If you live in the UK it’s blatantly obvious that a Defence Review is about to occur, even in a news cycle seemingly consumed by a Global Pandemic and an imminent US Presidential Election. This time partially hidden as part of a broader study entitled “The Integrated Security, Defence and Foreign Policy Review”, a Defence Review acts as a warning siren for current Senior Officers and a call-to-arms to both the Defence Industry and retired Very Senior Officers in their capacity as, often ennobled or press syndicated, eminence grises. In very simple terms, the spectre of a Defence Review inculcates some distinctly ‘Single Service’ behaviours and can degenerate swiftly into a brutal turf war, where leaks, press releases, Op-Eds and PR stunts are all ‘weaponised’ in an attempt to influence Politicians and Civil Servants that particular sacred cows should not be culled on the altar of financial cuts. There is a set of ‘unwritten rules’ that the military apply when such a Review is underway including, but not limited to;
1. If you’ve not used a capability in recent Operations, it will be scrutinised closely and you’ll likely have to justify retaining it;
2. Your ‘sister services’ will gleefully point out areas of capability duplication and claim they can do it cheaper and better;
3. You always threaten to remove something relatively cheap but very high profile – ie ‘The Red Arrows’ display team or HMS Victory. In the US it would be the equivalent of the USAF scrapping ‘The Thunderbirds’ and the US Navy decommissioning the USS Constitution. No politician wants to be associated with such an unpopular act.
4. You always emphasise the impact upon jobs and the economy if a large-scale project is cancelled, and maximise the potential benefits if it is retained.
The Tempest 6th Generation fighter project has just invoked ‘Rule 4’.
With the much anticipated (and delayed) report from the Independent Review now, seemingly, just a few short weeks away, the notional leader of ‘Team Tempest’, BAE Systems, has just released a report it commissioned from Price Waterhouse Coopers (PwC) that, it claims, makes a clear economic case for Tempest being shielded from the almost inevitable cuts to Defence Programs due to the ballooning Government debt being accrued as the nation copes with the Covid-19 impact upon all sectors of the economy. In the report, PwC identifies that Tempest will support circa 20 000 highly skilled and paid Defence Industry jobs and pump some £25 Billion into the UK economy between now and 2050. The program will also, doubtless, act as a stimulus for related technology, such as Artificial Intelligence / Unmanned Aircraft (both identified as key aspects of the Tempest ‘system’) and advances in material science, manufacturing techniques and military-grade avionics, such as radars, weapons and other sensors.
BAE Systems, and their industrial partners (Leonardo, Rolls Royce, MBDA and a host of smaller companies) are doubtless positioning the ‘buy in’ to Tempest as a ‘no-brainer’ for the Integrated Review; in effect using it as a massive industrial ‘stimulus package’ to help the UK high tech industrial base and economy navigate the potentially choppy waters of a post-Covid and post-Brexit world. Why wouldn’t the UK government back Tempest to the hilt? After all, we’ve been here before. The 1998 Strategic Defence Review, commissioned by the newly elected government of Tony Blair, effectively ringfenced the purchase of the then-new Eurofighter Typhoon, noting that “The acquisition of 232 Eurofighters remains central to our long-term plans” in both military and industrial terms. Of course, history shows that the RAF only received 160 jets, but at least the thought was there……
Will history repeat itself then?
Tempest is not a ‘sure thing’. The Government have only committed to £2Bn over 10 years in precursor and development work. Whilst £2Bn sounds like a lot of money, spread over 10 years and over so many companies, it’s in reality a drop in the ocean compared to the total development cost of a fully combat ready weapon system. Figures vary, but a sensible ‘guestimate’ at this stage would have the R&D cost and modest production run looking like £25-30 Billion. The gestation of Typhoon here is instructive; when originally postulated and budgeted by the MoD in 1985, the UK’s Typhoon programme to help develop and deliver 250 aircraft to the RAF was some £7 Billion. The last publicly announced total program cost, in 2003, was some £20 Billion, with the aircraft nearly five years late into service. The MoD refused to release any updated figures due to “commercial sensitivity’, however the National Audit Office noted in its 2011 report, “Management of the Typhoon Project”, that the UK had spent some £23 Billion by that point (with the unit cost per aircraft some 75% higher than predicted) and estimated that by the time the Typhoon left service the total development, purchase and operating cost would exceed £37 Billion – for only 160 aircraft. Rather bluntly the Report stated:
“Our examination has shown that key investment decisions were taken on an over-optimistic basis; the project suffered from corporate decisions to try to balance the defence budget; and the Department did not predict the substantial rate at which costs would rise. None of this suggests good cost control, a key determinant of value for money.”
Therefore, Tempest needs to prove to itself that its cost profile is realistic and affordable. If not, what are the UK’s options?
Option One is to back Tempest whatever the cost. The partnership with Leonardo (Italy) and SAAB (Sweden) is important to the UK is a post-Brexit Europe, and both bring key capabilities to the consortium. Leonardo, as for the Typhoon, will have the lion’s share of the expensive and complex radar, defensive aids and weapons systems whilst SAAB’s experience in developing and exporting the Gripen fighter may prove invaluable. It is highly unlikely that the combined purchase of the Tempest from the three nations is sufficient to reduce costs to an affordable level – export will be key to project viability. Here Tempest runs into competition. In the US, the USAF seem to be making great strides in their Next Generation Air Dominance (NGAD) programme to replace the F-22 Raptor, recently announcing that some form of prototype aircraft has already flown deep in the ‘Black World’. The US Navy also have their own NGAD programme underway, with an eye on replacing their F-18 Super Hornets and EF-18 Growler aircraft from the early 2030s. To further cloud the issue, there’s another European initiative, the Franco-German-Spanish Future Combat Aircraft System (FCAS), which aims to develop and export their own vision of a 6th Generation fighter. It is incredibly doubtful that there’s a large enough worldwide market for four competing Western 6th Generation aircraft. It’s a given that at least one, and probably two, designs will emerge in the US. Having learnt the lesson from F-22, these aircraft will undoubtedly be made available for export in some form or another. Whether there’s enough market share for Tempest and FCAS as well is contentious and by no means clear.
Which leads neatly to Option Two for the UK – ‘if you can’t beat them, join them’.
Again, there’s precedence here. Since the 1970s all of the RAF’s combat aircraft have been either purchased directly from abroad (F-4 Phantom) or been part of a consortium (Jaguar, Tornado and Typhoon) – none of which the UK has led quite as clearly as Tempest. The apparent overwhelming cost and political benefits of co-operation are always highlighted in such arrangements, but, as discussed earlier, keeping the politicians happy as governments change during long development cycles can be difficult, as can agreeing the initial division of work-share. The UK and US have collaborated successfully on the Harrier/AV-8 and F-35 programmes. In the former, the UK reluctantly ceded its leadership due to simple numbers – the USMC were intending to purchase far more AV-8B Harrier IIs than the UK were going to buy Harrier GR5s -whilst, in the latter, the UK’s expertise in Vertical/Short Take Off and Landing (V/STOL) technology and ship operations, as a result of both Harrier experience and ongoing research work (especially in VSTOL flight control systems) made it a logical decision to invite the UK inside the programme as the only Level One partner.
Could history repeat itself?
The UK not only relied upon Powered Lift and V/STOL knowledge to muscle into the F-35 project at such a high level. Shrouded in secrecy, a UK-only ‘stealth fighter’ programme was underway in the mid 1990s. Known as ‘Replica’ and headed by BAE Systems, it is thought the project was both a response to an emerging need under the Future Offensive Air System (FOAS) project to replace Tornado and also as an ‘insurance policy’ if negotiations to join the US Joint Strike Fighter (JSF) project, which led to the F-35, failed. By developing their own conceptual stealth technology design, the UK convinced the US that a higher than normal degree of UK access and influence was appropriate for F-35. Although it is thought Replica got no further than a concept and mock-up, several of its features are allegedly carried forward into the Tempest design. Therefore, if the UK were to go to the USAF or US Navy and say ‘we want in’, there would be something tangible to offer to buy themselves a seat at the table. A portion of the R&D costs/risk for influence into the project, a market for UK derived technology and a cut on export orders. It’s a very attractive option. It is estimated that the 15% UK workshare on F-35 supports some 20 000 jobs across over 100 UK companies, and even at this early stage of the production cycle, some £5 Billion in revenue has been received.
Such a payback, however, requires up-front investment and commitment. Perhaps the post Covid and Brexit world is simply too unknown for such a huge gamble, either in leading Tempest or in joining a US 6th Generation project. It has been discussed widely by Defense thinkers that the UK simply cannot afford to run Typhoon, continue to buy and field the intended 138 F-35s and pay for the R&D for Tempest. Assuming that the Independent Review will not increase Defence spending, something may have to give. Reducing the number of F-35s to support Tempest development is an attractive option, giving the UK financial headroom to continue to develop the platform whilst seeking more partners and potential export orders. The beauty of the F-35 is that it will be in production for decades; if Tempest failed, it would be relatively easy for the UK to start buying F-35s again in 10-15 years. Moreover, the rise of unmanned ‘Loyal Wingman’ style UAVs offer a relatively low cost means to bolster ‘combat mass’ in the short-medium term.
All of which brings us neatly to Option Three. Wait.
Much like the UK’s approach to the US Army’s Future Vertical Lift (FVL) FVL programme, the RAF may choose (or be forced) to sit on the side lines and wait for the new fighters to appear then select one. Undoubtedly this is the lowest cost option, in direct spend anyway as there is vanishingly little industrial offset via this approach. This would enable the RAF to continue to buy F-35s and field Combat UAV wingmen, while keeping abreast of developments in the US and, ultimately, selecting one as the Typhoon replacement. The risk and costs of R&D would be entirely within the US DoD.
However, such a decision would significantly hollow-out the UK military aircraft and defence electronics sector and put thousands of highly skilled jobs at risk. At this stage, given the high profile that both the Government and MoD has given Tempest, I can’t see that simply walking away is a viable option – let alone the reputational damage it would do to the UK’s future relationship with key post-Brexit European partners, and the impact upon the UK’s world prestige.
If the UK can’t afford to commit to the full development cycle for Tempest, then trading it for a profitable slice of a US NGAD project may just prove to be the ‘least worst’ option available.
Source: Forbes – Business