Editor's Note: This article has been updated with additional industry comment.
LONDON — A key part of a contractor-managed program to train future British military aircrew has finally fallen into place with the signing of a deal for a KBR-Elbit Systems joint venture to provide and support three new fixed-wing aircraft fleets as part of the UK Military Flying Training System (UKMFTS).
The private finance initiative (PFI) signed with Ascent, the Lockheed Martin-Babcock joint venture, which runs the UKMFTS program, will see Affinity Flying Training Services procure, operate and maintain 10 Beechcraft Texan T-6C aircraft, and 23 Grob G120TP Prefect turboprops along with five Embraer Phenom 100 jets to train Royal Air Force and Royal Navy air crew. The deal runs until 2033.
Embraer said in a press release accompanying the announcement Feb. 2 that it's contract includes "an option for additional follow on aircraft." Other suppliers are reckoned to have similar arrangements in place.
Iain Chalmers, Affinity's managing director, confirmed platform numbers could rise subject to future customer requirements.
"We have commercial arrangements in place with our suppliers in the event that the needs of our clients should change in the coming years," he said.
A decision on a winning contractor for a similar rotary wing service provision deal is expected in the next two months or so.
Affinity estimates its element of the fixed-wing training project will be worth around £500 million (US $720 million) through to the end of a deal, which will replace current aging elementary, multi-engine and basic flying training aircraft by January 2019.
The first aircraft to be delivered in the program, a German-built Grob G120TP, will be handed over to the contractor late this year while the final aircraft, a Texan T-6, is scheduled to be delivered mid-2018.
The deal will see the current training fleets of Grob G115, Beechcraft King Air 200/350s and Shorts Tucano be pensioned off.
In total, the Ministry of Defence has set aside £1.2 billion for Ascent to provide fixed-wing training under the UKMFTS deal, a figure which also includes ground-based training devices and infrastructure as well as the platforms.
Advanced training on RAF-owned BAE Systems Hawk jet trainers is also part of the UKMFTS program but comes under a separate budget.
Lockheed Martin has been contracted to supply a range of training devices including a full flight simulator for multi-engine pilot training and its Ascent partner, Babcock, will be adding new infrastructure as part of the fixed-wing training deal.
Ascent was awarded a 25-year PFI contract by the MoD in 2008 to develop and manage a UKMFTS program providing fixed-wing and helicopter pilot and rear crew training.
Affinity's deal with Ascent is effectively a PFI wrapped inside a larger PFI.
Andrew Barrie, who leads KBR's Government Services business in the UK, said he was "delighted that following our selection as a preferred bidder only a little over a year ago we have reached financial closure on this complex PFI."
A speedy conclusion to the contract, at least by the standards of a complex PFI, ends brings to a close a competition which in its entirety has been anything but swift.
Ascent kicked off the competition as far back as 2010 when it issued to potential bidders what was called an outline solution request for proposals.
Affinity was tapped as the winning bidder around September 2013 but was only confirmed as the preferred aircraft service provider in October 2014.
In part, negotiations ahead of Affinity being named preferred contractor were slowed while Ascent and the MoD sought to resolve a series of issues that were dogging the wider UKMFTS program.
The program is a substantial win for KBR and its Israeli partner.
For KBR, it's a boost to its government services business while the oil and gas industry is facing a dip. It also helps replace the fall-off of in-theater support on deployed operations work for which it is probably best known in the defense sector here.
The UK arm of KBR has secured several government services deals in the last few months, including a contract to act as delivery partner in a £1 billion emergency services mobile communications program for the Home Office.
Elbit already has a footprint in the UK, most notably as Thales UK’s partner in the supply of the Watchkeeper UAV unmanned air vehicle program to the British Army.
"This award attests to Elbit's leading position as a provider of advanced avionics system and training infrastructure, as well as maintenance and logistics support services," said Butzi Machlis, the president and CEO of Elbit.
The company already runs a PFI-type pilot training program for the Israeli Air Force.
Machlis said the UK was a prime market for Elbit.
The award to Affinity is to be followed by the selection of a contractor to provide and support two new rotary wing fleets for aircrew training for the British military.
Airbus Helicopters and Cobham are vying for a deal set to run to 2033 and reckoned to be worth around £500 million to the winner.
An Elbit-KBR helicopter bid failed to make the shortlist.
A decision on a winning bidder is expected to be announced around the end of the first quarter of this year.
The MoD has set a target date of April 2018 for what is describes as initial course capability with the new helicopters .
Neither of the shortlisted bidders have publicly declared what platform types will be offered to Ascent but media reports here have previously said Airbus is offering the EC145 and EC135 and rival Cobham is offering the Finmeccanica Helicopter Division's AW109 and AW139.
The two availability programs are the biggest single elements of the UKMFTS program being contracted for by Ascent.
In written evidence to the parliamentary public accounts committee late last year, the MoD said it had set a budget limit of around £1.3 billion for overall helicopter training.
The budget numbers were provided by the MoD in the wake of senior MoD and Ascent officials being quizzed by the committee last October over a near six-year delay in the full implementation of UKMFTS.
The committee blamed several factors for the delay including the MoD’s decision to substantially reduce aircrew training numbers following big cuts to the number of front-line squadrons; a massive reduction to the overall UKMFTS budget from a forecast £6.8 billion to £3.2 billion; and poor contractor performance by Ascent between 2008 and 2012.
The parliamentarians said the MoD had taken time to resolve the issues but with contractor performance improving the training scheme is now targeting full capacity by the end of 2019.