Oops - Cost of Lynx

[dervish]

From Daily Telegraph


Des Browne, the Defence Secretary, is being called on to clear up confusion over why the cost of an army helicopter contract appears to have doubled to £2bn in under a year.

Last year the Ministry of Defence said that the contract for 70 Lynx helicopters, awarded to AgustaWestland, would cost the taxpayer about £900m to £1bn. But in answer to a parliamentary question, Adam Ingram, armed forces minister, said the contract would be worth £2bn. The shadow procurement minister, Gerald Howarth, said: "If it is true that the cost of this project has doubled in 12 months then we need an immediate explanation."

One source involved in the contract, under which the helicopters will be delivered from 2011, said that the MoD had probably now added in the cost of spares, VAT and wage inflation. But in Mr Ingram's answer, which lists the top 20 defence procurements, no other contract has been inflated with such additional costs.

The MoD told The Daily Telegraph that the figure could be a typing error, but despite requests for further clarification it did not return calls. Francis Tusa, a defence analyst who first spotted the increase, said: "Someone has some serious explaining to do."


http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/04/03/cncopter03.xml

[Solid Rust Twotter]

Off Topic....

[Kitbag]

Mr Haine would have a deep rooted objection to buying anything from that country

[Solid Rust Twotter]

Not sure why.:confused: The ruling elite are the ones he campaigned so hard to get in power.

[tucumseh]

At £1Bn, that's £14M per cab. That sounds not unreasonable to me just for the development/production cost, although it depends what avionics and weapons are spec'd. I'm not a Lynx expert, but other current RW are far more expensive.

When you add through life support, in all its guises..........

VAT? Spares? Wages? All stuff that has to be accounted for long before submission for approval, never mind contract award.

When discrepancies like this happen, the lower figure is often the marketing guy's rough unit cost to DEC, which is always VAT-Ex. Typically, DEC will forget/ignore that EP is VAT-Inc. They never make adequate provision for spares, repairs, training etc; and the concept of differing wage structures is, to be fair, detail which is best left to Commercial and Tech Costs. This is compounded by the Services no longer being required to quantify their requirements properly. (To cost, one must first quantify, but Ministers ruled this discipline as "unnecessary detail" some years ago). That's why many projects are over BUDGET, but within the FAIR and REASONABLE COST. If a project has been costed properly, it's odds-on the project manager has quantified it himself.

My guess would be the two questions were phrased differently (or imprecisely, which is common), and two different people provided what they genuinely thought were correct answers. Someone is stirring the ****. Hope this faffing about doesn't delay ISD.