Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  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.


  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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