Select Committee on Defence Written Evidence

Annex A (continued)


  The Nimrod Maritime Reconnaissance and attack Mk4 (MRA4) will succeed the current Nimrod MR2 as the RAF's maritime patrol aircraft, providing significantly enhanced Anti-Submarine and Anti-Surface Unit Warfare capability through improved aircraft and sensor performance. The new aircraft will also provide a substantial improvement in availability and supportability. The aircraft, training system and initial support are being procured from BAE SYSTEMS (BAES) as Prime Contractor.

  Following an international prime contract competition between four companies (BAe, Lockheed Martin, Loral and Dassault), BAE's Nimrod 2000 (later to be re-designated Nimrod MRA4) offer was approved by EAC and Ministers in July 1996. This was the equivalent of Main Gate approval. The contract was placed in December 1996 and following difficulties encountered by BAE SYSTEMS in meeting the contractual programme, the contract was re-negotiated in May 1999. The contract was re-negotiated again in 2002 to take account of the decision to reduce the number of aircraft from 21 to 18 and to secure essential tools and facilities for long term, in-service support.

Current Position

  As a result of recent, and well publicised difficulties that BAE SYSTEMS is experiencing on the Nimrod contract, the MoD reached an agreement with the Company on 19 February whereby the current fixed price contract would be restructured to a Target Cost Incentive Fee (TCIF) contract. This agreement has allowed the Company to reduce its risks while at the same time introducing new incentives on the Company to improve its performance. For its part, in the context of its preliminary results for 2002, the Company has announced that it will be making further provision of £500 million against this project. This is in addition to a previous provision of £300 million made in the Company's 2000 results. The scale of the financial losses that have been announced by BAE SYSTEMS shows the Company accepting responsibility for the serious difficulties that have arisen on this immensely complex and demanding programme.

  The MoD has agreed to delay the start of series production until the aircraft design has attained an appropriate level of maturity that has been proven on the first three aircraft during the flight trials programme. This design maturity is scheduled to be achieved at end of 2005. The first flight of the first of the trials aircraft is likely to be achieved in 2004. The MoD's contribution to this re-structuring is some £270 million. The restructuring will result in a four year delay to the in-service date to 2009 (now defined as the delivery of the sixth series production aircraft).

  As a result of the delay to the start of production, the MoD now has the option of considering an increase in the aircraft capability to meet the defence requirements of the 21st century. To this end we will shortly be considering the results of Concept Study work conducted by BAE SYSTEMS and intend to place an Assessment Study contract later this year.

  The MoD and the Company continue to be committed to the principles of the Memorandum of Capability Partnering signed in December 2000. Building on the experience of the joint work to date, we are jointly reviewing the way ahead for in-service support; the slippage and consequent restructuring of the programme offers opportunities to revisit the proposed support arrangements to scope improvements in efficiency and effectiveness.

Operational Requirement

  Nimrod, Maritime Patrol Aircraft (MPA), with their reach and large area coverage, uniquely provide the long range maritime area surveillance and attack capability necessary to assure secure battlespace in the littoral. Without this assured access, the risk of loss of deployed forces, including CVF, from a continuing surface and sub-surface threat, would severely limit our ability to conduct post SDR joint and expeditionary warfare. MPA provide the bedrock of maritime capability and, through inherent reach, flexibility and capacity, offer the potential to fill current capability gaps in worldwide responsive deep strike and ISTAR, although these will have to be considered through future approvals.


  There have been no significant capability trade-offs.


  The 1996 requirement was for a fleet of 21 aircraft in total. In 2002. this was reduced to 18 to reflect the increase in capability and availability afforded by the MRA4 and the revised submarine threat assessment within the Atlantic theatre.

Strategic Defence Review

  The SDR confirmed the requirement for a maritime patrol aircraft with the capabilities of MRA4 and a recent revision of the Defence Planning Assumptions (DPAs) has re-iterated the need for 18 maritime patrol aircraft (MPA). Nimrod MRA4 also has significant potential as an "adaptable aircraft", building upon the results of experience in Afghanistan and the general need for more surveillance, reconnaissance and land attack capability identified in the SDR New Chapter. The MoD and the Company will jointly explore the potential for enhanced capability to be inserted into the programme.

Military Capability

  The Nimrod MRA4 is being procured principally for Anti-Submarine Warfare (ASW), Anti-Surface Unit Warfare (ASuW) and Search and Rescue (SAR). In this role, it can be used across a full range of missions and will contribute to 16 out of the current 27 Military Tasks. In particular the platform has a significant role to play in Protection of the Deterrent (MT26), Counter-Drugs Operations (MT3) and Integrity of UK Waters in Peacetime (MT8). Nimrod MRA4 will bring greatly enhanced capability over the existing Nimrod MR2, which is already using some of the Nimrod MRA4 technology, thereby reducing risk in the new programme and increasing existing capability. The broader potential of the Nimrod MRA4 aircraft as an "adaptable aircraft" which might fulfil roles for deep strike and ISTAR is also recognised and will be explored further.

Equipment to be Replaced and In-Service Date

  The Nimrod MRA4 replaces the Nimrod MR2, which has been in frontline service for over 20 years. Subject to further negotiation with the Company over the revised delivery assumptions, the re-structured programme envisages the first series production aircraft will be delivered in 2007 with ISD achieved by early 2009 (now defined as the sixth series production aircraft delivered) and the last aircraft delivered in 2011. We are currently reviewing the decommissioning programme of the MR2 to minimise the impact of MRA4 delays.

Procurement Approach

  The original contract for the supply of aircraft, training systems and an interim support package was the result of competitive tendering. As a result of the recent re-structuring however, the development and production of the first three Nimrod MRA4s as development aircraft will continue, with first flight planned for 2004. We have agreed with the Company that there should be a controlled and economic cessation of series production until design has reached a level of demonstrated maturity during trials on the first three aircraft. If the potential for the Nimrod MRA4 as an "adaptable aircraft" can be realised and is cost effective, we will ensure that the necessary provisions for adaptability are included in the first batch of production aircraft. At the appropriate time, we will consider whether to launch the production of the remaining Nimrod aircraft to a new adaptable standard or the existing MRA4 standard. We will also consider at the appropriate time whether it would be economic to convert the remaining development aircraft to a production standard.


  The Nimrod MRA4 will be crewed by Royal Air Force aircrew. With its improved sensor performance, communications, processing capability, automation and ergonomics, the MRA4 allows a reduction in crew numbers from the existing Nimrod MR2 minimum of 13 to 10.

Alternative Procurement Options

  Nimrod 2000 (now MRA4), was compared to the competitor P3 aircraft (Orion 2000 and Valkyrie), refurbished Nimrod MR2 "do minimum" and also run-on of the MR2 the "do nothing" option. In overall affordability terms and taking account also of industrial factors, the Nimrod 2000 was selected as offering the best value for money.

  There is no other comparable programme in the world which offers the prospect of providing the MoD's required maritime patrol capability in either a better timescale or at a cost which could represent better value for money.

Export Potential

  BAE SYSTEMS withdrew from contention for the US Multi Mission Aircraft (MMA) CAD Phase 1 process in September 2002. However, the Company continue to review its position with regard to this programme, and remains engaged in discussions about possible contributions to it. The export potential of the aircraft in other markets will be dependent in large part on the outcome of the US MMA selection process.

Industrial Factors

  The MoD is working closely with the Company to restructure the Nimrod MRA4 programme so that design and development activity can be brought to an effective and timely conclusion, including the manufacture and final assembly of the first 3 aircraft, used during the flight trials programme. The Company and MoD will study the most cost effective way to bring production of aircraft 4-18 to a controlled stop, with some long lead and other procurement proceeding where most economic. However, BAE SYSTEMS is responsible for managing the results of the decisions they have to take in order to deliver the Nimrod MRA4 capability in the timescale that is now being contemplated. On 18 March BAE SYSTEMS announced 1005 job losses, the majority attributable to Nimrod MRA4, reducing their direct work force to some 1000 strong. Four sites are affected by these redundancies; Chadderton, Prestwick, Warton and Woodford. Manufacture and test work is spread across these sites, with final assembly at Woodford. BAE SYSTEMS is in consultation with employee representatives to try to mitigate these job losses, most of which are expected to take place by the end of 2003. Deferred production will have implications, as yet unscoped, for the supply chain, with decisions needed as to whether to continue or halt delivery and how best to manage and or store, until required. Principal sub-contractors are Rolls Royce (Filton and Berlin) for the engine, Boeing for the Tactical Command System and some sensor sub-systems, Ultra for the Acoustics system and Thales for the Radar and Training System. The aircraft will carry a number of weapon systems, including STING RAY Torpedoes, manufactured by BAES, sonobuoys currently supplied by Ultra Electronics and US-sourced Harpoon air to surface missiles.

Smart Acquisition

  Although the MRA4 programme pre-dates the introduction of Smart Procurement, (now Smart Acquisition) it is being managed along Smart Acquisition lines. Performance, time and cost measures drive the key milestones of the programme.

Acquisition Phases/Key Milestones/Costs

  Predicted milestone dates reflect the current assumptions used in the negotiation of the MoD/BAE SYSTEMS Memorandum but are subject to further negotiation.

1st Flight
Mid 2004
1st Delivery
Late 2007
Early 2009
Final Delivery
Defined as delivery of the 6th production aircraft

  The approved procurement costs for the programme in resource terms stands at some £2.98 billion. The cash addition to the programme resulting from the latest Agreement is some £270 million. Taking this into account, together with the overall impact of four years' programme slippage (including increased cost of capital of some £250 million) and other activity including work with QinetiQ, the current estimated forecast cost of the programme is some £3.4 billion in resource terms. These costs will be refined during the course of negotiations and subject to re-approval when the detailed programme is reset in the Summer.

In-Service Support

  The DPA and BAES signed a Memorandum of Capability Partnering (MofCP) in December 2000. This appointed BAES as the prime contractor for support of the MRA4 weapon system. In order to define and acquire the required support, the DPA and BAES formed a joint, integrated team to conduct the Capability Partnering (CP) studies. The CP studies have considered how to ensure that the requirements of the DPAs for Nimrod MRA4 are met and preserve the integrity of the operational command chain, while providing for long-term industrial involvement in Nimrod MRA4 support. Slippage and consequent restructuring of the programme offers opportunities to revisit the proposed support arrangements to scope improvements in efficiency and effectiveness. A scoping study has considered how to merge the CP activity with the current contract obligations, where they remain valid, with the aim of creating a new single integrated support contract. This will be developed further through risk reduction work to enable an integrated support solution to be progressively introduced from July 2005 to support the Ready For Training (RFT) date in July 2007, first delivery at end 2007 and ISD in 2009.

"Front Line" Numbers

  The requirement is for 18 MRA4 aircraft. These will be split between 17 operating fleet and one sustainment aircraft (covers attrition and deep servicing). The operating fleet will be held at varying levels of readiness. All will be available within 60 days.


  MRA4 complies with the NATO Defence Capabilities Initiative. Furthermore, the proposed Capability Enhancement studies will consider the extent to which the MRA4 platform can participate in and contribute towards network centric capabilities.

Disposal of Equipment Replaced

  Those remaining MR2 aircraft which have not been converted as part of the MRA4 programme will then be withdrawn from use in their present role. The timescale for this remains to be assessed in detail. However, we have already introduced improvements to existing Nimrod MR2 aircraft by using some of the technology planned for the new MRA4, thereby both reducing risk in the new programme and increasing existing capability.

In-Service Life

  Nimrod MRA4 has an in-service life of 25 years based upon 650 flying hours per year.

Development Potential

  The mission systems have been designed with future development potential in mind. Provision is included for the installation of role fit work stations in the rear cabin. The aircraft's synthetic aperture radar, advanced communications suite, and extensive range and sortie duration make it a platform capable of adaptation to other roles. Capability Enhancement studies suggest there is latent potential in the Nimrod MRA4 platform which will be explored further during the Assessment Phase of study work scheduled to begin in Autumn 2003.


  "Typhoon" has been formally adopted as the four partner nations' name for Eurofighter. Typhoon is an agile fighter aircraft that will serve as the cornerstone of the RAF's fighting capability from the early years of this century. It will replace the Tornado F3 and Jaguar in air defence and offensive air support roles. Typhoon 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 1998. As announced in Parliament on 5 December 2002, the planned date for delivery of the first aircraft to the RAF is now June 2003. The first Series Production Aircraft for each nation made their maiden flights in February 2003.

Operational Requirement

  The original European Staff Target for the then European Fighter Aircraft (EFA), agreed in 1984, set a requirement for a new agile fighter aircraft, designed to fulfil air defence, including air superiority and interception, and air to surface roles (with the air-to-air capability generally recognised 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. It 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.

  The European Staff Requirement agreed in 1985 incorporated a number of key parameters—an 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 kiloNewtons. 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 2000—then Eurofighter—signed in 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 and theatres.


  To maintain contract signature and the aircraft delivery schedule for Tranche 1 aircraft, staged minimum functionality standards in the initial service release and acceptance standards were agreed with industry in 1998, along with a plan to upgrade the aircraft subsequently. This approach was designed to allow aircraft of a standard suitable for training to be delivered at the earliest possible stage.


  The current requirement, following changes to initial levels, is for 620 aircraft—180 for Germany, 121 for Italy, 87 for Spain, and 232 for the UK. The UK is 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. Industry proposals for Tranche 2 are being evaluated now.

Strategic Defence Review/"New Chapter"

  The SDR confirmed our commitment to acquiring 232 Typhoon aircraft. The acquisition of Typhoon will provide a step change in the RAF's ability to achieve air superiority and provide air defence. The additional "New Chapter" work carried out in the wake of the attacks of 11 September 2001 recognised that, since the SDR was published in 1998, the risk of large scale conflict in Europe had further reduced and placed new emphasis on the need for rapid reaction forces. Given the wider changes in the strategic and operational environment, there is a need to continue the evolution of our force structures away from the legacy systems more suited to the Cold War and towards capabilities that are optimised to meet the new threats and challenges. We shall keep under review how the capabilities offered by Typhoon can best respond to and be employed in this changing environment.

Military Capability

  Typhoon 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.

Equipment to be Replaced and In-Service Date

  The Typhoon will replace the Tornado F3 and Jaguar, the out of service dates for which are 2009 and 2008 respectively. The aircraft being replaced will have reached the end of their fatigue life.

  Over the past year, the flight test programme to gather the flight safety and performance data necessary for acceptance into service, as well as the resolution of outstanding and arising design issues, has not proceeded as quickly as expected. The crash of a development aircraft in Spain on 21 November 2002 also affected the flight test programme. In this light, we concluded with our international partners and with Industry that the evidence required to permit contractual acceptance of the aircraft by the four partner nations would not be complete until March 2003. Allowing for the joint, four-nation acceptance process, aircraft should now be ready for hand-over to the RAF by the end of June 2003 which represents a delay of 54 months against the original ISD of December 1998. Every effort is being made to accelerate the entry to service and work-up process to prevent or minimise any delay in the operational employment of Typhoon, scheduled for the second half of the decade.[1]

Acquisition Approach

  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.

  Typhoon 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 the 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. A large number of smaller companies in the UK and elsewhere contribute as subcontractors and suppliers to the prime consortia.

  The purchasing arrangements are summarised in the following tables.

1   The contracting route is unchanged since last year; prices are fixed, and subject to variation of price for inflation. The previous report used NATO terminology, which refers to such arrangements as "firm" prices. Back

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