Management of the Typhoon Project - Public Accounts Committee Contents


2  Improving the delivery model

8.  Typhoon is being delivered in collaboration with three other nations; Italy, Germany and Spain. The project was approved by the Department for full development in 1987 and contracts for delivery of the first 53 aircraft were signed in 1998.[20] Work is contracted to various suppliers across the four nations who are responsible for developing and producing various parts of the aircraft.[21] The Department entered into these arrangements in the mid 1980s when the project was first conceived.[22] The arrangements were driven by political considerations rather than commercial or military imperatives. The Department believes that Typhoon would not have been affordable and that the United Kingdom would have struggled to upgrade this complex technology efficiently without such collaboration.[23]

9.  The collaborative arrangements have proved problematic. The spread of design, manufacturing and support expertise across a number of suppliers throughout Europe has increased the cost of the aircraft overall and poses risks to the timeliness and affordability of support and upgrade activities.[24] Decisions need to be made with the consensus of all four nations but they have often found it difficult to stick to the suggested timescale of 40 days for agreeing such decisions. Some key upgrades, such as the ground attack capability on Tranche 2 aircraft, have taken several years to agree and deliver.[25]

10.  The Department did not anticipate the level of cost increases and delays that the collaboration would entail. [26] The Department has learned from its early experience and there have been improvements to the arrangements with partner nations. It has been working with partner nations to improve the efficiency and effectiveness of the collaborative process, and reduce the number of contracts.[27]

11.  Given the very limited number of industrial suppliers that have the capability required to support the aircraft, the Department has contracted with single suppliers without competition.[28] The Department has checks and systems that aim to ensure single-tender contracts are transparent and value for money.[29] The Department told the Committee that it also agrees progressive reductions in cost when it negotiates single tender contracts.[30]

12.  The Department has not been able to secure the availability of spare parts that it requires, and estimates that these difficulties will not be resolved until 2015 when it expects supply to reach a "steady state".[31] For example, in 2008 the Department placed an order for spares to support the deployment of Typhoon to the Falkland Islands in September 2009. By August 2010, 70% of the spares ordered had been delivered when required, 18% delivered late and 12% were outstanding.[32]

13.  These problems have prevented the RAF flying the aircraft for as many hours as required.[33] As a result, there were only eight of the 48 Typhoon pilots capable of undertaking ground attack missions.[34] The RAF told us that it grounds pilots if they are unable to obtain enough flying hours to keep their skills up to date; and five pilots have been temporarily grounded as a result.[35] As a result of lack of flying hours, aircraft have also been 'cannibalised' for spare parts to keep other Typhoons flying. This is standard practice even for commercial airlines, and negates the need to have vast numbers of spares.[36] On the day of our hearing, three Typhoon aircraft were being used as donor airframes for 'cannibalised' parts.[37]

14.  The Typhoon supply chain is complex and stretches across Europe. However, the Department admitted that it had not been managed well enough or delivered all the required parts when needed.[38] Furthermore, the Department had not negotiated penalty clauses for poor performance by industry within the collaborative arrangements, as doing so would risk incurring other significant costs.[39]

15.  Where possible, the Department has negotiated supply contracts with United Kingdom industry.[40] It has placed independent United Kingdom support contracts with BAE Systems and Rolls Royce based on the commercial support arrangements it pioneered for its Tornado and Harrier fleet. Under these contracts, United Kingdom industry provides support and maintenance for the aircraft, including engine spares. The contracts aim to incentivise industry to provide the Department with a set level of available aircraft. The Department told us that these contracts would give improved availability of spares and technical support. So far, these contracts had given better results and were largely meeting the Department's performance targets.[41]

16.  The role of the Senior Responsible Owner (SRO) on Typhoon followed the Department's standard model of governance. Budgetary and managerial responsibility for major components, such as training, equipment, personnel, infrastructure, information and logistics, was split between different parts of the Department and the RAF. The SRO could influence the owners of each of the components of capability but did not have the authority to compel them to take action or make cost or performance trade-offs between components.[42]

17.  Furthermore, the Typhoon SRO lacked wider influence in the Department. For example, he did not attend high ranking meetings at which Typhoon export issues were considered, even though decisions made on exports could affect the delivery and use of Typhoon.[43] We consider that the role as described to us lacks appropriate decision making powers and does not provide sufficient accountability.




20   C&AG's Report Fig 1 and para 3.2 Back

21   Q 58 Back

22   Q 63 Back

23   Qq 91 - 92 Back

24   Q 58; C&AG's Report, paragraph 3.3 Back

25   Q 91; C&AG's Report, paragraph 3.4 and figure 10 Back

26   Qq 63 - 64 Back

27   Qq 59 and 76 Back

28   Qq 97 - 98 Back

29   Q 98 Back

30   Q 102 Back

31   Q 79 Back

32   C&AG's Report, paragraph 1.7 Back

33   Qq 70 - 72 Back

34   Qq 14 and 19 - 21 Back

35   Qq 17 and 66 - 71 Back

36   Q 79 Back

37   HC Deb, 30 March 2011, c389W Back

38   Q 55 Back

39   Q 60 Back

40   Q 76 Back

41   Q 59; C&AG's Report, para 1.8 Back

42   C&AG's Report, paras 3.10 - 3.11 Back

43   Qq 123 - 124 Back


 
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Prepared 15 April 2011