CHOPPERED...
In an astonishing lure to Britain, Boeing axes the sky high cost of crucial Apache attack helicopter WAS: £20m NOW: £8.5m
PRESSURE is mounting on the Ministry of Defence to choose American aircraft maker Boeing to supply Britain’s next generation fleet of Apache attack helicopters after the price of each machine was slashed to just $13million (£8.5million).
The price represents a huge discount on the sum paid by the MoD for its current fleet of 67 Apaches in 1995. Then the MoD paid a total of £44million after AgustaWestland had added £24million of upgrades, including new engines, to Boeing’s £20million airframes.
Now defence industry sources say the 50 new helicopters, which would be part of a production run of 240 ordered mainly by the US Army and sold direct to the MoD by the American government, would be less than half the price of the existing machines even before inflation is taken into account – an almost unheard of deal in the industry.
The US defence department puts the official value of the deal at $3billion (£2billion). But this is the first time the price per helicopter has been given, suggesting the size of the discount.
The MoD said both AgustaWestland and the US government were submitting proposals and it was in the process of evaluating them. The MoD, under Defence Secretary Michael Fallon, refused to comment on price, but has said its assessment would include which offer was best value for taxpayers.
AgustaWestland, which is based in Yeovil, Somerset, declined to reveal details of its bid. But it could buy the airframes of the Apaches from Boeing and upgrade them with new equipment adapted to British Forces’ needs, possibly installing new engines too, though no information on costs is available.
For the previous order the company installed Rolls-Royce/Turbomeca engines, which performed well in operations in Afghanistan, allowing the helicopters to operate at high altitude in hot, thin air while carrying heavy equipment on board, which other countries operating the helicopter had to discard.
However, Rolls-Royce sold its half of the contract to its co-supplier, French company Safran, two years ago, meaning there is no longer any British involvement in the manufac- ture of the engines. This could weaken the political imperative to keep the overall contract with a British-based firm, say observers.
AgustaWestland retains the lucrative contract to maintain Britain’s fleet of Apache helicopters, known as a ‘through-life support’ contract.
A spokesman for AgustaWestland said: ‘We have been approached by the MoD over upgrading the Apache and are in discussion with Boeing and the MoD. There are a number of potential ways of meeting the needs of the MoD over this contract. We delivered the programme very successfully first time around.’
It declined to comment on how many jobs were directly connected to the Apache contract.
There have been suggestions that the awarding of the contract was delayed until spring 2016 because AgustaWestland, where former Defence Secretary Geoff Hoon is managing director of international business, intervened when the Coalition was in office. But the MoD denies the deal has been delayed.
Until this year, Yeovil was the constituency of Liberal Democrat MP David Laws, an influential member of the Coalition. But he lost his seat to Tory Marcus Fysh at the last Election. He has said he is ‘fighting for Apache work at Westland’.
AgustaWestland is the heir to the Westland helicopter firm, which was at the centre of a political storm in the 1980s over whether Britain should buy American helicopters, or machines from Westland, our only remaining helicopter maker, if it merged with European rivals.
The so-called Westland Affair saw the Government fractured, with the then Prime Minister Margaret Thatcher on the pro-US side and Defence Secretary Michael Heseltine on the other and serious accusations of dishonesty aimed at both camps. Heseltine finally resigned.
The present battle over which firm should supply the new Apache is reminiscent of that dispute in that it pits a US defence supplier against Britain’s sole helicopter-maker.
Douglas Barrie, senior fellow for military aerospace at the International Institute for Strategic Studies, said: ‘In this kind of big ticket defence procurement decision there are always three factors at work – price, performance and politics.
‘On price, Boeing and the US government have an advantage, not least because they own the platform, the aircraft, and the production run is already on-going. That makes it very hard for AgustaWestland to compete on price. But AgustaWestland has other arrows in its quiver. It has played the political card before and very effectively – it’s an “onshore” company and it has a long domestic history.’
Though, as Barrie points out, it is no longer the wholly British company it was when Margaret Thatcher was Prime Minister. Now AgustaWestland is a UK arm of the Italian defence firm Finmeccanica.
‘So it is a US company versus a British subsidiary of an Italian defence firm for the MoD to choose between. Perhaps that makes it easier politically,’ said Barrie.
A spokesman for the MoD said: ‘We are in the assessment phase and have sought proposals from both AgustaWestland and the US Government. No decisions will be made until next year.’
Boeing, which declined to comment on the Apache deal, has been at pains to point out, too, that it now has extensive operations in the UK with 1,000 Boeing staff working across the country in more than 20 locations, embedded within the UK’s military capability. It says its UK supply chain is worth £975million and supports more than 9,000 jobs.
Prince Harry was famously filmed dashing to the cockpit of his Apache in Afghanistan before heading out on a mission.
Now the problem of replacing his machine and the rest of the fleet looks set to generate a political storm for the Government.