UK MoD, Air Tanker Respond to NAO Report

Jan. 11, 2013 defense-aerospace.com

NAO Report

(Source: UK Ministry of Defence; issued Jan. 10, 2013)

There is widespread coverage this morning of the National Audit Office's Major Projects Report 2012. Many of the newspapers focus on the report's findings that the cost of the MOD's sixteen biggest equipment programmes have increased by £468m pounds and are critical of the Government for the cost growth and delays.

The coverage does not reflect that the increase for the last financial year represents just 0.8 per cent of the £63bn total value of the programmes and is seven times lower than the last year of the previous government. The NAO's own report acknowledges that three quarters of the cost increase was due to increased oil costs leading to higher fuel prices over the next 27 years for the RAF's Voyager fleet rather than factors within the department's control.

The articles in today's papers and online do not mention that six of the programmes have reported no slippage and unlike in previous years, the NAO found that none of the delay in the other 10 projects is due to the department deferring progress for financial reasons.

Defence Secretary Philip Hammond said:

"Thanks to rigorous financial management, this Government has dramatically reduced the annual cost growth of the biggest equipment projects from more than three billion pounds under the last year of the previous administration, to under half a billion pounds. The 0.8 per cent growth in programme cost represents much less than the rate of inflation for the year.

"Unlike the previous Government, who let spending spiral out of control, we have taken the tough decisions necessary to get the Equipment Plan under control. Fuel inflation and other factors outside of the Department's control are responsible for three-quarters of the cost increase over the past year.

"It will take time to rectify years of mismanagement of the programme, but the work this Government has done to balance the budget and address fundamental project management problems is paying off. We can now make more accurate cost projections and invest in the best equipment for our Armed Forces with more confidence than ever before."

Several media outlets have focused on comments made by the NAO about the MOD's future air transport capability. In response to claims there will be shortfalls to the RAF's air transport capability, the department has already mitigated delays to the RAF's new tactical transport aircraft (A400M), by purchasing two extra Boeing C-17 aircraft and two BAe 146 aircraft.

The RAF will have adequate numbers of transport aircraft to meet the requirements of the Strategic Defence and Security Review and Future Force 2020 - and by 2022 will have significantly greater air transport capacity (both tactical and strategic) than today.

Mr Hammond said, this morning (Jan. 10—Ed.), on BBC Radio 4's Today Programme:

"We're confident that we will have our full in-service air-to-air refuelling capability by May 2014. That was the date that was originally planned for a full in-service capability.

"Apart from the United States, we have the greatest air-to-air refuelling capability of any Western power and we will continue to maintain that air-to-air refuelling capability."

Nine Voyager aircraft remain on track to enter air-to-air refuelling service in 2014 and the first aircraft has already flown over 1,000 hours transporting troops around the world. (ends)

Open Letter: Phill Blundell CEO, AirTanker to Amyas Morse, Comptroller and Auditor General, National Audit Office

(Source: Air Tanker Ltd.; issued Jan. 10, 2013)

Dear Mr Morse,

We welcome the findings of your report into Ministry of Defence Major Projects, in that it positively acknowledges that the FSTA Programme has met all contractual obligations and milestones to date and that it is on time and is in fact under-budget.

We would also like to draw emphasis on the point made in the report that projected inflationary increases in fuel cost of £336m, sit outside the FSTA Programme and are funded completely separately by the MOD with no direct bearing on it whatsoever.

On this basis it would be unfortunate if readers of the report were left in any sense with a suggestion that this ‘ring-fenced’ and separate forecast of inflationary fuel costs in its own accounting by the MOD, was attributable to FSTA as a delivery programme.

It is also worth noting that the report also acknowledges that as inflationary increases, these fuel cost are largely beyond the control of either the Ministry of Defence or for that matter, AirTanker.

We would also wish to highlight the following areas for the purpose of clarification.

Although acknowledged by the NAO as author, it is our opinion that the indirect attribution of these costs against the FSTA programme significantly distorts perception of its performance, especially against other programmes where those same inflationary costs are not considered.

The suggestion made in the report that the MOD is extending the service life of its VC10 and TriStar fleets because of perceived risk of ‘delays’ in the FSTA programme is also disappointing given the report’s acknowledgement that the programme, in actuality, is very much on schedule.

As you are aware, at the time that the FSTA programme was signed in 2008, retirement dates for VC10 and TriStar fleets were 2014 and 2016 respectively (this, as you will be aware, is recorded in a number of official documents including Hansard, column 466W, 18/6/2009).

Out of service dates for these fleets were in fact only brought forward in the Strategic Defence and Security Review in 2010 - two years after the FSTA Programme delivery schedule was agreed. Further, and as you recognise in your report, the FSTA Programme is not tasked with delivering a full air-to-air refuelling capability until May 2014.

This is reinforced in the report’s own assessment of the MOD’s requirement for transport and refuelling aircraft (Fig. 7, P.23, The Major Projects Report 2012). The report suggests that by the end of last year, resourcing of air-to-air refuelling capability was falling ‘critically’ or ‘substantially short’ of requirement.

By contrast, contractual targets for FSTA place a requirement (one met by the programme) for the delivery of only one Voyager aircraft prior to this date. It is only towards the end of 2012 and the early part of 2013, that the programme is contracted to deliver a significant increase in capability with the arrival of two new aircraft at the tail end of last year and a further three by the mid-point of this year.

It is difficult on this basis to see, therefore, how any decision to extend the life of either VC10 or TriStar fleets has direct bearing to the delivery of the FSTA Programme or in perceived risk in its ability to deliver air-to-air refuelling capability on schedule.

This is an unfortunate detraction from a programme that continues to make good progress towards full service capability. This includes our expectation of imminent release to service from the MOD to begin air-to-air refuelling operations ahead of substantial build-up of capability throughout this year and next.

Yours sincerely,

Phill Blundell,

CEO, AirTanker Ltd.

Response to Concerns About Refuelling Capability

(Source: Air Tanker Ltd.; issued Jan. 10, 2013)

Question: The Major Projects Report cites specific MOD concerns about air-to-air refuelling capability in its decision to extend the service life of the VC10 and TriStar fleets. What are they?

ANSWER: Voyager is a fully certified tanker, however, the RAF identified and raised two behaviours with the first drogue as part of the research and development phase late in 2011.

As reported, this included occasional venting and separately, basket spin and associated hose oscillation. Both of these issues were resolved by mid-2012.

In the second half of 2012 and as part of a continuing programme of testing and evaluation the RAF raised a concern about occasional ‘tipping’ of the basket dependent on the angle and speed of contact between it and the receiver aircraft.

In response a second drogue (basket) has been trialled and successfully tested and is waiting for ‘paper’ approval from the MOD. It is our expectation that this will be given imminently.

The original basket remains part of the programme and both baskets are already cleared with relevant international certification bodies and fulfil the same fundamental functions; both are in operational service with other nations.

As stated, the Voyager programme remains on schedule to deliver core capability in air-to-air refuelling and transport, as contracted by May 2014. The decision by the MOD to extend the service life of the VC10 and TriStar fleets, is, on this basis an operational one.