As if the UK government didn't have enough on its plate at the moment with trying to reboot the domestic economy, it's also trapped in a procurement minefield over the Eurofighter Typhoon, plagued by years of cost overruns, technical delays and changes in political priorities.
It must have all made so much sense when the Eurofighter programme was proposed back in the 1970s – partner nations were to share its otherwise unbearable development and production costs, in return getting a common replacement for their aging fleets of Phantoms and Starfighters. In addition, they had the opportunity to secure long-term prospects for their indigenous defence industries and had the promise of lucrative export orders.
Production itself has been split into three tranches, each one giving the aircraft successively greater capabilities by allowing for system upgrades and integration of future weapons. Tranche 1 machines entered service in 2003, with final deliveries in March 2008 and deliveries of Tranche 2 aircraft started in late 2008. But it is the Tranche 3 craft that is causing the current headache.
UK must keep Eurofighter promise
The RAF's problem is that under its Tranche 1 and 2 allocations it has already ordered all the Eurofighters it needs. But the UK's Ministry of Defence (MoD), whose budget is already overstretched, can't pull out of Tranche 3 because the financial penalties are so harsh. In fact, in the same vicious circle that it experienced in the first two rounds, it costs little more for the MoD to continue to delivery as it would if it were to cancel the contract.
Another issue is that the aircraft was originally conceived purely as an air-superiority fighter but these days the RAF really needs a truly multi-role plane and it won't get that until the final delivery. While Tranche 2 models can be upgraded for multi-role duties, Tranche 1 machines can't. The MoD could try to sell these interceptor-only aircraft abroad but they won't look as good a buy as later versions.
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So how has the UK government ended up in this position? Marko Lukovic, principal consultant, aerospace and defence, at Frost & Sullivan says that planning so far ahead has been the MoD's downfall. "It's really a symptom of long-term thinking, the result of development by an international consortium and the fact that development has been overtaken by political events no one could have foreseen."
He adds: "There have been blunders, but the programme was already in full swing when the Cold War ended, which led to a huge reduction in defence spending and changes in political priorities. This in turn led to changes in procurement timelines, from the frequent turnarounds during the Cold War to the need now for equipment that will serve for decades."
It's not the government's fault, believes Lukovic – or at least if blame can be assigned at government level then the UK's is not the only one in the frame. At any rate, he says the UK has little choice but to 'bite the bullet'.
"When you look at the Nimrod programme, for example, the Eurofighter project looks like a picture of efficiency. Once the RAF does get the Eurofighters it needs it will be pretty covered for the next few decades," he says.
Reworking the deal
A glimmer of hope for the MoD may be on the horizon, however, after defence officials in consortium partner Germany suggested that Tranche 3 be split into two waves. This would allow the MoD to spread spending on its final allocation of 88 jets beyond the next few years.
The idea is reported to have been received sympathetically by the other partners, Italy and Spain, but there's unlikely to be much progress until after the German elections in September 2009. In any case, the UK is hoping it can take far fewer than 44 Typhoons in the first wave of Tranche 3, something that has yet to be agreed with the other partners.
A much bigger prize though – and one that all consortium members would benefit from – is the possibility of a deal with the Indian Air Force, which is looking to buy 126 multi-role aircraft worth an approximate total of $12bn. "It's the largest deal in a long time and the largest there's likely to be for some time to come," says Lukovic. "The India deal would make things easier for everyone in the consortium. For one thing it would make Tranche 3 cheaper," he says.
It's not just the sale, and subsequent support agreements, that would make this deal so attractive but the possibility of making India a long-term partner, as was proposed by the consortium in February 2009.
"That would be good for India," says Lukovic, "as it would give it access to a fair bit of leading defence technology."
But with strong competing bids from the US, Russia, France and Sweden, nothing is certain yet. And what does this saga say about future international collaborations?
"I think it will make countries wary about entering into such projects in the future – if there are any," says Lukovic. "If there are, then they'll have no choice but to collaborate, as it's simply too expensive now for countries to go it alone.
"If we can learn one lesson from the Eurofighter it's that when designing a new combat aircraft it will need to be as modular and as flexible in its functions as possible. It probably won't be flying for 15 years or so, and there's no way to predict what will be needed in technology terms by that time.
He concludes: "The aircraft will have to be multi-role – like the Eurofighter – and modular, which it isn't, and nor is any other fighter plane at the moment."