Dogfight begins over RAF fleet

Here, as they say, we go again. Every so often the military-industrial complex, as President Eisenhower described it, gets itself in a proper stew over a big defence procurement programme.

In the mid-1980s we had the Westland crisis. That was shortly followed by the Nimrod debacle. Two years ago it was helicopters again in the shape of a row over who should build the Royal Navy's EH101.

Apart from involving big bucks, each episode boiled down to a stand-off between American interests on the one hand, and British or European interests on the other.

Now there is a new cause celebre - the replacement of the RAF's ageing fleet of Hercules transport aircraft.

Should Britain's defence industry collaborate with US or European partners? Should we buy American hardware off the shelf or persevere with our own technology? Should the short-term preferences of military planners override all other considerations, even if it means exporting jobs to Seattle and St Louis?

The score, so far, is Yanks 3, Europeans 0. Westland decided its future lay with United Technologies Corporation of the US rather than Michael Heseltine's European rescue plan. The Government cancelled Nimrod at a cost of pounds 1bn and bought Boeing Awacs aircraft instead. IBM won the job as prime contractor on the EH101 programme in preference to a joint venture between British Aerospace and GEC.

The Hercules decision brings many of these sparring partners together again, although, as is often the way in the defence world, the game of military musical chairs means some of the combatants have swapped allegiances.

The choice is simple. The RAF can either replace the Hercules, now more than 20 years old, with a new variant, the C130-J, built by Lockheed of the US at a cost of some pounds 900m. Or it can refurbish its existing fleet at a cost of pounds 200m- pounds 300m and then buy the Future Large Aircraft when it becomes available early next century. The FLA, or Euroflag as it is also called, is a pan-European venture. BAe is one of the partners.

Marshalls of Cambridge is due to report to the Ministry of Defence on the refurbishment option by the end of March. Lockheed is likely to submit its tender at about the same time. If a decision is made by the end of this year, the first aircraft could enter service in 1996.

On current form the Americans should win hands down. The C130-J is a proven aircraft, it is in production and it is, probably, the preferred choice of the RAF, despite the superior logistical capabilities and lower life-cycle costs that the Euroflag supposedly offers. By contrast, a refurbishment programme on quite the scale envisaged for the Hercules has never before been attempted, so there can be no guarantee that costs would not start to run away.

As for the FLA, it is a paper plane that may or may not fly on time and inside budget. It is also a collaborative project - and we all know from the experience of Eurofighter the strains that can impose. Last, and not least, Britain is no longer a member of FLA, having dropped out in the mid- 1980s, although BAe remains one of the industrial partners and has so far committed some pounds 12m in development funds.

Despite, or perhaps because of, all this the tub-thumping has begun. Selecting Lockheed, we are told, would be one more example of Britain turning its back on Europe, of Britain letting its own aerospace capacity wither still further. Selecting Lockheed would also rob Britain of potential export orders worth pounds 3bn- pounds 7bn.

Lockheed counters most of these objections, pointing to the 18 UK industrial partners already signed up to the C130-J programme and the pounds 1.2bn worth of export work they stand to win. As to whether buying American would undermine Britain's technological prowess, BAe itself admits that the FLA is not a piece of complex high-cost military hardware but is based on proven technology already tried and tested on the Airbus programme.

For all that, Lockheed may well lose this particular contest. When Boeing snatched the Awacs contract away from GEC, it sweetened the pill significantly by promising to place high-technology sub-contract work worth 130 per cent of the value of the Awacs order with British firms. This offset deal was important in winning the political seal of approval.

Lockheed, by contrast, can only promise that its UK partners will carry out 13-15 per cent of the work. Furthermore, the UK is guaranteed its pounds 1.2bn share of the overall C130-J programme come what may, since the aircraft will go ahead whether or not the RAF buys it. If, on the other hand, there is no RAF purchase of the FLA then there may well be no FLA programme.

Then there is the question of money. In these times of straitened defence budgets it may prove easier to justify spending pounds 300m on a refurbishment than three times that amount on a brand new fleet of aircraft. Whether the FLA then goes ahead is a matter for the future and, moreover, one that may not need to be decided by the same set of officials or politicians.

This time, political expediency rather than jingoism points to a close contest.