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BAE's Plain-Speaking CEO Slams UK Defense Under-Funding
Talking to the press at Le Bourget yesterday, BAE Systems CEO
Mike Turner said, "Under-funding in Britain's defense budgets
is a fundamental problem. I have real doubts whether UK military
budgets can meet currently proposed equipment procurement programs,
particularly in relation to proposed RAF Hawk re-orders, and two
new Royal Navy aircraft carriers."
Earlier, he said that BAE was delighted with the settlement last
year of disputes with the MoD on cost and delivery issues relating
to the Nimrod MRA.4 and Astute submarine programs. BAE is changing
its trade terms on which it will accept future MoD business, he
added, and will now only take-on defense equipment program contracts
with acceptable risk levels.
Turner said that he was pleased to report that negotiation were
still continuing with the MoD for its Advanced Jet Trainer (AJT)
requirement for 30 or so Hawk Mk 128s. He pointed out that the
original 1 billion pound contract for 175 RAF Hawks led to returns
of 15 billion pounds to date from export sales, for which there
was still further potential.
Discussions were also continuing with the MoD concerning planned
Tranche 2 procurement of 89 more Eurofighter Typhoons, for which
he said there was "real export potential." Configured
for ground-attack as well as air defense, Tranche 2 Typhoons would
be equipped to operate with MBDA Storm Shadow cruise missiles.
There was a need to renegotiate Tranche 1 schedules, however,
to avoid a production gap.
On other subjects, Turner said that any reports concerning possible
mergers with U.S. or other companies were pure speculation. Talks
were continuing with Finmeccanica and others, although there was
"significant" room for improvement in European joint
ventures. "I'm concerned that JVs don't give us the returns
they should," he said.
As for the MoD's Private Finance Initiative (PFI) programs, Turner
says "they simply don't work.
By John Fricker
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