Has transport and airborne refuelling been neglected in recent times and resources funnelled to Typhoon, Tornado, Harrier and other more offensive systems?
If you believe the ‘Fast Jet Mafia’ theories then yes and the dire state of the RAF’s transport and AAR capability would seem to confirm this. The RAF’s lack of capacity has been exposed by enduring operations in the Middle East, perhaps the most damaging PR problems have come from this area, soldiers leave being delayed and other stories paint a picture, however unjustified, of RAF indifference to the needs of the Army whilst they continue to devote most of their funding to the whizzy shooty stuff.
It is not a fair accusation for any number of reasons but whatever reasons for the real or perceived lack of priority the fact is, the RAF needs to concentrate more resources to this area. The general thrust of the Think Defence proposal for the RAF is retention of minimal UK air defence and reduction in expeditionary fast jet capacity. A steady state for UK air defence with the ability to surge to 2-3 squadrons for a short term contingent operation dropping down to 1 squadron of fast jets for enduring operations. This shrinkage will free up funding for the ‘capability plus’ areas of ISTAR, transport and building regional security/special forces support; those that deliver effect for the most likely types of operation we will be involved in and afford influence in coalitions; again, the most likely operating condition for UK forces.
I also think this is an area where the UK should be bold, invest to save and not be afraid of taking a clean sheet of paper approach.
In this post I am going to look at the strategic transport and air refuelling capability area.
With the advent of the civilian passenger jet most air forces have used derivatives of them for the strategic transport role, apart from operating in higher risk airspace there is very little to distinguish the flight profiles of commercial and military aircraft transporting pallets of stores or personnel, going on holiday or summering on a two range is largely the same in terms of air transportation.
Civilian wide body jets are optimised for efficient movement and low operating cost, exactly what is needed for the strategic transport role. These have been developed to also provide airborne refuelling, often only with minimal modification.
Aeromedical evacuation is also a typical mission, along with various other transport requirements for training locations like Canada for example.
What might be considered as proper airborne refuelling was invented by the British company founded by Sir John Cobham in the 1940’s as a direct result of the insatiable thirst of the early jet engines and need for extended range. Before then, various expedient solutions were used, like catching the trailing hose with a walking stick, in the 20’s and 30’s for breaking endurance records.
In 1934 Sir John formed Air Refuelling Limited to exploit the early systems for military use. Although used by the RAF’s Tiger Force in the Far East the true potential of airborne refuelling was not realised until after the war when Boeing used the same Air Refuelling Limited equipment to equip 4 KB-29M aircraft which allowed the record breaking B-50A Lucky Lady II to circumnavigate the world in a continuous flight.
Developments rapidly followed and the Cobham probe and drogue system is used to this day.
There is a great source of information on the history of airborne refuelling at the Cobham 75 website, here, well worth a read, as usual with most stories of military logistics they are under recognised.
Being able to refuel whilst in flight has the obvious advantages of extending mission range and endurance, the iconic Black Buck raids by RAF Vulcan bombers and Victor tankers during the Falklands conflict in 1982 were an extreme and record setting example but it is now a routine, almost mundane occurrence, in modern operations.
Not only are there operational advantages to extending the persistence of tactical combat and logistics aircraft but a number of cost benefits also accrue, instead of expensively transferring fuel over long distances, an airborne refuelling facility allows bulk fuel to be obtained at cheaper locations. Tactical strike fighters delivering close air support and ISTAR can take off with heavier loads than might normally be possible, take on fuel in one or multiple ‘pit stops’ and extend mission times, less aircraft are needed for a given coverage, less crew, less maintainers etc.
However, all in the garden is not rosy; the cost of maintaining this capability is not insignificant but they are the very definition of force multipliers.
Because the RAF basically cannot meet the requirements of the deployment in Afghanistan the MoD are using civilian charter aircraft, the expected cost for this year is estimated to be £215m as given in a recent parliamentary answer.
Operating ageing aircraft like the Tristar and VC10 has resulted in an over reliance on charter transport and morale sapping delays in personnel movement. That the joint logistics team have managed so far to maintain the air bridge to the Middle East is a testament to their skill and hard work, again, they do not get anywhere near the credit they deserve.
But skill and hard work do not make up for a lack of airframes, fire fighting and overcoming daily obstacles do not make for an efficient system.
Some might say that this is OK, the Treasury is paying the cost of operations in Afghanistan, Afghanistan is a particularly air intensive operation, the service is adequate and the RAF is not having to fund aircraft that in times of less intense or no operations would stand idle. There is some logic to this but the notion relies on the availability of the civilian charter market, if the world economy improves availability will decrease and costs will rise. This is a similar situation that prompted the letting of the Points class RORO ships contract and we are taking risks, hoping that the civilian charter market tap will always be available to turn.
These civilian aircraft are not fitted with defensive aids, as a matter of policy the UK does not use them for personnel transport so has to resort to a time consuming, inefficient and expensive ‘hub and spoke’ arrangements that involve civilian charters to the Middle East and transfer to RAF C17/C130 for the flight to Afghanistan. Flying directly into theatre from the UK will reduce the total number of air movements and deliver a much more efficient, lower cost capability.
The majority of flights in an enduring operation will be personnel and pallets, vehicles and helicopters may well form the bulk of requirements in the early stages of an operation but this will change once they are delivered. As forces are built up prior to a higher intensity operation then the mix and intensity might change as well.
The sheer volume of cargo requirements can be staggering, recent information from the MoD detailed the flight and cargo requirements for operations in Afghanistan. During the early years there were about 750 flights, 7,000 pallets and about 12,000 tonnes flown per year in a rough 50:50 split between the RAF and civilian charter. Last year this jumped to just under a thousand flights, a similar number of pallets but a weight of 16,000 tonnes, again on a rough 50:50 split.
This averages out to about 4 flights, 20 odd pallets and 40 odd tonnes per day based on Afghanistan, which might be described as the worst case scenario for resupply on an enduring basis by air, assumption in SDSR are 1 brigade of about 6,500 personnel on an enduring basis, we currently have about 10,000 personnel deployed. We might assume that Afghanistan is the worst case scenario for enduring operations but even though Afghanistan is relatively air intensive there are conceivable locations where a similar situation might prevail.
Afghanistan might establish a reasonable baseline onto which we load contingent operations, build ups for larger scale one off operations and other commitments such as the Falkland Islands, training and airborne refuelling.
Whilst the existing fleet has been getting used and abused the RAF and MoD have been moving along with the delayed and very expensive FSTA agreement that will solve all the strategic transport problems.
Replacing the RAF’s clapped out Tristars and VC10’s will be the Future Strategic Transport Aircraft or FSTA programme. Delivered as a 27 year £13 billion Private Finance Initiative from Air Tanker, it will provide a step change in capability, availability and reliability. Based on the Airbus A330 Multi Role Tanker Transport (MRTT) ordered by Australia, Saudi Arabia, and the United Arab Emirates it must be understood that it is not simply having the aircraft on Hire Purchase, it’s a complete availability and service contract.
Despite the problems we should note that Air Tanker have competently and diligently met all their performance targets and programme objectives.
FSTA progress so far
Despite recent progress the FSTA programme has a long and none too stellar history, it’s an MoD procurement after all, surely you weren’t expecting anything other than a woeful story of delays and incompetence were you?
It is worth quoting the reports summary;
In March 2008, the Ministry of Defence (the Department) signed a private finance initiative (PFI) contract with AirTanker Ltd, for the Future Strategic Tanker Aircraft (FSTA) to provide air-to-air refuelling and passenger transport services. FSTA is based around 14 modified Airbus A330-200 MRTT and will replace the 24 Tristars and VC10s that form the RAF’s current fleet.
Under the contract, AirTanker owns the aircraft and will provide them to the Department when required. AirTanker will also provide the associated aircraft support, maintenance and infrastructure, making the scope of the deal broader than any other defence PFI contract to date. The value of the contract, worth £10.5 billion over 27 years, also makes it the largest signed.
PFI works best where activities and demand are predictable. This is clearly not the case for FSTA. For instance, it is simply astonishing that the Department did not decide until 2006 that FSTA should be able to fly into high threat environments such as Afghanistan. Yet the Department is inhibited from changing the specification because of the implications to the cost of the PFI. Just two years after the deal was signed, the forthcoming Strategic Defence and Security Review is likely to change the demand for the services AirTanker has been contracted to deliver. As the Committee’s previous work shows, dealing with changes on PFI deals is expensive and the Review may question whether this PFI deal is sensible or affordable. The fact that no other country has chosen to procure air-to-air refuelling and passenger transport using PFI type arrangements is further indication that PFI is not a suitable procurement route for such important military capabilities.
There are significant shortcomings in the Department’s procurement of FSTA and we do not believe the procurement was value for money. The shortcomings include:
Assuming that PFI would be the right solution from the outset without a sound evaluation of alternative options;
Running only a limited competition;
Never developing a realistic fallback if the PFI solution proved unworkable;
Failing to have a clear understanding of the full costs of running its current aircraft fleets and failing to secure visibility of sub-contractor cost data, meaning the Department was unable either to compare costs with the price being offered by AirTanker or determine whether the PFI option was good value for money;
Not fixing the requirements until late into the process so that the negotiations themselves took over nine years to complete, more than double the expected four years. This delay in turn led to a considerable cost increase against initial estimates;
Not having the right skills and experience in place and failing to provide firm leadership until the later stages of the procurement to effectively manage the procurement, and
Not making timely decisions on fitting the necessary protection equipment to enable the aircraft to fly into high threat environments like Afghanistan, a task that the Tristar may have to continue doing until 2016.
In order to obtain best value going forward, the Department must retain contract expertise and ensure that staff make decisions regarding FSTA in the full knowledge of the financial implications. Without this action, the risk is that extra demands will be placed on AirTanker which result in additional, and unnecessary, payments being made by the Department.
In the measured tones of official publications this is pretty damning stuff.
Quite clearly it is yet another MoD/Military weapons grade cock up.
But we say this with the benefit of hindsight, if we had purchased them outright something else would have had to be delayed or omitted from the equipment plan. The PFI arrangement means that pretty much everything is included for about £400 million per year, more details here.
The delays have resulted in a woefully inadequate air transport capability, highlighted above, which has had serious impact on the Iraq and Afghanistan air bridge and as usual, we have had to rely on the herculean efforts of the existing aircraft maintainers and capabilities of the air movements teams to keep even a basic level of service in support of operations. We spend millions on training personnel so they can do a good job but then saddle them with antique equipment that is fundamentally unfit for service.
PFI’s are a fundamentally poor way of procuring capabilities that are unpredictable and involve risk because the cost of that risk is always transferred back to the customer and interestingly, one of the funding partners for Air Tanker is the Royal Bank of Scotland. We will therefore be borrowing money off ourselves because we can’t afford it!
A few of comments from members of the current government are interesting.
Vince Cable MP said of PFI’s
“The whole thing has become terribly opaque and dishonest and it’s a way of hiding obligations. PFI has now largely broken down and we are in the ludicrous situation where the government is having to provide the funds for the private finance initiative”
Philip Hammond, Conservative Treasury spokesman, said
“If you take the private finance out of PFI, you haven’t got much left . . . if you transfer the financial risk back to the public sector, then that has to be reflected in the structure of the contracts. The public sector cannot simply step in and lend the money to itself, taking more risk so that the PFI structure can be maintained while leaving the private sector with the high returns these projects can bring. That seems to us fairly ridiculous.”
Liam Fox MP, Secretary of State for Defence, commenting on the NAO report said;
“This NAO report exposes one of the most absurd procurement decisions taken by this Labour Government.
“First, they failed to examine alternative ways of funding the requirement for air-to-air tankers / transport aircraft. The extraordinarily convoluted PFI process means the programme is five years late, leaving the RAF dependent on 40 year old Tri-Stars and VC-10s which have provided our troops with an unreliable service.
“Secondly, because the contract was shrouded in secrecy, it is only now that we learn that the planes will not even be fitted with defensive aids to enable them to fly into war zones.
“As troop carriers they will be of no more use than hiring British Airways or Easyjet planes, but twice as expensive. Meanwhile, the NAO confirms it will be years – and millions more pounds of taxpayers’ money – to bring the planes up to the standard necessary to replace the Tri-Stars on routes to war zones like Afghanistan.
“This FSTA programme sums up the utter incompetence of Labour’s management of defence procurement”
Politicians must be used a diet of their own words!
So it being obvious what the Conservative Secretary of State for Defence and the Liberal Democrat Business Minister think of PFI’s have they had the CEO of AirTanker into Whitehall for an interview without coffee, what do you think?
Business as usual it would seem, so let’s not have any more lectures from our current crop of ‘grown ups’ about PFI’s or lecturing the previous incumbents about the financial good sense shall we.
Because of the need to ‘get the small print right’ in the agreement every minor change in requirement needed yet more costly and time consuming legal/commercial reviews and the time to get the funding consortium sorted have all added to the considerable delays and costs. The delay means we have had to spend a lot of money on the VC10’s and Tristars, additional maintenance and equipment. Money that we can ill afford to spend and is essentially, wasted. The older aircraft are much less fuel efficient as well.
It is conceivable that the delay costs, additional spend on fuel, charters and maintenance could have paid for new aircraft outright.
We tend to fixate on the aircraft number, divide that number by the contract value and proceed to the spitting coffee/ruining keyboard stage but it is not a lease deal for a number of aircraft, it’s a service delivery contract, the number of aircraft is dictated by the requirements.
The whole PFI concept is based on stable demand, where this is impossible, this variability has to be expensively written into a hideously complex contract during which both parties will have agreed to break points, usage levels and risk. Costs are therefore predicated on looking into a crystal ball and taking what at best are educated guesses. Will the RAF be able to sell on some of its AAR capacity to other nations, will the passenger charter market allow Air Tanker to make maximum use of the aircraft, will we need more than can be provided by the aircraft, who knows.
If we cannot predict the next 27 years, how about looking back?
What has happened to the RAF aircraft fleet, air combat, technology and the geo political landscape since the conflict in the Falklands, it is roughly the same time period. Coming back from the Falklands could we have predicted the Balkans, Iraq, Afghanistan, the reduction in aircraft, technology or the collapse of the Soviet Union, yet we are being asked to predict what demand for AAR and AT for the next couple and a half decades?
Now all these issues might be worth swallowing if the services were getting a tangible improvement and a decent set of capabilities.
You hopeless optimistics you, you didn’t really think that would be the case did you?
Come on, Really!
Because of the nature of the PFI contract, where AirTanker can use some of the aircraft for non MoD charters there had to be compromises which means minimal modification to the base platform, or they had to be made as civilian as possible to both facilitate this reuse and of course keep costs down to a minimum.
What are these compromises?
There will be no airborne refuelling receptacles fitted, which means the aircraft will not be able to take on fuel themselves whist airborne. One might think that this would not be needed because of the aircrafts extreme range and fuel capacity but this is not the case. Many missions have demonstrated the value of being able to take on fuel. Every other sensible operator of airborne refuelling aircraft ensure they can take on fuel themselves. The Royal Australian Air Force use the same A330 as the FSTA aircraft will but they have of course decided on this capability.
Here is a video of what we will not be getting
These receptacles are standard fit on the A330 MRTT and it is called the Universal Aerial Refuelling Receptacle Slipway Installation (UARRSI), the MoD have ensured it will be removed from the design.
Although the VC10’s and Tristar’s don’t have a boom the other A330 refuelling aircraft do, it’s a system that allows the aircraft to refuel those fitted with a receptacle rather than probe. In UK service there is only 2 such aircraft, the C17 and E3, although when the RC-135 Rivet Joint purchase is finished that will be another. It also limits our usefulness in coalition operations, especially with the US, and combined with Number 1 will reduce flexibility and utility in the AAR role.
Here is a video of something else we won’t be getting
Boom refuelling is much easier for a large aircraft in the receiving mode although it is not impossible for them to use a drogue.
The boom system is called Airbus Military Aerial Refuelling Boom System (ARBS) and despite the recent problems will no doubt be fully proven and matured in due course.
Not all of the aircraft will be fitted for the high capacity AAR role, only 5 will be fitted with a Cobham 805E Fuselage Refuelling Unit (FRU) to provide flexibility and high rate offload for large aircraft. This system also allows different fuel types to be carried and the variation in equipment fit across the small fleet will result in a loss of flexibility as having aircraft in the right place with the right equipment becomes that much more difficult with a non-homogeneous equipment fit. The sensible thing, funnily enough that other operators do, is to have a single interchangeable fleet.
No self defence system or flight deck armour was originally specified, in the early 90’s when the programme was initiated these might have been a reasonable things to leave off but for operations today, it is simply unthinkable for an aircraft to fly in hazardous airspace without a full suite of protection systems. It has been stated that all aircraft will be fitted with suitable defence systems but the impact of this on the contract and the aircraft’s desirability to the lease market is unknown. DAS are some of the most restricted systems in existence, closely guarded and seldom discussed. Quite how they might be removed so the aircraft could be used for the civilian lease market and refitted without complex engineering and recertification processes is again, unknown. If only the core aircraft are fitted with DAS then not only does it make a mockery of that statement but the ones used for surge operations would need to fitted at short notice. Not having sufficient DAS equipped aircraft might result in inefficient hub and spoke arrangements where the FSTA aircraft fly into a benign location with personnel transferring to tactical transport for the flight forward.
In some ways it is perhaps a good thing because had they been specified in the original contract they would have been fitted and probably immediately removed due to obsolescence when the aircraft entered service. At least this way the RAF will get the latest DAS but how this is being funded is uncertain.
It is easy to be seduced by the bungling MoD line on this issue but I suspect that it was not omitted at all, but deleted due to commercial and cost issues. It is an interesting excuse; ‘how could we predict we would be flying into high threat environments’ is often heard but whilst hiding behind the convenience of not being able to predict the future we are quite happy to enter into a 27 year contract.
The RAF FSTA aircraft will not have a large freight door on the main deck, nor a cargo floor. The KC-45 that EADS proposed for the recent US tanker competition had a boom, in flight refuelling receptacle and a full cargo door/floor, for about £120m each. Not having suitable cargo handling capabilities on the main deck will limit it to light stores on small pallets and personnel, the lower deck will be able to handle LD3 containers and 463L’s but because upper deck access is limited by a small door the overall cargo capacity will be extremely limited even if the seats could be removed.
Here is yet another video of something we will not be getting
This lack of cargo carrying flexibility is arguably the most significant omission from the FSTA contract, have a look here for an image of a Tristar cargo setup. If we can have this type of common sense flexibility on a 30 year old aircraft why is it why cannot have the same on our shiny new toys?
The A330 MRTT comes in two basic flavours, the passenger + fuel version or the cargo + passenger + fuel version.
The first is the cheapest and inevitably the option we have selected because of the need to both keep costs down and make them attractive to the civilian charter market (depending on which of the aircraft we are talking about)
To understand how this is a ludicrous decision we need to understand the difference between the two versions
The A330 MRTT has the traditional wide body 2 deck layout of the A330. The lower deck on both versions is the same; it can carry a combination of military 463L pallets and civilian LD3 and LD6 containers, typically 8x 463L, 1x LD6 and 1x LD3 or 25x LD3 as the diagrams below.
The difference between the two versions is the upper deck.
In the passenger version there is no cargo door and the seats are semi permanently installed, capacity depending on the seat size/pitch is between 270 and 291. A crew rest compartment may also be fitted for extended mission times but given that we decided not to bother with the ability to take on fuel from another aircraft this has not been taken. An aeromedical evacuation setup can also be fitted but it is not known if this will be the simple stretcher configuration or the high dependency palletised systems as used on the C17.
This is the version the RAF will be getting, absolutely minimal modification from a civilian A330 passenger jet.
In the cargo configuration, the upper deck is configured for pallets and containers rather than personnel, as per the image below, no windows and cargo rollers.
This is not to say personnel cannot be accommodated in the cargo version because palletised seats are freely available in a range of colours!
Using palletised seats (as the image below) a total of 252 personnel can be accommodated, less than the dedicated version but not by much.
Instead of seats, the upper deck could also carry a whopping 26x 463L pallets.
As we all know by now, palletised systems might deliver slightly less capacity but infinitely increased flexibility, a mixed configuration could be 136 palletised seats and 5x 463L pallets on the upper deck plus 25 LD3 on the lower deck for example.
It is not certain if the RAF aircraft will be able to accommodate the palletised intensive care facilities used so successfully by the C17 and in service with the UK. If it is the case that these systems will not be able to be used on FSTA then we will have to keep using the C17 for high dependency aeromedical evacuation instead of the more suitable FSTA, injecting yet more inefficiency into the system as a whole.
The cargo door opening is 2.56m high and 3.58m wide so some smaller vehicles like Land Rovers or Ocelot could be accommodated on the upper deck if they could be angled in.
Compare the number of pallets routinely going into Afghanistan (about 40 per day) with a solution that can carry 8 (the RAF A330 ) or 32 (the cargo A330) and it should be obvious which one will be the more useful. Before anyone shouts up I know I have not included the LD3 capacity in the RAF versions figures but when flying cargo and personnel the RAF’s FSTA aircraft will be hauling a paltry 8 463L pallets and significant quantities of fresh air and empty seats, seats that will be burning fuel.
The cargo version can be easily modified to suit the mission at hand and it is this flexibility, carrying the exact mix of passengers, 463L and LD3′s required, means that utilisation rates would be significantly increased, less flights being made with sub optimal loading, less flights overall and dramatically improved efficiency.
At this point it is worth noting that the FSTA is designated as an air to air refuelling and passenger transport capability with air transport of cargo being a secondary role, somewhat unfairly criticising it for something it was not designed for, but whilst this statement might have been fine at the project outset it certainly is not now. Expeditionary operations, even at a Brigade level will require significant air transportation of cargo, even if the preferable option of sea transport is available. Deploying, building up more concentrated forces and withdraw will equally require capacity that may not be available in the civilian market.
It is ludicrous to not have selected the cargo version.
With the changes in force levels as per the SDSR and suggestion in the Think Defence series, the RAF would arguably need less refuelling capacity and more air transport.
FSTA delivers the inverse of this.
Without seeing the exact nature of the agreement for the second batch of aircraft, how much they cost when being used or not being used for example, it is difficult to speculate on whether the number of provided aircraft is too high or too low. We should also remember that we are contracting for a service, not necessarily a number of aircraft but this exposes the fundamental inflexibility of long term PFI’s, a difficulty in coping with variation in demand IF that demand is lower than the contracted baseline.
The baseline requirement is for 9 aircraft, an option for the 10th in permanent RAF service and the rest will be available on a surge basis to the RAF or used for revenue generation.
With a conventional purchase, if demand drops, the aircraft can be placed in extended readiness at low cost or used to even out airframe hours. This might not suit the MoD’s accounting systems but the operational and long term financial benefits are clear.
It has been reported that the terms of the agreement prevent the RAF from using any other aircraft or service provider for the air refuelling role which sounds eminently reasonable in a commercial context but of course flies in the face of operational necessity and basic old fashioned common sense.
Because the A400 has been designed from the outset to offer airborne refuelling, using it in a mixed cargo/AAR role would be a relatively simple affair, all the plumbing is there, expensive modification not needed. Beyond training and the relatively low cost refuelling assemblies we could extract maximum value out of the A400 in three scenarios;
The first is for the Falkland Islands, to provide refuelling cover for the Typhoon flight, supporting long flights from Ascension Island or diverts in the case of bad weather, the RAF maintain a single VC10 at Mount Pleasant. Joining the VC10 is a C130 used for tactical transport and some maritime patrol tasks. When the A400 comes into service it would be able to cover both these roles with a single aircraft, a significant cost reduction and capability improvement. As it stands now, the Falklands will require both an FSTA A330 AND an A400. Multiply that additional cost by a decade or so and it should become clear just how expensive and restrictive this contract condition is.
The second scenario is helicopter refuelling, special forces missions often require long range helicopter flights, instead of using multiple helicopters whose effective mission load would have been dramatically reduced because of a high fuel load, an A400 could fly a similar low level tactical flight profile, refuelling the helicopter/s whilst also providing airdrop facilities for vehicles and heavier stores. It is not likely that the A330 will be able to fly low and slow enough to refuel helicopters and low enough to be survivable or maintain surprise. This is a capability we currently have to rely on allies for but given our global reach, should be able to do this on sovereign missions and it would be available at minimal cost.
Finally, blending a tactical transport and AAR mission would be extremely cost effective in a number of situations and the flexibility to refuel fast jets should it be needed is also an added bonus.
Having an A400 AAR capability would allow the RAF to maximise the investment in these aircraft, improve capabilities and significantly enhance operational cost efficiency.
The MoD has traded affordability for value for money, penny wise pound foolish as it seems so often to be.
Whatever the merits of FSTA, I suspect it is very poor value for money and will fail to deliver the capability that we actually need, with too much air refuelling for a fast jet fleet we longer have and not enough air transport of sufficient flexibility for future sustained expeditionary operations.
Given the budget issues I suspect that Liam Fox has decided to do what all SoS Def have done and that is push out the pain to the next administration. No more invective about PFI’s, not a single one has been cancelled yet despite the hyperbole its all gone quiet on that front.
The first option is simply to carry on and forget all the problems, this is of course the most likely option to be taken but it is not the correct option as we all know.
Every time anyone suggests that a PFI is unsuitable, delivering the wrong capabilities, inflexible, too expensive and generally not fit for purpose, the first response is always the dreaded penalty clause.
The government seems institutionally scared of them.
The problem with being scared of the contract and its penalty clauses is it fails to take into account the reality of the defence marketplace. All the Air Tanker consortium members need a sound long term relationship with the MoD and as BAe has found out, sitting back on contract clauses has resulted in the ‘anyone but BAe’ policy for future projects. What is needed but never happened with CVF; is a good dose of level headed pragmatism.
The current consultation on the future defence industrial strategy and likely direction of travel of more off the shelf, less government funded development programmes and generally an end to the good times should focus the minds of defence suppliers. They should balance the assured revenue of FSTA against an unsatisfied customer and poor PR for the next 20 odd years.
Quite clearly what needs to happen is a cancellation of the PFI and renegotiation to address the serious operational, capacity, configuration and financial shortcomings.
Much is made of cancellation costs, exclusivity clauses and penalties should we ever use any other operators and this document makes interesting reading about risk financing.
The A330MRTT with Rolls Royce engines is absolutely the right aircraft but in trying to scrimp and save we have knobbled the fleet, they will be inflexible, inappropriate and expensive.
A cool headed renegotiation would still provide the Air tanker partners with significant and assured revenue, the customer would be much happier and world peace would become reality!
This new agreement could include the types of integrated and innovative support contracts that have been pioneered in the UK and there is no reason why some airframe sharing leasing scheme could not be delivered.
## Other posts in this series ##