Typhoon Procurement Costs
A Question of Mathematics

It came at one of those natural pauses in lunch. The starred rank opposite, who had been explaining about his juggle with programmes, twiddled the stem of the glass of a rather pleasant Pinot Grigio. "Do you know," he said, "for the cost of 12-18 Eurofighters, we could fund practically all of the programmes we need. Maybe not the full Christmas wish list, but a major number of them, Urgent Operational Requirements and all." This wasn't the first time that a senior MoD figure has said – on or off the record – that for a certain number of Eurofighters being cut by the UK, the cash could go so much further elsewhere.

Indeed, in the summer days of 2003, the whole question of "Cut this number of Eurofighters and I'll be able to deliver so much capability in my own defence area," has been almost the standard level of mathematics that virtually everyone uses. Evidently, if anyone needed proof of it, Typhoon is the present budget buster.

TABLE ONE: Assorted Typhoon Annual Costs

• Written Answer, June 2003 (Unknown Basis): £1,465-million
• National Audit Office 1999 Cash Figure: £1,109-million
• Defence Analysis Peak Spend Curve 2002-03: £900-1,200-million

These figures do not make much sense on their own – especially the first which may (or may not) be in the dreaded Resource Account Budget terms. But to put it into an appropriate and understandable context, the following are the last cash outturn figures published for UK defence procurement spending from Defence Statistics 2002:

TABLE TWO: UK Procurement Spending 1997-2001 (£ millions)

	1997/98	1998/99	1999/00	2000/01
Procurement	9373	10281	10094	10408
Expenditure
Research	656	620	584	558
Development	1655	1476	1761	1821
Production	5057	6132	5830	6059
Repair/Spares	1884	1930	1805	1849
Other	121	124	114	121

What is key here is the line for production. On a like-forlike assessment, Typhoon certainly cost a minimum of 20 per cent of the total production budget in 1999 – it might even have reached 23-24 per cent. The Defence Analysis peak spend curve figures also point to the fact that Typhoon will eat up a minimum of 20 per cent of all new production in the years 1999 up to 2005.

As a comparison, the Trident ballistic missile submarine programme, apart from one year, 1993/94, when it ate up 35 per cent of the entire procurement budget, tended to require 20-25 per cent of procurement spending – so Typhoon in the first half of this decade is a comparable burden to the UK.

As reported elsewhere in this edition, the conclusion is that not only are the sums being spent on Typhoon too great in simple cash terms, but they are also too high in doctrinal terms. At a time when the Army is scratching around for money, why is so much being spent on the RAF? Going back to the quote at the beginning, just think of what some of the money spent on Typhoon could do elsewhere!

TABLE THREE: Eurofighter Typhoon Equivalence Figures (£ millions)

Watchkeeper	600	15
FIST	450	12
LFATGW	300	7.5
FCLV	325	8
SABR	2500	63

It might be unfair to quote primarily Army equipment programmes but they do make the best reading! After all, so the argument goes, would the RAF and the UK as a whole really miss a dozen Typhoons, let alone eight? But it is worthy of note that an up-front purchase of support helicopters for the Support Amphibious and Battlefield Rotorcraft (SABR) programme would cost less than one later tranche of Typhoon.

But, unfortunately, all of these calculations, mouth watering though they might be to some planners, are actually immaterial. Because as envious observers look at the Typhoon kitty, they tend to forget something: it is basically untouchable. Why so? As a result of some crafty contract writing in the early 1990s, which might now come back to haunt those who wish to see some form of dramatic reshaping of the UK defence budget.

Because there were major concerns in the early 1990s that Germany would continue to mess the programme up, the contract was written so that once signed it would be more expensive to change the programme than it would just to keep going with it. But that which was put in place to keep Berlin in check equally holds back those who wish to redistribute Typhoon money in the UK.

What they don't seem to realise is that, for all intents and purposes, the first two tranches of Typhoon are signed, sealed, and awaiting delivery (OK, the formal signature for Tranche Two hasn't yet been signed but is very close).

This limits, to a major extent, any anticipated cost savings for anyone looking for such things from the Typhoon programme until the post-2008 timeframe. And there is then the assumption that the UK will cut, entirely, the third tranche – and this seems less than likely. London looks more set to buy around half of the proposed 84 aircraft, in as advanced a form as possible for the planned stretch missions for Typhoon, such as SEAD.

Which then limits potential cost savings to some £1.6-billion in direct procurement costs spread out over some six years. With up-front support costs, this could rise to a saving as high as £2.4-billion over 6-8 years – £3-400-million a year. Not a bad sum when one's key, un-funded programmes are £200-400-million but possibly not as great as many desire.

• UK Future Carrier-SILLY SEASON OR SERIOUS STUFF?
• Air Craft Carrier Cost - CARRYING THE COST CAN
• UK Operations in Iraq: First Reflections - AN ACCEPTABLE START
• Force Assumptions And Planning - NOBODY EXPECTS TE SPANISH INQUISITION
• UK Procurement Policy - PULLED IN TWO DIRECTIONS
• UK Defence Review: The Next Steps - WHAT TO MAKE OF IT ALL?
• Future British Army Shape - GOOD IF YOU GET THERE
• UK Defence Review - EVERY CUT HURTS
• Support Helicopter Market - THE CHANGING BALANCE
• UK Future Command and Liaison Vehicle Order - HALFWAY HOUSE?
• UK Advanced Jet Trainer - BITTER BICKERING
• DEFENCE INDUSTRY NEWS
• DEFENCE DIVERSITY

REF XQQDA XQQEE XQQLD XQQAR