121. In similar vein, collaborative delays have affected
the A400M aircraft programme. The Secretary of State announced
in May 2000 that the MoD would acquire 25 A400M aircraft for its
long-term outsize airlift requirement, and that in the interim
four C-17s would be leased from Boeing.
There have been setbacks with the A400M's engine, when Airbus
rejected the joint proposal of Rolls-Royce, Snecma and others,
and relaunched the engine competition.
The potentially more significant difficulties, however, are probably
concerned with the aircraft itself. Delays with the A400M since
May 2000 meant that a memorandum of understanding (rather than
a contract) was signed by the collaborative partner countries
in December 2001. A development and production contract will enter
force only once Germany is able to provide an "unqualified
financial commitment" to the aircraft it says it requires.
The partners had set March 2002 as "a realistic deadline"
for this, but
budgetary difficulties in Germany may allow them only to commit
to the funds necessary for 40 aircraft rather than for their total
requirement of 73 aircraft. Lord Bach told us in May, however,
that "the financial commitment has come from the Germans
and has satisfied the other partners, which is why the other partners
are in the process of signing up to the agreement that has been
reached. I would hope that we would be able to put into effect
the contract very soon indeed now."
122. If the A400M does go ahead, however, it is already
clear that the in-service date for UK aircraft will be delayed.
The MoD has negotiated a restructured delivery schedule, with
a one-year delay in the in-service date, which will now be in
2010. Furthermore, some of its tactical capability will also be
delayeda "full day/night poor-weather hostile-environment
capability" will only be available in 2015, which is three
years later than previously planned. While obtaining an earlier
tactically-capable A400M would enhance operational flexibility,
the MoD consider that this is a "lesser priority than competing
calls for funds within the Equipment Plan".
In the intervening period the C-130 will continue to provide a
tactical capability. In the C-17s leased by the RAF, moreover,
the MoD can also be assured of an effective, continuing airlift
capability. When in 2000 our predecessors examined the MoD's
decision to seek a solution for its longer term strategic airlift
requirements through the A400M , they approved the contribution
that the A400M would make to the deployability of the Joint Rapid
Reaction Force, and welcomed the "insurance policy"
that the C-17 lease provided.
In our current inquiry, CDP confirmed the continuing utility of
that fall-back position and told us that he had in his back pocket
a financial proposal that he could quickly convert to a contract
at a known price for two C-17s "We have got the back
door covered against the A400M collapsing."
In that advantageous position, we were told, it was better not
to be rushed into an unnecessarily constrained deadline for signing
an A400M contract, and lose workshare to another country.
Currently, therefore, the MoD finds itself in an enviable position.
But if the A400M continues to struggle the secret will be to know
when it would be better to deal with someone else.