CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 307

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2.

PHANTOM: MCDONNELL/FERRANTI CONTRACTUAL POSITION (Previous reference: OPD(67) 32nd Meeting, Item 1)

The Committee had before them a memorandum by the Minister of Technology (OPD (67)80) on the contractual position between McDonnell and

Ferranti for the navigation attack system for the Spey Phantom.

THE MINISTER OF TECHNOLOGY said that, following the decision in 1965

that a Ferranti navigation attack system should be fitted in Spey Phantom

aircraft that we were purchasing from the United States, it had been decided

that the responsibility for making the contract for the supply of this

equipment should be given to the United States aircraft firm, McDonnell,

instead of the contract being placed by ourselves direct with Ferranti.

This had been done because the navigation attack system had to be fitted in

with the airframe and equipment as a whole and it had seemed desirable that

McDonnell should be responsible for the complete task. Doubts which had

since proved to be justified, about the ability of Ferranti to develop and

produce the equipment on time, had led us to press for clauses providing

for liquidating damages against late deliveries of the equipment to be

included in the contract between McDonnell and Ferranti, and the Ministry

of Technology had been given to understand in late 1965 that this would be

done; it subsequently emerged however that McDonnell had dropped this

requirement during contractual negotiations. The Ministry were not aware

of this until after the event and could only have insisted on the inclusion

of such clauses had they themselves made the contract with Ferranti.

Although the belief that there would be such penalty clauses in the contract

had been a factor in the decision to fit the Ferranti system into the Spey

Phanton, since it had increased confidence in the equipment, he believed

that other considerations would have led us to choose the Ferranti system

even had the Ministry of Technology made the contractual position clearer.

In discussion the Committee were informed that delay in the delivery

of the Ferrenti navigation attack system was likely to be less than had

previously been expected. But the programme would still be delayed by

twelve months and this would mean that the first sixty or seventy Spey

Phantom aircraft would be delivered without an adequate navigation attack

system; although this was a serious delay, it would in part be masked by

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