Farnborough: Eurofighter casts doubt on quoted Typhoon price

Farnborough
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By Jon Lake in Farnborough

Eurofighter GmbH has filed a freedom of information request to obtain ‘clarification’ of the Typhoon unit production cost published in the 2005 UK National Audit Office (NAO) Major Projects Report.

Programme director Brian Phillipson describes the £64.8 million ($120 million) price quoted by the NAO – and subsequently widely quoted in the press – as being “much higher” than unit cost that he would recognise.

“The numbers in the NAO reports changed between 2004 and 2005 from £49.1 million to £64.8 million. Eurofighter does not understand why. The increase in cost bears no relation to any change from us,” says Phillipson.

“We have sought an official explanation, but understand that other charges, over and above anything that we have been paid, have been included.

“This leads me to question whether the NAO price is really a Unit Production Cost.”

Typically in Germany, he says, recovery of production investment and two years of support and operating costs have been included in what effectively becomes a unit system cost. “My suspicion is that the UK MoD has moved towards a system cost while still calling it a Unit Production Cost,” he says.

“This £64.8 million figure is much higher than any unit cost, flyaway cost or purchase price that I would recognise. It’s something quite different.

“The brief note in the NAO report fell short of providing any real explanation of the increase, which is why we formally requested clarification of the changes made to create the new figure in the NAO report. We initially made an informal enquiry, but after discussion agreed that it would be best to file a formal enquiry under the Freedom of Information Act.”

An answer is expected in August. Meanwhile, Phillipson suggests is would be “extremely unfortunate” if changes in the reporting of accounting procedures were allowed to give the impression of cost growth.

“This is important not only for the export market, but also looking ahead to Tranche 3. I remain entirely confident that Eurofighter Typhoon represents excellent, unparalleled value for money for our nations’ air forces and taxpayers.”

“Whatever the perceived price - and there are so many variables that may or may not be included in any ‘headline figure’ - we believe Eurofighter Typhoon provides the best possible value, and the most cost-effective solution, when pitched against any competition in the export market. The aircraft’s availability is contractually guaranteed, as are the very low costs of ownership, and these make Typhoon unbeatable in cost terms.”

It is understood that the NAO figures include Nato Eurofighter Management Agency (NEFMA) running costs and Qinetiq charges – legitimate parts of a total programme cost, but not of a unit production cost.

The UK’s 55 Tranche 1 aircraft are known to have cost £2.5 billion, representing a unit production cost of £45.45 million, while the Tranche 2 global contract was £9.56 billion for all partners, which gave a unit production cost of about £40 million. It has been reported that Austria paid a unit flyaway price of €62 million ($78 million) for its 18 aircraft.