NAO REPORT – CARRIER STRIKE – THE 2012 REVERSION DECISION
10 May 13. The Ministry of Defence acted quickly once it realized, in early 2012, the extent to which its 2010 decision to procure the carrier variant of the Joint Strike Fighter (JSF) had been based on immature data and flawed assumptions. In May 2012, the Department announced that it was reverting to procuring the short take-off and vertical landing (STOVL) variant of the fighter. In a report published today examining that 2012 decision, the National Audit Office has called for the Department to introduce a degree of consistency in decision-making not previously apparent in the Carrier Strike programme and to work within the financial and capability assumptions underpinning the decision, if it is to deliver value for money.
By February 2012, the estimated cost of converting the aircraft carrier for the carrier variant of the JSF, requiring the ship to be fitted with catapults and arrestor gear (‘cats and traps’), had increased by 150 per cent: from £800 million to about £2 billion. As a result, the Department estimated that, over the next ten years, the STOVL option would be £1.2 billion cheaper than the carrier variant. This difference halves to £600 million over 30 years.
Amyas Morse, head of the National Audit Office, said: “It is good that the MOD acted promptly, once it became clear that pursuing the option to buy the carrier variant aircraft would cost a lot more money and add another three years to the whole programme. But to achieve value for money in this project, the Department will have to manage significant technical and affordability risks and be consistent in sticking to the present plan.”
Another key factor was that the carrier variant option of the JSF could also not be delivered until 2023, three years later than the planned date of 2020. The Chief of Defence Staff judged that, in the emerging security environment, such a gap in capability would be undesirable. When the Department reverted to the STOVL option, it announced that it would deliver the Carrier Strike by 2020. However, a week later, it delayed investment in Crowsnest, the helicopter based radar system making up the third element of Carrier Strike, meaning that the system is not now scheduled to be fully operational until 2022, two years later than the carriers and aircraft.
In May 2012, the Department gave decision-makers two options: to continue converting to the carrier variant, or revert to the STOVL variant. The Department did not present further options because it had not changed its view on the capability advantages of the Joint Strike Fighter variant options over alternative, cheaper but non-stealth aircraft. Similarly, it still believed that the alternative steam-based catapult and arrestor gear was not a viable option. The Department advised decision-makers to make a swift decision between the two options, to avoid the substantial increase in commitments to the carrier variant option.
The Department’s understanding of the differences between the two options was more mature than in October 2010, but there were still a number of uncertainties that it made clear to decision-makers. The Conversion Development Phase studies were not complete and the Department had ceased work to further understand the STOVL option. The Department made extensive use of its Cost Analysis and Assurance Service to provide independent challenge and to give confidence in its cost estimates. It is unlikely that, even cumulatively, the scale of any potential errors would have completely eroded the cost difference between the two options.
The Department estimated that over the next ten years the STOVL option would be £1.2 billion cheaper than the carrier variant. This difference halves to £600 million over 30 years. The short-term difference was largely due to the 150 per cent cost increase to install EMALS (rather than steam) on one carrier. Over 30 years the difference reduces because o