BAE Systems today found itself staring down the barrel of adverse publicity spurred by cost overruns and late deliveries.

Among unscrupulous rumour mongers and industry experts alike, the question is whether the aerospace giant's past performance has seriously jeopardised its chances of winning a £13 billion contract to supply the Royal Air Force with refuelling aircraft.

The Defence Procurement Minister, Lord Bach, refused to comment on the matter in a radio interview this morning, but did say that a decision on the contract was close. The implication was heavy that BAE Systems had not won the deal.

Those anodyne remarks fuelled further speculation that BAE System's arch European rival, EADS, the makers of the Airbus, will win the strategically important contract. The RAF's requirements are a rare opportunity to establish a footing in an area dominated by Boeing.

However, among other equally pressing questions are:

Can yet another indication of lackadaisical performance from BAE actually constitute "news"?

And how long can Sir Richard Evans, the company's chairman since 1998, keep hold of his job?

The spur for today's furore was a report from the National Audit Office. The Government's bookkeepers were damning in their critique of the Ministry of Defence's spending record, identifying an overshoot of some £3 billion.

Where the NAO really put the boot in, however, was in stating that nearly 90 per cent of the cost overrun was on account of four delayed projects from BAE Systems.

Is this damning enough to hasten Sir Richard's departure? BAE is already on the lookout for a replacement to take over in time for the company's annual general meeting in May.

Among the low-spots highlighted by the NAO's Major Projects Report 2003 are the Eurofighter: 60 months late, £1bn over budget; the Nimrod reconnaissance aircraft: 71 months late, £400m over budget; the Astute submarine: 43 months late, £1bn over budget; and the Brimstone missile: £126m over budget.

These four BAE projects all date from the mid-1990s or earlier, and have all been plagued by a history of technical problems and delays. It is plain that BAE's problems have been festering for some time.

We now have a government policy of keeping such contracts in this country wherever possible, but such is the lack of confidence in the firm's ability to manage this sort of massive project that the Government felt it needed to appoint Thales, a French rival, together with BAE to build warships for the Royal Navy. That project has run far from smoothly, however, with the Royal Navy now looking at smaller ships than first envisaged.

But how long can BAE go on providing unrealistic quotes and delivering projects late?

"BAE Systems has formulated and is now executing continuous improvement in all areas under its control in the company's performance on major MoD projects," said a spokesman for the company, which may now have to take on board Government-appointed project managers on its existing contracts.

But can these improvements come quickly enough to save Sir Richard's skin?

Other contracts, such as that to supply Hawk trainer jets to India, were smoothed out through political intervention by the Government.

There would have been some discomfort in the BAE boardroom when Lord Bach denied today there was any effort to "punish" BAE, but went on to state that the arms industry in general must "raise its game".

However, could the tender process itself be to blame.

Sir Raymond Lygo, chief executive of BAE in the 1990s, said this morning: "it's a well-known fact, whether anybody admits it or not: you'll never get any programme through the Government if you ever reveal the real cost.

"After a year you say: 'I'm terribly sorry, but the costs have now risen for this reason and the other reason'."

The correct riposte to this argument was supplied by an unnamed senior MoD official, quoted in today's press. "You don't keep employing a plumber who continually floods your house," he said.

BAE beware.