War zone threat forces MoD to renegotiate tanker deal

3 July 2002
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04 July 2002 | Liam O'Brien

The increased likelihood that the Royal Air Force's planned new tanker fleet will have to overfly war zones has forced the renegotiation of the Ministry of Defence's largest-ever private finance initiative (PFI) deal.

The two consortia tendering for the £17 billion contract - Air Tanker and Tanker Transport Services Company - are concerned about the potential costs of the tanker fleet's increasingly mobile role.

The two now require changes to the PFI agreement, prompting the MoD to put back the launch of the tanker fleet by 15 months to April 2008.

Since the PFI was launched in 1997, the MoD's defence review has ushered in a wider role for the UK's armed forces.

During the Kosovo conflict, an RAF tanker was used to nurse a damaged combat aircraft back to base. The journey involved flying over enemy territory.

Tim MacMahon, marketing director of Air Tanker, said the delay was needed to resolve contractual issues.

"The more mobile deployment of UK armed forces has underlined the importance of refuelling tankers," he said.

"One can't now exclude the possibility that they will be used close to the front line, which adds to the risk and has technical and financial implications that need to be resolved."

The deal is the largest of the 47 PFIs that the MoD has introduced and will see the RAF's near-obsolete VC10s and TriStars replaced by either Boeing 767s or Airbus A330s.

The MoD denied that the delay and concerns over the operational risks for the aircraft will add to the cost of the PFI.

It is sticking to its plan of announcing the preferred bidder later this year and awarding the contract in early 2003.

In a statement to Parliament, Lord Bach, minister for defence procurement, said the project was "highly complex and innovative" and that it was "essential that the programme is soundly based".

He added: "We are working very closely with both of the consortia to achieve the earliest possible announcement of the preferred contractor."

SMjul2002

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