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AirTanker Aims to Distance Itself from British Procurement Spending Hike

Jan. 9, 2013 - 07:56PM   |  
By ANDREW CHUTER   |   Comments
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Determined not to be labeled as the villain in a report on how the British Ministry of Defence managed its major equipment programs, in-flight refueling contractor AirTanker has released an open letter to the government’s spending watchdog distancing itself from accusations that its Future Strategic Tanker Aircraft program is responsible for a hike in overall procurement spending.

The National Audit Office is scheduled to release its annual report into the cost and timing of Britain’s 16 biggest defense programs Jan 10.

The report says that forecasted fuel-cost increases on the private finance initiative FSTA program to provide an in-flight refueling and transport service for the Royal Air Force are primarily responsible for a 468 million pound increase in overall costs of the 16 programs in the financial year 2011-12.

The open letter to NAO boss Amyas Morse from AirTanker chief executive Phill Blundell said the 336 million pound increase in fuel costs to operate the fleet of tankers owned by the EADS-led consortium “sits outside the FSTA program and are funded completely separately by the MoD with no direct bearing on it (FSTA) whatsoever.”

The NAO’s Major Projects Report attracts considerable attention not least from the powerful Parliamentary Public Accounts Committee who will hold hearings into the reports finding later this month.

The EADS-led AirTanker consortium is anxious not to be tagged as responsible for the bulk of MoD program cost increases in part because the PFI scheme is already unpopular in some quarters due to the perceived high cost of the 12 billion Pound cost of providing up to 14 Airbus A330 aircraft along with maintenance and training facilities for the next 24 years.

“It is our opinion that the indirect attribution of these costs against the FSTA program significantly distorts perceptions of it performance especially against other programs where those same inflationary costs are not considered,” said Blundell.

The fuel cost increases are largely beyond the control of MoD or for that matter AirTanker.

Three A330s have been delivered to AirTanker so far and the aircraft are undertaking RAF transport duties but are not expected to start its refueling role until 2014.

The program has suffered technical problems partly related to the refueling drogues but the program remains on schedule.

Blundell also denied suggestions by the NAO that the MoD is extending the service life of VC10 and Tristar refuelers and transport aircraft due to perceived risk of delays in the program.

AirTanker said this was misleading and the aircraft, known as the Voyager in RAF service was on target and had met all contractual targets to date.

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