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17 Apr 03. The two consortia bidding for the UK MoD’s largest PFI deal, the Future Strategic Tanker Aircraft (FSTA) contract are placing their final bids for the £13bn programme to replace the RAF’s air-to-air refuelling tankers at the end of the month following the 12 month delay. The MoD blamed the complexity of project and protracted negotiations with the two bidders, it is the first time that the MoD has tried to apply the PFI concept to a frontline role, thus there are training and support implications. The first aircraft are now due to enter service in 2008.

The battle for the Ministry of Defence’s biggest private finance initiative project will reach a crucial stage at the end of the month when the two consortia are due to submit their final bids.

The rival consortia offer different approaches in terms of equipment. AirTanker, in which Airbus, Rolls-Royce, Cobham and Thales are shareholders, is proposing a service based on the new Airbus A330 aircraft. The aircraft has not been used in any military application but in Cobham the group has the leading specialist in air-to-air refuelling equipment.

The other team includes including Boeing and BAE Systems, is offering second-hand 767s from British Airways. Tanker & Transport Service Company, which includes Serco and Spectrum Capital.

The BAE team believes it has the upper hand because the 767 is gaining acceptance among other leading air forces particularly in Japan, Italy and soon in the US. In addition although the Air Tanker team says that the through life costs run down towards the end of the contract because they are offering new aircraft with no usage, the initial costs are expected to be higher as there are no A330 aircraft in military service, thus no logistic support, in comparison with the 767 which has a large user base across the world and can use any runway. The A300 requires a greater runway length than the 767.

The conclusion of the tendering process should help to ease concerns in industry that the defence ministry, one of the leading champions of public-private partnerships, was starting to rethink its commitment to PFI.

Under the 27-year programme, the aircraft will remain the property of the winning consortium, which will offer refuelling as a service to the RAF and retain responsibility for their maintenance. The aircraft will be predominantly flown by RAF personnel but a quarter of the crews will be employees of the contractor. As so-called “sponsored res-erves” they can be called up in wartime.
The winning consortium will be allowed to earn extra revenues, reducing the cost to the RAF, by leasing out the reserve aircraft, not normally required during peacetime, to airlines as normal commercial passenger jets.

One possibility offered by the Air tanker consortium, given the greater size of the A330, is to offer the Airbus as an aerial Command & Communications station in line with General Jumper’s proposals in the US.

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