Annex
PURCHASING ARRANGEMENTS
DEVELOPMENT
| Contractor |
Contract Type | Procurement Route
|
| Eurofighter GmbH Airframe consortium comprising: Alenia, BAE SYSTEMS, CASA, DASA
| Fixed prices for airframe and aircraft equipments, with a target cost incentive arrangement for aircraft equipment integration.
| Non-competitive, but with international sub-contract competitive elements, the value of which amounts to some 30% of the overall value of the prime contract
|
| Eurojet GmbH Engine Consortium comprising: FIAT, ITP, MTU, Rolls Royce
| Fixed price. | Non-competitive, but with international sub-contract competitive elements, the value of which amounts to some 10% of the overall value of the prime contract
|
PRODUCTION INVESTMENT/PRODUCTION
| Contractor | Contract Type
| Procurement Route |
| Eurofighter GmbH Airframe consortium comprising: Alenia, BAE SYSTEMS, CASA, DASA
| Overall maximum prices for production investment and production of airframes. Overall firm prices for production investment and production of aircraft equipment.
| Non-competitive, but with international sub-contract competitive elements, the value of which amounts to some 30% of the overall value of the prime contract
|
| Eurojet GmbH Engine consortium comprising: FIAT, ITP, MTU, Rolls Royce.
| Overall maximum prices for production investment and production of engines.
| Non-competitive, but with international sub-contract competitive elements, the value of which amounts to some 10% of the overall value of the prime contract
|
PROJECT COSTS SUMMARY
All figures at 1999-2000 prices in £M
| Breakdown of Procurement costs | Development
| Production | Total
|
| Current estimate | 4,593
| 10,134 | 14,727
|
| Estimate at time of MOD approval | 3,126
| 10,230 | 13,356
|
| Difference | +1,467
| -96 | +1,371
|
REASONS FOR COST VARIATION
| Factor | Increase £M
| Decrease £M
| Explanation |
Changed
requirement
(Development)
| 239 |
| Provision for integration of new weapons and sensors not contained within original approval. Includes: Conventionally Armed Stand-off Missile, CASOM, Advance Anti-Armour Weapon, AAAW, Low Level Laser Guided Bomb, LLLGB, Thermal Imaging Airborne Laser Designator, TIALD. +£239M
|
Changed
costing
(Development) |
1,004 |
| Changes in accounting rules, to include intramural costs, +275M; German withdrawal from certain equipments, +£106M; higher than expected development costs, notably for equipments, +£316M.
***Development Assurance Programme to bridge gap between development and production investment, +£28M; extension of the Integrated Logistic Support programme, +£45M; Eurofighter/Eurojet GmbH management costs, +£30M; contract price increases +£87M; risk provision, +£117M.
|
Changed
costing
(Production) |
| 218 | Transfer of costs of industrial consortia management activities from production phase to support phase.
|
| Inflation | 378
| | Difference in annual price uplift between specific indices and GDP deflator for development, +224M and production, +£154M.
|
Exchange
rate
variation |
| 32 | Improvement in exchange rate since production approval given, from 2.1958M to 2.7353DM: £1, has reduced costs to the UK of management agency.
|
| Total | 1,621
| 250 |
|
| Total balance | 1,371
| |
|
Expenditure to 31 March 1999: £3,979M
| Approval | Date
| Explanation |
| First Approval | 1984
| Feasibility Study |
| Latest Approval | 1997
| Production Investment, Production, Initial Support
|
PROJECT CONTRACT SUMMARY
| Current cost of Main Contract | Airframe development, £1,527M
|
| Cost change since contract award | +£49M
|
REASONS FOR COST VARIATION SINCE CONTRACT AWARD
| Factor | Increase £M
| Decrease £m | Explanation
|
| Inflation | 49
| | Difference in annual price uplifts between specific indices and GDP deflator, +£49M
|
| Total | 49
| |
|
| Years of peak expenditure: | 2002-03 and 2003-04
|
| Further expenditure in clear prospect, at 1999-2000 prices
| NIL |
| Unit production cost: £41.7M |
|
| Quantities required: 232 |
|
FUTURE CARRIER BORNE AIRCRAFT-FCBA
The Future Carrier Borne Aircraft, FCBA, is planned to replace
the capability currently provided by both the RN's Sea Harrier
and the RAF Harrier GR7 in the second decade of the next century,
in a joint force to operate from the new aircraft carriers or
from land bases. While the Short Take-Off and Vertical Landing
version of the US Joint Strike Fighter is a strong contender to
meet this requirement, other options are also being studied, with
a view to selecting an aircraft type in 2000-01. Meanwhile, the
UK is a full collaborative partner with the US in the JSF Concept
Demonstration phase.
OPERATIONAL REQUIREMENT
1. The FCBA requirement was originally intended to provide
the Royal Navy with a new multi-role fighter/attack aircraft the
Sea Harrier from about 2012. There has been no significant change
to the requirement, in terms of the aircraft's capabilities, since
the Staff Target was approved in 1996. The Strategic Defence Review,
however, concluded that we should plan to replace Invincible class
carriers with two new larger aircraft carriers and establish the
Joint Force 2000, comprising RN and RAF elements. Therefore the
FCBA project envisages a common aircraft to replace both Sea Harrier
FA2 and RAF Harrier GR7, capable of being deployed in both land
and sea based operations. Under a Memorandum of Understanding
signed in December 1995, the UK is a full collaborative partner
in the JSF Concept Demonstration phase, which began in November
1996. UK/US requirements are largely the same and UK staffs have
participated in development of the JSF Joint Operational Requirement
Document (JORD), and included UK specific requirements.
TRADE-OFFS
2. Trade-offs are being constructed in the JSF element
of the FCBA programme, using the "cost as an independent
variable" process. This means that, in the evolution of requirements
and design solutions, affordability is taken directly into account
along with lethality, survivability and supportability. The JSF
trade-off studies will be completed in the autumn of 2000, in
time to inform the decision on the selected design for the JSF.
In parallel, other FCBA options, see paragraph 8 below, are being
studied in order to compare them with JSF. Trade-offs for FCBA
options are being considered in preparation for the selection
of the aircraft type.
NUMBERS
3. The likely number of FCBA required has changed as
a result of the SDR. Final numbers will be determined in the work
leading to the selection of the FCBA.
STRATEGIC DEFENCE
REVIEW
4. The requirement for FCBA and other future fast jets
was closely scrutinised in the SDR. The Joint Force 2000, now
renamed Joint Force Harrier, arising from the SDR has brought
all Naval and RAF Harrier squadrons under a unified command and
control structure, with squadrons capable of operating from ashore
or afloat as required. Current plans envisage that FCBA will start
entering service in 2012, see paragraph 6.
MILITARY CAPABILITY
5. FCBA will be a multi-role aircraft capable of fighter,
attack and reconnaissance missions.
EQUIPMENT TO
BE REPLACED
AND IN
-SERVICE DATE
6. Pre SDR the FCBA was planned to succeed the Sea Harrier
FA2 from 2012. Following the SDR, FCBA will now also succeed Harrier
GR7 from 2015. As previously planned, out-of-service dates for
Sea Harrier and Harrier GR7 continue to be 2012 and 2015 respectively.
The FCBA in-service date is defined as the receipt of the tenth
aircraft, and is currently planned for late 2012.
PROCUREMENT APPROACH
7. FCBA is in the Assessment Phase of the Smart Procurement
process. JSF Concept Demonstration is being run on a competitive
basis between consortia led by Boeing and Lockheed Martin under
cost plus fixed fee (subject to maximum price), contracts placed
by the US government. Both consortia involve British companies.
By nature of the competition itself and the contract pricing mechanism,
the prime contractors are expected to maximise competition wherever
possible at sub-contract level. The US government also has a contract
on a similar basis with Pratt & Whitney for the development
of the engine. A contract has also been placed on BAE Systems
to examine the viability of marinised Eurofighter. The procurement
route and contractual arrangements for FCBA options other than
JSF would depend on the specific option chosen.
ALTERNATIVE PROCUREMENT
OPTIONS
8. We are studying the estimated costs and merits of
other potential solutions for FCBA. These include the carrier
version of JSF (JSF CV), possible development of a Short Take-Off
But Arrested Recovery marinised Eurofighter, off the shelf purchase
of a conventional catapult-launched aircraft, such as the Rafale
M or F/A18 E/F; and options related to an advanced Harrier design.
The relative strengths and weaknesses of these options will be
examined in the Combined Operational Effectiveness and Investment
Appraisal.
COLLABORATION
9. We are contributing $200M, under the MOU with the
US, to the $2Bn JSF Concept Demonstration Phase. The JSF programme
is managed from a US Project Office in Washington, which has a
total of about 150 staff, currently including nine UK staff. The
UK has no direct contractual relationship with the JSF prime contractors
for the current phase. There is no formal workshare agreement
within the MoU for Concept Demonstration, but a number of UK companies
have competed successfully to win work with the US prime contractors.
Arrangements for potential UK involvement in the next phase have
not yet been decided.
10. The eventual US production requirement, extending
across the US Air Force, Navy and Marine Corps, could approach
3,000 aircraft.
EXPORT POTENTIAL
11. The export of FCBA will depend on the aircraft selected.
INDUSTRIAL FACTORS
12. Downselection from three to two prime contractors
for the JSF requirement was made by the US before Concept Demonstration
started. Further downselection will take place at the end of the
current phase. The industrial implications of the alternative
solutions to the FCBA requirement will be taken into account in
determining the UK's choice of aircraft.
SMART PROCUREMENT
13. The JSF programme accords with Smart Procurement
principles. The joint US/UK programme office operates as an integrated
project team, including close partnering arrangements between
the programme office and the competing companies, and operational
staffs are contributing to the development of the requirement.
The concept of "cost as an independent variable" is
a further indicator of the iterative approach to the programme,
as cost is seen as another "engineering parameter" against
which potential technical solutions have to be measured and moderated
if they produce unsatisfactory outcomes. The US programme has
significant "front end" investment, as evinced by the
Technical Maturity Program, a risk reduction measure to prove
technology before it is offered to both companies for potential
incorporation in their solutions. This early investment is also
seen in the Concept Demonstration aircraft both companies are
currently building. These aircraft are being used to prove various
"lean manufacturing" techniques aimed at reducing both
build and through life costs. Early consideration is being given
to an innovative support philosophy, including a major role for
industry in direct support.
ACQUISITION PHASES,
MILESTONES AND
COSTS
14. The JSF Concept Demonstration Phase, begun in November
1996, will last for four years. If JSF were chosen to meet the
FC requirement, the next stage would be the Engineering and Manufacturing
Development phase of the JSF programme. No commitment has been
entered into by the UK beyond Concept Demonstration. There are,
however, ongoing negotiations with the US, entered into without
commitment, to enable mature proposals to be developed for possible
UK participation in the JSF EM&D phase. These will help inform
the next key decision point, the selection of the FCBA solution,
when decisions will also be taken on subsequent acquisition phases.
15. The main risk areas currently identified for JSF
are technology transfer, avionics software, aircraft controllability,
thrust/weight ratio, and safety management. A main aim of Concept
Demonstration is to reduce these risks to an acceptable level.
16. Approval has been given to expenditure of £155M,
1999-00 prices to cover both the contribution to the US JSF Concept
Demonstration Phase and UK Feasibility Studies. Expenditure, also
at 1999-00 prices, is shown in the table below.
|
| Year | US programme
| UK feasibility studies
|
|
| 1996-97 | $15.165M
| £1.2M |
| 1997-98 | $74.885M
| £2.1M |
| 1998-99 | $56.933M
| £3.7M |
| Total | $146.983M (£94.0M)
| £7.0M |
|
17. Overall FCBA numbers, and hence the total cost of
the programme, which could be in the region of £5 to £7Bn,
have yet to be determined. Peak expenditure is likely to occur
in 2013-14 and 2014-15.
IN -SERVICE
SUPPORT
18. Support arrangements will depend on the FCBA solution
selected, and are currently being examined. For JSF, this includes
consideration of the extent of collaborative support. Detailed
plans for the transition from the current Harrier fleet to FCBA
will be formulated nearer the time.
FRONT LINE,
STORAGE AND
RESERVES
19. The numbers have yet to be determined.
INTEROPERABILITY
20. A JSF (STOVL or CV) solution to the FCBA requirement
would offer good interoperability with the US and any other NATO
allies who buy JSF. Of other options, marinised Eurofighter would
offer interoperability within NATO, but only enable operations
from a UK carrier, Rafale M would offer good interoperability
with the French carrier force and others who purchase it, and
F18 E/F would offer potential for interoperability with the US.
DISPOSAL OF
EQUIPMENT REPLACED
21. Disposal has yet to be considered. Either aircraft
type may be of interest to existing overseas STOVL customers,
but the aircraft are likely to have a limited useful life remaining.
IN -SERVICE
LIFE
22. FCBA is planned to have a 25-year service life.
DEVELOPMENT POTENTIAL
23. It is too early to comment on the potential options
for the further development, update or use of the chosen FCBA
solution.
|
