On that FSTA RAF Voyager Exclusivity Clause

I have covered the Future Strategic Tanker programme several times (the main one being here) on Think Defence including the oft held assertion that Air Tanker have some sort of monopoly on air to air refueling for the UK that would prevent anything other than the A330 Voyagers providing fuel offload for UK aircraft.

The generally held opinion seems to verge between ambiguous and uncertain.

A recent Parliamentary Answer confirmed that the RAF ‘has no requirements’ for the A400M to be used in the AAR role but is that because there are genuinely no requirements or because of commercial issues surrounding the 27 year FSTA PFI?

Given the obvious benefits of utilising the A400M in the AAR role, the potential for increased flexibility in locations such as the Falkland Islands and the ability to hugely increase the versatility of the Chinook and Merlin helicopter force I suspect most people would suspect the reason would have to be a very good one.

A recent FOI request might throw some light on things.

Dear Mr ###,

Thank you for your festive wishes in your E-Mail dated 25 December 2012 and I note your request that your latest supplemental questions be answered by e-mail. In previous correspondence, you asked a number of questions regarding “the agreement” (the PFI contract) between MOD and AirTanker in relation to Air to Air Refuelling (AAR). Below I reproduce your original questions and the previously provided answers, followed by your supplemental questions with associated answers:

Question 1

Is there any part of the agreement that would limit, restrict or financially penalise the MoD should it wish to;

a) Use another nations aircraft for the purpose of airborne refuelling MoD owned or operated fixed wing or rotary wing aircraft during training or operations

b) Use another commercial provider of airborne refuelling services for the purpose of airborne refuelling MoD owned or operated fixed wing or rotary aircraft during training or operations

c) Use another MoD owned aircraft for the purpose of airborne refuelling MoD owned or operated fixed wing or rotary aircraft during training or operations.

Answer:

The Future Strategic Tanker Aircraft (FSTA) Private Finance Initiative (PFI) contract contains provisions to ensure that AirTanker has first call on all requirements for AAR for the RAF. The RAF is able to utilise AAR provided by other Nations, by commercial providers or another MOD owned aircraft but may have to make contractual payments to AirTanker if it does so.

Question 1 – Supplemental:

“I fully understand that the MoD will need to make payments to AirTanker if it decides to use other aircraft for either transport or AAR. Your response uses the words ‘may have to make contractual payments’ which implies some decision matrix will be used or other determinant of ‘may’ It is this decision matrix or the conditions under which payments will be made, that I am trying to understand. Fully appreciate that the amounts of these payments would be subject to commercial confidentiality”.

Answer:

There is no formal decision matrix for determining MOD liability for payments to AirTanker for AAR provided by other providers, including other Nations, commercial providers or another MOD owned aircraft. Liability for payment would be determined on a case by case basis. At the end of each financial year, AirTanker and the MOD would undertake a reconciliation process to account for the notional cost of RAF fuel offloads to foreign air forces. This would be used to offset MOD’s liability to AirTanker for receiving fuel from other providers.

Question 2:

“Does the MoD have any plans to utilise the A400 Atlas in the AAR role” and “Will the RAF’s A400 Atlas aircraft have the provision for fitting AAR pods should the MoD wish to implement this capability”.

Answers

There are currently no plans to utilise the A400M Atlas in the AAR role.

The A400M Atlas is designed such that it can be configured for the AAR role by addition of pods and associated internal provisions. Additional certification and qualification would be required, along with training activity to enable the capability to be utilised.

Question 2 – Supplemental

“Under the current terms of the FSTA PFI agreement with AirTanker what would be the commercial implications to the MoD (in respect of the PFI only) of bringing the A400M Atlas AAR capability into service”

Answer:

If the MoD chose to introduce another AAR capability, the MoD would probably be required to pay a charge to Air Tanker each time it were used (subject to the aforementioned liability process), or both parties could elect to enter into negotiations to achieve a more favourable contractual outcome.

So does that mean what I think it means or does ‘probably required to pay a charge’ just adds to the uncertainty.

Perhaps the FOI request should have been for the contract documentation but that would probably have been refused on commercial grounds.

Interesting though

 

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Tom
Tom
March 26, 2013 4:22 pm

Some interesting replies and broadly in line with my understanding of the contract.

In terms of the Falkland Islands, I think Air Tanker wouldn’t be that bothered about if we wanted a couple of dual role Tanker/MPA aircraft down there. Having a Voyager based in the FI is not (I imagine) a commercially attractive as the aircraft is not well located to undertake other operations.

mike
mike
March 26, 2013 5:18 pm

Good shout by Tom,

but still… “If the MoD chose to introduce another AAR capability, the MoD would probably be required to pay a charge to Air Tanker each time it were used”…Christ, no man in uniform could have been involved in this.

Chris.B
March 26, 2013 5:24 pm

Just sounds ludicrous, the whole thing from start to finish. There is always one option for dealing with PFI’s, but it’s not exactly ideal; hammer the shit out what ever you’ve bought.

Chris
Chris
March 26, 2013 5:45 pm

Thanks to TD and whoever framed the question to the slippery customers at MoD (takes a lawyer to catch a lawyer, perhaps?)

Looks like the truth falls, as expected, somewhere between complete freedom and absolute prohibition. Would they withdraw “their” aircraft from use if we didn’t cough up an amount they agreed to?

The Chinook (and Merlin?) situation is the most ridiculous as they surely can’t levy a charge to refuel aircraft that Voyager couldn’t possibly handle?

Gloomy Northern Boy
March 26, 2013 5:46 pm

@ Chris B. I’m more inclined to hammer the shit out of whoever bought it!

Raging and Gloomy

Jeremy M H
March 26, 2013 6:02 pm

Wow, that is a really awful arrangement. Is this deal going to save the UK any money at all? I mean I know no one wants to borrow money anymore but the UK does not pay that much to borrow. It can’t be worth this kind of nonsense.

Chris.B
March 26, 2013 6:16 pm

Actually scrap that. Looking at the NAO report on the PFI, it would seem the government could be penalised for using the tankers above a pre-agreed level. Absolute garbage. What a disaster.

Mark
Mark
March 26, 2013 6:19 pm

Does that mean we get money given back to us because we had to use an Italian airforce tanker to trail the typhoons out to Malaysia last week cause airtanker couldn’t?

Gloomy Northern Boy
March 26, 2013 6:20 pm

@Jeremy MH – It isn’t – it was a wizard Tory wheeze seized on by New Labour to take Capital Funding off-book, and it’s horrible consequences will be felt across all Government Budgets for decades to come…I just hope for your sake it doesn’t pop up in the Obama play-book, but bearing in mind the Fannie Mae/Freddie Mac bombshell that precipitated financial melt-down was a Clinton (Bill) brainchild I wouldn’t bet on it.

I always find it curious when people are raging about the banks that behind it all lies the efforts of a Democratic President to extend home-ownership to poor people who couldn’t really sustain mortgages, achieved by pressuring those very same banks to lend irresponsibly…a particularly egregious piece of stupidity now taken up by our very own Little Lord Gideon…

Deeply despairing and very Gloomy.

Topman
Topman
March 26, 2013 8:24 pm

@ mark, they haven’t got IOC yet, Air Tanker have only just figured out which aar baskets work ;)

@GNB the person in question is GB. When holder of the purse string, every other option put forward by the RAF was knocked back. It was PFI or nothing, that made very clear…

JC
JC
March 26, 2013 8:52 pm

Interesting…the questions clearly state “MoD owned” whilst the responses specifically say “RAF” (or are non-specific)…I wonder if the replies use the term “RAF”in a strict (the service) or pejorative (i.e. RAF = all flying things) sense…?

Gloomy Northern Boy
March 26, 2013 8:54 pm

@Topman – let me guess – no aircraft factories in Scottish Labour marginals? bet RBS set up the deal though…

Cynical and Gloomy

Chris.B
March 26, 2013 9:11 pm

You should see the NAO’s estimate of a severance package. It looks bloody grim. The only hope we have is that AirTanker is unable to meet its agreed committments, for which it can be fined up to £22 million. Any more than that and we can cut them off as a contractor failure which means we’d probably be off the hook for most of the cash.

If we’re going to cut it loose though, it needs to be done now and not later.

Mark
Mark
March 26, 2013 9:36 pm

They do appear to be slow learners Topman,there’ll be a few at Abington ill suggest it and bill a consultancy fee, have they got ETOPs clearance yet?

GNB

Well prestwick is in a labour constituency and does some a330 work as is broughton which builds the wings does that count?

Gloomy Northern Boy
March 26, 2013 9:50 pm

@TD – Quelle surprise! Fred the Shred – New Labour’s favourite Banker (or something)

@ Mark – obviously not marginal, not able to build the necessary bits, or held by one of GB’s (many,many) enemies in the Scottish Labour Party…

Topman
Topman
March 26, 2013 10:17 pm

@mark oh they’re not slow learners but they are very good at trying to push the blame unto others. I flew back on one from the us so yes I assume so yes.

topman
topman
March 26, 2013 10:24 pm

@Gnb
He wasn’t so much bothered about work share but pfi or nothing. More than one option was put forward but nothing was acceptable apart from a pfi option.

Mark
Mark
March 26, 2013 10:49 pm

Topman

Cheers. They must run special management schools in that for business Ive seen one or two aerospace companies that are quite gd at that in fact I’m currently working with one right now who could even teach bae a thing or too.

Topman
Topman
March 26, 2013 11:04 pm

@mark that’s some effort to show bae a clean pair of heels in shoulder sloping!

Keil Kraft
Keil Kraft
March 27, 2013 12:59 am

The QRA Typhoons based in the Falklands will always require an AAR aircraft to be on station. (Currently a VC10) I have not heard how that theatre requirement is to be performed in future (or what will replace the C-130 based at Mount Pleasant.) Maybe Voyagers will replace the MoD chartered airliner on the twice weekly airbridge to the UK which replaced the 216 Sqn Tristars some 8 years ago. The airbridge requirement alone will soak up one aircraft. One option may be to use two aircraft alternating between AAR cover and airbridge, not the most efficient use of aircrew or aircraft. The PFI contract seems to assume that the RAF will always be operating from the UK and small but important key details have been swept aside to simplify the contract.This naive approach is mirrored in the SAR deal. Who will provide SAR cover for the RAF in the Falkland Islands when the Sea Kings HAR3s are withdrawn? Has anyone considered what aircraft would be used and who would operate them?

HarbingeR
HarbingeR
March 27, 2013 9:57 am

This has got to be the single most stupid contract the government has signed up for.

Fedaykin
March 27, 2013 10:50 am

In respect of operating a Voyager for AAR off the Falklands that is frankly absurd when the far more suitable A400M will come available. A400M has a similar fuel offload as the VC10 and can replace the C130 on sight as well.

As for SAR the Griffon HAR2 might well be ideal for the Falklands and already in service.

Keil Kraft
Keil Kraft
March 27, 2013 11:29 am

But Fedaykin, answer 2 above states; “There are currently no plans to utilise the A400M Atlas in the AAR role.”

Fedaykin
March 27, 2013 11:51 am

Exactly, what I am saying is A400M would be better suited to the role but they will have to use Voyager.

All Politicians are the Same
All Politicians are the Same
March 27, 2013 12:04 pm

I sincerely hope that the MOD were clever enough to ensure that Air Tanker have to match the current AAR capability of the FI. In other words, a permanent tanker presence. Somehow I just cannot see it though.

Brian Black
Brian Black
March 27, 2013 1:06 pm

Might the C130 service in the islands be ripe for a private provider?

A Voyager on station for tanking could also carry other role equipment. Vigilance pods, ELINT gubbins, etc. Make the most of your flying hours. Plenty of room onboard for black boxes and operator work stations, and the wing hard points too if only a centre-line refueling pod were fitted.
Only problem would be AirTanker own the aircraft. Any mods would have to be cleared through them.

Alex
March 27, 2013 1:39 pm

The best of it is that the PFI didn’t add up unless they deleted receiver capability and a proper cargo door. A330MRTT is a bit less than the KC45 version they offered the Americans. We should have kicked the whole PFI mess in the arse and taken some of the production slots left when Boeing bribed Airbus out of the contest and then the yanks fixed that by changing the conditions so Boeing won.

Supposedly, back in 1996 Airbus offered the MoD 20 A310 tanker/transports like the Germans got but we turned them down because they didn’t want a PFI, just sell ’em cash on the nail, as they had a restricted window before the 310 rework line closed.

Topman
Topman
March 27, 2013 1:55 pm

@Alex yeah that was one of the other options.I believe it was joint with the gaf in terms of training and maint being carried out at Lufthansa tech.

Challenger
Challenger
March 27, 2013 4:49 pm

@HarbingeR

‘This has got to be the single most stupid contract the government has signed up for’

We can only hope that this ridiculous example of how complicated and double-edged PFI’s can be, coupled with all of that dicking around with Nimrod and then trying to ‘reinvent the wheel’ with A400m will finally convince TPTB that sometimes it’s best to just buy off the shelf!

Alex
March 27, 2013 5:01 pm

You know what this reminds me of, especially the complicated process to decide who pays who? Railtrack.

Chris.B
March 27, 2013 6:08 pm

@ Alex,
Lol, brilliant.

@ All,
Maybe this is an ultra clever plan where the MoD is counting on AirTanker not to be able to meet all of its contract requirements, thus voiding the contract, at which point the MoD can then offer to take all the tankers off their hands dirt cheap? No, I’m not buying that either, but we can live in hope….

Stupid thing is, only 9 of the 14 tankers will actually be fitted as such. The others are “for, not with”, so around 1/3 of the tankers will not even serve as tankers on a regular basis.

x
x
March 27, 2013 6:38 pm

It is only says RAF.

I have searched this page and as far as I can tell the words FAA, RN, navy, or Royal Navy don’t appear.

Or do I assume the MoD doesn’t realise the other services fly aircraft? :)

Shower of custard.

a
a
March 28, 2013 12:12 pm

I just hope for your sake it doesn’t pop up in the Obama play-book, but bearing in mind the Fannie Mae/Freddie Mac bombshell that precipitated financial melt-down was a Clinton (Bill) brainchild I wouldn’t bet on it.

Interestingly, no: it goes back all the way to 1970, when Richard Nixon decided to take Fannie and Freddie off the government books in order to make the enormous Vietnam War-induced debt look smaller.

Mark
Mark
July 5, 2013 11:46 am

http://www.aviationweek.com/Article.aspx?id=/article-xml/awx_07_05_2013_p0-593999.xml

The UK Royal Air Force and the USAF are working on a memorandum of understanding which will give the UK access to tankers equipped with refueling booms to support its fleet of RC-135 Rivet Joint intelligence-gathering aircraft.

Gloomy Northern Boy
July 5, 2013 12:38 pm

@a – Just spotted your comment from months ago – just to clarify, I wasn’t referring to the original sleight of hand to which you quite rightly draw my attention – but rather the subsequent Clinton pressure on Freddie and Fanny to make cheap money available to fund mortgages – mostly for poor Black and Hispanic Families – that they were never likely to be able to reply…bundles of which the world of finance has been using as lavatory paper since Lehman Brothers hit the buffers…

Should have been clearer.

GNB