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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