UK MoD Confirms A400M, UAV Cost Overruns

April 23, 2013 defense-aerospace.com

(Source: House of commons; posted April 23, 2013)

The House of Commons Hansard (official bulletin) has published the following ministerial answer:

Angus Robertson: To ask the Secretary of State for Defence which projects being delivered for his Department by (a) Babcock, (b) Boeing, (c) Cobham, (d) the European Aeronautic Defence and Space Company, (e) Finmeccanica, (f) General Dynamics, (g) Kelloggs-Brown-Root, (h) Lockheed Martin (i) Marshall Aerospace, (j) Northrup Grumman, (k) Rolls-Royce, (l) Thales and (m) Ultra Electronics are running over budget; and by how much in each case. [128063]

Substantive answer from Mr Dunne to Angus Robertson:

I am writing in full response to the answer I gave on 26 November 2012, Official Report, column 22W, regarding the question you asked about Ministry of Defence (MOD) projects being delivered by a list of named companies that are running over budget.

The following table details the three projects being delivered by those named contractors that are currently assessed as running over budget.

Contractor/Project name/Cost variation as at March 2013 (£ million)

-- Airbus Ltd (EADS): A400M: +£770 million

-- Northrop Grumman: Sentry Mode S Identification Friend or Foe: +£6 million

-- Thales UK Ltd: Watchkeeper: +£57 million

For the purpose of answering this question, my officials have examined all Category A-D equipment acquisition projects, but limited to those showing a variance of more than £1 million against their approval costs, 50% confidence figure. It is also limited to those projects where the named company is listed as the prime contractor or where projects are being delivered by subsidiaries of the named companies. It does not include support projects. This was necessary to avoid significantly exceeding the disproportionate cost threshold limit for answering parliamentary questions.

This approach means that there are some differences between the above table and the list provided to you in my answer of 6 November 2012, Official Report, column 519W, for example the inclusion of the A400M supplied by Airbus Ltd. as a subsidiary of EADS. The differences are due to the filters placed upon the data as explained above, as well as the passage of time.

It should be noted that the cost variation quoted is assessed against MOD project approval figures, which represent the total MOD costs for any particular project. They therefore do not necessarily reflect contractual obligations. Project performance can be affected by a number of reasons, not all of which are in the contractor's control.

I apologise for the time it has taken to get this information to you but its compilation has involved a significant amount of work and there was also a need to consult the companies concerned.

(EDITOR’S NOTE: The above figures are the same as those reported in January by the UK National Audit Office, i.e. a cost overrun of £770 million on the A400M, despite the number of aircraft having been reduced from 25 to 22, and a slippage of 73 months compared to the original schedule. The first A400M is due to be delivered (to France) in May 2013, and the first Royal Air Force aircraft is due in 2015.

As for Watchkeeper UAV, MoD was quoted by Flightglobal as having acknowledged that one-third of the planned 54-aircraft fleet had been delivered, plus 9 of 15 planned ground stations. It said MoD declined to state where the aircraft are being held, while “prime contractor Thales UK didn't respond to requests to comment.”)