Wednesday, 18 January 2012

Unbelievably Orribly Rippedoff (UOR) -Or why with the £6 million aircraft, the headline figure is not what it seems...

The £6 million aircraft - why the headline figure is not what it seems...
Humphrey took an interest recently in reports that the RAF is acquiring 2 BAe 146 aircraft to conduct passenger transport in Afghanistan to fill the gap left by the overstretched C130 fleet. The total reported cost is £6 million to provide a capability, probably until 2015, or whenever final withdrawal is due. This report attracted negative comment on some websites, with well informed commentators suggesting that the planes had been offered to commercial firms for 1/3rd of that price recently and that the MOD was being ripped off. The author confidently expects to see a 'useless MOD civil servants ripped off again' headline appearing in short order by whichever journalist trawls that site looking for stories.

This is an interesting debate - was the MOD ripped off, or is this another case where people are comparing chalk and cheese? The author has some experience of dealing with the provision of urgent operation requirements, and how they are funded, and suspects that there is a lot of misinformation being broadcast here.

In the first instance, it may well be the case that a private company was offered the aircraft for £2 million. That may well have been the basic cost for a transfer of ownership with no work or modifications made. In the MODs case though, it's not as simple as saying the MOD has paid £6 million for the 2 aircraft. In reality, this figure almost certainly covers a raft of costs which a normal commercial aircraft would not have to consider - military modifications to communications, stores, and other key equipment. A defensive aids suite would have to be fitted as well to enable to aircraft to operate without running a high risk of being shot down in theatre. It's likely a wide range of other issues have to be dealt with to ensure that the aircraft is able of acting as a military aircraft, and not as a civilian aircraft painted military colours (a key difference). By the time you add in the initial purchase of stores, plus the cost of moving and placing stores and supplies in places like Bastion and Kabul, and suddenly that figure of £6million is starting to look reasonable value for money.

The problem the MOD has is that it doesn't do a good enough job of explaining that when it spends money, it's not just a case of buying the kit and then using it. As the author used to say in briefings - buying UOR modifications is easy, it's the integrating it with all the other kit to ensure everything still works as intended that's the real problem. Doubtless part of the cost will be that of ensuring that the aircraft can still work and fly, and that by fitting new kit, the MOD isn't ensuring that its bought kit which will inadvertently switch off the engines in mid flight, or some other major catastrophe. This may sound flippant, but integration is critical, and if skimped on, or not done properly, then people's lives are at stake.

Some have asked why the MOD can't buy spare C130s? Firstly, the C130K is going out of service, partly as a result of previous planning rounds and the SDSR. The support network to keep it going is no longer in place, the crews are disbanding and the training staff are not present any more. It would be extortionately expensive to keep a flight of 2 C130K's in service for 4 years, and require major expenditure (almost certainly far beyond £6 million) to do this. As the RN has discovered to its cost, the only real savings that can be accrued from aircraft fleets really occur when the fleet itself is taken out of service. Anything prior to this requires a whole raft of maintenance, support, technical issues and training schools. That's not to say it couldn't be done, but it could be done at a much higher cost than getting 2 x BAe 146 in service.

There is also a dearth of nations with surplus C130 J models hanging around - it's incredibly unlikely that they'd be willing to lease one to the UK for 4 years - particularly as the airframe would return utterly shagged, and in dire need of replacement. There is no money in the pot for new C130s, especially as the fleet is being taken out of service by roughly 2020-2025, and there is no money available to increase the airframe fleet. Moreover, the purchase of new C130s would not be in keeping with the requirement of UORs - namely that it's an urgent and operationally specific requirement which can't be solved by the Equipment Programme. This author would suggest that the C130J is not unique, not specific and definitely not an answer to a UOR.

So, the RAF has found itself faced with three options -

  1.            Run on C130K for 4 more years at vast cost.
  2.            Acquire sufficient C130Js to generate the task lines to support HERRICK at vast  cost.
  3.            Acquire cheap transports at minimal cost and run them into the ground.

With a bit of analysis, not only does the proposed solution seem fairly sensible, but it seems a good use of resources. It eases the pressure on the massively overworked C130 fleet (and helps restore harmony time, and provide tactical transports for other tasks, such as generating parachute training again). Of course it's not the perfect solution (the author personally suspects that in an ideal world, additional C130J frames would probably have been the DS solution if money were no object), but in the absence of money in the Equipment Programme, the procurement of 146s is probably the most pragmatic and cost efficient solution.

Naturally the author expects the MOD to be roundly chastised for its actions by all and sundry - proof then that its probably done the right thing!

3 comments:

  1. I wonder what UOR actually stands for... perhaps as a layman it's best not to enquire: bit like military procurement in general! An interesting parallel is the procurement of building for a lay client. You cannot get upset at a main contractor's quote for, say, a boiler, drive to B&Q and buy a boiler that's obviously cheaper and therefore better value and expect to have hot water on tap when the job's finished... you know who you are!

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  2. Thanks for your comment - UOR means 'Urgent Operational Requirement' - its a means of getting equipment to meet a very specific threat or need into service quickly, but its bought at a significant trade off in cost, support and is often not the long term solution. Its a useful means of getting something, which can often be a stop gap, but is not always the long term solution.

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  3. also, isn't there a rough field kit for the 146? And are the papers comparing any old 146 with the QC (Quick Change) version, with the cargo door and easily removed seats, which is the one they want?

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