Warning of Nimrod repeat if BAE team wins £13bn air tanker deal

The Royal Air Force could face a repeat of the Nimrod fiasco if a consortium led by Boeing and BAE Systems wins a £13bn order to supply the Ministry of Defence with air-to-air refuelling aircraft.

The extraordinary claim was made yesterday by the head of the rival European consortium bidding for the 27-year PFI contract - the biggest UK military procurement deal in history. Robin Southwell, chief executive of the AirTanker consortium, also said that Britain could lose out on export orders worth billions of pounds and the opportunity to create a new refuelling industry if the contract went to the rival bidder.

AirTanker, which is made up of the Franco-German aerospace giant EADS, Thales UK, Cobham and Rolls-Royce, is offering the RAF a fleet of 15-20 Airbus A330-200 aircraft to replace its ageing Tristar and VC10 refuelling aircraft.

The rival Tanker Team, which comprises Boeing, BAE, Serco and Spectrum Capital, is proposing to use a fleet of 20 secondhand Boeing 767-300 aircraft bought from British Airways. Mr Southwell, himself a former BAE executive, claimed that because the Tanker Team's bid would involve extensive re-engineering of the wings of the 767 to accommodate the new fuel tanks and re-fuelling pods, it was a much riskier proposal.

"It is a very complex business messing around with large and ageing aircraft. Just think of what went wrong when they did that to the Nimrod." The taxpayer was forced to write-off £700m in cost overruns on Nimrod, which is being converted by BAE into a surveillance plane. By contrast, Mr Southwell claimed that AirTanker's bid was risk-free because there was no redesign of the wing involved, other than fitting the fuel pods where the outer engines would normally be on a conventional A330.

Tanker Team has estimated that its bid would save the UK taxpayer £220m over the lifetime of the contract, partly because it is using a larger but cheaper and more versatile secondhand aircraft capable of undertaking commercial work when not in service with the RAF. But Mr Southwell disclosed that AirTanker's bid, submitted to the MoD earlier this year, included a cut-price option of using a mix of new and secondhand A330s. He said the total number of aircraft AirTanker had offered the RAF was "not significantly different" from the Tanker Team and a number of airlines had already been identified as potential suppliers of second hand A330s.

"Ours is an innovative and aggressive bid which has no risk, breaks Boeing's monopoly over refuelling aircraft and creates a new market for Britain and British jobs," he said. "How often does an opportunity like that come around?"

Mr Southwell also claimed the RAF would run into difficulties at the end of the 27-year contract if it opted for Tanker Team since the 767 would have reached the end of its life by then, whereas the Joint Strike Fighter and the Eurofighter Typhoon - the two combat jets it will principally be used to refuel - would have another 10-15 years of service left. The A330, which is a much newer aircraft, could operate for the full lifetime of the JSF and Eurofighter.

AirTanker claims its bid would safeguard 7,500 jobs and would be much better for UK manufacturing because the wings, undercarriage, refuelling pods, engines and avionics would all come from Britain. Tanker Team's bid, on the other hand, involved offering the RAF "the bin-ends of BA, like it or leave it," said Mr Southwell.

Tanker Team will today spell out what it sees as the industrial advantages of its bid. Boeing will also attempt to set the record straight over its contract to supply the US Air Force with brand new 767 refuelling aircraft. The deal has become mired in controversy after the US Congress Budget Office criticised it on cost grounds.