UK Government spending watchdog, the National Audit Office (NAO), is raising concerns that the GKN Westland/ Agusta EH101 Merlin military helicopter faces further delays and additional price hikes.
Its Major Projects Report 1996 reveals that the Merlin programme is "-likely to cost over £650 million [$1 billion] more than originally envisaged". The project was originally costed by the Ministry of Defence at over £3.6 billion. This has now risen to more than £4.2 billion. The EH101 is at least five years late entering service, and the NAO warns that"-there is a risk that further delays could lead to cost increases on the prime contract."
The implicit criticism of the EH-101 comes at an unwelcome moment for Westland, and potentially for the Royal Navy (RN) as well as for the RN's prime contractor on the Merlin programme, Lockheed Martin.
The government's Strategic Defence Review (SDR) will inevitably consider the navy's procurement of 44 anti-submarine warfare (ASW) Merlins. Given the pressure on the defence budget, a cut in the number of ASW helicopters purchased is a possibility
With regard to the SDR, sources close to the Merlin programme admit that"-the naval situation remains unclear, but if they went for fewer ships this would mean fewer helicopters".
The NAO also claims that the delays to the EH101 programme have resulted in an additional cost of £147 million as a result of the Navy running on its Sea Kings for an extra five years .
Cost overruns on the EH101 programme are in part ascribed by the NAO to the impact of the loss of two prototypes, PP2 and PP4, as well as the crash of a third aircraft - now being rebuilt - in August 1996.
The NAO recorded a 2% drop in the overall £33 billion cost of the 25 defence projects it examined, the reduction being caused predominantly by a scaling-down of the Navy's Trident nuclear-missile submarine programme. Among the aerospace projects considered, the Skynet 4 and 5 military satellites, Eurofighter 2000, BAe Sea Harrier attrition programme, Matra BAe Dynamics Advanced Short Range Air-to-Air Missile, Euromissile Dynamics Medium Range Trigat missile and Panavia Tornado GR1 mid-life update all showed significant cost overruns - the latter by £365 million.
Source: Flight International
