Senior BAE Systems directors have stirred up controversy over the UK government's use of private finance initiatives (PFI) to finance major defence projects.
BAE spin doctors attempted to distance the company from yesterday's scathing comments about PFI by chief executive Mike Turner, which followed criticism of the concept from BAE Systems chairman Sir Richard Evans just before the show.
Mike Turner, BAE Systems chief executive, underlined the point here at Le Bourget, saying: "PFIs don't work. All you are doing is mortgaging the future. You're just putting off today's expenditure to pay tomorrow."
But a BAE spokesman claimed Turner's remarks had applied quite specifically to the Hawk advanced jet trainer (AJT), though this had not been made clear at the press conference. Turner had also referred specifically to PFIs in the plural.
Sir Richard had earlier said: "Any PFI is always going to be more expensive than traditional procurement. It may be handy for Government to keep spending off the public balance sheet but the treasury is right to wonder whether PFI offers value for money."
However, the spokesman said: "PFIs are not a ‘one size fits all' solution, though, and there are many ways to skin a cat. We shouldn't get hung up on the f-word [finance]; what is important to us are all the other arguments, which can result in a given output being delivered with greater effectiveness and speed."
Other companies were more pragmatic. Ian Stopps, chief executive of Lockheed Martin UK, was less openly critical of the concept than his BAE opposite numbers. "We look at our customers. We see no wavering in the commitment to PFI and public-private partnerships (PPP). Other countries are looking at similar procurement strategies. We recognise our customers' desire, and we have no problem with that, but you do need to look at programmes individually.
"A PFI may require massive investment on our part to participate, so we need qualified management and we need to know that delivery of the service is possible, and that risk is properly allocated."
Source: Flight Daily News
