The USAF reports that it paid about $4.2 billion for petroleum in FY 2005, with JP-8 jet fuel at $1.74/gallon and BP as the #1 fuel provider among many thanks to its lowest-cost bid. That was still almost $1.4 billion more than fiscal 2004, and more than the $3.57 billion spent on petroleum in FY 2005 by the US Army, Navy and Marines combined. Indeed, ACC reportedly faced an FY 2005 shortfall of $825 million in must-pay funds.
Recent prices reflect a 31% jump to about $2.53 per gallon, and there are consequences…
In our December 2005 coverage of the $10 billion Saudi Eurofighter sale, DID counseled caution regarding reports that the aircraft would replace the Saudis’ existing Tornado squadrons. Now British newspapers are reporting that BAE has won a GBP 2.5 billion (about $4.66 billion) contract to upgrade Saudi Arabia’s Tornado fighter aircraft, and that these measures are likely to keep the ground attack (Tornado IDS) and air-defense (Tornado F3) aircraft in service until 2020 or so.
Saudi Arabia currently operates about 120 Tornado aircraft, including both the strike-optimized Tornado IDS (96 aircraft, Scramble places them within 7, 66, 75 & 83 Squadrons at Dhahran on the east coast), and Tornado F3 ADV long-range interceptors (24 planes in 29 Sqadron at Tabuk near Jordan).
dos-06201/”> “Saudi TSP adding Storm Shadow Steath Strike to Tornados” for more.
Despite earlier protests from SAP, the Expeditionary Combat Support System (ECSS) continues to move ahead. The US Electronic Systems Center’s 554th Electronic Systems Group recently awarded a $627.8 million task order to Computer Sciences Corporation for systems integration support. CSC will be providing business process improvement consulting as well as software installation and testing, a common feature of corporate ERP(Enterprise Resource Planning) software implementations.
On Sept 6, 2006, the US DSCA(Defense Security Cooperation Agency) announced South Korea’s request for continuing support of their RC-800 Tactical Reconnaissance Aircraft, as well as the accompanying Reconnaissance Ground Stations that process and analyze the data gathered. Work will include contractor services, maintenance, spare and repair parts, support and test equipment, communication support, prime mission equipment (PME), technical support, contractor engineering, and other related elements of program support. The total value, if all options are exercised, could be as high as $200 million.
Earlier versions of the Lynx helicopter are currently in service with the British Army (AH7 & AH9) and Fleet Air Arm (Mk 8), using Rolls Royce GEM engines.
Rolls-Royce recently won a GBP 40 million contract (about $75 million) to support those engines under its Mission Ready Management Solutions services. GEM engine modules will be overhauled at the company’s facility at Ansty, supported by Rolls-Royce personnel at Yeovilton and Bristol. The two year contract also includes an incentive for Rolls-Royce to reduce costs for support activity, and is seen as the first step towards the British MoD’s preferred kind of contract which would provide a guaranteed level of engine availability at all times.
Rolls-Royce already operates a number of MRMS contracts along those lines for aircraft such as the Typhoon, Tornado and the Nimrod. Indeed, over the last 12 months, Rolls-Royce reports that it has won MRMS contracts worth more than GBP 400 million from the UK MoD, and services currently account for 55% of Rolls-Royce’s defense/aerospace revenues.