Eurofighter Typhoon Programme:
Tranche Two Negotiations Taking Principle Too Far?

There is a whiff of sanctimonious self-righteousness emanating from many areas of current British defence procurement. In so many cases, and for so many programmes, "sources" are quoted as saying, "We won't go ahead until we are satisfied that we will get what we want", or, "What is offered at the moment will not meet our requirements".

This attitude may be perceived as paralleling that of the pernickety shopper sneering at unsatisfactory goods and trying to get the shopkeeper to bring his best wares to the counter.

Fair enough – being regularly castigated by House of Commons Select Committees or the National Audit Office might well make those involved in procurement adopt such a stance – better to be safe but sure early on, rather than having to answer embarrassing questions before the Public Accounts Committee later.

But there is a point and time at which adherence to socalled "principles" can seriously harm efficient procurement. And it is likely that this stage has already been reached with negotiations on the Tranche Two Typhoon contract. The concern is that the UK's negotiating position rather than saving money and defining a workable game-plan will actually end up costing more. All this in the name of principle. The issue is – to some eyes at least – quite basic.

The UK procurement community generally, and the RAF specifically, regards bringing into service a Tranche Two Typhoon without sound air-to-ground capabilities from the start as pretty much a waste of time. No talk of road maps or "spiral development" seems good enough for the RAF – the service wants it up-front, there and now!

But Britain's partner nations have different requirements. Overall, they might well wish to have air-to-ground capabilities, but as one Anglo observer of the programme said with regard to German requirements, "Let's face facts, they are not exactly looking to put much of their air force ever into harm's way". There are also Spanish desires for airto- ground capabilities – although not quite yet.

However, within the Eurofighter consortium a series of solutions has now been determined, with general agreement on what the Tranche Two baseline standard should be on those elements that need to be hardwired into the aircraft during build. There are also a goodly number of agreements on further enhancements later in the programme. But, most cleverly of all, a way of building two out of three blocks of aircraft for the UK in Tranche One, compliant with Tranche Two standard, has been decided on.

To obtain significant air-to-ground capability work on integrating the Litening 3 laser-targeting pod, as well as the Enhanced Paveway II combined laser/GPS guidance bomb, has been brought forward. If the timelines are agreed, then by the last batches of Tranche One, Typhoon would be able to drop Enhanced Paveway with most of the functions of both laser and GPS guidance. The smart part is that time has been created in the test programme by deleting the requirement for dropping dumb 1000lb bombs. The time that would have been taken for this is more than sufficient to undertake integration of Litening 3 and Enhanced Paveway.

What more could one want? As early as 2006, RAF Typhoons would be able to carry, self-designate and deliver the most flexible and capable tactical weapon in the service's inventory, Enhanced Paveway. And the roadmap to further air-to-ground capability would be much clearer with integration of Litening 3 already well underway. In fact, even with quite an austere fit of Litening 3, elements of the recce capabilities can be exploited. And by undertaking the work for late model Tranche One aircraft, utilisation of the more advanced air-to-ground cockpit in Tranche Two can be accelerated. Isn't this an utterly "win-win" situation?

Well if is it, then why all the humming and hawing over the contract? Even this, as reported in Defence Analysis last month, isn't a difficult decision. Tranche Two aircraft have next to no structural differences from the Tranche One models. The key advances in Tranche Two are in the software releases and the different weapons integrated onto the aircraft.

So there is no reason why the main structures for Tranche Two cannot be ordered today. To be fair, 20 centre section fuselages have already been ordered as lead items for Tranche Two. But much more could be ordered, allowing the fall-off of work between the peaks of Tranche One and Tranche Two to be avoided.

But this is where problems kick in – or will do later. Present delays are being lengthened by British wishes to see an absolutely clear future picture of precisely what the standard will be at the end of Tranche One, exactly what standard will prevail at the start and end of Tranche Two, and a perfect roadmap between Tranches One and Two. One can argue, as Defence Analysis has, that such a stance, in the name of procedure, embodies exactly the dictum of "Perfection, the enemy of sufficient."

Does absolutely everything have to be in place down to the last letter, jot, tittle and punctuation mark for a programme phase that will last over five years? Or using US concepts of spiral development, could there not be a progressive series of releases as Tranche Two gets underway? The aircraft will have its new computers from an early stage, and further systems can be added in succession. Indeed, by applying the fix suggested for the last two blocks of Tranche One this process could be speeded up.

However, to get Litening 3 integration underway, the Ministry of Defence will have to obtain some pods, either from Israel's Rafael or from one of the other Typhoon partner countries. But to allow time for the development and integration programme to meet a 2006 ISD, work is going to have to start soon – 2006 is just around the corner. And to permit the system to work properly after that, then work on fitting the few wiring alterations to Tranche Two baseline standard aircraft needs to be signed off.

THE BITTER BIT

But now the kicker. Because of the delay in signing the Tranche Two contract, BAES had to lay off close on 1,000 staff at Warton. Some at BAES say that these losses cover a variety of programmes. But senior sources say that well over 90 per cent of job losses resulted from the Typhoon production rate slowdown dictated by MoD, as well as the production gap between Tranches One and Two.

The company, however, will not bear the costs of these redundancies – they are covered by the contract, which says that if agreed and contractually-bound production rates change, costs will be borne by government. So in order to "save" money, MoD will fund the Warton redundancy programme.

Dare we suggest that there is more than an even chance that in two to three years time, MoD will wish to raise Typhoon production rates, and will then have to pay for a production ramp-up? And – oh yes! -there is a chance that the longer MoD takes to sign the contract – all the time claiming it is driven by principle and practice – the chances are that the three other partner nations might have a case for damages against the UK. There is also the near-certainty that if matters trail on towards the year's end, there could be another call from BAES to MoD for more cash to cover losses on the contract.

A situation is faced that could, in the name of principle, see more money being expended and less achieved, with lesser adherence to Smart Acquisition, than if common sense took over. Common sense suggests that there is a satisfactory early enhancement in air-to-ground capability available for Tranche One, with valid progression from that standard onto the early Tranche Two. Despite the other partners not having such pressing needs for this capability, certainly not at this stage, they appear to be in agreement on funding as it will save time and money later – and their chequebooks are at the ready.

So why no UK signature? What's really holding things up? And how much more money will be wasted by these delays?

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