RAF in private deal for mid-air tankersThe Ministry of Defence will announce the largest private finance initiative (PFI) so far tomorrow with a £13 billion deal to buy a new fleet of air-refuelling tankers.
The deal is the first big defence project to be paid for using the controversial PFI scheme, which allows the Government effectively to rent infrastructure such as hospitals from private companies.
The MoD is expected to confirm tomorrow that the AirTanker consortium will supply all 14 refuelling aircraft for the RAF and will maintain the planes throughout their 20-year lives.
The deal has been delayed for months because of turbulence in the financial markets, which has made raising the capital needed to start the project difficult. The consortium, which includes EADS, Rolls-Royce, Cobham, VT Group and Thales UK, needed £2.5 billion to buy the A330 aircraft and modify them into refuelling tankers. The decision to buy the RAF's refuelling tankers using PFI has not been popular among many senior military figures. They are concerned that relying on a private company to own, maintain and deploy vital military equipment is a strategic mistake.
However, executives within the defence industry believe that the RAF may get a better deal out of PFI as the contract will stipulate a certain level of readiness. This will encourage the AirTanker consortium to maintain the aircraft at a higher standard than the military can manage at present. Recent audit assessments of similar deals have found that outsourcing maintenance to private companies produces a better outcome for the Armed Forces.
Link to full story
http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article3621599.ece
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