• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Excelitas Qioptiq banner

BATTLESPACE Updates

   +44 (0)77689 54766
   

  • Home
  • Features
  • News Updates
  • Defence Engage
  • Company Directory
  • About
  • Subscribe
  • Contact
  • Media Pack 2023

BAE IN THE DOCK AGAIN OVER TYPHOON?

February 4, 2004 by

23 Jan 04. Still reeling from the double whammy of being the company blamed for the major cost overruns in the ‘Major Projects: National Audit Office (NAO) Report’ published Ministry of Defence: Major Projects Report 2003 (MPR 03), BAE SYSTEMS is believed to be in further trouble with regard to its contract price to build the Eurofighter Typhoon. (MPR 03 covered the year to 31 Mar 03 and provides details of 30 projects: the 20 largest for which the main investment decision had been taken (Post-Main Gate) and the 10 largest which had yet to reach that point (Pre-Main Gate). The Bowman, Skynet 5 and Support Vehicle programmes feature in the Post-Main Gate category for the first time). Four projects involving BAE – the Eurofighter Typhoon, Nimrod reconnaissance planes, Astute submarines and Brimstone air-launched anti-tank missiles – together accounted for 87 per cent of the cost overrun and 79 per cent of the total “slippage” in delivery times. The Tories yesterday branded the situation “a scandal” and called on the Government to “get a grip for the sake of our servicemen”.

The Ministry of Defence (MoD) was warned to “raise its game” after a National Audit Office (NAO) report showed that BAE Systems projects were largely to blame for a massive £3.1 billion overspend on MoD equipment last year.
The cost of the 20 Post-Main Gate projects increased by £3,086m in the year to 31 Mar 03 and in-service dates by a total of 12 years. Four BAE projects accounted for most of the problems: Astute Class SSN (£1,003m and 43 months); Brimstone AAAW (£126m and 18 months); Nimrod MRA4 (£538m and 40 months) and Typhoon (£1,037m and 12 months). (Source: DNA DEFENCE NEWS ANALYSIS, Issue 04/05, 26 Jan 04)

A combination of a slowdown in production numbers following delays in the signing of Tranche 2, coupled with the company’s low bid to win the contract has led to concerns over the overall profitability of the project for BAE. BAE is believed to wish to renegotiate a major portion of Tranche 2, given delays to the signing due to a changed requirement for the aircraft to introduce a ground attack role. However we understand that a requirement has been issued in Germany that all contractors involved in Euro Fighter must significantly reduce their costs and that if all signatories are not in place in time for the second tranche release in June of this year, the entire programme could be scrapped, this puts BAE in a vice between expected increase in the German requirement and further cost cutting. These delays will not only affect BAE but major subscontractors Rolls-Royce, Smiths, Cobham, Ultra and Chemring. Another source suggested that the JSF requirement could be cut to only 80 aircraft which may explain the rumours of up to 7000 redundancies at the company’s Warton site

Following these reports, in an interview with the Times, Sir Raymond Lygo, chief executive of BAE Systems during the 1990s, told BBC Radio 5 Live that his firm would deliberately price contracts at an attractive rate and then charge more later as the costs rose to a more realistic level.

His revelations come on the day Sir Raymond said: “I think it’s a well-known fact, whether anybody admits it or not, is you’ll never get any programme through the Government if you ever revealed the real cost. “Whatever you want to get through Government, you have to first of all establish what is the Treasury likely to approve in terms of money? And then you think, what can you offer for these terms within the parameters that have been set? And pretty often it is pretty nearly impossible.

“So you say right, we can do this and we’ll do it for the price and then the programme goes ahead. But you know automatically that it’s going to cost more than that because it will.

“And so after a year you say ‘I’m terribly sorry but the costs have now risen for this reason and the other reason’. “There are always a thousand reasons because the customer will never stop mucking about with the co

Primary Sidebar

Advertisers

  • qioptiq.com
  • Exensor
  • TCI
  • Visit the Oxley website
  • Visit the Viasat website
  • Blighter
  • SPECTRA
  • Britbots logo
  • Faun Trackway
  • Systematic
  • CISION logo
  • ProTEK logo
  • businesswire logo
  • ProTEK logo
  • ssafa logo
  • Atkins
  • IEE
  • EXFOR logo
  • KME logo
  • DSEi
  • sibylline logo
  • Team Thunder logo
  • Commando Spirit - Blended Scoth Whisy
  • Comtech logo
Hilux Military Raceday Novemeber 2023 Chepstow

Contact Us

BATTLESPACE Publications
Old Charlock
Abthorpe Road
Silverstone
Towcester NN12 8TW

+44 (0)77689 54766

BATTLESPACE Technologies

An international defence electronics news service providing our readers with up to date developments in the defence electronics industry.

Recent News

  • PARLIAMENTARY QUESTIONS

    January 26, 2023
    Read more
  • EXHIBITIONS AND CONFERENCES

    January 20, 2023
    Read more
  • MANAGEMENT ON THE MOVE

    January 20, 2023
    Read more

Copyright BATTLESPACE Publications © 2002–2023.

This website uses cookies to improve your experience. If you continue to use the website, we'll assume you're ok with this.   Read More  Accept
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT