Examination of Witnesses (Questions 1
- 19)
TUESDAY 23 MAY 2000
SIR ROBERT
WALMSLEY AND
VICE-ADMIRAL
SIR JEREMY
BLACKHAM
Chairman
1. Sir Robert, welcome to you and your colleagues.
This is the second year of our rolling survey of a selected list
of major MOD procurement projects. The list we have has 11 projects
at different stages of development and each year we intend to
focus on the handful which are at a particularly interesting stage.
This year it is BVRAAM, Strategic Lift, air and sea, the Bowman
digital communication system and the new Type-45 destroyer. Our
work is intended to complement that of the National Audit Office
and the Committee of Public Accounts in their annual major projects
report. However, as you know, the MOD spends upwards of £5
billion a year on buying new equipment and £10 billion on
procurement in general and it is important we keep a check on
it, particularly as some of them do not meet the initial requirements
in terms of cost and starting time and efficiency. We are trying
to see whether Smart Procurement truly delivers and that is part
of our tracking of projects through their lifecycle. What we are
doing intends to build on and develop a long tradition of systematic
scrutiny of procurement projects by our Defence Committee and
it is to be hoped that as Select Committees develop, it will be
integrated into a more formal process of parliamentary approval
for the spending of these huge sums of money; perhaps if and when
some of the proposals of the Procedure Committee on voting on
financial business are eventually implemented. Before we start
the questioning, Sir Robert, is there anything you would like
to say by way of introduction?
(Sir Robert Walmsley) Simply to say that
on my left is Vice-Admiral Sir Jeremy Blackham, Deputy Chief of
Defence Staff.
2. The first question is to Admiral Blackham
on BVRAAM, which is an object of intense public interest and lobbying
by seemingly all and sundry. We had the announcement last week.
How important is BVRAAM to Eurofighter's capability?
(Vice-Admiral Sir Jeremy Blackham) It is very important
or, if I may put it another way, it will be very important because
the threat which it is designed to address has not yet eventuated.
As and when that happens it will be critically important because
it will allow the Eurofighter to engage targets at a much better
range than any missile we currently have.
3. Is the BVRAAM requirement principally aimed
at meeting current levels of threat or the threats likely when
the Eurofighter is operationally in service or the sort of threat
which may materialise during that period or even at a later date?
(Vice-Admiral Sir Jeremy Blackham) It is designed
primarily to meet the threat which will be facing us when it comes
into service and the threat which could eventuate in that time.
It is fairly well known that the potential opposition are in a
position to develop their own threat rather more than they have
done at the moment and BVRAAM will be designed to deal with that
threat, or indeed further threats which might develop as time
goes by.
4. What kind of analysis have you done of the
likely threat a decade or so from now?
(Vice-Admiral Sir Jeremy Blackham) Obviously we draw
very heavily on intelligence for that purpose. Having done that
and established what we think the basis of the threat is, we then
compare our current capability against that and try to establish
as objectively as we can what the gap is between the two. It is
that gap we set out to fill when we go forward for this, or for
that matter for any other new procurement project.
5. Could you share the intelligence with our
colleagues in the Treasury, because their perception seems largely
based on costs rather than your more sophisticated and mature
perception and analysis?
(Vice-Admiral Sir Jeremy Blackham) I do not think
I could guess what the Treasury might think to themselves. I think
you would have to ask them.
6. If we had the opportunity. They have been
very reluctant, very shy over the years to appear before us. You
have told us previously that your organisation is responsible
for determining requirements for generic equipment capability
rather than for a particular weapon or platform to provide that
capability. To deliver an air superiority capability, to what
extent is there flexibility in trading-off the number of Eurofighters
and the number and type of armaments they carry?
(Vice-Admiral Sir Jeremy Blackham) It is not so much
the number, it is the capability. Clearly you could deal with
the capability of the aircraft itself, either in terms of its
performance or its observability, or you can deal with the missile
and of course with the sensors which the aircraft carries. To
a large extent we know which aircraft is going to be carrying
the missile: it is going to be the Eurofighter. So we do know
about that. We then have to address a missile which, together
with the aircraft, provides a system which will match the threat.
In this case of course, we are anxious that we should be able
to match the threat at substantial range.
7. How early do you think that your organisation
decided that BVRAAM was the best solution?
(Vice-Admiral Sir Jeremy Blackham) Strictly speaking
it was not my organisation which decided, since it has only been
in existence since October.
8. You must have passed your views on.
(Vice-Admiral Sir Jeremy Blackham) Indeed. This particular
requirement has its roots some years before that but it is based
primarily on the notion that the Eurofighter is the aircraft which
will bring it to service and we know the characteristics of the
Eurofighter, so in addressing the match of missile to it against
the threat, we came up with the BVRAAM. I am quite certain that
is the right answer to the highest level of threat which we might
face during the Eurofighter's life.
9. May I ask Sir Robert to come in on that answer?
Do you in your job objectively analyse and pass the decision on
to others to make that decision or would you recommend? May I
ask at what stage you felt that BVRAAM was the most suitable missile
to put on a European aircraft?
(Sir Robert Walmsley) First of all I regret to say
that I am not quite so disciplined as simply to work mechanistically
through all the figures and say that is the answer. We do try
to review the fundamentals of any procurement programme at each
stage we continue spending money, whether it is to continue or
whether indeed it is to make a new commitment. However, I would
very much differentiate between determining a solution, which
is a decision which the government reached very late and actually
the official advice was not formulated until this year, and determining
a requirement. Determining a requirement is very much Admiral
Blackham's prerogative. One of the most important aspects of Smart
procurement is that there is now a far closer link between Admiral
Blackham's staff's reasonable questions to my organisation about
what the various components of performance cost, what the cost
drivers are in a requirement, because they want to make sure that
they are not asking some particular parameter to be reached which
is doubling the cost of the whole thing. We are continually revisiting
to check the requirement is sensible in terms of being able to
deliver value for money, but the basic requirement remains solid
throughout. That is quite important too because once this weapon
system comes into service it will be in service for another 25
years. So we are really trying to predict 35 years ahead and one
should not be knocked off course by things which happen over a
12 or 24-month period.
10. Admiral, when you came last I asked you
how many decisions were reversed when they left your office, because
I presume politics does not dominate your thinking on the subject
but it seemed to me that decisions of this kind are intensely
political. You have to be satisfied with the analysis which was
made that we chose the right weapons system.
(Sir Robert Walmsley) Absolutely, hand on heart, no
doubts whatsoever, 101%.
11. What will you be doing to make sure that
there is no slippage in the programme, because the missile is
coming some years after the aircraft? Perhaps neither you nor
I will be in situ when the missile is put on the aircraft,
but can you give us assurances, bearing in mind that on the major
project statement and almost every major programme ever introduced
by the Ministry of Defence there has occasionally been some little
slippage? What can your office do to ensure that those who succeeded
in selling an untried system—frankly I must say I believe
it was very much the right decision—deliver within the time
the government expects it to be delivered? With any system like
this it is a question of faith as well as monitoring. In the light
of the delays and cost overruns in almost every system I have
ever come across is anything special being instituted to try to
ensure that Eurofighter and the missile going on it are delivered
within the time the government expects them to be delivered?
(Sir Robert Walmsley) Except the biggest procurement
you have ever encountered, Trident, which was on time and below
budget.
12. Is there another one?
(Sir Robert Walmsley) Tomahawk.
13. That was American.
(Sir Robert Walmsley) The submarine integration was
not American, nor was refurbishing the dry dock at Rosyth American,
nor were many other safety activities American. We felt very proud
that that system did its firing on the day we selected in December
1998. That is perhaps a rather tendentious point and I should
not have shown my defensive nature so quickly.
14. Nor should I have been so flippant in response.
I asked that very same question on Trident and we were told it
was simply too big to screw up essentially, put in delicate language.
Trident in a way is a little exceptional.
(Sir Robert Walmsley) I am very proud of Tomahawk
because of the people who worked so hard on that. To get back
to your real question: what are we doing to deliver the Meteor
solution to the BVRAAM requirement as required by the Royal Air
Force? I apologise in a way for going back to another component
of Smart Procurement, but we too have noticed that many of our
predictions about timescale go hopelessly wrong. One of the instructions
we used to work to, essentially in order to manage our budget,
was to try to predict the outcome of events on a 50:50 basis,
by which I mean that it was as likely to be early as it was to
be late. We looked around that medium point of probabilities.
The fact is that difficulties arise rather more easily than difficulties
disappear. We have now put our predictions of in-service date
onto what we call a 90% confidence level. That means that it is
far more likely than a 50:50 decision that the thing will turn
up on the date we have promised. With BVRAAM, although the date
is confidential for reasons you will readily understand, the Royal
Air Force and indeed Admiral Blackham's organisation understand
that the date we have promised to deliver this weapon is the 90%
confidence date. That is substantially after the date that the
manufacturer is promising he will deliver it. I think that is
a very sensible thing to do. It allows us to align our budget
sensibly with what we are pretty sure will happen and it means
we do not create false expectations in the Royal Air Force, or,
in some ways even worse, allow them to plan on withdrawing from
service a very important piece of equipment which would help to
cover the gap between the promised in-service date and the delayed
in-service date. That is what is new. What is old is brutal, contractual
mechanisms to incentivise delivery and no contract is going to
be more sharp with the contractor than the BVRAAM delivery programme.
Mr Cann
15. With penalties?
(Sir Robert Walmsley) We are not allowed to say penalties.
In English law it is liquidated damages which compensates us for
the financial loss associated with it and we do have some wholly
novel arrangements whereby if a contractor fails to pass any one
of four technical milestones occurring over the first six years
of the development programme, which is the risky phase of this
missile, then we can ask for our money back and terminate the
contract. That is a principle which is agreed; the contract is
not signed yet but I have no doubt that will be embedded in the
contract we reach with Matra-BAE Dynamics.
Chairman
16. And indeed the best quality people, I hope,
are monitoring the programme at every single stage and you are
not just relying on the companies to honour their commitments.
(Sir Robert Walmsley) I think that is true. I hope
I am not getting starry-eyed about this. One of the very encouraging
features of this programme is that it does bring together the
best of the European missile industry. We used to have a rather
fragmented industrial structure; of course we have lost competition.
I think we will now have the best brains, the best competence,
the best expertise on air-to-air missiles in Europe working in
a team on this programme. That brings immense French and German
experience. They have had their own programmes. We turned our
face away from those in the past. They have engineers with all
that deep experience and whether it is on French programmes or
German or indeed Swedish or Italian they will all be pulling on
the same rope for this programme.
17. I am not sure whether you have confided
in us what the milestones are so that we can see annually which
stage the activities have reached, so we can be alert. What our
successors do not want is to have your successor by two coming
in and giving all manner of excuses, saying there were not enough
qualified people; you know, because you have given them in the
past. You are now monitoring so many high value, highly important
projects, from aircraft carriers to the most expensive programme
of all, the Eurofighter and BVRAAM. We really are anxious to ensure
that if there are delays they are totally outside the control
of the Ministry of Defence. You cannot determine what the exchange
rate is going to be, but you have control over a lot of other
things.
(Sir Robert Walmsley) I very much accept the spirit
of that. The thing is that we have not negotiated the contract
yet. I have set out the principle against which we shall negotiate
these. We are calling them Smart default points in the contract.
I should very much like to complete the contract negotiations
and when we have done that I shall be quite happy to provide the
list of milestones to the Committee. I am afraid that will not
be until early next year. We are now into a really difficult contract
negotiation involving six countries of which the United Kingdom
is one.
18. How do you decide the mix of air-to-air
weapons needed for an aircraft like Eurofighter? Presumably with
enough short-range ASRAAM missiles, you would not need a machine
gun and with enough BVRAAMs you would not need a short-range ASRAAM.
How do you reach your figures?
(Sir Robert Walmsley) This is very much Admiral Blackham's
country, so may I hand over to him.
(Vice-Admiral Sir Jeremy Blackham) Let me put it this
way. We are faced with a range of threats from the highest level
and perhaps in many ways the least likely threat down to the sort
of thing which we are doing day by day. Each of these will demand
a different kind of response. It depends very much on what you
are up against, what you think the prevailing conditions and weather
are and of course to a degree what sort of other allies you are
operating with. We need to provide ourselves with a reasonable
mix of weapons. Sometimes, for example, we shall demand that our
pilots visually identify contacts before they engage them and
in those circumstances we would want a short-range missile. In
other circumstances we may be prepared to have different sorts
of rules of engagement and that would allow us to use a longer
range missile such as a BVRAAM. We need to provide both long and
short-range systems and that is what we set out to do. The actual
balance of numbers of weapons will obviously depend on the relative
likelihood of the threats which you have identified.
19. Is the number of Eurofighters determined,
sacrosanct? How was it based?
(Sir Robert Walmsley) It is based very much on what
is required in order to sustain the Royal Air Force's fighting
capability and again that is Admiral Blackham's point of responsibility.
What I would say is that those numbers, the 232 Eurofighters coming
to the United Kingdom, just as the number of aircraft coming to
the other countries, making up, I think, the 620 in all, are enshrined
in calculations about work etcetera, etcetera, which go after
the decimal point, not in front of the decimal point. Any country
which suggested changing its numbers could expect to have to renegotiate
a substantial number of the contract placement authorities. We
have therefore been very pleased to see those numbers settled
in the MoU. That does not mean they are cast in tablets of stone,
it just means it is not simple for any country, whether it is
us or anybody else, suddenly to decide they have a new idea about
how many aircraft they want.
(Vice-Admiral Sir Jeremy Blackham) In case it should
be helpful, seven squadrons of Eurofighters are planned and a
training unit and that produces the numbers of aircraft which
are in active service. The remainder is based on our calculations
about the likely rate of attrition of those aircraft. That is
how the number is reached. We should therefore have to have a
significant change in force structure before we considered whether
the number was wrong.
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