Letter from the Ministry of Defence (10
In response to your letter of 24 November 2000,
I am pleased to attach a series of 12 memoranda that represents
the MoD's contribution to the Committee's Major Procurements Projects
Eleven memoranda cover the "tracker"
projects that the Committee first examined two years ago. These
have been thoroughly updated since last year. You will understand,
in the light of a number of major procurement decisions in the
last 12 months, that some have changed considerablynotably
those on the Beyond Visual Range Air-to-Air Missile (BVRAAMMeteor),
Future Carrier-Borne Aircraft (FCBAJSF), Hercules Rolling
Replacement 2 (HRR2A400M), Sealift, and Short-Term Strategic
Airlift (STSAC-17). We have amended the titles of three
of the memoranda to reflect major procurement decisions that we
have taken during the last 12 months. "BVRAAM" has become
"Meteor"; "HRR2" has become "A400M";
and "STSA" has become "C-17".
The twelfth memorandum provides a progress report
on the implementation of the three main equipment-related measures
arising from the Kosovo conflict (Interim Precision Guided Bomb,
Maverick, and Secure Air-to-Air Communications).
In order to avoid any unnecessary confusion,
I should emphasise that, in line with the Major Projects Report
2000, cost information is reported on a resource basis at outturn
prices rather than on a cash basis at constant prices. This means
that it is not possible directly to compare the information contained
in these memoranda with that reported in the last two years.
The memoranda also reflect the adoption of the
phrase "Smart Acquisition", rather than "Smart
Procurement", to refer to the sustaining, reinforcing, and
broadening of the application of Smart Procurement principles
across the wider acquisition community, including requirements
setting, procurement, and in-service support.
TACTICAL RECONNAISSANCE ARMOURED COMBAT EQUIPMENT
An Intelligence, Surveillance, Target Acquisition
and Reconnaissance (ISTAR) capability is crucial to the conduct
of operations and a balanced, layered system of systems is key
to providing a robust capability that will meet commanders' information
requirements in all weathers. TRACER is the name given to the
land-based component of this ISTAR capability. No decisions have
yet been made on the specification or numbers of TRACER platforms
required. We are currently conducting a project definition (PD)
study on TRACER in collaboration with the US, which, together
with associated national studies (including those into the use
of tactical Unmanned Air Vehicles (UAVs) in the reconnaissance
role), will inform our future balance of investment decisions.
Since our previous report to the Committee, the future UAV programmes,
SENDER and SPECTATOR, have been combined into a single programme,
WATCHKEEPER, which will also assess the future role of PHOENIX
(the in-service UAV system). This memorandum deals principally
with TRACER, but also outlines the current position on the UAV
element of the wider land ISTAR programme.
1. The original requirement for TRACER was
as a direct replacement for the Scimitar, Sabre, and Striker variants
of the ageing Combat Vehicle Reconnaissance (Tracked) (CVR(T))
fleet, to provide a high resolution, near real-time information
gathering capability at extended ranges in all conditions, and
to carry out a number of other operational roles that reconnaissance
forces are required to undertake. Since then, however, the rapid
development of UAV technology has meant that these systems are
likely to be able to deliver a significant portion of the ISTAR
required capability, without the risk to life associated with
deploying troops far forward into enemy territory. Operational
analysis and military judgement show that manned reconnaissance
is still required, however, and studies are currently being conducted
into the sensors required to deliver the capability and the most
appropriate platform, manned and unmanned, on which to deploy
them. It is envisaged that the TRACER requirement will be met
by the procurement of a family of three reconnaissance variants:
a scout to fulfil the formation and close reconnaissance roles
within formation reconnaissance regiments and armoured infantry
battlegroups respectively; a variant equipped with a Long-Range
Anti-Tank Guided Weapon (LRATGW) system to provide overwatch protection
for vehicles deployed far forward without protection from other
anti-armour assets; and a variant specially equipped for engineer
2. In 1996 it emerged from discussions that
the United Stated also had a requirement for a land-based, manned,
armoured reconnaissance vehicle, known as the Future Scout and
Cavalry System (FSCS). We decided, therefore, to participate in
a joint project definition study to further define the TRACER/FSCS
requirement and to provide the information necessary to inform
the UK's balance of investment decision. A UK/US Combined Operational
Requirement Document (CORD) was agreed in December 1997. The joint
programme covers only the scout variant. Since its armoured cavalry
regiments are normally supported by main battle tanks, and their
combat engineers are employed in a different manner, the US has
no similar requirement for LRATGW and engineer variants and the
UK is pursuing these on a national basis.
3. The principal trade-offs within the land
tactical ISTAR are between a manned, land-based capability and
an unmanned, air-based capability. We are currently conducting
a series of parallel studies to help determine the optimum balance
of investment into these complementary capabilities. Within TRACER,
possible trade-offs will be studied in depth in the combined operational
and technical analysis conducted as part of the joint PD study.
An affordability review was conducted 24 months into the PD phase
(in January 2001); this reviewed capability against cost and further
refined the TRACER/FSCS requirement. The operational analysis
has not prompted any significant changes to the harmonised CORD
4. No decision will be taken on the number
of TRACER (or WATCHKEEPER) systems to be procured, pending the
outcome of the balance of investment studies.
*** It is too early to make any assumptions
about WATCHKEEPER numbers.
5. The Strategic Defence Review emphasised
the importance of ISTAR capabilities. For example, it saw the
number of formation reconnaissance regiments in our order of battle
increased from three to four. It confirmed the importance of a
continued ability to conduct high intensity conflict, which TRACER
and WATCHKEEPER will be capable of supporting.
6. TRACER will have wide utility across
the spectrum of conflict and will operate with a diverse set of
force mixes, from light and airmobile formations through to heavy
armour. It will be capable not only of providing intelligence,
but also of acting as a deterrent, monitoring opposing forces,
helping to maintain freedom of movement, and providing a credible
offensive capability. TRACER will be able to engage enemy forces
with direct fire weapons systems and to call on indirect fire
systems and Close Air Support. It is planned that TRACER will
be transportable by strategic transport aircraft (C-130). WATCHKEEPER
would also be used in all phases of war and in situations other
7. The current land-based manned reconnaissance
capability is provided by the Scimitar, Striker and Sabre variants
of the CVR(T) fleet. The CVR(T) was introduced in 1972 and proved
to be inadequate during the Gulf conflict, particularly in the
areas of sensors, stealth, survivability, mobility and lethality.
CVR(T) is undergoing a life extension programme, which will make
limited improvements to its sensors, mobility, and sustainability,
but the basic platform is inadequate and it would not be cost-effective
to upgrade it to meet the requirements of the modern battlefield.
The out-of-service date for all variants of the CVR(T) family
of vehicles is about 2015. An ISD will only be confirmed for TRACER
when the major investment decision is taken at the project's Main
8. TRACER was conceived as a national development
programme. The initial feasibility study for TRACER, jointly funded
by the MoD and industry, was conducted by three UK industrial
consortia and reported in 1994. A further cost and risk study
allowed the consortia to propose concepts and prices, address
areas of risk, and consider candidate technologies for integration
into the production system. As the cost and risk study neared
completion in 1996, it became clear that the US had a similar
requirement. The UK and US decided, therefore, to collaborate
on Project Definition (PD) studies and subsequently signed an
"umbrella" Memorandum of Understanding in July 1998.
An invitation to tender for two firm-price PD contracts was issued
to two consortia on 9 July 1998 and contract proposals were received
in October that year. Following successful evaluation of the proposals,
the contracts were awarded on 29 January 1999. The limited competition
meant that "no acceptable price, no contract" procedures
were applied. The current PD phase will be of 42 months duration
(to July 2002) and will focus on candidate technologies and their
integration into the most cost-and operationally-effective system
design. Each consortium is to produce a detailed specification
for Full Development and Initial Production in accordance with
the agreed pricing strategy; an assessment of training requirements;
a range of demonstrators, including an integrated demonstrator
vehicle; a risk management plan, supported by an updated risk
register; a software integration plan; a trials and acceptance
plan; a project management plan; a quality plan; a safety plan;
and an integrated logistic support plan.
9. Two UK/US industrial consortia have formed
to participate in the TRACER PD phase. SIKA International is a
joint venture company formed by BAe Systems and Lockheed Martin,
and includes Vickers Defence Systems and General Dynamics Land
Systems as principal sub-contractors. LANCER is a consortium headed
by BAe Systems (at the time of contract signature Marconi Electronic
Systems) acting as prime contractor, with Alvis Vehicles, United
Defense LP, and Raytheon. The merger of British Aerospace and
Marconi Electronic Systems has presented challenges to the programme,
but the undertakings have required BAe Systems to put in place
a series of "firewalls" to ensure that effective competition
10. The "umbrella" Memorandum
of Understanding with the US covers all phases of the programme
through to Manufacture and In-Service Support, but recognises
that formal commitment of both nations is limited to the current
phase of work. The procurement strategy for future phases of the
TRACER programme will be defined in the Main Gate submission,
which is expected to be in early 2003.
11. As a result of the parallel work on
tactical UAVs, contracts with four consortia for the first part
of the WATCHKEEPER Assessment Phase were let in September 2000.
12. Alternatives to the development of a
new vehicle were considered in 1992 and again in 1997. A market
survey of off-the-shelf options revealed that no commercially
available solutions to the requirement existed, or would be likely
to exist in the relevant timescale. The possibility of modifying
a number of existing or proposed armoured vehicles, including
the Challenger 2 main battle tank, was also considered. As it
was estimated that the platform itself would only account for
around 20 per cent of the system cost, there were high integration
risks, and there was a high risk of failing to meet the full requirement
this option was not assessed to be cost-effective. This assumption
has been borne out by the current operational analysis being conducted
as part of the TRACER programme. Modified in-service systems and
upgrades to commercial off-the-shelf solutions fail to achieve
the necessary level of performance and the whole-life costs for
systems capable of being sustained to the planned out of service
date for TRACER are higher than those for a bespoke solution.
Under the contracts let for the first part of the WATCHKEEPER
Assessment Phase, industry has been asked to advise on procurement
13. It is assessed that there is currently
no opportunity for a European collaborative programme on TRACER,
owing to different national doctrine concerning the use of reconnaissance
forces and the force mixes that are employed.
14. The TRACER project is directed by a
UK/US Steering Committee and administered by a Joint Project Office
(JPO). The UK has assumed the lead of the JPO for PD, and was
responsible for placing the contracts on behalf of both nations.
The JPO is led from the Defence Procurement Agency's office at
Bristol. It has a permanent staff of about 35 military and civilian
personnel, covering a wide range of disciplines, and can also
call on the expertise of the Defence Evaluation and Research Agency.
The estimated cost of the UK office for the PD phase is some £2
million a year (in addition, some £2 million a year is spent
on support from DERA). A satellite project office, funded by the
US, has been set up at the US Army's Tank Automotive and Armaments
Command in Warren, Michigan. All decisions relating to the progress
of the programme must be agreed jointly.
15. The MoU commits both the US and UK to
an equal cost share during PD and Full Development, although if
the collaborative project continues into the next acquisition
phase the latter would be the subject of further national approvals.
Supplements to the MoU, taking account of national off-take, would
be negotiated for the production phase if it were decided to proceed
with production. There is no formal commitment by either nation
beyond the current PD stage. The next stage would be the award
of a single contract for Engineering and Manufacture (the US equivalent
of our demonstration phase) to the successful consortium. However,
US commitment to the future phases is now in considerable doubt.
This uncertainty dates back to 1999, when the US Chief of Staff
of the Army, General Shinseki, announced his vision for a lighter-weight,
more readily deployable Army. Central to his vision is the development
of a new family of vehicles known as the Future Combat System
(FCS). In order to make financial headroom for this new strategy,
during 2000 the US Congress deleted the funding for a number of
equipment projects. Among those affected is the follow-on Engineering
and Manufacture Development for FSCS/TRACER. The US intends to
make a decision on the way forward for the FCS programme in April
2003, which may include the use of FSCS as a low-risk route towards
meeting part of the FCS requirement. In the light of this uncertainty
over the future of the collaborative programme, the UK MoD is
developing a strategy for a national solution to the TRACER requirement,
whilst at the same time keeping open the collaborative option.
We are also studying our future armoured vehicle programmes to
determine whether we have a similar requirement for a lighter-weight
family of vehicles that could improve our ability to achieve rapid
effect in a crisis through improved strategic mobility.
16. The market potential for TRACER and
WATCHKEEPER cannot yet be assessed.
17. Collaboration has provided an opportunity
for UK companies to forge links and share technical expertise
with US companies. The TRACER/FSCS MoU sets a goal of equitable
work-share, which is reflected in the balance of the industrial
consortia. The two industrial consortia participating in Project
Definition were the only industrial groupings to come forward
after briefings on the collaborative programme.
18. The TRACER programme embraces several
Smart Acquisition features. Greater emphasis is being placed on
risk reduction during PD. The JPO is liaising closely with all
stakeholders, including industry, to reduce timescales and achieve
a better understanding of a complex programme. The benefits of
this approach were realised early in the programme in the evaluation
of tenders for the PD phasea process which would traditionally
have taken six to eight months was completed in four. Increased
emphasis is being placed on through-life costs, with challenging
but achievable targets for reliability and in-service availability.
The TRACER Integrated Project Team (IPT) was formed in January
2000. A similar approach is being adopted for WATCHKEEPER. The
Tactical UAV IPT was formed in February 2000.
19. The PD phase is due to be complete by
mid-2002. The next steps will be determined in the light of the
outcome of work on the way forward for the TRACER programme (see
20. A reliable estimate of the total cost
of the project is not possible in advance of decisions on the
balance of investment between TRACER and WATCHKEEPER. Some £10
million was spent by the UK on the Feasibility Study phase. The
UK costs for TRACER PD are £121 million at outturn prices.
As already indicated, there is no commitment for either nation
to proceed beyond the current phase. An overall upper limit has
been set in the forward equipment programme funding for TRACER
and WATCHKEEPER. This provision has not been split between the
programmes beyond the current phases. It is planned to spend about
£15 million in total on the first part of the WATCHKEEPER
21. During TRACER PD, contractors will deliver
costed options for contractor logistic support for the first two
years in service, the following five years, and subsequent periods.
Options may include direct supply of spares to the field force
and Public/Private Partnership type arrangements for major spares
components, as well as contractor-provided maintenance support.
A Training Needs Analysis will also be undertaken during PD.
22. The number of each variant of TRACER
that will be required will be determined during the balance of
investment considerations in 2002.
23. The PD phase will cover TRACER's compatibility,
interoperability and commonality with other systems. Assuming
that the collaborative procurement of TRACER/FSCS continues, there
will be a high level of interoperability and commonality with
US reconnaissance forces.
24. CVR(T) will have been in service for
over 40 years when it is replaced. Options for disposal are likely
to be limited. The future of the PHOENIX system is one of the
issues to be considered in the WATCHKEEPER Assessment Phase.
25. It is anticipated that TRACER will remain
in service for a long period of time. For TRACER, the consortia
have been instructed to prepare to carry out through life improvements
to the system in order to fulfil emerging capability gaps and
to capture the advantages of novel technology. Such an approach
will add to the useful life of the system.
AIRLIFT ASSETS: C-17
The Strategic Defence Review (SDR) identified
an urgent need to improve our strategic air transport capability
and concluded that, in the short term, pending the introduction
of the Hercules Rolling Replacement tranche 2 (HRR2for
which the A400M has now been chosensee separate memorandum)
we should acquire the capability of four C-17 aircraft or their
equivalent. Following a competitive process, the decision was
taken to lease four Boeing C-17 aircraft to provide this capability.
1. Based on operational analysis which modelled
a range of scenarios in which UK forces might be deployed, the
SDR identified a requirement for additional strategic lift assets,
including four C-17 aircraft or their equivalent. The Staff Requirement,
endorsed in September 1998, describes the capability equivalent
to four C-17s in terms of:
(a) those individual equipments considered
likely to drive the minimum acceptable payload or cargo-box dimensions,
drawn from a list of equipment assessed as likely to have to be
transported in the early stages of a deployment of the Joint Rapid
Reaction Force; and
(b) theoretical overall maximum out-load
capability over a seven-day period, derived from the operational
analysis supporting the SDR work and expressed in terms of the
maximum potential payload, floor area, and volume to be transported.
2. Other characteristics sought include
the ability to:
(a) operate world-wide from the widest possible
range of airfields, including poorly maintained runways, with
the minimum of ground handling support;
(b) carry wheeled and tracked vehicles, palletised
freight (including ammunition), troops, or stretchers, or a combination
of all four, using integral equipment;
(c) load and unload the aircraft without
specialist ground equipment, including the ability to drive wheeled
and tracked vehicles onto and off the aircraft without an intermediary
loading vehicle or platform; and
(d) rapidly re-role the aircraft between
the different load configurations when away from base.
3. Trade-offs between cost and capability,
including in relation to the characteristics described above,
were considered in the light of the bids received to meet the
requirement. At the bidders' conference in October 1998, potential
bidders raised concerns that the requirement could only be met
by one aircraft type, the C-17. They were therefore asked to identify
those areas of the requirement where relaxations would be needed
to allow significant cost/capability trade-offs. None of the relaxations
identified was ruled out as unacceptable in broad terms for consideration
of the bids.
4. The SDR established a short-term requirement
for four C-17 aircraft or their equivalent. The chosen solution
is to lease four C-17 aircraft from the Boeing Company.
5. This requirement arises directly from
work carried out during the SDR.
6. The four C-17s will provide an outsize
strategic lift capability in peace, crisis and war. The aircraft
will play a key part in enhancing the early deployment of the
Joint Rapid Reaction Force (JRRF) until the Future Transport Aircraft
(A400M) enters service in the latter part of this decade.
7. STSA is being procured to meet a new
requirement and does not directly replace any existing equipment
or capability. The in-service date (ISD) of December 2001 is defined
as two aircraft fully operational with trained and seasoned air
and ground crews; in practice, we hope to beat that target to
allow some of the C-17s to participate in the JRRF exercise SAIF
SAREEA 2 in the Autumn, with all the aircraft fully operational
with trained and seasoned air and ground crews by December 2001
at the latest.
8. An invitation to tender was issued on
30 September 1998 to eight potential bidders for open competition
at prime contractor level. The deadline for tenders was 29 January
1999, the same as that for the four-nation collaborative competition
to identify the solution for the Future Transport Aircraft (A400M)
requirement (see separate memorandum). The two competitions were
linked and assessed in parallel, both to consider the most cost-effective
solution overall and to ensure that the solution chosen for STSA
did not prejudice the FTA competition.
9. In January 1999 five bids were received,
from Boeing (C-17), Air Foyle (Antonov An124-210), IBP (Antonov
An124-100), Airbus Transport International (Beluga and a mix of
A300 freighters), and Rolls Royce offering a fleet management
service of MoD-acquired assets. The STSA competition was subsequently
terminated in August 1999, because none of the bids offered the
right combination of capability and cost. The DPA continued to
work with industry in seeking an off-the-shelf solution to meet
the requirement. This work culminated in a Request For Proposals
being issued on 14 October 1999, from which three proposals were
received on 29 October: Boeing (C-17), Air Foyle (Antonov An124-100),
and Heavylift (Antonov An124-100). Following initial EAC consideration
in December, further work was undertaken with the bidders, including
a risk reduction contract with Air Foyle, and the final main gate
submission went to the EAC in February 2000.
10. The Secretary of State for Defence announced
on 16 May 2000 that the UK had determined that the best solution
to meet the short term strategic airlift requirement was to lease
four C-17A Globemaster III (C-17) aircraft.
11. A contract with The Boeing Company was
signed on 2 September 2000 for the lease of four C-17 aircraft
for a period of seven years, with the possibility of two further
annual extensions. Boeing will retain ownership of the aircraft
but there are no restrictions placed on RAF operation whether
through the contract, the export licence, or the support arrangements.
However, the contract stipulated that it would not enter into
effect until certain "conditions precedent" were met,
in particular, relating to the raising of the necessary financing
on terms acceptable to the UK.
12. The finance was raised on 17 January
2001 by the placement of a sterling bond covering the value of
the seven year lease. The deal allows MoD to make 14 half-yearly
firm-priced payments to realise the sum payable on the bond, thus
allowing us to spread the cost over the period of the lease rather
than having to pay up front. All other conditions precedent had
also been satisfied and the contract therefore came into force
on 17 January.
13. A variety of acquisition options were
considered, including charter, lease and purchase. Leasing C-17
was shown to fully meet the requirement for STSA. Leasing is a
cost-effective solution given that we only need the aircraft until
HRR2 is available.
14. STSA is not a collaborative project,
although the United States Air Force (USAF) has played a key role
in developing the C-17 project, especially in relation to logistic
support (including training) which is being delivered through
US Foreign Military Sales (FMS) arrangements.
15. The STSA requirement is being satisfied
by the lease of commercial off-the-shelf (COTS) C-17 aircraft.
Export potential is not therefore an issue for the UK.
16. The number of potential contractors
for STSA was limited to those who could provide a solution in
the required time-frame. The invitation to tender and subsequent
Request For Proposals (RFP) were sent to all potential suppliers
who had expressed an interest and had a realistic chance of meeting
17. The procurement strategy includes key
elements of Smart Procurement. Industry has been closely involved
in the project from the earliest possible stages. The project
is managed by a DPA multi-disciplinary Integrated Project Team
at the core of a wider team consisting of staff from the DPA,
Boeing, USAF, DEREA, Customer 1, and Customer 2. The support arrangements
have a number of novel aspects (see below). The solution to the
requirement has been acquired on a firm price basis.
18. STSA is not following a conventional
procurement programme. The short time-scale precluded the consideration
of a solution other than a COTS aircraft.
19. Key milestones are:
|ITT issued||30 September 1998
|Bids received||29 January 1999
|Competition terminated||5 August 1999
|RFP issued||14 October 1999
|Proposals received||29 October 1999
|Main Gate submission||14 February 2000
|Decision announced||16 May 2000
|First aircraft delivery||June 2001
20. The STSA programme cost is in the region of £750
million at outturn prices on a resource basis (as opposed to the
previous estimate of around £500 million, which was compiled
on the previous reporting basis of a cash figure, at fixed economic
conditions, and earlier exchange and interest rates). The cost
includes the seven year lease; full support during this period
under Foreign Military Sales (FMS) arrangements by Boeing through
the USAF flexible sustainment contract; and training of RAF air
and ground crews at USAF bases also under FMS arrangements. It
does not include fuel or manpower costs, though these were taken
fully into account during the assessment in comparing the C-17
with alternative solutions.
21. While we are leasing the four C-17 aircraft directly
from The Boeing Company, separate arrangements have been made
under the FMS scheme for training and support. These FMS arrangements
provide for RAF C-17 aircrew training (both initial and refresher)
to take place at Altus Air Force Base, while initial RAF groundcrew
training is being undertaken at Charleston Air Force Base. The
RAF will undertake first line and second line on-aircraft maintenance
to USAF Technical Orders, as well as some limited off-aircraft
repair. Deeper maintenance will be provided under FMS arrangements
by The Boeing Company through the USAF flexible sustainment contract.
In effect, the four RAF C-17s will be part of the "world-wide
fleet", which offers a novel and economic approach to logistic
22. All aircraft will be put into front line service.
23. C-17 will present a good opportunity to cement working
relations and to promote greater co-operation between the RAF
and the USAF. UK aircraft will be to the same standard as US aircraft
and will be part of a worldwide C-17 fleet, benefiting fully from
the USAF support and training structures. We expect that the RAF's
C-17 aircraft will make a vital contribution to improving the
airlift capabilities for NATO and European operations. With our
European and NATO allies we are currently studying a number of
options for co-operative acquisition and management of strategic
24. STSA is being procured to meet a short-term requirement,
pending the introduction into service of FTA (A400M). We have
contracted for a seven year lease with options for two further
annual extensions allowing a maximum lease period of nine years.
At the end of the lease period the aircraft will be handed back
to Boeing. We do not currently plan to retain the C-17 aircraft
once A400M is in service.
AIRLIFT ASSETS: A400M
It was decided in 1994 to replace a first tranche of the
Hercules air transport fleet with 25 new C-130J aircraft. We are
now seeking, through a collaborative programme, both to replace
the capability provided by the remainder of our ageing air transport
fleet and to procure for the long-term a dedicated outsize strategic
lift capability (which will be provided in the near term by "short-term
strategic airlift"see separate memorandum). The Secretary
of State announced on 16 May [Hansard col 150] the Department's
intention to order 25 aircraft in the A400M initial launch to
fulfil our long-term outsize airlift requirements from the latter
part of the decade. We will lease four Boeing C-17 aircraft to
improve our strategic airlift capability for the period until
the A400M enters service.
1. The Staff Requirement to replace the RAF's ageing
fleet of Hercules transport aircraft was originally endorsed in
the summer of 1993. The roles and characteristics sought for both
tactical and strategic airlift were essentially similar to those
of the existing aircraft. They included the ability to deploy
troops or freight between theatres or within a theatre of operations
either by parachute or landing on short, semi-prepared strips.
Emphasis was placed on solutions that offered significant improvements
in reliability and maintenance and operating costs over the existing
RAF Hercules. In December 1994, the decision was announced to
buy 25 C-130J as tranche 1 of a Hercules Rolling Replacement Programme
2. In July 1997, with a view of informing decisions on
tranche 2 of the Hercules Rolling Replacement programme (HRR2),
we announced our intention to rejoin the collaborative European
Future Large Aircraft (FLA) programme (subsequently given the
Airbus family name of A400M) and to endorse the related European
Staff Requirement (ESR). The ESR was prepared to meet the future
air transport requirements of eight participating nationsBelgium,
UK, France, Germany, Turkey, Italy, Spain and Portugal. In the
event, Portugal decided not to participate formally in subsequent
stages of the FLA programme, but subsequently rejoined the programme
in January 2001. The ESR matches, and in some cases exceeds, the
original UK requirement (SR(A)435) for a Hercules replacement.
In particular, it specifies a larger cargo carrying volume, a
greater maximum payload, and a higher cruise speed.
3. The Strategic Defence Review confirmed the need to
replace the capability provided by the Hercules and concluded
that an outsize airlift capability was required to support the
deployment of the Joint Rapid Reaction Force (JRRF). The latter
requirement is to move items such as the Attack Helicopter and
certain engineer equipment but not, for example, Challenger, AS90,
or armoured bridge layers. This outsize lift capability was consistent
with the requirements for FLA set out in the ESR and thus required
no change to the procurement strategy to meet the longer-term
HRR2 requirement agreed in July 1997.
4. Studies were carried out in March 1993 to examine
various Hercules refurbishment and replacement options, including
C-17, C-130J, and FLA, using projected costs. Further studies
were conducted in 1994, based on Lockheed Martin's response to
the HRR1 invitation to tender. Since FLA would not be available
within the prescribed timescale, these studies included consideration
of refurbishment of the existing Hercules, followed by procurement
of C-130J or FLA, as well as early procurement of the then current
C-130H production model or its planned replacement, the C-130J.
The conclusion was that procurement of C-130J to meet the HRR1
requirement would provide best value for money, earliest maximum
increase in availability, and a significant increase in capability
compared with refurbishment options.
5. Studies in 1996 examined various options to meet the
HRR2 requirement, including procurement of C-130J, FLA, C-17,
and a mixed fleet of C-130J and C-17. These studies indicated
that none of the options could be ruled out, but it was not possible
to draw definitive conclusions in the absence of firm costs. Further
studies were carried out on the basis of the priced proposals
received from Airbus, Boeing, and Lockheed Martin, and Ministers
announced their decision on 16 May 2000 to make a commitment to
procure 25 A400M aircraft in the initial production tranche. In
selecting A400M as the chosen solution, the greater industrial
benefits and technical compliance of the European solution were
taken into account.
6. Requests for Proposals issued in July 1998 quoted
a potential UK requirement for up to 45 FLA and sought prices
for stated equivalent numbers of C-17 and mixed fleets of C-17
and C-130J. Final numbers were decided in the light of further
operational analysis of the requirements and cost-effectiveness
trade-offs between the solutions; this process took into account
the fact that we will be replacing 25 Hercules C-130K aircraft
with 25 A400Ms, the latter providing a 50 per cent increase in
7. As already noted, the SDR confirmed the need for HRR2
and for an outsize airlift capability.
8. The A400M will provide tactical and strategic mobility
to all three Services in peace, crisis, and war. In crisis or
war, the A400M will be employed on inter- and intra-theatre air
transport tasks, primarily in support of the JRRF. The A400M meets
the UK operational requirement without compromise. The only technical
requirement that remains to be specified is the Directed InfraRed
Countermeasures systemnew technology that could not be
adequately defined at this stage but will be examined by the Airbus
Military Company (AMC) during development. The concept of a basic
common standard aircraft with a range of capability options provides
each of the air forces with an aircraft meeting their requirements.
9. Of the existing fleet of 55 Hercules C130, which entered
service in the 1960s, 25 are being replaced by C-130J aircraft
under the HRR1 project. The capability provided by the rest of
the fleet, and by that provided in the short term by STSA, will
be replaced and enhanced (by increasing outsize airlift capability)
by the A400M. We expect the A400M to enter RAF service towards
the end of the decade, with existing aircraft replaced progressively
from that date.
10. On 4 September 1997, the seven collaborating European
nations issued a Request for Proposals for FLA to Airbus Industrie
against the agreed ESR. Each nation specified its required in-service
date, expected off-take, support needs, and other variables. The
aim would be to place a fixed price contract for acquisition and
elements of support for the first 10 years. The contract would
be placed by the Organisation Conjointe de Cooperation en Matiere
D'Armement (OCCAR) and embrace many aspects of Airbus's proposed
11. A second Request for Proposals was issued to Airbus
Industrie, the Boeing Company, and Lockheed Martin Aeronautical
Systems on 31 July 1998 by the UK on behalf of Belgium, France,
Spain, and the UK, seeking tenders at prime contractor level against
the ESR. Securing best value for money through competition was
a condition of our willingness to remain involved with the FLA
programme. Tenders for this Future Transport Aircraft (FTA) competition
were received on 29 January 1999, coincident with those for the
STSA. Tender assessments were conducted jointly with other nations
and in more detail on a national basis.
12. Contenders in the collaborative competition included
the Airbus A400M and the existing C-17 and C-130J aircraft, both
available as commercial off-the-shelf purchases. Germany, a non-participant
in the four-nation competition, also considered the Antonov An-7X
(a customised version of the Russo-Ukrainian An-70), along with
France, Spain, and Italy, as a further alternative to the A400M.
The UK would have been prepared to assess a compliant tender for
AN-7X offered by a Western prime contractor had it been proposed
in response to the 31 July 1998 Request for Proposals, but no
such bid was made. The C-130J cannot fulfil the "outsize
lift" element of the ESR and would only have been considered
as part of a mixed fleet solution.
13. There was a seven-nation assessment of the collaborative
A400M. When the Request for Proposals was issued, the A400M nations
indicated potential requirements totalling 288 aircraft. Airbus
has offered prices for the A400M based on this and a number of
other off-takes. The partner nations announced on 27 July 2000
(the Farnborough Declaration) that they intended to procure, in
an initial order, numbers of aircraft sufficient to launch the
programme: Belgium seven aircraft, France 50 aircraft, Germany
73 aircraft, Italy 16 aircraft, Luxembourg one aircraft in co-operation
with Belgium, Spain 27 aircraft, Turkey 26 aircraft, and the UK
25 aircraft. Since then, the Portuguese decision to rejoin has
added a further four aircraft to the programme.
14. There would have been no collaborative opportunities
in respect of the purchase of C-17 or C130J, except perhaps in
the field of shared support.
15. Airbus Military Company (AMC) believes that there
is a significant market for the A400M beyond the European collaborative
partners, though estimates for the scale of this market vary.
16. For the A400M, the aim is to ensure broadly equitable
work-sharing arrangements, without detriment to overall value
for money. A key element of Airbus's successful record in meeting
challenging delivery timescales is their system of relying on
centres of excellence in successive programmes. Thus Airbus UK,
the UK industrial partner in Airbus, has become the Airbus centre
of excellence for wing design. Our expectation is that AMC will
manage the A400M programme in the same way, drawing on partner
companies' strengths as appropriate.
17. AMC announced on 30 November 2000 that the TP 400
engine, offered by a European consortium including Rolls-Royce,
had been selected through competition to power the A400M. This
decision gives further confidence to the "commercial approach"
adopted on this programme; AMC described the outcome as the best
possible engine, technically and commercially.
18. The collaborative but commercial approach will help
to achieve a cost-effective solution, along the lines of civil
aircraft development and procurement. There will be no separate
development contract: AMC will be contracted to deliver aircraft,
and would be responsible for the risk management associated with
development. The final price of the A400M will reflect the extent
to which AMC will have to carry costs pending production deliveries.
This single-phase approach circumvents the potential delay evident
in collaborative programmes needing production approval. In respect
of aircraft certification, the intention is to adopt an approach
based on civil Joint Airworthiness Requirements, supplemented
by military requirements where appropriate.
19. The A400M project is in the later stages of Project
Definition, with design feasibility work mature.
20. For A400M, the risks associated with a collaborative
programme, and the need to achieve favourable commercial terms,
combine with technical risks and the inexperience of the prime
contractor in the military domain. But we expect AMC to draw heavily
on the military experience of its partner companies.
21. Key milestones are:
|FLA Request for Proposals issued||4 September 1997
|Competitive Request for Proposals issued
||30 July 1998|
|Tenders submitted||29 January 1999
|Decision||16 May 2000
|Contract let||Summer 2001
|ISD||Latter part of the decade
22. Total estimated costs for the acquisition and initial
support of the A400M are of the order of £3.5 billion for
acquisition and initial support. No significant costs have so
far been incurred.
23. AMC is providing a range of in-service support options,
with the options mainly differing in the level of contractor support
offered. The in-service support strategy selected by the UK requires
that RAF personnel carry out all first line maintenance and on-aircraft
second line maintenance. Third line on-aircraft maintenance and
second and third line maintenance of off-aircraft components will
be undertaken by industry. This strategy will ensure flexible
and responsive support to operations, especially deployed operations,
whilst making best use of industry experience and resources for
the conduct of the more specialised and resource intensive tasks.
Opportunities for common European support and training continue
to be evaluated but, as yet, no decisions have been taken on this
24. Potential problems during any change-over period
include the scope for dual utilisation of Service support resources,
such as equipment or manpower. Such problems will be minimised
through controlled delivery/disposal contracts and manpower planning.
25. No decision has yet been taken on the availability
of the A400M fleet, which will be considered in due coursethe
Concept of Employment is currently being developed.
26. Future users of the A400M will include Belgium, France,
Germany, Italy, Spain, Turkey, Portugal, and the UK. It is not
possible to quantify the operational effectiveness implications
of different air forces using the same type of transport aircraft,
but the A400M will be able to carry the universal cargo pallet,
as can the existing Hercules. Savings in support costs could be
expected as a result of several nations operating the same type
of aircraft; however, it will not be possible to quantify this
until each nation has decided on the support strategy for its
27. The 25 Hercules C-130K aircraft that are being replaced
by C-130J will be returned to Lockheed Martin as part of the HRR1
procurement package. No decision has yet been made on the subsequent
disposal of the remainder of the C-130K fleet.
28. The Staff Requirement assumes an in-service life
of 30 years.
29. No specific options are being considered at this
stage for long-term development. Improvements to avionics and
other systems are likely to be required over the life of the aircraft.
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's Harrier GR7 aircraft in the second decade of this
century in a joint force to operate from new aircraft carriers
or from land bases.
As the Defence Secretary announced on 17 January 2001, we
have concluded that the US Joint Strike Fighter (JSF) has the
best potential to meet our FCBA requirement. We have accordingly
decided to join the US as a full collaborative partner in the
next stage of the programmeEngineering and Manufacturing
Development (EMD)subject, of course, to the decisions of
the new US Administration on the future of the programme.
1. The FCBA requirement was originally intended to provide
the Royal Navy with a new multi-role fighter/attack aircraft to
replace 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 and more capable aircraft carriers
and establish the Joint Force 2000 (since renamed Joint Force
Harrier), comprising RN and RAF elements. Therefore the FCBA project
envisages a common aircraft to replace both the Sea Harrier FA2
and RAF Harrier GR7, capable of being deployed in both land and
sea based operations.
2. 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. This will end
upon start of EMD planned for October 2001. The UK will continue
to be the only full collaborative partner during the next phase
of the programme. Signature of a Memorandum of Understanding in
January 2001 for EMD has allowed us to participate in the selection
of the winning consortium, a process known as Source Selection,
which commenced in February and is due to end by October 2001.
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.
3. Trade-offs are an essential part of the procurement
process in the JSF 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 were completed in the autumn of 2000, in time
to allow the competing prime contractors to include results in
their respective bids.
4. The current planning assumption is for 150 aircraft,
but final numbers will depend on the version of JSFCarrier
Variant (CV) or Short Take-Off and Vertical Landing (STOVL)selected
and the outcome of ongoing work to confirm overall future offensive
air capability requirements.
5. 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. In addition, the Strategic Defence Review
noted that the US Joint Strike Fighter (JSF) was a strong contender
to meet our requirement for a Future Carrier Borne Aircraft. Current
plans envisage that FCBA will start entering service in 2012 (see
6. JSF is a single seat, supersonic aircraft, incorporating
advanced "stealth" technology, that is capable of performing
multi-role (strike, reconnaissance, and air defence) operations
from aircraft carriers and land bases. Our analysis of the available
options demonstrated that, on a through life basis, JSF would
be the most cost-effective solution to our military requirement.
7. 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 point where we have
the ability to conduct sustained operations with eight aircraft,
and is currently planned for late 2012.
8. JSF is a collaborative programme which runs to US
procurement procedures. The current concept demonstration phase
of the programme could be compared to the Assessment Phase of
the Smart Acquisition 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 the 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 separate
MoD contract was also placed on BAe Systems to examine the viability
of a marinised Eurofighter.
9. Should the JSF programme fail to deliver a suitable
aircraft, a number of alternatives could be considered. These
include the possible development of a Short Take-Off But Arrested
Recovery marinised Eurofighter; an 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.
10. We contributed $200 million, under the MoU with the
US, to the $2 billion JSF Concept Demonstration Phase. The UK
contribution to the next phase (EMD) will be £1.3 billion,
with a further £600 million for additional work on national
requirements. The JSF programme is managed from a US Project Office
in Washington, which has a total of about 150 staff, currently
including nine from the UK. 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.
11. The eventual US production requirement, extending
across the US Air Force, Navy and Marine Corps, could approach
12. JSF has a considerable potential to generate export
opportunities for UK industry, whichever consortium wins. The
JSF production run, including exports, may approach 5,000 aircraft
estimated to be worth some $400 billion.
13. The industrial implications of the alternative solutions
to the FCBA requirement were taken into account in determining
the UK's choice of aircraft. UK participation as a full collaborative
partner in the JSF programme represents a significant opportunity
for UK industry. UK companies have already played a significant
role in the programme to date. They are well placed in both of
the bidding consortia to win, on merit, substantial high quality
work, both in the next phase and over the life of potentially
the largest military procurement programme ever.
14. The JSF programme accords with Smart Acquisition
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 flying. These aircraft are also 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.
15. The JSF Concept Demonstration phase, begun in November
1996, is now coming to an end. The next stage will be the EMD
phase of the programme. The Secretary of State for Defence announced
UK participation in this on 17 January. EMD is expected to start
in October 2001 and last for some 11 years.
16. 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
before the programme moves into the EMD phase.
17. Approval was given for expenditure of £160 million
(2000-01 outturn prices to cover both our contribution to the
US JSF Concept Demonstration Phase and UK Feasibility Studies.
Approval has been given for expenditure of £1.3 billion (2000-01
outturn prices) to cover the UK contribution to EMD and a further
£600 million for additional work on national requirements.
This will be paid over an 11 year period beginning in October
18. Overall numbers and the choice of variant, both of
which have yet to be determined, will drive the cost of the programme.
It is currently estimated to be in the region of £7-10 billion
(2000-01 outturn pricesthe increase from last year reflects
the change to outturn prices). Peak expenditure is likely to occur
in 2013-14 and 2014-15.
19. Support arrangements are currently being examined.
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.
20. The numbers have yet to be determined, but the planning
assumption is 150 aircraft.
21. JSF (STOVL or CV) will offer good interoperability
with the US and any other NATO allies who buy the aircraft. It
will, of course, be fully interoperable with legacy UK systems:
able to be fitted with extant UK weapons and able to communicate
with other UK platforms.
22. 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.
23. FCBA is planned to have a 25-year service life.
24. It is too early to comment on the potential options
for the further development, update, or use of JSF.
The decision in the Strategic Defence Review to purchase
two large aircraft carriers to replace the three Invincible-class
carriers from around 2012 is being taken forward and competitive
contracts for the CVF Assessment Phase were awarded in November
1999 to BAe Land and Sea Systems (now BAe Systems) and Thomson-CSF
(now Thales Naval Systems). The first part of this phase examined
a wide range of carrier designs, to reflect the options for the
Future Carrier Borne Aircraft (FCBAsee separate memorandum).
This work helped to inform a decision, in January 2001, to select
the Joint Strike Fighter (JSF) as the aircraft with the best potential
to meet the FCBA requirement. Carrier design work is now focusing
on vessels capable of supporting JSF pending a decision on aircraft
1. The Strategic Defence Review (SDR) concluded that
the ability to deploy offensive air power will be central to future
force projection operations, and that aircraft carriers can provide
valuable flexibility in a range of operational circumstances.
They can also offer a coercive presence, which may forestall the
need for war fighting. The SDR recognised that there is an increasing
likelihood of future operations being conducted by forces far
from their home bases. In such operations, host-nation support,
including access to suitable air bases, cannot be guaranteed,
particularly during an evolving regional crisis or the early stages
of a conflict. The SDR concluded that there is a continuing need
for Britain to have the capability offered by aircraft carriers.
Our three Invincible-class carriers were designed for Cold War
anti-submarine operations. Our intention, announced in the SDR,
is to replace these with a new class of larger and more capable
carriers, known as the Carrier Vessel Future (CVF) class.
2. In accordance with the Smart Acquisition model, CVF
is following a two-stage approval process that involves an Initial
and Main Gate. Initial Gate approval, utilising the Smart Acquisition
model, was given in December 1998 for an Assessment phase. Studies
being undertaken in Assessment will examine the User Requirement
Document and develop it, using cost/capability trade-offs to produce
an affordable and achievable System Requirements Document. The
objective is to build a replacement for the current carriers that
has an increased emphasis on offensive air operations and is capable
of operating the largest possible range of aircraft in the widest
possible range of roles.
3. Trade-offs between cost and capability and time and
capability are integral to the Assessment phase work.
4. The original plan was to replace the three Invincible-class
carriers with three 20,000 tonne vessels. Operational analysis
demonstrated, however, that it would be more cost-effective to
procure two large carriers, each capable of carrying up to about
50 aircraft. The SDR also saw advantage in future carriers being
capable of carrying more fixed-wing aircraft than the current
vessels, in order to be able to contribute more effectively to
the support of operations on land and at sea.
5. The SDR assessed the requirement for aircraft carriers
within the overall requirement for an offensive air capability.
It concluded that "there is . . . a continuing need for Britain
to have the capability offered by aircraft carriers" and
the emphasis for replacement carriers should be on "increased
offensive air power, and an ability to operate the largest possible
range of aircraft in the widest possible range of roles"
(The Strategic Defence Review, Supporting Essays, pages 6-6 to
6. The CVF will deploy offensive air power in support
of the full spectrum of future operations, including force projection
as a central component of the maritime contribution to joint operations.
7. The planned out of service dates for HMS Invincible,
HMS Illustrious, and HMS Ark Royal are 2010, 2012, and 2015 respectively.
The SDR introduced no changes to this programme of withdrawals
from service. The first CVF is scheduled to enter operational
service in 2012 and the second in 2015. The in-service date of
CVF is defined as the "Operational Date Materiel Assessment",
which is the date at which it will be accepted as fit for entry
into the operational fleet.
8. The CVF procurement strategy is based on competition
and prime contractorship, with clear and unambiguous output requirement
specifications. Although we intend that the ships should be built
in the UK, prospective prime contractors are from the UK and France.
9. In accordance with the Smart Acquisition model, the
project is following a two-stage approval process. Invitations
to tender for the Assessment phase were issued in January 1999
to six potential prime contractorsBAe, Lockheed Martin,
Boeing, Marconi Electronic Systems, Raytheon, and Thomson-CSF.
Responses were received in May from two teams: the first led by
Thomson-CSF of France with BMT Defence Services Ltd and Raytheon
Systems as major sub-contractors; the other by BAe Land and Sea
Systems with Marconi Electronics Systems as a sub-contractor.
Following tender evaluation and face-to-face meetings with industry
it was judged that the bids offered the basis for robust and effective
competition and contracts were awarded to both teams in November
1999. BAe and Marconi subsequently merged to form BAe Systems,
and in February 2000 Lockheed Martin joined the Thomson-CSF team
(now known as Thales).
10. The Assessment phase comprises two main stages. The
first has so far involved the examination of carrier design options
and helped inform the decision, in January 2001, to select JSF
as the aircraft with the best potential to meet the FCBA requirement.
Further stage one design work, reflecting this decision, is now
underway focusing on vessels capable of supporting JSF, pending
a decision on aircraft variant selection. Progress to the second
stage of Assessment will be subject to satisfactory completion
by BAe Systems and Thales of stage one, based on a review of their
performance, and the timeliness and quality of their deliverables.
The second stage will involve detailed work, informed by our choice
of JSF, to determine the carriers' design parameters and to reduce
technological risk. It will culminate in the Main Gate approval
decision, planned for December 2003, to down-select to one preferred
prime contractor to proceed to Demonstration and Manufacture of
two carriers. The Demonstration phase will begin with the design
of a virtual prototype by the selected prime contractor, using
computer-aided technology. The intention is to achieve, so far
as possible, a freeze on a mature design before construction begins.
11. A cost model is being developed to generate whole-life
cost estimates for CVF and this will be populated with data from
industry. In the event of competition collapsing, this model would
be used as the basis for No Acceptable Price, No Contract negotiations.
12. During the first stage of Assessment, a wide range
of carrier and aircraft options, including conventional take-off
and landing, short take off and vertical landing, and short take
off but arrested recovery were considered. As part of this work
and following normal practice, the cost of life-extending the
three existing carriers, by 10 years, has been assessed to provide
a baseline against which all the options can be evaluated.
13. Whole ship collaboration is unlikely to be a viable
option, but opportunities are being reviewed during Assessment,
especially for equipment systems and sub-systems. In particular,
arrangements have been agreed with the French to explore areas
for possible co-operation in common areas of aircraft carrier
technology at a system or sub-system level.
14. It is unlikely that this project will lead directly
to whole-ship sales, although the commercial marketing of CVF
design skills and production technology could benefit UK industry.
Much of the ship's equipment could have export potential. Industrial
Participation proposals will be invited, as appropriate, for offshore
content of the proposed solution.
15. In accordance with government policy for the construction
of warships, the CVF will be built in a UK shipyard or shipyards.
Industrial factors will be taken into account in the selection
of a contractor.
16. The CVF programme will adopt a range of Smart Acquisition
techniques including a greater emphasis on identifying, evaluating,
and implementing effective trade-offs between system performance,
whole-life costs and time; the adoption of incremental acquisition
for areas such as the combat systems; and the use of off-the-shelf
equipment and commercial standards, where appropriate. An Integrated
Project Team (IPT) is managing the project under the leadership
of an industrialist recruited in an open competition. In accordance
with Smart Acquisition, what would previously have been Feasibility
and Project Definition stages have been combined into a single
Assessment phase, with increased investment at this stage to achieve
early risk reduction. The two consortia have been encouraged to
be innovative throughout the project.
17. A number of small-scale pre-feasibility studies were
completed prior to the award of the assessment contracts. A risk
register will be maintained throughout the life of the project
as the core of an integrated risk management system. It will contain
both MoD and contractor inputs from the Analysis of Options studies
undertaken by industry and will be the focus for risk reduction
work during the Assessment phase. These will help to provide confidence
in the data to be assessed in the Combined Operational Effectiveness
and Investment Appraisal that will support the Main Gate submission
to proceed with Demonstration and Manufacture.
18. CVF milestones, as currently planned, are shown in
the table below:
|User Requirements Document endorsement and Initial Gate approval
|Issue ITT||January 1999
|Start ITT Assessment||November 1999
|FCBA variant selection||2001-02
|FCBA decision||January 2001
|Systems Requirement Document endorsement and Main Gate approval
|ISDs||2012 and 2015|
19. We envisage a total acquisition cost for the two
carriers of £2.7 billion at outturn prices (EP 2001), including
combat system and initial support costs, but excluding the aircraft.
The peak years of expenditure are likely to be between 2008 and
2012. Costs incurred so far, including pre-feasibility studies,
total just over £16 million.
20. We plan to investigate the let of a design/build/through-life
support/disposal contract as one package. Collaborative support
arrangements are unlikely.
21. Manning levels will be based on work by human factors
designers, to achieve a balance between automated and manual tasks,
and by training needs analysis, in accordance with the RN training
equipment strategy. The size of ship's complement is planned to
be about the same as for the Invincible class. Contractors will
be tasked to propose the most efficient manning strategies for
their designs, which will be examined during Assessment.
22. All logistic support associated with CVF will be
considered as a direct cost to the project, with an emphasis on
avoiding expenditure on new infrastructure. The maintenance management
system will be required to integrate with other MoD logistic systems
and to take account of emerging developments in IT. Innovative
support solutions will be examined, using Integrated Logistic
Support methodology to minimise costs throughout the ship's life.
23. Contractor Logistic Support (CLS) will be examined
for some or all of the maintenance and logistics. The benefits
of CLS include a strong focus on reliability for initial designs;
better standards of availability, reliability, and maintenance;
and an incentive to the contractor to design and build systems
that minimise support costs. One option to be considered is the
adoption of best practice in supply chain techniques, to minimise
MoD ownership of spares, by contracting for agreed spares availability
from industry. CLS options for up to 30 years will be examined
24. The upkeep cycle of the CVF will reflect the vessels'
modern design, and developments in upkeep practice such as "reliability
centred maintenance" rather than lengthy and expensive refits.
This will enable availability requirements to be met by only two
25. Both CVF will be assigned to the front line.
26. The aim is to maximise the interoperability of the
CVF with the greatest possible range of UK and allied aircraft
and with other carriers, to the extent that this can be achieved
cost-effectively. This is being explored further during the Assessment
27. Prospects for the sale of the Invincible class will
be explored in due course.
28. Each CVF is planned to have an in-service life of
29. The CVF programme is closely linked with the FCBA
and Future Organic Airborne Early Warning programmes (the latter
managed by the CVF Integrated Project Team).
Bowman will provide a secure, robust data and voice communications
system in support of land operations, to replace the Clansman
combat radio and some of the HQ infrastructure element of the
Ptarmigan trunk system. It will also play a key role in the MoD's
Battlespace Digitization initiative.
In June 2000, Minister (Defence Procurement) announced the
removal of preferred supplier status from Archer Communications
Systems Ltd (ACSL) and the launch of a new competition for the
Bowman requirement. The decision was taken because the ACSL bid
did not provide sufficient confidence of a value for money solution
within an acceptable time frame. The new competition is progressing
well. Bids for the supply and support contract have been received
from Computing Devices Canada (CDC), Thales, and TRW and are currently
being evaluated. Depending on the outcome of the competition and
subject to a successful passage to Main Gate, the production contract
is expected to be let during Autumn this year.
1. Bowman is required to provide a secure combat communications
system for the Army and elements of the other Services, in support
of land and littoral operations. It will serve as the primary
means of voice and data communication for tactical level operations,
where operations are characterised by mobility and are undertaken
by many individual platforms and by dismounted individuals. The
system will, therefore, be based on radio communications that
can operate without relying on fixed infrastructure. As well as
man-portable versions, Bowman will be an integral part of the
communications fit of major equipments such as the Challenger
2 Main Battle Tank, helicopters, and warships. In addition to
radios, Bowman will also provide a local area sub-system. This
sub-system will distribute information within key platforms and
around deployed divisional, brigade, and unit level headquarters,
as well as providing the inter-connection between Bowman and other
military and civil communications systems. A management information
system will enable operational deployment of the system to be
planned and managed.
2. This breadth of requirement developed over the extended
Bowman programme between 1988 and 1997. Reviews in 1999 and 2000
confirmed that the current scope is both appropriate and affordable.
3. The scope for trade-offs is identified within the
User Requirement Document, in terms of cost, capability, and time,
across the requirements spectrum, from total numbers of radios
to the level of integration that will be provided for different
platforms. The delivery of capability will be staged: elements
of the system that are assessed to require prolonged development
to reduce risk will be delivered after the in-service date. Some
detailed reductions in functionality have also been agreed. Ruggedized
off-the-shelf, rather than bespoke, computer terminals will be
4. Bowman equipment is planned to be fitted to some 20,000
vehicles, 158 ships (including 43 capital ships), and some 350
aircraft. Around 100,000 trained servicemen will use it. More
than 48,000 radios (excluding the Personal Role Radiosee
paragraph 9) and 26,000 computer terminals will be procured.
5. The Strategic Defence Review highlighted the importance
of effective command control and communication Systems and confirmed
the requirement for Bowman.
6. As the primary means of communication at the tactical
level for land operations, Bowman will be used across the spectrum
of conflict, for all missions and at all scales of deployment.
Bowman will be central to the command and control, and therefore
the effective deployment, of forces used for military tasks ranging
from disaster relief to regional conflicts.
7. Bowman will replace the Clansman family of combat
radios, which has been in service since the 1970s. It will also
replace those elements of the Ptarmigan trunk communication system
within tactical headquarters, that is vehicle borne HQs at divisional,
brigade and unit (ie battlegroup) level.
8. Bowman was originally endorsed against an ISD of December
1995. In 1993 this was revised to June 1999 as a result of budgetary
constraints and an increased understanding of the technical complexity
of the project gained from the Phase 1 Feasibility Studies (FS1).
During the competitive first stage of the Project Development
phase (PD1), the ISD was revised to April 2001 for budgetary reasons.
Following the completion of PD1, the ISD was slipped to March
2002 as a result of the revised procurement strategy and the re-definition
of the ISD to reflect the delivery of a true operational capability.
In the light of an assessment of the technical risk remaining
in the programme, the ISD was further slipped in December 1999
to late 2003/early 2004, subject to a Main Gate approval. We are
seeking to maintain this date, but, until Main Gate approval,
it is not possible to give a firm ISD. Since August 1998 the ISD
has been defined as the date when a brigade HQ and two battle
groups are equipped and capable of deploying on operations other
than war. The Clansman family of combat radios and the relevant
elements of Ptarmigan will be progressively removed from service
over the period 2003-10, as Bowman is introduced.
9. It has been possible, however, to plan for the early
delivery of a small but significant operational capability that
previously was tied to the delivery of the whole system. Through
the application of Smart Acquisition principles, in particular
incremental procurement, the Personal Role Radio, a short range,
non-secure tactical radio for use at section level will now be
procured in advance of the delivery of the main Bowman system
with initial deliveries expected to start by the end of 2001.
In addition, the requirement for insecure tactical ground-air
communications is being met by the Tac G-A project.
10. Initial work on Bowman was conducted by two consortia,
who undertook Phase 2 Feasibility Study (FS2) and PD1 work. Following
completion of PD1 in late 1996, the competing consortia announced
their intention to form a joint venture company, known as Archer
Communications Systems Ltd (ACSL) to bid jointly for the Bowman
supply contract. This resulted in a review of the procurement
options open to the MoD, namely continuing with either one of
the consortia, continuing with ACSL or finding a new prime systems
integrator. A revised, single source, procurement strategy for
Bowman and the remainder of the risk reduction work was approved
in March 1997, and a risk reduction contract was placed with ACSL
in August 1997. A further risk reduction contract (known as Package
0) was placed in October 1998 to ensure the necessary confidence
in performance, time and cost of the programme prior to the Main
Gate approval and before contractual commitment. The contract
for Package 0 was placed with ACSL in October 1998 at a value
of £185 million.
11. In the event, assessment of ACSL's final bid showed
it as unable to meet the minimum performance requirements and
the decision was taken to remove preferred supplier status from
the company and to launch a fresh competition. A pre-qualification
questionnaire exercise was conducted, resulting in the selection
of three good potential prime contractors: CDC, Thales, and TRW.
An Invitation to Tender (ITT) for the supply and support contract
was issued to these three potential primes in November 2000. The
ITT sought bids within the tradable range of the Bowman requirement,
allowing potential prime contractors to offer capability, risk
and cost trade-offs down to a minimum acceptable range. The ITT
also mandated a UK supplier of the cryptographic system (Cogent)
and offered preferred supplier status for the VHF radio sub-system
to ITT Defence Ltd. In parallel with the ITT, risk reduction contracts
for ground VHF radio were placed with the two key sub-contractors
(Cogent and ITT Defence Ltd) and with each of the potential primes.
This work will maximise confidence in delivering capability and
will feed into the assessment process at any stage up to the announcement
of the preferred supplier.
12. Bids for the Bowman supply and support contract were
received from each of the potential prime contractors on 7 February
2001. The IPT has now begun a period of assessment and clarification
to inform the main gate business case in summer 2001.
13. The options of upgrading Clansman or procuring an
austere off the shelf solution were examined at the time of the
review of procurement options in 1997, but were considered to
be less cost effective options for meeting the requirement. We
have examined a number of alternative technical options, and have
reviewed the validity of the basic approach to Bowman in the light
of rapid developments in the mobile communications field. This
analysis demonstrates that the Bowman approach can lead to a robust
solution to the military requirement.
14. There will be marketing opportunities in those countries
operating VHF and HF radios bought from the selected Bowman suppliers,
which might be upgraded using elements of the Bowman system, or
in those countries which wish to improve their capability at brigade
level and below. The sophistication and cost of Bowman will limit
the market for the total system but there will be scope for supplying
parts in many countries.
15. We believe that the BOWMAN competition will result
in a broadly neutral impact on UK employment. All bidders are
expected to perform significant manufacturing work and the vehicle
conversion programme in the UK. Though we do envisage some posts
being staffed by foreign personnel, overall this competition should
provide significant quality of work for the UK.
16. Smart Acquisition has given the MoD scope to deal
with BOWMAN in a controlled and managed way. The freedom to trade
requirements in search of a more cost-effective solution enabled
us to seek "fallback" options in case the ACSL bid failed.
The results of these studies revealed that there were realistic
alternatives to ACSL, which could be rapidly pursued. The MoD
was, therefore, able to re-open the competition in search of value
for money, rather than stopping the entire programme and starting
from scratch, delaying BOWMAN even further.
17. We have been able to adopt incremental acquisition
methods and now plan, for example, to deliver the Personal Role
Radio element of the programme later this year, ahead of the main
18. In the original competition, FS1, FS2 and PD1 were
completed. The award of the Package 0 contract to ACSL in October
1998 enabled the completion of the sub-system definition and sub-contractor
selection and it was planned to award the first of the production
contracts in late 1999. However, following a submission from industry
in March 1999, an affordability review and some redefinition of
the project was carried out. The principal area of risk was the
integration of sub-systems supplied by a number of different sub-contractors.
A further key risk was the timescale for contracting for installation
design certification and conversion in over 200 platform types
with complex existing design rights.
19. These risks remain with the new competition and have
been addressed through the letting of risk reduction contracts
to each of the three potential prime contractors. Within each
general area, the potential prime contractors have different specific
areas of risk and output. All of these areas will be fully reported
on at Main Gate. Three bids for the supply and support contract
have been received and are being evaluated. The evaluation aims
to assess the performance, programme, management, commercial,
and risk areas of the bids, with the main emphasis being on delivering
the relevant BOWMAN criteria at the ISD with a viable and affordable
programme. The results of the assessment phase will inform the
Main Gate submission in the summer this year.
20. Key milestones now in prospect for this project are:
|Main Gate submission (nominating preferred supplier)
|Approval to place Supply and Support contract
|First Deliveries of PRR||Dec 2001
21. The original budget for BOWMAN was £1.9 billion
at LTC 93 prices, excluding long-term support. This was the first
ministerially-approved total procurement cost. Allowing for inflation,
the current cost is estimated to be £2.345 billion, excluding
long-term support, as detailed in EP 2001 at outturn prices.
22. The total costs incurred to 31 March 2001 are shown
in the table below:
Prior to 1993-94
|Expenditure still to be incurred:||£1.968 billion (at EP 2001 outturn prices).|
Of this £69 million is committed.
|Peak Expenditure: 04/05||05/06
|Current Forecast: £335 million
||£325 million (at outturn prices)
23. The published MPR 2000 figure for the project cost
is £2.286 billion. However, this figure is based on the previous
EP 2000 and is on a resource basis (ie the figure includes the
cost of capital charge and does not include any support or Post
Design Services costs). MPR 2001 is in the course of preparation
and, when completed, can be more easily compared to the EP 2001
figures quoted above.
24. There are two aspects to Bowman support: the provision
of initial spares and facilities to support operations, which
will be provided with the prime equipment and installations, and
on-going support that enables reprovisioning correcting action
and contractor support to ensure sustainability of the deployed
system. The planned single Supply and Support contract will encompass
both aspects. The level of support required is being determined
using integrated logistics support principles. The importance
of reliability and spares availability, and their impact on equipment
sustainability, is reflected in the draft contract. The use of
existing spares and equipment, where appropriate, has been mandated.
Training is being addressed under the tri-Service Training Needs
Analysis, which will identify the recommended training methodology,
including training media.
25. The Bowman conversion programme is a major task that
will be carried out over a total of five years, including a three
year period of main conversion (the change from eight years, as
reported in last year's memorandum, reflects the change in the
procurement strategy and the closing down of the original competition).
Conversion will be by operational grouping, principally brigade;
there is therefore a vital link between conversion planning and
the Army's Formation Readiness Cycle. The focus for unit conversion
will be the training year. The Bowman Fielding Plan addresses
the requirement to provide support to both the new system and
that being replaced. Dual Clansman and Bowman training will be
needed at certain locations.
26. In accordance with the principles of whole fleet
management, Bowman equipment that is not assigned to the front
line will in effect be held in reserve, although there will be
no formal war reserve. Spares to support Bowman will be held in
storage, under arrangements still to be decided.
27. National interoperability for land operations will
be achieved, since, ultimately, all elements of the three Services
that take part in the land or littoral battle will be equipped
with Bowman. International interoperability will be achieved through
the implementation of all endorsed NATO Standards applicable to
the operating environment. To achieve secure interoperability,
Bowman mandates the endorsed NATO applique unit to meet NATO encryption
28. Defence Export Services will consider the most appropriate
disposal route (sale or scrap) for Clansman equipment that is
no longer required. Relevant parts of Ptarmigan will be retained
as spares to support the Ptarmigan elements remaining in service.
29. Bowman is planned to be in service for at least 25
30. Given the pace of change in information systems technology,
it is likely that there will be developments that require technology
insertion over the course of Bowman's service life, and the system
is being designed accordingly.
TYPE 45 ANTI-AIR WARFARE DESTROYER AND ITS PRINCIPAL ANTI-AIR
MISSILE SYSTEM (PAAMS)
The Common New Generation Frigate (CNGF), a collaborative
programme with France and Italy, was planned to replace the UK's
Type 42 destroyers in the early part of the century. CNGF comprised
two distinct collaborative programmes: the Principal Anti Air
Missile System (PAAMS) and the ship with its other systems (Horizon).
Whilst the contract for the development and initial production
of PAAMS has been placed, the "Horizon" project did
not progress satisfactorily. The three nations agreed on 25 April
1999 that it would not be cost-effective to pursue a single prime
contract for the ship and that the tri-national Horizon programme
would end upon completion of its Project Definition and Initial
Design Phase (Phase 1) at the end of October 1999. The UK is now
taking forward its ship programme, designated the Type 45 Anti-Air
Warfare Destroyer Programme, through a national prime contract,
building on the tri-national project work already carried out
and pursuing opportunities for co-operative procurement in equipping
1. PAAMS and Horizon both derived from the single Tri-Partite
Staff Requirement for CNGF. The requirement was approved by the
three participating nations, the UK, France, and Italy, in December
1992. The UK requirement was, and continues to be in the national
Type 45 programme, for a ship to provide effective area air defence
against aircraft and missiles, to replace the Type 42 destroyers.
At the start of Project Definition for Horizon in 1995, the intention
was that PAAMS would provide an anti-air warfare capability sufficient
to meet the most demanding threat foreseen. It was subsequently
agreed that the initial capability sought should be sufficient
to meet the most demanding threat forecast at the then expected
in-service date for CNGF (2004), but that a growth path to provide
the capability necessary to address future predicted threats would
also be identified as part of this work. This remains the position
for the Type 45, and we have revalidated that PAAMS will be able
to meet the most demanding threat foreseen for 2007, when the
Type 45 is due to enter service.
2. The principal cost/capability trade-off in the PAAMS
programme has been the acceptance of a capability sufficient to
meet the threat at ISD, rather than beyond. However, the PAAMS
Full Scale Engineering Development and Initial Production (FSED/IP)
contract (see Paragraph 12) includes a Growth Potential Study
that examines the modifications that may be required to meet the
threat beyond 2010. Studies into cost/capability and programme/capability
trade-offs for Project Horizon to achieve an affordable CNGF were
undertaken as part of Phase 1 of its programme which completed
on 31 October 1999. This work has been carried forward into the
UK's national programme.
3. The UK planning assumption is for the acquisition
of up to 12 Type 45s. The Horizon Memorandum of Understanding,
which was signed in 1994, assumed French and Italian procurement
of four and six ships respectively.
4. The requirement to replace the Type 42 destroyers
was scrutinised in the Strategic Defence Review. No changes were
made to the operational case underpinning Project Horizon, which
is now being addressed by the Type 45 Programme.
5. Type 45 destroyers equipped with PAAMS will provide
area defence against aircraft and missiles, including local area
defence against modern anti-ship missiles, to protect lightly
armed or unarmed ships. In this role, the warships will support
maritime assets across the range, from RoRo vessels through amphibious
assault ships to aircraft carriers, in both UK national and allied/coalition
operations. In addition, the Type 45in common with all
destroyers and frigateswill be a multi-role, general-purpose
platform capable of operations across the spectrum of tasks, from
peace support to high intensity warfare.
6. The warship and PAAMS are planned to replace the capability
currently provided in the Type 42 destroyer with its GWS30 Sea
Dart weapon system. The Type 42s are scheduled to be withdrawn
from service from the Type 45 first of class in service date and
then at intervals staged to match the in-service dates of incoming
hulls, with the exception of HMS Birmingham, which left service
7. The ISD for CNGF was defined as the completion of
Part IV Trials, which indicate that the ship is fit to enter service.
The original estimated ISD was December 2002. This slipped, largely
owing to the need to synchronise the warship and combat system
programmes, and the internationally agreed ISD for CNGF was amended
to June 2004. The last offer from the Horizon industry group pointed
to a UK first of class CNGF being further delayed until 2007,
although there was no detailed plan to support even this date.
We are confident that the Type 45 first of class can be delivered
within a similar timescale and with less risk. A 12 ship build
programme could be completed in 2014. ISD definition has since
been revised to reflect the availability of the Destroyer for
operational tasking after sea training. This will normally be
two months after the completion of Part IV Trials and sets the
ISD for the first of class as November 2007. There is no effect
on the programme as a result of this change.
8. Marconi Electronic Systems (MES) was appointed as
the prime contractor for the Type 45 Programme on 23 November
1999 when it was also contracted to complete the Preparation for
Demonstration (PFD) phase of the programme. This responsibility
passed to BAe Systems when MES merged with British Aerospace.
The appointment of BAe Systems (formerly MES) ensured the minimum
of delay to the overall programme; that maximum benefit from the
Horizon programme was carried forward into the UK national programme;
and that the prime contractor would own much of the risk associated
with that earlier work. On 20 December 2000, the Demonstration
and First of Class Manufacture (DFM) contract, which is to complete
the design and build of the first three ships, was placed with
BAe Systems Electronicthe commercial title for the Type
45 Prime Contract Office (PCO).
9. The MoD's procurement strategy for the Type 45 was
announced by Secretary of State in July 2000. Under this, the
first of class (HMS Daring) would be assembled by BAe Systems
Marine, with a substantial contribution from Vosper Thornycroft
(VT), the second (HMS Dauntless) by VT, and the third (HMS
Diamond) by BAe Systems Marine. Both companies are jointly
involved in developing the design for the Type 45. The Prime Contractor
will be letting sub-contracts for the build of the ships as soon
as an affordable price at an acceptable risk has been agreed.
10. Under this strategy, it is intended that the Prime
Contractor would manage competitions for the manufacture and assembly
of subsequent batches of Type 45 destroyers with MoD oversight.
It is expected that all UK shipyards would have the opportunity
to bid for the manufacture of blocks for the second batch of ships
(with the competition for assembly of this batch being limited
to Marine and VT), and for both ship assembly and manufacture
for subsequent batches. In line with Government policy, there
are no plans to extend competition for warship construction for
the Royal Navy to yards overseas.
11. Separately, the MoD and the Prime Contractor have
received an unsolicited bid from BAe Systems Marine concerning
the procurement approach to the Type 45 programme. This proposal
is being evaluated and the MoD will consult with other Government
departments before coming to a conclusion.
12. Collaboration continues with France and Italy on
PAAMS. On 11 August 1999, France placed a contract on behalf of
the three nations for Full Scale Engineering Development and Initial
Production (FSED/IP) with the tri-national consortium EUROPAAMS
acting as prime contractor. Prime contractor members were nominated
by their governments and the UK member is UKAMS, which began as
a jointly-owned subsidiary of Siemens Plessey, GEC and BAe SEMA.
Following subsequent restructuring, UKAMS is now a wholly owned
subsidiary of, and remains within, Matra BAe Dynamics. FSED/IP
sub-contracts have been let by the prime contractor, and the placement
of second tier sub-contracts is now well underway.
13. In order to get PAAMS to sea as quickly as possible,
a strategy of incremental acquisition, from a baseline standard
which is both affordable and achievable in the time to in-service
date, has been adopted. This will enable the upgrade of capability
throughout the life of the Type 45 Class to take advantage of
future changes in defence requirements and technology advances.
Following the placement of the Demonstration and First of Class
Manufacture (DFM) contract on 20 December 2000 (see paragraph
26) we have been able to accelerate the Incremental Acquisition
Plan (IAP) so as to enable a hull-mounted sonar (the top priority
in the Plan) to be fitted to all the ships as they are built.
14. Before the 1996 PAAMS Programme MoU was signed, the
UK considered a number of procurement options, including life
extension of Type 42s and acquisition of off-the-shelf alternatives.
15. The PAAMS Programme MoU and its FSED/IP Supplement
were signed by France, Italy and the UK in March 1996. The UK
share of the costs of PAAMS FSED/IP will be higher than those
of France and Italy because we are bearing the costs of developing
the Sampson Radar, which will only be used in the UK variant,
and because the UK is making a contribution to the cost of the
Franco-Italian technology in the Family of Future Surface to Air
Missile Systems (FSAF Programme) being used for PAAMS. In addition,
the UK currently plans to fit PAAMS to a significantly larger
number of ships than the French and Italian navies combined.
16. The PAAMS Programme is managed by the tri-national
PAAMS Programme Office (PPO) in Paris which reports to a tri-national
Steering Committee. The aim is to delegate as much programme management
work as possible to the PPO, although co-ordination of UK policy
on PAAMS remains the responsibility of the Type 45 Integrated
Project Team (IPT). Charters, agreed with France and Italy, set
out the arrangements for co-ordinating PAAMS with the national
Type 45 ship-programme and the new Franco/Italian bilateral Horizon
programme. PAAMS is a candidate programme for administration within
OCCAR (Organisme Conjoint De Co-operation En Matie"re D'Armament).
The optimum date for joining is under debate.
17. At 1 February 2000, the PPO had 21 full time staff
(10 from the UK, five Italian, and six French) and four part time
staff (one Italian and three French). The UK also has one member
of staff located with the FSAF Project Office in Paris. The tri-national
Joint Project Office (JPO) located in London disbanded on completion
of the Project Definition and Initial Design Phase of Project
Horizon on 31 October 1999. The Type 45 IPT has an annual running
costs budget of £4.5 million, including the salaries and
expenses of UK staff working in the PPO and FSAF Project Office.
18. The reasons for the failure of the tri-national Horizon
programme were the subject of analysis by the tri-national Horizon
JPO and the Horizon Steering Committee. A short paper synthesised
their and others' views into a single national "lessons learned"
report and is informing the UK's approach to future potential
collaborative ventures. A copy was provided to the Committee as
an Annex to last year's (2000) Memorandum.
19. The potential for achieving economies of scale by
co-operative purchasing of common items in the Type 45 and Franco-Italian
Horizon programmes has been explored without success to date.
However, a recent improvement in relations between the two ship
programmes has allowed some more constructive dialogue to take
20. Export potential for the system as a whole is constrained
by its high technological specification and cost, but elements
of the system such as the selected prime mover (the Rolls Royce/Northrop
Grumman WR21 gas turbine) and PAAMS (in particular its associated
multi-function radarSAMPSON in the UK variant) may have
considerable export prospects to the value of several billion
pounds over the next 15 years. There could be prospects in refit
programmes as well as in new build hulls. There is a growing level
of interest from the Australian Navy where their recent white
paper envisaged three air defence destroyers from 2013.
21. For PAAMS, the Matra BAe Dynamics UKAMS consortium
was formed out of the companies possessing the technologies crucial
to the programmenotably the existing FSAF contractors and
the Sampson supplier Siemens Plessey Systems (now BAe Defence
Systems Ltd). PAAMS work share is constrained by existing FSAF
arrangements, but the aim is to achieve equitable work share throughout
the life of the programme as far as possible, subject to considerations
of cost-effectiveness and competition.
22. For the national warship programme, MES, as part
of GEC, was part of the Horizon International Joint Venture Company
(IJVC) and was, therefore, heavily involved with the work that
was undertaken by the IJVC during the Horizon Project Definition
and Initial Design Stage, which completed at the end of October
1999. To avoid further delay to the programme to replace the Type
42 destroyers, it was essential that the chosen prime contractor
would be able to make maximum use of the outputs of the HORIZON
definition work, and demonstrate an ability to resource the programme
and the timelines in partnership with the IPT.
23. The Type 45 Programme is being undertaken within
the principles of Smart Acquisition. The Type 45 IPT was formally
established in September 1999, consisting of the MoD Project Team
at the DPA and the single Prime Contractor Organisation (PCO)
two miles away at Filton, Bristol. A charter, setting out the
working ethos between the DPA and PCO, has been agreed. The Department
is confident that the Smart Acquisition approach to requirements
management, through the development of an initial operating capability,
which could be progressively enhanced through a programme of incremental
upgrading, will enable the first of class ship to be delivered
on time and to cost.
24. The principal lessons for the UK that were learned
from the outcome of the Horizon programme, covering the procurement
strategy, risk reduction, communication with industry at an early
stage of the project, and affordability, have been built into
the Smart Acquisition Initiative.
25. The PAAMS FSED/IP Phase contract was placed on 11
August 1999. This includes the supply of the systems and associated
equipments and spares for the three nations' first of class ships.
Systems for follow-on ships will be covered by a second supplement
to the PAAMS programme MoU on which formal negotiations with France
and Italy are close to conclusion.
26. For the warship, the prime contractor BAe Systems
Electronics was contracted on 20 December 2000 to undertake the
DFM phase. The next batch of three Type 45s is expected to be
ordered around 2004.
27. The table below shows the currently planned milestones
and approved budget at MPR 2000 price base:
|Expenditure (See Note 1)||£6,168 million (approval for six ships)
Start of PAAMS FSED/IP
|Start of warship assessment phase||July 1999
|Completion of Horizon Phase 1||July 1998
|Completion of warship assessment phase
||End 2000||End 2000|
|Start of warship Demonstration and manufacture (DFM) phase (for first three ships)
||September 2000||December 2000
|First-of-class ISD (see paragraph 7 above)
||September 2007 (completion of Part IV trials)
||November 2007 (availability for operational tasking)
|DFM completed (ISD of third ship)||December 2009
NOTE 1. Following Main
Gate Approval in July 2000, figures show: total approved level
of expenditure for six ships and prior approvals covering predominantly
PAAMS FSED/IP, HORIZON and T45 Assessment phase (Latest Approval);
against the current estimate of expenditure (Current Estimate).
Last year's figures therefore excluded the financial approval
for six ships. Expenditure is calculated, as for MPR 2000, at
out-turn prices on a resource basis.
28. Delays in the PAAMS programme were largely related
to slow progress in agreeing a procurement strategy with partners
and then in negotiating a satisfactory contract.
29. The table below shows cash expenditure to date (ie
excluding accruals and interest on capital). Forward commitment
amounts to £2,168 million (this figure has been increased
from the one reported last year, since it now includes the Type
45 DFM commitment). For the projected class of 12 ships, the total
cost is expected to be of the order of £8 billion, including
£2.8 billion total acquisition costs for PAAMS (calculated
on a resource basis, as in MPR 2000). The years of peak expenditure
are expected to be 2007-08 and 2008-09.
|Date||Spend to Date
|Pre 1996-97 (see Note 1)||£87m
NOTE 1: Excludes aborted
NFR Programme and other pre-CNGF costs.
30. Under the terms of the Horizon MoU, the UK carried
liabilities in respect of additional expenses associated with
winding up the Horizon JPO/International Joint Venture Company
(IJVC). Following completion of the contract, the IJVC has been
wound up without any claim on the MOD. The JPO was closed on 31
October 1999, no additional expenses being incurred.
31. As part of the initial contract to procure the first
three Type 45s, BAe Systems has undertaken to study options for
Contractor Logistic Support (CLS) of the platforms. These reports
will be prepared in consultation with the DPA and are expected
to be completed by the end of 2001. The development of CLS in
parallel with ship design activity is encouraging the Prime Contractor
to consider low cost maintenance when selecting ship's equipment
and material. The decision to pursue these recommendations, in
whole or in part, will be based on their potential to improve
support and produce savings, bearing in mind any requirement to
keep elements of support within the uniformed sector for strategic
32. Ship staff training and spares storage are potential
bottlenecks. Increased use of experienced Type 42 crew would reduce
the load on pre-joining training, and thus the training bottleneck,
when the Type 42 replacement comes into service. Use of computer-based
training will reduce disruption to operational programmes. "Just
in Time" stock management techniques will reduce the volume
of spares to be held, thus minimising the need for new storage
facilities during the transition period. It is planned that a
CLS contract will be in place a year before ISD, to provide experience
in its operation during trials.
33. Assuming a class of 12 ships, nine or 10 would, on
average, be available at any one time to the Commander-in-Chief
Fleet for tasking, while two or three would be undergoing maintenance,
including one or two in refit. It is not planned to hold any ships
in storage or as in-use reserves.
34. Commonality of many of the PAAMS systems and sub-systems,
including in particular the Aster missile, will ensure a good
level of interoperability with both France and Italy. In the warship
context, the requirement for interoperability will remain a high
35. The sales potential of Type 42 warships is being
36. The Type 45 is planned to have an in-service life
of 25 years.
37. The Type 45's systems and sub-systems will be updated
as appropriate throughout the life of the system to take account
of developments in the operational environment. It is likely that
the future aircraft carrier programme, currently in its assessment,
and the future surface combatant currently in the early stages
of concept development, will both draw on major elements of the
Eurofighter is an agile fighter aircraft that will serve
as the cornerstone of the RAF's fighting capability from the early
years of this century. The 232 aircraft we plan to acquire will
replace the Tornado F3 and Jaguar in air defence and offensive
air support roles. Eurofighter is being developed in a collaborative
project with Germany, Italy and Spain. Contracts for the production
of the first tranche of 148 aircraft, of which 55 are for the
RAF, were signed in September 1998 and the UK expects first deliveries
in June 2002.
1. The original European Staff Target for the Eurofighterthen
European Fighter Aircraft (EFA)was signed in Rome on 11
October 1984, by France, Germany, Italy, Spain, and the UK. The
nations' air forces agreed a requirement for a new fighter aircraft
to enter service in the 1990s. EFA was to be agile and designed
to fulfil air defence, including air superiority and interception,
and air to surface roles. France attached equal importance to
both roles; all other nations, while wishing to retain good air
to surface capability, recognised air-to-air as the conditioning
role. EFA was to be capable of intercepting, fighting in air combat,
and destroying a wide range of aerial targets, including cruise
missiles, remotely piloted vehicles, and drones at a threat level
expected in the mid 1990s and beyond, as well as attacking enemy
airfields and enemy surface forces. EFA was to be able to operate
in the electronic warfare environment of a late 1990s European
scenario by day and by night, in all weathers for air defence,
and in poor visibility and low cloud-base for its air-to-surface
role. The numerical superiority of hostile air forces was to be
compensated for by EFA's superior quality and operational flexibility.
Low observability and survivability were key design goals, as
were reliability, maintainability and testability.
2. Following a 1984-85 feasibility study, the other four
nations found it impossible to reconcile all their requirements
with those of France, who wanted a lighter aircraft that would
not provide the overall operational capability required by the
others. France accordingly withdrew from the programme in August
1985. The key parameters agreed by the other nationsan
unstable, delta-winged aircraft, with canards, to have a "basic
mass empty" of 9.75 metric tonnes, a wing area of 50 square
metres and two engines each producing a static sea level thrust
of 90 kilonewtonswere incorporated in the European Staff
Requirement (ESR) and signed by the four Chiefs of Air Staffs
in December 1985.
3. The collapse of the Warsaw Pact and the re-unification
of Germany led to a "reorientation" of the programme.
The ESR needed to be updated to reflect the radically changed
political and military situation in Europe after 1989 and to address
the requirement for the year 2000 and beyond, taking account of
EFA development work. Amendments were embodied in the European
Staff Requirement for Development (ESR-D) of a European Fighter
2000Eurofightersigned on 21 January 1994. The ESR-D
acknowledges that specific threats are no longer predictable in
detail, but stipulates that a future European fighter aircraft
must be capable of operating effectively in a variety of roles
5. The original requirement of the four partner nations
was for a total of 765 aircraft250 for Germany, 165 for
Italy, 100 for Spain and 250 for the UK. The current requirement
is for 620 aircraft180 for Germany, 121 for Italy, 87 for
Spain, and 232 for the UK. Germany, Italy and Spain reduced their
numbers during the reorientation. The UK reduced its own requirement
following studies that concluded that the UK required 232 aircraft
to meet its operational commitments. The UK is now committed contractually
to the Tranche 1 production of 55 aircraft. Future production
contracts would commit the UK to 89 and 88 aircraft for Tranches
2 and 3 respectively.
6. The SDR confirmed our commitment to acquiring 232
Eurofighter aircraft. The acquisition of Eurofighter will provide
a step change in the RAF's ability to achieve air superiority
and provide air defence.
7. Eurofighter will bring a significant increase in our
air superiority capability as it replaces the Tornado F3. It will
also provide a true, adverse weather, multi-role capability. This
will allow it to be employed in the full spectrum of air operations
from air policing to peace support through to high intensity conflict.
Its multi-role capability will also allow it to fulfil the ground
attack roles now performed by Jaguar.
8. The Eurofighter will replace the Tornado F3 and Jaguar,
the out of service dates for which are 2010 and 2008 respectively.
The currently forecast in-service date for Eurofighter, defined
as the date of the delivery of the first aircraft to the RAF,
is June 2002. This represents a delay of 42 months against the
original ISD of December 1998. The slippage is attributable to
procurement delays caused by reorientation; delays in signature
of the Memoranda of Understanding for the Production and Support
phases (some 22 months slippage); and technical difficulties resulting
from the application of complex technologies required to enable
the equipment to meet the original Staff Requirement (some 20
months slippage). The definition of the ISD for Eurofighter relates
to procurement factors and was agreed internationally some years
9. Early work in each participating country by defence
contractors working to their national governments was co-ordinated
under Memoranda of Understanding between the partner nations.
Full collaborative development was launched in 1988. Collaborative
Production Investment and Production, including Initial Support,
was launched by the partner nations at the end of 1997, following
signature of further MoUs, and contracts were signed in January
1998. Contracts for production of the first tranche of 148 aircraft,
including 55 for the RAF, were signed in September 1998.
10. Eurofighter development and production are undertaken
by two consortia: Eurofighter GmbH and Eurojet GmbH. Eurofighter
GmbH comprises BAe Systems from the UK, Alenia from Italy, EADS
(Deutschland) from Germany, and EADS (CASA) from Spain. It is
responsible for developing and producing the airframe, avionics,
and other aircraft systems, and for the integration of the EJ200
engine. The latter is being developed and produced by Eurojet
GmbH, comprising Rolls-Royce from the UK, MTU from Germany, Fiat
from Italy, and ITP from Spain.
11. The purchasing arrangements are described in further
detail in the table at Annex.
12. Government oversight of the programme is exercised
through the Board of Directors of the NATO Eurofighter and Tornado
Development, Production and Logistics Management Agency (NETMA),
which carries out day-to-day management of the international contracts.
The Agency has some 300 staff and an annual budget of about 40
million Euro. Funding for the Agency is shared in accordance with
the respective participation of each nation in the Eurofighter
and Tornado programmes. The UK contribution is about 35 per cent.
The UK national project office element of the programme is managed
by an Integrated Project Team (IPT), which co-ordinates UK input
to the programme and produces national oversight. The IPT currently
comprises some 180 staff. Its annual budget is about £8 million.
(The increase in the number of staff, in comparison to that reported
in last year's memorandum, reflects that fact that the IPT has
now drawn in personnel who were previously based in the DLO).
13. Existing development work and costs are shared on
the basis of nations' planned production off-takes, as declared
in 1987, giving the UK and Germany 33 per cent shares each, Italy
21 per cent, and Spain 13 per cent. Production Investment and
Production work and cost share are based on aircraft off-take
declared at the start of these phases in 1997, giving the UK some
37.5 per cent share, Germany 29 per cent, Italy 19.5 per cent,
and Spain 14 per cent.
14. Seven MoUs commit the four collaborative partners
to the various phases of the programme and its management.
15. Eurofighter GmbH has identified several potential
customers for Eurofighter in Europe, the Middle East, the Pacific
Rim, and South America. Export sales could run to several hundred
aircraft over many years, but there will be competition from a
variety of American, French, and Russian combat aircraft types,
Eurofighter won the competition for a fourth generation fighter,
although Greece is now likely to postpone its purchase of at least
60 aircraft until after the 2004 Athens Olympiad.
16. The Eurofighter project is fundamental to maintaining
an industrial capacity within the UK for the design and build
of advanced military aircraft. As the only suitably qualified
UK firms to undertake the development and manufacture of advanced
fast jet aircraft and engines, BAe Systems and Rolls Royce were
the natural choice as the major UK partners. Similar factors influenced
the selection of contractors by our collaborative partners. The
development phase currently sustains approximately 6,000 jobs
in the UK, which is expected to rise to 14,000 jobs at the peak
of production. Any export sales will also have a positive impact
on these numbers.
17. The Eurofighter programme embraces several Smart
Acquisition features. The UK has an Integrated Project Team with
collocated operational requirements, procurement, and logistics
staff. The design standard of delivered aircraft will follow an
incremental acquisition path, with the first aircraft being delivered
to an initial standardto allow early trainingwith
the full standard delivered later to meet the declaration of operational
capability. The prices negotiated with industry have taken account
of efficiency improvements by industry; arrangements have been
agreed to share further efficiency benefits beyond those already
included in the price. Elements of the production contracts include
firm, non-revisable prices for the first five years and, for subsequent
years, Variation or Price formulae based on Producer Output Indices.
There is provision for liquidated damages and the right of termination.
Development and adoption of innovative support arrangements for
Eurofighter in partnership with Industry has identified potential
reductions in cost of up to £1.8 billion over traditional
arrangements through the life of the aircraft, including the incentivisation
of repair and overhaul services; the transfer of risk for reliability
to suppliers; and taking advantage of the benefits offered by
evolving, more reliable technologies.
18. There are four distinct phases within the Eurofighter
programme: pre-development, development, production, and support.
19. Pre-development comprised a number of activities.
Following early concept studies and various efforts to establish
a collaborative programme, two key demonstration activities were
completed by the UK before development: the Experimental Aircraft
Programme (an airframe programme primarily aimed at proving the
feasibility of unstable flight control concepts) and the XG40
engine demonstrator programme at Rolls Royce. The results of these
demonstrators and associated studies, and similar work by the
other nations, were harmonised in a definition, refinement and
risk reduction phase that ran from the end of 1985, when the four
nations signed the MoU covering this phase, to 1988.
20. The main development contracts were signed in November
1988 and amended in November 1995.
21. The Eurofighter production contract strategy is based
on an "umbrella contract" that secures maximum prices
for all production investment and the total order of 620 aircraft.
Commitments against this contract are made as a series of supplements
against fixed prices within the overall maximum price. The umbrella
contract and the first supplement covering production investment
were signed in January 1998. The second supplement, covering the
production of the first tranche of 148 aircraft, was signed in
September 1998. The first production aircraft are now being assembled
at BAe Systems, Warton, and production engines are currently being
built at Rolls Royce, Filton.
22. Integrated logistic support procedures were embedded
in the programme from the outset, to ensure that adequate attention
was given to support issues throughout the development phase.
Concurrently with the umbrella contract, the first two support
procurement contracts were let, following agreement that industry
would ensure that support is available when the first aircraft
23. A reliability maintenance panel meets every three
months to monitor progress against the reliability plan. In-service
demonstration is also part of the programme.
24. The current assessment of risks associated with the
timely completion of the programme highlights the flight test
programme, the achievement of incremental increases to functionality,
and the integration of development results into production aircraft
as the greatest areas for concern. Risk management processes in
industry and MoD, and contractual incentives for industry, aim
to ensure that these risks are mitigated as far as possible to
protect delivery timescales.
25. The four nations signed the Full Development MoU
and consequent contracts in November 1988. MoUs for Production
Investment/Production and Support were signed in December 1997.
These were followed by signature of the Production Investment/Production
and Support overarching contracts in January 1998 and the first
tranche of Production contracts in September 1998. The first aircraft
is scheduled to be delivered to the RAF in mid-2002. Commitment
to tranches two and three is planned for 2003 and 2007 respectively.
26. Details of expenditure to 31 March 2000 (now presented
at outturn prices) are provided in the table at Annex.
(These mirror the information provided to the Public Accounts
Committee in the Major Projects Report 2000).
27. In the event of late delivery, the production contracts
with Eurofighter GmbH and Eurojet GmbH both include provision
for liquidated damages up to a maximum of 3 per cent of individual
weapon system value. All interim payments made prior to delivery
are subject to the achievement of technical milestones. If a milestone
is not achieved, payment is withheld.
28. Support for Eurofighter is being managed collaboratively
to reduce life cycle costs. MoUs and International Framing Agreements
aim to ensure that all elements of the project are taken forward
on an agreed international basis. Costs are shared in proportion
to the aircraft off-take of each nation. This is the first major
international project to apply integrated logistic support (ILS)
procedures, thus enabling all aspects of logistic support to be
optimised. Emphasis is being placed on partnership with industry
to define the most cost-effective solution.
29. For 18 months following the delivery of the first
aircraft, Eurofighter will be operated and supported at BAe Systems,
Warton. This enables the support arrangements for these aircraft
to be optimised through combined use of RAF assets and support
from BAe Systems production line facilities and resources, during
this period of relatively low flying hours. Additional benefits
will be achieved through the close proximity of RAF flying training
and BAe Systems test flying at Warton.
30. The Eurofighter IPT is maintaining close liaison
with the RAF throughout the planning process to ensure that the
end users contribute to the development of support policy and
have a clear understanding of the developing support concepts.
The IPT is also ensuring that, where it is cost-effective, maximum
use is made of existing support capability and also that, where
possible, any new generic support equipment being procured for
in-service aircraft is compatible with Eurofighter.
31. The most obvious potential bottleneck is the support
infrastructure at the Main Operating Bases (MOBs). As each MOB
converts, there will be a short period where both Tornado F3 and
Eurofighter will be required to operate together and, as each
maintenance facility is converted, the Tornado F3 would potentially
be left unsupported. This risk will be overcome by ensuring that
the MOBs provide mutual support during the conversion phase. Another
potential problem that has been identified is the maintenance
of minimum manning levels at the front line whilst training the
first tranche of Eurofighter tradesmen and building up the Operational
Conversion Unit and the first squadrons. Such potential difficulties
are being addressed by a series of working groups. All are currently
considered to be manageable.
32. The active RAF fleet of Eurofighter will be 137 aircraft,
covering the seven front-line squadrons, the Operational Conversion
Unit (OCU), and the Operational Evaluation Unit. Each squadron
will have one in-use reserve and the OCU will have two in-use
reserves, giving a total of nine. The remaining aircraft allow
for assumptions of attrition and overall use of the aircraft over
the 25-year life of the aircraft, with the last aircraft being
scheduled for delivery in 2014. The fleet once in steady state
will be managed around engineering requirements, such as scheduled
servicing and modification programmes.
33. Interoperability is fundamental to the Eurofighter
design. The Eurofighter programme has adhered to NATO Standardisation
Agreements (STANAGs) and protocols to ensure Eurofighter's compatibility
with current and future systems, both operational and logistic.
34. The aircraft being replaced will be at the end of
their productive lives and will probably be scrapped.
35. Eurofighter is planned to be in service for 25 years.
36. Unlike previous programmes, where major enhancements
were incorporated via a major in-service upgrade, we shall, following
Smart Acquisition principles, establish a programme for through-life
evolution of the RAF Eurofighter fleet. The aim is to acquire
and incorporate emerging technology, on an incremental basis,
to maintain the capability of the weapon system. Partnership between
the MoD and industry will provide the necessary expertise and
focus to enable us to identify, prioritise and pursue modifications
to Eurofighter that balance operational effectiveness, life cycle
costs, and obsolescence issues.
37. Further development of Eurofighter derivatives is
among the options being considered to meet the requirement for
Future Offensive Air Systems (FOAS).
See p 52. Back
See p 52. Back