Further supplementary memorandum from
the Ministry of Defence
FSTA IN -SERVICE
DATE
The Committee will be aware that our policy
is not to declare an In-Service date until a project has been
through Main Gate. However, in the case of the FSTA, a PFI project,
a fund-raising process is required before the final costs and
timescales can be confirmed. Therefore an ISD will not be formally
confirmed until completion of the fund raising process.
DIFFICULTIES IN
EXTENDING THE
IN -SERVICE
DATE OF
RAF TRISTAR AND
VC10
On our current assessment, both VC-10 and Tri-Star
could, in principle, be extended in service until at least 2020
as there are no known major risks to the supply and integrity
of engines, airframes and systems. However, the cost of maintaining
airworthiness and availability would increase significantly during
this time driven by the need for safety audit, possible structural
repair, increased depth and frequency of maintenance and the dwindling
economies of scale associated with becoming the main operator
for increasingly small fleets of aircraft. This, together with
the significant investment needed to maintain compliance with
airspace regulations and military interoperability requirements,
would need to be weighed against the benefits of switching investment
to new platforms with long lives ahead of them.
COST OF
FSTA PFI ARRANGEMENT
On 6 June 2007 the Department announced its
intention to proceed to financial close on a PFI deal with AirTanker
Ltd, subject to satisfactory completion of the PFI funding process.
The price of the deal is commercially sensitive and premature
release of FSTA financial data could harm the Department's commercial
position during the funding process. In view of this, the requested
information cannot be released. However, AirTanker was declared
Preferred Bidder following competition and the consortium's bid
has been subjected to Investment Appraisal against a Public Sector
Comparator. Our analysis has confirmed that AirTanker's PFI proposal
offers a Value For Money solution. The overall Whole Life Cost
of the programme is expected to be in the order of £13 billion.
18 June 2007
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