Memorandum submitted by the Ministry of
Defence responding to the Committee's questions on the MoD's Performance
Report
Q1. What is the MoD's policy on making available
information on the prices secured on estate disposals?
Release of Information on Individual Disposal
Receipts
A1. The basis of our current policy on the release
of information on receipts once a sale has been completed, is
that the purchaser may, for their own good reasons, not wish their
competitors or the public generally to know what they have paid.
For instance, they may (for good reason) have paid substantially
above the market price to obtain a particular property and may
not wish to reveal this fact which (if widely known) might have
implications for the way they were perceived in the course of
their day to day business. In other cases, were the purchaser
to agree MoD would consider publishing the information, unless
there were other reasons for withholding it—i.e., it might
influence the market view, and thus the eventual receipt from
other MoD disposals of a similar nature which had yet to take
place.
Where a sale has not been completed, it is our
normal policy to regard such information as commercially confidential.
Although it is our invariable practice, in accordance with Treasury
guidelines, to obtain an open market valuation for surplus properties
in disposal, these are not made public. To release our assessment
of the open market valuation might influence the market or even
place an artificial ceiling on bids. In the absence of such information
individual bidders may place a higher value on the property than
have our professional advisors.
The NAO have, in connection with their recent
report on the disposal of surplus Defence sites, published the
actual receipts, but this was against the DEO's advice and wishes.
When responding to PQs and dealing with Ministerial correspondence,
it currently remains DEO's policy that such information should
be withheld, if necessary by citing Exemption 7 of the Code of
Practice on Access to Government Information which covers commercial
confidentiality. DEO is considering whether to put in place arrangements
whereby all future land purchasers are asked if they would consent
to the sale price being made public on request. In the event that
such consent was refused, however, DEO would have no option but
to withhold the figure.
Q2. What is the MoD's approach to any forthcoming
Freedom of Information legislation including its policy on seeking
exemptions on disclosure?
A2. The Ministry of Defence already operates
in accordance with the Code of Practice on Access to Government
Information, which has done much to encourage a culture of openness
and a willingness to provide information about how its business
is conducted. Accordingly, the Department is making more and more
information available, particularly through the Internet. The
Secretary of State's commitment to greater openness is set out
in the Department's instructions to staff on how to operate the
Code, which are themselves available on the MoD's website at:
http://www.mod.uk/policy/opengovt/policy.htm
We see the introduction of a Freedom of Information
Act not simply as a set of rules about disclosure of information,
but as a means of furthering that culture of openness.
The Freedom of Information White Paper "Your
Right to Know" recognises, particularly in the specified
interests covering national security, defence and international
relations, and commercial confidentiality, that there are elements
of defence business which should remain protected. In discussions
about the shape of the Act, the Ministry of Defence has not been
seeking additional exemptions, but simply to ensure that those
which exist will adequately protect information which should legitimately
be protected. As at present, each request for information would
be treated on a case by case basis, with a view towards disclosure
wherever possible.
Q3. What are the latest details on the estimated
in-service date, and the slippage now envisaged, on the C130J
programme; along with details of additional costs for the MoD
because of the slippage and the likely amount of liquidated damages
from Lockheed Martin?
A3. The In Service Date (defined as the delivery
of the 12th aircraft) has slipped from July 1998 to the latest
estimate of May 2000.
On current forecasts, it is estimated that the
total Liquidated Damages will amount to some £50 million
which will be used to offset the costs of running on the C130Ks.
Q4. What are the latest statistics on manpower
wastage rates. We would be grateful if you could give data for
each of the last four years if possible, differentiating between
each Service, and between officers and other ranks. Also any information
on the number taking particular exit routes would be appreciated—PVR
redundancy, retirement at the end of service, early retirement,
at the end of minimum-engagement or at the end of extended-engagement?
A4. The information sought is shown in the attached
tables. For 1998-99, the figures are based on an estimate of wastage
for the full year, as final data is not yet available. More generally,
the figures are for trained personnel only, as this best represents
the underlying position in relation to military capability, and
the categories of wastage distinguish between those that could
be viewed as predictable (such as retirement at normal age, or
those who leave at the end of engagements) and those which are
less predictable (such as PVR, medical and disciplinary discharge
etc).
In interpreting the information, the following
points should be borne in mind:
(a) Terms of service are different in each
Service (e.g., normal retirement age varies between Services)—so
inter-Service comparisons should be treated cautiously.
(b) Rates in any one year can be affected
by recruitment/retention policies of many years earlier. For example,
recruitment policies 16 years ago will affect the number of officers
able to take an immediate pension retirement this year. It is
more informative to look at figures over several years to help
get rid of this "bow-wave" effect.
(c) Premature Voluntary Release (PVR) includes
personnel who left the Services because of pregnancy or due to
marriage. Redundancies include both voluntary and compulsory redundancies.
(d) Figures for the Naval Service include
all personnel who are serving in the Royal Navy, Royal Marines
and the Queen Alexandra's Royal Naval Nursing Service.
(e) Figures for the Army exclude Gurkhas,
those serving in the Royal Irish Regiment (Home Service) and reservists
mobilised for duties relating to Bosnia.
Q5. Will the new tri-Service Staff College have
full academic recognition? (Q82)
A5. The Advanced Command and Staff Course (ACSC)
held annually at the Joint Services Command and Staff College
(JSCSC) is fully accredited to postgraduate standard by King's
College, University of London. Those officers who undertake a
programme of work in addition to the 10-month ACSC syllabus and
pass the two examinations, are awarded either a postgraduate Diploma
and Master of Arts in Defence Studies by King's College, University
of London. This accreditation will continue to be valid when the
courses are run at the JSCSC's future location at Watchfield.
Q6. What is the number of civilians recruited
into, and leaving, DERA in 1997-98; and the percentage staff turnover
in DERA in 1997-98 and in the current year?
A6. The number of civilians recruited into DERA
during financial year 1997-1998 was 1,321. The number of civilians
leaving DERA during the same period was 913. This figure includes
resignations, redundancies, retirements, dismissals and deaths
in service. It excludes transfers to the Ministry of Defence and
those at the end of fixed term contracts.
The percentage staff turnover during financial
year 1997-98 was about 8 per cent. The corresponding figure for
the current financial year (to the end of January 1999) was about
6 per cent.
Q7. What are current plans for employment of fast
jet volunteer reservist pilots?
A7. Work is ongoing to determine whether there
is real potential for fast jet reservist aircrew to work alongside
their regular colleagues.
We intend to take a view on this potential later
this year following an evaluation of the trials involving six
pilots and two navigators currently being undertaken with the
Tornado F3 Squadrons at RAF Coningsby, RAF Leeming and RAF Leuchars.
Q8. Could you provide details of the two projects
that failed to meet their 1997-98 ISD, and the further project
slipping while its ISD is being re-assessed (Performance Report
paragraph 529)
A8. Details of the two projects that missed
their in-year in service date (ISD) are set out below.
Precision Gunnery Training Equipment (PGTE)
This project had a target ISD of October 1997
but achieved an ISD of April 1998. This facility provides classroom
training aids and other training packages related to the Challenger
2 (CR2) and Challenger 1 (CR1) tanks.
The ISD for the PGTE programme has suffered
due to software problems and a Vickers Defence Systems sub-contractor
dispute. CR2 PGTE was accepted into service on 19 December 1997
and CR1 PGTE was accepted on 28 April 1998, thereby achieving
the revised ISD for the whole programme.
Landing Platform Helicopters (LPH)
The project had a target ISD of March 1998 but
achieved its ISD in October 1998. The LPH programme slipped at
the end of last year following delays in the construction phase
at Kvaerner Govan Ltd.
Boxer
The project that was slipping while its ISD
was being re-assessed was Boxer. The project had a target ISD
of September 1997 but was not expected to achieve ISD until March
1999. This project provides survivable digital trunk communications
links with the UK.
Delays were caused by the need to carry out
intrusive repairs which required investigation of the Fibre Optic
cable, hence removing links within the BOXER ring.
Q9. How does the MoD intend to report on achievements
against targets in relation to the new training cycle which the
SDR set out?
A9. Targets for the overall restructuring of
the Armed Forces were set out in the Public Service Agreement
and progress will be reported in the Output and Performance Analysis.
We do not intend to provide public information
about the level of readiness of our Armed Forces.
Q10. How did the volume of exercising compare
with the previous year? Which areas of the world had the most
significant increases or decreases in exercise activity in 1997-98?
What changes were there in the type of exercises undertaken or
the Services involved? Is there scope for the results of exercises
and their costs to be published?
A.10 Despite the high operational tempo, the
level of exercising in 1997-98 remained broadly similar to that
of the previous year, apart from the Far East, which saw an increase,
due to the Ocean Wave deployment, and North America, which
saw a slight reduction. Examples of this are Exercise Flying
Fish 97, a regional live exercise with air and maritime forces
in support of the Five Power Defence Arrangements, and Exercise
Setia Kawan, an amphibious assault training exercise in
Brunei. Following these exercises Royal Marine Commando units
proceeded to Thailand and Singapore for jungle training exercises.
In 1997-98 there was greater emphasis on Joint
Operations. RAF Harriers were embarked on HMS Invincible
alongside RN Sea Harriers during Ocean Wave. The annual
Tier 3 Exercise organised by the Permanent Joint Headquarters
(PJHQ), Exercise Purple Link, was a Joint Command Post
exercise with the Americans and employed a large amount of computer
simulation. Exercise Strong Resolve was a major NATO live
exercise that took place in March 1998 and proved the concept
of a Combined Joint Force Headquarters.
After each exercise, detailed analysis is carried
out and a post-exercise report is issued. The Single-Services
and PJHQ keep records of lessons-learnt relevant to each of their
areas of capability. The results of each exercise are largely
only of interest to the Command involved and would be difficult
for a wider audience to interpret correctly. MOD's budget structure
devolves costs to the lowest possible level and therefore, it
would currently be uneconomical to obtain accurate detailed exercise
costs.
Q.11 The Performance Report describes the 1997
Ocean Wave deployment of 20 ships as "demonstrating the Navy's
ability to deploy and sustain, at range, an operationally effective
task group" [Paragraph 235]. Will this level of capability
still be possible once the SDR ship reductions have been made?
What were the costs of Ocean Wave both in financial terms and
in terms of what the Navy were not able to do because of the deployment?
A.11 Although the SDR reduced Frigates/Destroyers
from 35 to 32 and SSNs from 12 to 10 the Royal Navy retains the
ability to deploy a task group of the size of Ocean Wave.
Defence Diplomacy and support to wider British
interests are key post—SDR missions and Royal Navy task
groups are very well suited to assisting the achievement of those
missions. Current MoD policy is to undertake a Group Deployment
every four years with the emphasis very much on Joint Operations,
e.g., FTX 2001, a bilateral UK/Oman Joint Rapid Reaction Force
validation exercise. UK elements will comprise of a RN medium-scale
Maritime Task Group (including CVS and Amphibious Group), one
Armoured Brigade and a medium-scale RAF air component. These deployments
are also an important contributor to building up the operational
capability which the Commander in Chief Fleet is tasked to deliver.
In the shorter term, similar slightly smaller deployments are
being planned.
With regard to the financial cost of Ocean
Wave, the ships, aircraft and personnel involved in the deployment
would, in any event, have been fully engaged in other activities
and the additional costs directly attributable to Ocean Wave
were about £9.8 million. The main elements of this additional
sum are port and harbour dues, Suez Canal transit fees, operational
support, additional fuel costs, local overseas allowances, Air
Taken Up From Trade (ATUFT) and travel and subsistence.
Planning for OCEAN WAVE commenced two and a
half years prior to the deployment taking place to enable the
Commander in Chief Fleet to determine at a very early stage the
force assets available to undertake the deployment and to ensure
that the programme of activity provided maximum benefit from the
deployment. The long lead planning for such deployments ensures
that we do not impinge on the Royal Navy's ability to meet standing
commitments, such as Armilla, UK contribution to NATO's Standing
Naval Forces, West Indies Guardship, etc., or the capability to
mount a contingent operation. We were, therefore, able to ensure
that no tasks were displaced as a result of the OCEAN WAVE Deployment.
Q12. What lies behind the changes that have been
made to in-service dates, since the previous year's Report; in
regard to: JTIDS SHAR/SKH; MR TRIGAT; and Chinook MSH?
JTIDS for SHAR and Sea King AEW (Project ISD changed
from 2000-02 to 2000-04)
A12. The ISD for JTIDS for Sea King AEW has
slipped seven months (December 2000 to July 2001) due to the need
to maintain compliance with NATO message standards.
The ISD for JTIDS for the Sea Harrier has slipped
as a result of technical difficulties on the integration programme
and the need to address shortfalls in computing capacity through
the purchase of a new Core computer. The revised timetable is
based on an initial ISD of July 2003 and the full ISD, at which
full capability will be provided, by December 2004.
MR TRIGAT (Project ISD changed from 2002-2003)
This was caused by late equipment deliveries
for trials and delays to system qualification.
Chinook MSH (Project ISD changed from 1997 to
1999)
The Chinook Medium Support Helicopter programme
comprises the procurement of six Mk 2A and eight Mk 3 Chinook
Helicopters.
It did not prove possible for the manufacturer
to contract to meet our original preferred ISD for Chinook MK2,
namely six aircraft to be delivered by December 1997, but the
delivery of the first MK 2 aircraft was achieved in December 1997
and the last was delivered in July 1998.
Similarly the preferred ISD for MK 3, six aircraft
delivered by November 1998, was not reflected in the contract
as it was known the contractor would be unable to meet that schedule.
However, in November 1997 the contract was amended to achieve
deliveries to the RAF after an Avionics Upgrade had been carried
out in the USA.
The ISD is now planned for February 2002, after
the avionics upgrade has been carried out on the new aircraft,
flight trials have been completed and Full Operational Clearance
granted. This new definition of the ISD accords with the current
practice of defining an ISD in terms of the achievement of an
initial operating capability.
Q13. What were the reasons for areas of significant
underspending; in particular, the £203 million on the Vote
3 procurement budget and the £97 million on RAF Logistics
Command?
A13. The final outturn in 1997-98 was £20,916
million, and represented an underspend of £225.2 million
(1.06 per cent) against the Defence Budget Cash Limit of £21,141
million. This should be considered against the background of a
sizeable overspend in 1996-97, (for which the Department received
a fine of £168 million), and the determination to protect
cash limits in that a degree of underspend is a natural corollary
of reducing the risk of overspend.
Overall, Vote 3 was underspent by £203
million; £187 million of this on the equipment programme.
This outcome was a direct consequence of deliberate decisions
not to "backfill" natural slippages in the PE equipment
programme with new work/projects and end-year control measures,
which slipped some £150 million worth of equipment payments
into 1998-99.
On Vote 2, where RAF Logistics Command expenditure
falls, the cash limit was some £111 million lower than the
net Estimates provision principally because it reflected a later
version of the defence programme and the Vote 2 share of the fine
for overspending in 1996-97. However, because net provision on
a Vote cannot be reduced, a gap between the Estimates provision
and outturn expenditure was inevitable. As a result RAF Logistics
Command programme was being managed to a cash allocation substantially
below the revised Estimates provision, and its net outturn was
£1,569 million, within £3 million of this cash allocation,
representing a creditable performance.
Q14. When we took evidence for our inquiry on
SDR, the Department told us that in broad terms £500 million
of new efficiency savings would have to be found in each of the
next four years, and for 1999-2000 they had already earmarked
£400 million of savings. What level of savings have been
provisionally identified so far for 1999-2000?
A14. Draft plans indicate the potential to achieve
efficiency improvements valued at some £530 million in 1999-2000.
The realism of these plans, and the level of cash savings they
eventually produce, is being evaluated and continues to be monitored
by the Ministerial Efficiency Steering Group.
Q15. What is the rationale for establishing the
PE as an agency given its role as MoD's customer for equipment,
rather than a service-provider? Will the new Defence Procurement
Agency subsume all purchasing tasks, including those of the current
logistics commands?
A15. Despite its procurement role, the PE does
not see itself as a customer for equipment but rather as an agent
of the MoD and the Armed Forces. This relationship has been increasingly
emphasised in recent years.
The point has been reached, however, where the
hierarchical structure of the PE would have inhibited further
development of an essentially customer oriented organisation.
This is the main rationale for the conversion of the PE into an
agency. The change of status will emphasise the fundamental distinction
between its role and that of the equipment customer function within
MoD headquarters. The majority of Agency staff will operate within
Integrated Project Teams (IPTs) which will deal directly with
the MoD customer. The teams will receive guidance and advice,
rather than management in the conventional sense, from the Agency's
top structure. Another feature of the new arrangements will be
that the IPTs will transfer to the newly created Defence Logistics
Organisation when the equipment enters service.
The DPA will not subsume all purchasing tasks
as the Defence Logistics Organisation will be responsible for
supporting equipment once it enters service and for the initial
procurement of routine items, such as consumables.
Q16. How does the concept of a new Chief of Defence
Logistics mesh with the creation of new stores and distribution
agencies? What advantages will having a CDL bring, that new tri-Service
logistics agencies cannot provide alone? How is the creation of
the CDL organisation being co-ordinated with initiatives in the
new logistics agencies?
A16. The decision under SDR to create a Defence
Storage and Distribution Agency and Defence Transport and Movements
Agency from the existing stores and distribution organisations
of the three single services is entirely consistent with the creation
of CDL. It is designed to deliver the most efficient and effective
operation of these activities across Defence. The Agencies will,
of course, be part of the Defence Logistics Organisation, under
CDL from 1 April 1999. However, whilst the new agencies will drive
down the costs of storing and distributing the Defence inventory,
they cannot themselves influence what is stored and in what quantity.
CDL has already commissioned urgent work across the Defence support
chain to identify more efficient means of delivering Service needs
through modern Lean Support Chain techniques. Such a pan-Defence
approach, co-ordinating and focusing effort across acquisition,
storage, distribution and commodity management activities would
not have been possible without CDL.
Agency status provides a management regime designed
to enable Chief Executives to secure efficiency and output improvements
within their Agency boundaries. CDL, on the other hand, has a
much wider remit and his authority will extend across the whole
of the Defence Logistics Organisation. He will thus be able to
ensure that challenging targets are set not only for the Agencies
within his management area but also for the non-Agency parts of
his organisation. Coupled with the introduction of Resource Accounting
and Budgeting, CDL will be well placed to drive forward across
the logistics area a programme designed to exploit synergies and
spread best practice whilst removing duplication and encouraging
rationalisation. The creation of CDL is an example of the MoD's
commitment to a more joined up approach to Defence. CDL will ensure
a coherent approach designed to improve the performance of the
total logistics process as well as exploiting efficiencies within
each agency.
The new logistics Agencies will form, on 1 April
1999, within the new CDL organisation. Agency ownership responsibilities
will, for 1999-2000, be discharged by the PAOs, who will be accountable
to CDL. Longer term Agency ownership arrangements within the unified
logistics organisation will be examined early during CDL's first
year of operation. The CDL Implementation Team has already launched
a number of studies, using personnel drawn from both the Implementation
Team and existing PAO staffs, to identify further opportunities
for early efficiency gains generated by the created of CDL, to
complement those expected to arise from the operation of the new
logistics Agencies.
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