Public Accounts Committee HC 1444Written evidence from the Permanent Under-Secretary, Ministry of Defence

MINISTRY OF DEFENCE: ARMOURED VEHICLES

Thank you for your letter of 25 October covering a copy of the uncorrected transcript of oral evidence from the PAC hearing on “Armoured Vehicles”, held on 24 October 2011.

I enclose a version of the transcript with corrections shown as tracked changes. I would be grateful if you would arrange for the corrected version of the transcript to be posted on the PAC website.

I also enclose a note providing the supplementary material which we undertook to provide on the Costs of the Chinook Mk6.

I am copying this to the Comptroller and Auditor General and the Treasury Officer of Accounts.

ARMOURED VEHICLE PAC HEARING—SUPPLEMENTARY NOTE

Question 45—The unit cost of the Mk6 Chinook helicopter that will be available in 2015

Chinook Costs:

The approved budget for the Demonstration and Manufacture contract for the purchase of the 14 new Chinook aircraft is £841 million. This includes:

1.The prime contract with Boeing for:

(a)The non-recurring costs for development, test and evaluation

(b)The recurring production costs for the aircraft

(c)Initial spares provisioning

2.Third party contracts for additional items that are purchased separately by the MOD and then fitted to the aircraft by Boeing (eg Defensive Aids Systems) and to support the acquisition process (eg independent safety advice).

3.The project’s management reserve and provision for the compound effect of inflation

The unit production cost for the aircraft is £34 million at 2011 economic conditions including engines and those items purchased by MOD outside the Boeing prime contract (of which £27 million is the recurring cost of each aircraft alone at 2011 economic conditions). These figures have, due to commercial sensitivities, been rounded to the nearest million pounds.

3 November 2011

Prepared 8th December 2011