Boeing lose out again!
The British government is about to award a £13bn contract to replace the RAF's refuelling aircraft to a team led by EADS, the Franco-German defence group, in a blow to a rival consortium led by BAE of the UK and Boeing of the US.
Although the timing of the announcement could slip, industry executives say the team led by the parent of Airbus is scheduled to meet Ministry of Defence procurement officials on Monday to be told it has won.
The decision to favour the AirTanker consortium came as the MoD warned BAE that it could lose future contracts if it failed to improve its project management of big weapons programmes.
An annual review of the armed services' 30 largest weapons programmes, published on Friday, shows the projects have slipped an additional £3.1bn over budget and were delayed an average of nine months, one of the worst performances in recent history.
The National Audit Office study showed that more than 87 per cent of cost overruns and 79 per cent of delays last year were down to four projects, three run by BAE and the other by a missile house partly owned by BAE.
"You don't keep employing a plumber who continually floods your house," a senior MoD official said.
The award of the 27-year contract is a breakthrough for Airbus, which is 80 per cent owned by EADS and 20 per cent owned by BAE. Airbus will supply the aircraft to the AirTanker consortium, with engines and avionics provided by Rolls-Royce of the UK and Thales of France respectively. Cobham of the UK, the other consortium member, will refit the A330 passenger jets.
EADS thinks a win in the UK will give it a leg up when the Pentagon looks for its next tranche of tanker aircraft - large jets used to refuel other military aircraft in mid-air. That contract will mean hundreds of orders for the winner. Boeing has a near-monopoly on tanker aircraft. Losing the RAF contract would have effectively shut Airbus and EADS out of the market.
The loss of the contract - the MoD's largest private finance initiative - follows a disastrous few months for BAE's TTSC consortium, which it leads with Boeing and Serco. Boeing is engulfed in a scandal over a much larger tanker deal for the US Air Force, which led to the resignations of two senior managers, including Phil Condit, its chief executive.
BAE on Thursday acknowledged strained relations with the MoD in the past - particularly its difficulties on the Astute submarine and Nimrod patrol aircraft - but insisted those problems had been dealt with early last year.
"The bottom line is that the [NAO] report is retrospective," BAE said. "Inevitably there are still things BAE needs to do to repair the relationship, but the issues are being sorted out."
Lord Bach, minister for defence procurement, said his call for improved project management covered all companies doing business with the MoD.
Nimrod and Astute are two of the four most costly and delayed programmes, according to the NAO. The other two are the four-nation Eurofighter, run in the UK by BAE, and the Brimstone missile made by MBDA, a consortium part owned by BAE.