Cancelled Nimrod MRA4 costs highlighted by NAO report

Final costs for cancelling the much-troubled Nimrod MRA4 programme have been confirmed.

In a report on major UK Ministry of Defence (MoD) projects published by the National Audit Office (NAO) on November 16, final costs for cancelling the much-troubled Nimrod MRA4 programme were finally confirmed.

The original contract for 21 Nimrod Maritime Reconnaissance and Attack Mk4 aircraft was placed with BAE Systems in 1996 at a cost of £2.8 billion, with a projected in-service date of April 2003. But the report says that “Programme difficulties stemmed from ‘the design challenge being hugely underestimated by industry’ compounded by a weak programme management culture, which lacked transparency, neglected or overrode project control systems and disciplines, and produced forecasts that ‘lacked depth and reality’.”

Several renegotiations of the contract during the period 2002 to 2008 resulted in the procurement number of aircraft dropping to first 18, then 12 and finally just nine. Meanwhile delays, caused by “Departmental funding constraints, leading to resources being re-prioritised in the short term; and industry underestimating the design challenge and technical complexity in their initial forecast schedule,” according to the report, meant the in-service date slipped by 114 months, very nearly ten years. The projected cost had risen to £3.4 billion, equating to £378 million per aircraft. The NAO reports notes that “The MoD reported that each reduction in aircraft numbers still allowed the defence requirement to be met, but only after adjusting down the requirement on each occasion, as the reductions were financially driven.”

Options to cancelling the project were considered before October 2010, notes the report. These included completing production of all nine aircraft, or just the three that were largely complete. Completed aircraft could be kept for future sale or storage. But the MoD “judged continuing production as risky, because it could involve further difficulties and cost increases of the type that had already been encountered on the project to date.” Keeping the workforce employed at the Woodford plant was also an issue, as BAE Systems had already indicated the site would be closed on completion of the Nimrod contract. Storing any finished aircraft was also discounted on the basis that it would be “too expensive to recover the aircraft, such as upgrading and re-establishing training facilities. It could take two to three years from the date of any decision to do so.”

By cancellation in October 2010, the report states that “95% of forecast spend for completing the nine aircraft had been used, leaving around £200 million to spend” from the £3.4 billion project. Most of this money was used to scrap the aircraft, but the report acknowledges that there are “some termination costs” currently under negotiation with BAE Systems and therefore cannot yet be published.

Although the NAO is concerned primarily about cost, it has also considered the capability gap left by cancellation of Nimrod. It states “The MoD has assessed that the Nimrod maritime patrol aircraft contributed to eight of the 15 security priority risks described in the National Security Strategy - Nimrod was uniquely able to rapidly search large maritime areas, a capability relevant to long-range search and rescue, maritime counter terrorism, gathering strategic intelligence, and protecting the nuclear deterrent.

“Some limited analysis was carried out on how specific military tasks could be covered by a combination of Sentry surveillance aircraft, Hercules transport aircraft and the Merlin maritime helicopters. However, the MoD noted that there would be ‘significant shortfalls without significant investment, and the co-ordination of such assets at the right place and the right time might prove to be very risky’. Using other existing assets would provide a reduced capability compared with Nimrod, and diverting resources from existing tasks would have wider implications for defence. The Sentry surveillance aircraft is already at minimum crew and aircraft numbers to cover NATO commitments. Using helicopters, such as the Merlin or Lynx, would affect national commitments or training of crews for other tasks. Other alternatives are fully committed to current operations.”

In response to the NAO report, the Secretary of State for Defence, Philip Hammond, said: “It was right to take tough decisions in the Strategic Defence and Security Review to deal with an equipment programme that was out of control. The Nimrod MRA4 was over eight years late, almost £800 million over budget, and had seen the unit cost of each aircraft soar by 200%; with no clear idea of when the capability would be delivered.”


Source: By Gary Parsons - 22 November 2011 - Military Aviation News (www.key.aero.com)

Photo: Two Nimrod MRA4s await their fate before scrapping at BAE Woodford in 2010. Key. (Photo by Gary Parsons / key.aero)

(22.11.2011)