shawbury whilst the disposals process was worked through. We kept the GR7s cocooned (sort of, with dehumidifiers etc) in a hangar at Cottesmore before they were moved out to the US ro Cherry Point and AMARC.

I've never seen anything like the disposal of the MRA4 airframes before :{, at least some of the MR2s survived for museums.

When discussing the disposal of the Shar FA2s with a friend at an air museum he bemoaned the fact that museums were often priced out of he market by business enterprises. RAF and RN can only 'donate' to the Service museums, everyone else has to pay up and most museums don't have the budget.

[Easy Street]

I have to say that £12bn for 14 A330s (which we don't even own!) is absolutely outrageous. 14 basic A330s would cost around £2.5bn, and even allowing for some expenditure in adding AAR capability, the notion that through-life support would cost an additional £7-8bn or so is mind-boggling. I'm glad to see PFI being increasingly questioned in all sorts of areas.

Edited to add: look at the price the Indians are paying for their A330 MRTT (http://defenceforumindia.com/airbus-a330-mrtt-bags-indias-mega-mid-air-refueling-aircraft-deal-1456)!!

India has selected the European Airbus A330 MRTT (Multi Role Tanker Transport) over the Russian Ilyushin-78 mid-air refuelling aircraft in an Rs 8,500-crore contract.

Both the four-engine IL-78 and the two-engine Airbus A330 MRTT had passed the extensive field evaluation trials conducted by IAF but the latter emerged the cheaper option in the subsequent commercial evaluation. “Though the two commercial bids were opened earlier, the final costing last week put the Airbus-330 as the L-1 (lowest bidder) on account of life-cycle costs,” said a source.

IAF, which already operates six IL-78s since 2003-04, is looking to induct the six new tankers or “force-multipliers” from 2017 onwards...8500-crore is 85bn rupees, which is £1bn for 6 aircraft... equivalent to £2.3bn for 14 even without a "bulk discount". And the operating costs are evidently low enough that they chose to get a new type, even though they presumably have support arrangements for IL-78 in place already. We are being utterly, utterly fleeced.

[WhiteOvies]

And yet everyone has a go at how expensive the new Carriers will be! They seem an absolute bargain in comparison and we will actually own them.

Wonder how much the PFI will charge MOD for a boom mod if we end up buying F-35A as a Tonka replacement...?

[Not_a_boffin]

Sharp intake of breath........"Oooh that's going to cost you, sir......"

[Saintsman]

People always look at the headline figure for Voyager. Whilst it is no doubt expensive, there are lots of costs that are not appreciated, such as the cost of supporting the operation, which goes as far down to the number of toilet rolls Air Tanker will have to buy over the period.

The PFI is considerably more than just buying A330s. For whatever reason, it took ages to get the PFI signed in the first place and the legal costs alone were horrendous. Not to mention the number of staff involved with all the different companies involved. Those costs need to be recovered and are bundled into the price. Add such things as wages, pensions, interest on the loans that were needed to buy the aircraft in the first place, the cost of insurance and risk etc. and suddenly the price starts to climb. Add in profit (which is why Air tanker is in it in the first place), over 25 years it will be a huge sum.

I'm not saying that its value for money by any means, but you have to look at the whole picture before making comparisons.

You also have to remember why we went down the PFI route in the first place. Its because the MOD couldn't afford to buy replacement tankers up front.

[Jimlad1]

Absolutely agreed - its very easy to look at eye catching headline figures and go "HOW MUCH" particularly when compared to other nations alleged deals. I'd suggest there is little point comparing like for like as every deal has different elements including provision of airframes, supplies, spares, maintenance contracts etc.
The Voyager PFI went up in part due to the cost of fuel rising - we'd still have to have absorbed that price rise even if we owned the fleet, it just appears in a different line of accounts.
I'm very sceptical of any account which costs an airframe at a cheap cost, as such costs very rarely include any through life support or associated issues, which quickly ratchet the bills up. In the case of India, I suspect by the time you add in all this then their unit price quickly increases.

Never forget with Voyager that we are not paying for an aircraft but a guranteed level of service delivery of fuel and pax for a prolonged period of time.

[Onceapilot]

Anyone know the penalty clause or excess costs if we bend one?

OAP

[Roland Pulfrew]

The Voyager PFI went up in part due to the cost of fuel rising

Err, why? All fuel provided for FSTA/Voyager comes from military fuel stocks and comes out of the normal operating budget.

[melmothtw]

Err, why? All fuel provided for FSTA/Voyager comes from military fuel stocks and comes out of the normal operating budget.


Not quite, as a PFI programme FSTA is fully managed by AirTanker and part of this involved them managing the supply of fuel over the 27-year life of the programme. The MoD does have to pay them for this, but it is listed as a programme cost rather than a consumable, hence its inclusion in this report.

[Biggus]

I once visited an aircraft manufacturer, and the person showing me around candidly stated that they virtually sold aircraft at a loss. Where they made their money was in the spares and support contract over the next X number of years.



As has already been pointed out, unit cost prices for other nations buying similar aircraft should be taken with a pinch of salt, there is much more to consider. Not that I'm personally saying the PFI contract is a good or bad idea, I simply don't know enough of the details - but as someone has pointed out, in theory we (the MOD) was so broke it was either that or nothing!!

[bobward]

This raised a smile. Didn't they keep a whole fleet of ex-airline VC-10's at Abingdon for many years, before they became K2,3 and 4?

Plus ca change, plus ca meme chose.....:sad: