What's going on with Typhoon prices?
Thread Starter
What's going on with Typhoon prices?
OK, what's going on with Typhoon costs.
The cost of 232 jets was originally planned to be £16.7 Bn (later stated as £17.4 Bn), including R&D.
That gave a unit programme price (including R&D) of £72 m (later £75 m).
The NAO subsequently revealed that this had increased to £19.7 Bn, including R&D
That gave a unit programme price (including R&D) of £85 m.
The NAO later settled on a total programme cost of £19.014 Bn, including R&D
That gave a unit programme price (including R&D) of £81.96 m.
In the latest (2005) major project report, the total programme cost is now “commercially sensitive to protect our ability to negotiate on subsequent purchases of the aircraft.”
In the NAO major projects report 2003, the unit production cost (excluding R&D) was quoted as £56.8 m (assuming a full 232 aircraft buy). (£13.18 Bn + R&D)
In the NAO major projects report 2004, the unit production cost (excluding R&D) was quoted as £49.1 m (assuming a full 232 aircraft buy). (£11.39 Bn + R&D)
This reduction was in line with the expected reduction in costs with each successive Tranche, and reflected some cancelled weapons integrations, and the shift of some costs from production to R&D.
It was later said that our 55 Tranche 1 aircraft were costing £2.5 Bn, representing a unit production cost of £45.45 m. (The difference between £45.45 and £45.91 is trivial enough to be down to interest, or currency fluctuation).
The ballpark unit flyaway seemed to be £45 m - close to the export price of €62 m for Austria.
But in the NAO major projects report 2005, the unit production cost (presumably excluding R&D) is now quoted as £64.8 m (but that is a unit production cost of Tranche 1 and 2 Typhoon only - 144 aircraft). (£9.33 Bn)
That's nigh on £20 m more, per jet. WHY?
Why the change in the way the NAO is calculating these costs?
It doesn't seem to be that T3 has been ****-canned. On 2 Feb 2006 the Parliamentary Under-Secretary of State for Defence (Mr. Don Touhig) said:
“My right hon. Friend spoke about the Eurofighter. He was particularly concerned about Typhoon tranche 3. The UK has entered into international arrangements to order 232 Typhoons in three tranches. That undertaking remains unchanged. A decision on the third tranche is not required before June 2007, and will be the subject of the MOD's main gate approval process……..”
Does this £9.33 Bn figure include R&D so far? Surely not, but if not, the Tranche 3 jets would cost just under £10 Bn for 89 jets, including R&D, making them more than £100 m each.
£9.482 Bn had been spent to March 2005.
“MPR05 reflects an increase to £64.8 m in the unit production cost for the aircraft. This reflects the costs agreed for Tranche 2 and Tranche 3 only. The cost of Tranche 3 aircraft will be the subject of a separate negotiation and contract with industry.”
If T1 and T2 jets cost £64.8 m each, then the T3 jets will need to come in at £23.25 m to remain within the average unit production cost quoted as recently as 2004.
Austria paid €62 m (£42.32 m) per aircraft, including a 7% profit for EF GmbH.
Why is the UK cost higher in pounds than the Austrian price is in Euros?
The cost of 232 jets was originally planned to be £16.7 Bn (later stated as £17.4 Bn), including R&D.
That gave a unit programme price (including R&D) of £72 m (later £75 m).
The NAO subsequently revealed that this had increased to £19.7 Bn, including R&D
That gave a unit programme price (including R&D) of £85 m.
The NAO later settled on a total programme cost of £19.014 Bn, including R&D
That gave a unit programme price (including R&D) of £81.96 m.
In the latest (2005) major project report, the total programme cost is now “commercially sensitive to protect our ability to negotiate on subsequent purchases of the aircraft.”
In the NAO major projects report 2003, the unit production cost (excluding R&D) was quoted as £56.8 m (assuming a full 232 aircraft buy). (£13.18 Bn + R&D)
In the NAO major projects report 2004, the unit production cost (excluding R&D) was quoted as £49.1 m (assuming a full 232 aircraft buy). (£11.39 Bn + R&D)
This reduction was in line with the expected reduction in costs with each successive Tranche, and reflected some cancelled weapons integrations, and the shift of some costs from production to R&D.
It was later said that our 55 Tranche 1 aircraft were costing £2.5 Bn, representing a unit production cost of £45.45 m. (The difference between £45.45 and £45.91 is trivial enough to be down to interest, or currency fluctuation).
The ballpark unit flyaway seemed to be £45 m - close to the export price of €62 m for Austria.
But in the NAO major projects report 2005, the unit production cost (presumably excluding R&D) is now quoted as £64.8 m (but that is a unit production cost of Tranche 1 and 2 Typhoon only - 144 aircraft). (£9.33 Bn)
That's nigh on £20 m more, per jet. WHY?
Why the change in the way the NAO is calculating these costs?
It doesn't seem to be that T3 has been ****-canned. On 2 Feb 2006 the Parliamentary Under-Secretary of State for Defence (Mr. Don Touhig) said:
“My right hon. Friend spoke about the Eurofighter. He was particularly concerned about Typhoon tranche 3. The UK has entered into international arrangements to order 232 Typhoons in three tranches. That undertaking remains unchanged. A decision on the third tranche is not required before June 2007, and will be the subject of the MOD's main gate approval process……..”
Does this £9.33 Bn figure include R&D so far? Surely not, but if not, the Tranche 3 jets would cost just under £10 Bn for 89 jets, including R&D, making them more than £100 m each.
£9.482 Bn had been spent to March 2005.
“MPR05 reflects an increase to £64.8 m in the unit production cost for the aircraft. This reflects the costs agreed for Tranche 2 and Tranche 3 only. The cost of Tranche 3 aircraft will be the subject of a separate negotiation and contract with industry.”
If T1 and T2 jets cost £64.8 m each, then the T3 jets will need to come in at £23.25 m to remain within the average unit production cost quoted as recently as 2004.
Austria paid €62 m (£42.32 m) per aircraft, including a 7% profit for EF GmbH.
Why is the UK cost higher in pounds than the Austrian price is in Euros?
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Perhaps earlier figures for home consumption, later ones for Saudis? 
Less than ringing on May 2:
Mr. Ellwood: To ask the Secretary of State for Defence how many Eurofighters the UK plans to purchase; and how many will be used by the RAF. [66606] Mr. Ingram: The United Kingdom has, to date, contracted for 144 Eurofighter-Typhoon aircraft for use by the Royal Air Force. A decision by the Eurofighter Partner Nations on the third production buy of the aircraft (known as Tranche 3) is not required until at least 2007.
Less than ringing on May 2:
Mr. Ellwood: To ask the Secretary of State for Defence how many Eurofighters the UK plans to purchase; and how many will be used by the RAF. [66606] Mr. Ingram: The United Kingdom has, to date, contracted for 144 Eurofighter-Typhoon aircraft for use by the Royal Air Force. A decision by the Eurofighter Partner Nations on the third production buy of the aircraft (known as Tranche 3) is not required until at least 2007.
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RAB?
Jackonicko - I don't suppose you're a victim of RAB (adopted by HMG with effect from 2004/2005 I think) or approvals based on Through Life Cost? For example, one of the prices quoted for Tranche 2 was 5.5Bn for 89 ac through life. That would make it about 62 million per aircraft, or £10k per hour (design life of 6000 hours per ac).
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Does some of those prices include the cost of upgrading Tranche 1 to Tranche 2???.
AIUI each Tranche has more equipment on it, so while the basic aircraft price reduces the level of equipment fitted rises...
Yup its bloody complicated..
cheers
AIUI each Tranche has more equipment on it, so while the basic aircraft price reduces the level of equipment fitted rises...
Yup its bloody complicated..
cheers
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Reading the NAO doc rules out RAB, TLC, & Tranche 1 upgrades.
Why not take numbers at face value? i.e. UPC is now stated for T1 & T2 based on contracted costs rather than including over optimistic T3 forecasts. There's chitchat that kinda supports that.
Why not take numbers at face value? i.e. UPC is now stated for T1 & T2 based on contracted costs rather than including over optimistic T3 forecasts. There's chitchat that kinda supports that.
