Defence Business: While there is life, there is hope | ADM July 2012

These were the words that Gustavo Garcia Miranda, Airbus Military’s Vice President of Marketing and Development, used when questioned over the government’s decision to buy the C27-J Spartan for the Battlefield Airlifter requirement in May.

The other favourite quote of the day was “the customer is always right even when they’re wrong. We are ready to respond [with the C295] should the government change their mind.”

The debate surrounding the process to acquire the Caribou replacement has been intense to say the least. Only two days after the Budget was released, Defence Minister Stephen Smith announced at the RAAF Air Power Conference in Canberra that the government had decided to acquire 10 C27-J Spartans, spares and training under a Foreign Military Sales (FMS) arrangement with the US.

Last month, the government also announced that they had signed a $63 million contract with Alenia, the OEM, for through life support of the aircraft. The commonwealth has contracted almost $1.5 billion for a project that didn’t even get a mention in the Budget. A further breakdown of the FMS case details were not available at the time of writing.

Airbus Military was keen to offer their C295 transport plane for the requirement. With Spain and Poland among other operating the craft in Afghanistan, Iraq and Chad in recent times with reliability rates between 95 and 97 per cent, Airbus Military was keen for an open competition against the Spartan, knowing the odds were against them.

With a global fleet of 108 planes across 16 operators, the C295 was always seen as the underdog in any Australian competition for the Caribou replacement. This was made even clearer after the US Air Force (USAF) chose the C27-J for their Joint Cargo Airlifter program (after numerous disputes), a competition that the RAAF was watching with great interest.

A matter of competition

ADM understands from industry sources that the Australian Air Force has effectively been trying to buy the Spartan for the better part of 15 years and Airbus Military should have been aware of this. It seems they were and still chose to try their luck. The company was hoping for an RFT so that they could provide tender quality information to the Commonwealth for evaluation. This tactic had worked for the company before in relation to the competition for the Naval helicopter Air 9000 Ph 8 where the NH90 was pitted against the MH60R (Romeo) from Sikorsky and Lockheed Martin. While Team Romeo was awarded the contract via FMS, the DMO admitted that the competition had allowed them to reduce the cost of the program by 20 per cent thanks to the competition process. It was not unreasonable to expect another competition for the BFA in this light.

Airbus Military also pointed to their life of type costs compared to the C27-J, based on USAF data from December 2011 as part of the Operational Test and Evaluation report for the platform, concluding that the C295 was considerably lower to run and maintain. Ohio Air National Guard Captain Dave Lohrer publicly disputes the USAF’s operating cost figures for the C-27J. His argues that early analysis pegged the C-27J’s 25-year lifecycle costs at just $US111 million, rather than the final $US308 million figures used by the USAF in its justifications, and argues that the USAF both overstated flight-hour costs, and added 53 more airmen to staff and service the planes, pushing the cost up by over $US100 million.

The USAF says the personnel numbers came from the Guard, and the Pentagon’s Cost Analysis and Program Evaluation (CAPE) group’s analysis suggests that the difference could stem from the basing of small four-plane units at so many sites, instead of running much larger units from one base. The difference, if the C-27Js were based like C-130s? Just over $US100 million, according to CAPE.

The debate in the US over the fate, and even the true cost of ownership, of their C27-J fleet is ongoing and will continue for some time yet ADM suspects.

But perhaps the biggest factor affecting the Australian government decision was the performance of the company and related subsidiaries of the parent company on other projects; the Tiger ARH, the MRTT (see box for more on this platform) and the MRH90. All three have had wellknown issues related to their development and release into ADF service.

The DMO has made it clear that they will be penalising companies on their past performance as an indicator of future performance and all three have been on the Projects of Concern at some stage in their short lives. All three programs are now performing much better but there are still issues to be addressed.

Disclaimer: The author travelled to Spain as a guest of Airbus Military.