MercoPress. South Atlantic News Agency

Air-to-air refuelling is a key military capability.

Four consortia are being asked to bid for a possible Private Finance Initiative deal to provide an air-to-air refuelling service for the Royal Air Force, Defence Procurement Minister Baroness Symons announced.

The bidders' proposals will help the Ministry of Defence to decide whether PFI can provide the operational capability the RAF needs at best value for money. A final decision on whether to go ahead with a PFI deal will be made in 2002.

Baroness Symons said:

"Air-to-air refuelling is a key military capability. It is a force multiplier that has proven its worth repeatedly since the Falklands campaign, most recently in the Balkans. However, our current VC10 and Tristar aircraft are ageing and need to be replaced.

"A PFI arrangement would mean a contractor providing a complete air-to-air refuelling service to the Royal Air Force. The contractor would own, manage and maintain the aircraft, and provide training facilities and some personnel. The RAF would continue to retain key military responsibility for the delivery of the air-to-air refuelling capability and would work closely with industry.

"At times when we do not require use of all the aircraft in the deal, the contractor would be able to earn revenue by using spare aircraft to transport commercial loads. We believe that such a deal could offer a clear value for money advantage to the taxpayer whilst maintaining the RAF's operational effectiveness, which is of course our paramount consideration. We will be seeking innovative proposals from the consortia which we will then need to examine in detail to be able to confirm that PFI can indeed provide these benefits."

The Future Strategic Tanker Aircraft project is the MOD's largest potential PFI deal with a potential value of around £9bn over the life of the contract, which will be around 25 years.

The four consortia under consideration by the Ministry of Defence are Air Reach (Rolls Royce), BAE Systems, Eurotanker and the Serco-led SSM. Each submitted outline proposals to the MOD in November 1999, and will now be asked to provide fully costed bids. The consortia are considering a number of aircraft platforms as candidates for the tanker service, including Airbus and Boeing solutions.

Source: MOD Press Release 001221