ANNEX
This memorandum constitutes the Government's response
to the House of Commons Defence Select Committee's 10th Report
on Major Procurement Projects. This is the second report in which
the Committee has conducted an annual survey of major procurement
projects, with a view to measuring the success of the Smart Procurement
Initiative (SPI), and we welcome the Committee's decision to scrutinise
the Ministry of Defence (MoD)'s procurement in this way. We share
the Committee's hope that their report will inform the Commons'
debate on equipment procurement scheduled for this autumn. We
note the Committee's intention to focus on the Future Carriers,
inter alia, in its next report on this topic.
The Government welcomes the Committee's report, which
we believe gives an objective view of the latest progress on major
procurement projects. We acknowledge the Committee's criticisms
of MoD's past procurement performance, which we are seeking to
address through the SPI. We therefore welcome the thrust of the
Committee's overall conclusion, i.e. that it can see signs of
smart procurement delivering tangible results, even at this stage.
MoD has now successfully put in place the machinery for change
in its acquisition practice. The SPI, launched to drive out cost
and time overruns from the procurement programme, will have a
greater effect on programmes that are in their early stages, and
consequently it will take time, indeed many years, for the full
benefits to be achieved. However, the NAO findings, following
their audit of the Major Projects Report 99, in common with the
Committee's report, showed that there are signs of early successes
from the application of the SPI principles even though the launch
year was only completed on 2 May. As the Initiative has more time
to demonstrate its worth, particularly on new projects, the Government
is confident that the record on bringing major equipment projects
to fruition on time and within budget, meeting the needs of the
armed forces of the future and saving taxpayers' money, will radically
improve.
BACKGROUND
(Paragraph 9) The test of the success of this
at first sight risky decision to loan a senior civil servant [Mr
John Howe] to a foreign-owned competitor for UK defence contracts
will be whether the competitive pressures are in fact maintained,
and whether there are identifiable consequential benefits in terms
of price and innovative technical solutions, in the Carrier, Bowman
and other programmes. These gains will have to be significant
if this act of apparent altruism is to be shown to be actually
self-interested. The MoD's case would be more persuasive had it
been able to secure a reciprocal arrangement with the French defence
department.
In our view Mr Howe's secondment to Thomson CSF was
not an act of altruism; as Sir Robert Walmsley, Chief of Defence
Procurement, explained to the Committee, it was taken on the basis
that it would clearly be in the interest of obtaining best value
for money to enhance competition within the defence electronics
industry in the UK. It is also in keeping with the Government
policy of broadening the experience of Senior Civil Servants through
increased interchange with the private sector. The question of
reciprocal arrangements with the French defence department therefore
did not arise.
BEYOND VISUAL RANGE AIR TO AIR MISSILE (BVRAAM)
(Paragraph 15) Once any debriefings are completed,
we expect the MoD to provide us with its more detailed assessment
underlying its choice for the [Meteor] missile.
As the Committee notes, the Chief of Defence Procurement
has not yet formally debriefed Raytheon on why its bid was not
successful, so it would be improper at this stage to go into more
detail on the technical reasons for preferring Meteor. These debriefings
usually take place after contract signature, expected to be around
the end of this financial year. We will then be in a position
to provide the Committee with more information.
(Paragraph 16) The incremental approach to capability
acquisition is that now favoured by the MoD's smart procurement
initiative, . . .
and uncertainties about the cost [of ERAAM+] should not have been
a determining factor against it. If MoD is to get the full benefits
of smart procurement, it will have to develop the tools and techniques
it will need to assess rigorously the costs and benefits of bids
which offer different routes to the full capability sought, so
that it can fully demonstrate the financial case for the choices
it makes.
The BVRAAM competition was decided on the basis of
a balanced judgement of operational capability, missile performance,
affordability, and overall value for money. We concluded that
Meteor best meets our needs over the life of the Eurofighter aircraft,
and represents best value for money. The overall performance of
Meteor will ensure that Eurofighter will deliver the air superiority
that is key to success in many military operations.
We agree that incremental acquisition is one of the
tenets of Smart Procurement, and we have developed and used the
tools to compare different paths to reach the full capability
requirement—most notably the Combined Operational Effectiveness
and Investment Appraisal (COEIA), which uses discounted cash flow
to assess bid costs on a comparative basis. Careful comparisons
were therefore made between the costs of the different procurements
routes. However, in the case of the incremental ERAAM+ proposal,
the uncertainties were not confined solely to the costs likely
to be involved. Indeed, our assessment of both bids necessarily
took account of a wide range of non-financial risks and uncertainties.
We therefore have confidence that our decision to prefer Meteor
was robustly based. But we are, of course, always on the lookout
for better estimating and evaluation techniques applicable to
both the conventional and incremental procurement approaches.
(Paragraphs 21, 22) The in-service date for the
missile . . .
is now expected to be 2008. When we asked CDP what confidence
he had in the current in-service date for BVRAAM, he explained
that such predictions were now based on a 90% confidence level
. . . The
cautious definition of the missile's target in-service date may
be realistic, particularly in view of the technological challenges
that will have to be overcome, but in BVRAAM's case it is a date
that must be met if Eurofighter is to fulfil its potential.
The Government shares the Committee's view of the
importance of keeping momentum behind the project to bring Meteor
into service at the earliest opportunity. We have conducted a
comprehensive risk assessment of Matra BAe Dynamics' proposed
programme. A single contractor will have the responsibility of
delivering to time and cost, and we will be putting in place a
taut contractual regime, with its emphasis on demonstrable milestones
and incentivised performance. We assure the Committee that these
factors, together with the UK's strong project management role,
give the Department very high confidence that the BVRAAM capability
will be achieved within the approved time and cost thresholds.
The BVRAAM in-service date (ISD) of 2008 included
in the Committee's report is the latest declared planning assumption
prior to the selection of Meteor, as included in the NAO's Major
Projects Report 99. 2008 is not the 90% confidence date referred
to later in this paragraph; as described in the report, the 90%
date is a prudent estimate, substantially after the date that
the company is promising to deliver, which is used for planning
and approval purposes. We aim to bring the missile into service
in advance of the 90% date, to a timescale which will be set once
the discussions with partner nations and the Prime Contractor
have been concluded. This timescale will also be affected by the
need to dovetail into the complex Eurofighter programme the integration
of the missile onto the aircraft. We will be in a position to
declare the set ISD at the time of contract signature.
(Paragraph 22) Eurofighter needs the BVRAAM capability
to give it the air superiority for which it is designed. We therefore
welcome the fact that MoD has now selected a missile and contractor . . . The
Meteor missile has some clear advantages over its Raytheon competitor . . .
Although the project is in its early days, it also offers the
prospect of avoiding some of the problems which have plagued other
European procurement collaborations, without arbitrary workshare
divisions and with a clear project leadership role to be provided
by the UK. The MoD needs to take advantage of that leadership
role to keep momentum behind the project, including an early contract
which will lock-in not just the contractor but also the commitments
of our international partners.
The Government welcomes the Committee's recognition
of the importance of a BVRAAM capability for Eurofighter, and
of the advantages of choosing the Meteor missile to provide this
capability. The Advanced Medium Range Air-to-Air Missile (AMRAAM)
will provide Eurofighter with the capability required for its
air superiority role until Meteor comes into service.
The Committee has recognised in its report the more
imaginative and robust approach to procurement now in place and
exemplified by the BVRAAM programme. We accept the Committee's
conclusion that the UK must exploit its leadership to keep momentum
behind this collaborative project, and in bringing together an
experienced Integrated Project Team, including industry representation,
to manage the project through-life, we have sought to provide
that clear leadership. We will be working very hard to secure
delivery of this high performance missile ahead of schedule and
within budget.
Meteor will be a Smart Procurement programme with
incentives to reward good performance and discourage poor performance.
The programme will be run in a partnership with industry that
will place emphasis on managed risk and continued delivery of
value for money, and gain-sharing potential will be kept under
continuous review. A culture of open reporting and shared problem
solving will be established, underpinned by the formal process
of Earned Value Management which instils a structured management
reporting discipline. In addition, as the Committee is aware,
the contractor has agreed to a series of key technological milestones,
failure to achieve which may lead to the termination of the contract
with all money being returned to the Partner Nations.
Since the UK's decision, all our partner nations
have written to the Chief of Defence Procurement welcoming the
announcement and reconfirming their own commitment to the programme.
Progress with the Memorandum of Understanding has been very good
and contract negotiations with Matra BAe Dynamics are forging
ahead; we expect to sign both around the end of this financial
year.
(Paragraph 26) The MoD does not envisage Eurofighter
having a ground attack role . . . The
MoD has however already sunk £90 million into the cannon
which has now been wasted. The savings from not using the gun
would only be £2.5 million a year. Admiral Blackham believed
that that was no reason to go on sinking more money unnecessarily.
We are less convinced of the economic sense of this decision at
this late stage of the aircraft's development, and we look to
MoD in its response to this report to provide further explanation
of its rationale for not using the cannon, and how a very close
range engagement capability could otherwise be provided.
Unfortunately there are a number of factual errors
in this paragraph of the Committee's report, emanating from mistakes
in the transcript of evidence. We apologise for not having picked
up these transcript errors at an earlier stage. Corrections are
as follows:
- we have spent £19M, not £90M, on procuring
the gun. That this money has been spent is of course not an argument
for spending more. Having now assessed that the gun is not needed,
it is common sense that we do not continue to spend taxpayers'
money on it.
- the deletion of the gun will save more than £3.5M
(not £2.5M) every year of Eurofighter's operational life
in projected support costs. In addition, it has saved some £30M
in the forward equipment programme. But we have deleted the gun
not in order to save this money, but because a gun capability
on Eurofighter is simply not required.
- we do envisage an air-to-ground role for Eurofighter
in the future, alongside other aircraft and the extremely capable
Apache, as stated in our written evidence to the Committee. For
this role, the aircraft would carry weapons such as Brimstone
and Storm Shadow. However, it is correct that our priority for
Eurofighter is an operational air-to-air role. With Tornado GR4
and Harriers continuing in-service for many years, there is less
immediate need for Eurofighter to assume an air-to-ground role
at its entry into service, and the relatively indiscriminate nature
of gun firing means that the cannon is a far less appropriate
or effective weapon for Eurofighter in its future air-to-ground
role than precision-guided munitions.
The rationale for our decision to delete the requirement
for the Mauser cannon on Eurofighter is set out in the written
evidence provided to the Committee (Evidence p93, paragraph A4).
A close range engagement capability will be provided by the Advanced
Short Range Air-to-Air Missile (ASRAAM), which has a shorter minimum
range than any previous missile. ASRAAM will provide a significant
contribution to achieving and maintaining air superiority: it
can be employed in the full spectrum of air operations from air
policing to peace support through to high intensity conflict,
and will provide Eurofighter with a substantial advantage against
the foreseeable threat in short-range air combat. But to perform
its operational role effectively, Eurofighter needs to be armed
not with very short-range weaponry but with longer-range guided
missiles such as Meteor.
SEALIFT
(Paragraph 28) The lesson of the Kosovo campaign
remains that such deployments depend on a great deal of sealift
being readily available. Having dedicated assets, such as the
six Ro-Ro ships envisaged by the MoD, will be essential if the
UK is to maintain that deployability in less favourable circumstances.
The Government welcomes the Committee's conclusion
on the value of strategic sealift. The Committee rightly identifies
the potential difficulties in securing suitable sealift in the
necessary timescale to support operations, and at a reasonable
cost. While early planning and chartering avoided problems in
the Kosovo operations, as we stated in the recently published
'Kosovo: lessons from the crisis' pamphlet, 'in operations in
future where we do not have similar time to prepare, a national
strategic sealift and outsize strategic airlift capability will
be essential.'
While, depending on the requirements of individual
operations, some take-up of vessels from trade to assist in rapid
logistics support may remain necessary in some circumstances,
the provision of dedicated shipping for this task is the best
way to give assurance that the Joint Rapid Reaction Force's (JRRF)
deployment can be supported. In order to guarantee the service,
which includes the transit of warlike zones, crew availability
is also crucial and the requirement is therefore for crews to
be under terms of employment which guarantee service in warlike
zones (i.e. they are likely to be seamen eligible to be called
out as sponsored reserves). This is the basis of the current competition
for a strategic sealift service and would also accommodate the
security considerations necessary because of the operational and
financial value of the cargo.
In the interim period, the MoD continues to have
available two chartered strategic lift vessels, SEA CRUSADER and
SEA CENTURION, until their charter arrangements expire in January
and April 2001 respectively. We intend to provide by charter within
the coming months an interim service of three ships continually
available, with an additional vessel available for periods of
peak demand and crises. This interim service will be tailed off
as a dedicated RoRo service becomes available, and extended should
there be any slippage. The Alternative Landing Ship Logistics
that are being procured will also add to the potential amount
of sealift available to the MoD as well as enhancing our amphibious
capability .
(Paragraph 29) We share the concerns that have
been expressed in many quarters about the consequences of a decision
to build the MoD's Ro-Ro ships abroad might have for the UK's
shipbuilding capacities. We trust that the MoD's decision will
recognise the wider industrial and strategic issues involved.
It is government policy that warships for
the Royal Navy are built in British yards. However, the Ro-Ros
are non-warlike vessels. For instance, their design will not be
especially specialised; they will not be fitted with weaponry
and they are not intended for operations in a battle zone. For
non-warlike vessels, we are obliged to follow European Treaty
and public procurement rules. These prohibit discrimination in
favour of national industries in this type of contract. We have,
however, within the bounds of fair competition and our EC obligations,
ensured that UK shipbuilders are given the opportunity to compete
for these contracts . The RoRo service includes support, service
and manning of the vessels, as the requirement is for the provision
of a shipping service rather than a simple design and build procurement.
The value of the contract that is spent in the UK, wherever the
ships are built, would be the majority of the price paid.
Beyond the Ro-Ros, MoD has a very much more substantial
naval procurement programme of warlike vessels indicated in the
SDR, including the Type 45 destroyer, Alternative Landing Ship
Logistics, the larger aircraft carriers, the Future Surface Combatants,
and already under construction, other programmes such as the Landing
Platform Dock (Replacement), the new fleet tankers, the Astute
submarines and the survey vessels. These programmes provide a
secure long-term platform for the UK shipbuilding industry to
increase its efficiency and to secure further export orders.
AIRLIFT
The long-term airlift programme
(Paragraph 31) Last month [May 1999] the Secretary
of State announced that the MoD intended to acquire up to 25 A400Ms
to satisfy its longer term airlift requirements. This is somewhat
lower than the "up to 45" that had been subsumed in
collaborative "requests for proposals" issued to Airbus.
Admiral Blackham told us that the lower figure reflected the work
done in his organisation to balance investment in air and sea
transport. It is quite a dramatic reassessment, however, which
has not been matched by any increase in the requirement for sealift.
As the Committee recognises in the same paragraph,
airlift is needed to deploy lead elements of the Joint Rapid Reaction
Force (JRRF), with heavy equipment following by sea. Therefore
a re-evaluation of the rate of airlift deployment does not automatically
imply an increase in the amount of sealift required. However,
in this case there has been a clear evolution in the definition
of the requirement.
We originally announced in December 1994 our intention
of rejoining the Future Large Aircraft (FLA) programme. At that
stage, we were considering the FLA as a replacement for the balance
of the Hercules fleet (beyond the 25 C-130J announced at that
time) and other possible air transport requirements; the judgement
then was that this could lead to a requirement for between 40
and 50 FLA. Since that date, the UK's force levels and force structure,
and assumptions about the type, size and speed of deployment which
might be needed under various (themselves evolving) crisis scenarios,
have all changed significantly - most notably with the development
first of the Joint Rapid Deployment Force, and subsequently the
JRRF concept and other conclusions of the 1997 Strategic Defence
Review (SDR). The SDR also reached a new judgement on the level
of investment needed in sealift, with its conclusion that we should
increase the amount of strategic sealift required through the
acquisition of four additional Ro-Ros. We were able to confirm
25 A400M, after further detailed operational analysis (based on
greater knowledge of the proposed aircraft acquired during the
competition process and considering the numbers of aircraft required
for the programme's launch), as the necessary number to deploy
the lead elements of the JRRF in the appropriate timeframe for
the various scenarios in which that would be necessary.
(Paragraph 31) Airlift is needed to deploy lead
elements of the MoD's Joint Rapid Reaction Forces such as the
Attack Helicopter, with heavy equipment following on by sea -
not just tanks and AS90 artillery, but also armoured engineering
vehicles and bridge-launchers, and in its response to this report
we invite the MoD to explain the circumstances in which lead elements
of the JRRF will be able to operate without engineering support
capabilities.
In many foreseeable situations, heavy engineering
support of the kind the Committee mentions will not be necessary
at all - for instance, in Sierra Leone, strategic airlift was
used to deploy elements of the JRRF, but armoured engineering
vehicles and bridge-layers were not required. For the more testing
potential scenarios where heavy engineering equipment is
required, such as medium scale war-fighting, the A400M's outsized
lift capacity will enable it to carry much more of the heavy engineering
support equipment required than was previously possible. With
the capacity to carry loads that range from the Warrior and its
derivatives, through fuel tankers, dump trunks and 15 ton cranes
up to a 35 ton Royal Engineer plant semi-trailer, the A400M will
significantly enhance engineering support capabilities in the
early stages of such a deployment. This will allow the remainder
of the heavy equipment to arrive in a timely fashion by sealift
and thus provide full engineering support facilities.
(Paragraph 35) The MoD needs to keep the industrial
implications of its A400M commitments under close review.
The Government accepts the Committee's recommendation.
Our aim is to ensure broadly equitable work-sharing arrangements,
without detriment to overall value for money. A key element of
Airbus's successful record in meeting challenging delivery timescales
is their system of relying on centres of expertise in successive
programmes. Thus BAE SYSTEMS has become the Airbus centre of expertise
for wing design. A400M is no exception and we expect Airbus Military
to use the partner companies' strengths in the normal way: we
factored this into the cost and risk assessments that underpinned
our decision. BAE SYSTEMS stated during the competition that a
successful launch of the A400M could be expected to create 3,400
direct skilled jobs (and 10,000 indirectly related jobs) in the
United Kingdom, and we will continue to assess the impact of current
and future programmes on the UK's defence industry.
(Paragraph 35) Cooperation between Rolls-Royce
and Snecma to build the A400M engine could be a useful development
but only if the result is a better and more cost-effective engine.
Whatever engine solution is adopted, however, the decision must
be clearly the result of fair competition, it should not be foreclosed
by prior development choices, and the costs and benefits underpinning
it must be completely transparent, both to the MoD and to this
Committee.
Our aim is to ensure that Airbus Military Company
makes the selection of the engine for A400M on a commercial basis,
in accordance with the principles on which the Future Large Aircraft
programme was founded. We recognise the benefits to be gained
from competitive selection of the A400M engine and anticipate
it resulting in a better and more cost-effective engine. We expect
transparency from Airbus on the basis for the selection, and will
continue to press for this.
THE SHORT-TERM AIRLIFT PROGRAMME
(Paragraph 39) We welcome the fact that the MoD
has made a clear decision on its short-term and long-term airlift
programmes. This is a real step towards providing the range and
the depth of strategic lift that is needed to meet the operational
demands envisaged by the Strategic Defence Review.
The Government welcomes the Committee's conclusion.
The Strategic Defence Review (SDR) identified an urgent need to
improve our strategic transport, to allow us to move more powerful
forces quickly to an overseas theatre. With the 25 new C130J now
entering service, and four C-17 from 2001, as well as existing
airlift assets (e.g. Tristar), we will have a flexible fleet of
aircraft capable of meeting the short-term strategic airlift requirement.
The A400M at the end of the decade will enable us to meet the
long-term requirement and provide more aircraft capable of tactical
as well as strategic airlift.
(Paragraph 39) We recognise the compelling reality
that providing a capability to carry a worthwhile heavy armoured
force by air is a super-power capability and one that would not
be a sensible use of the MoD's limited resources. This is properly
the domain of sealift.
The Government welcomes the Committee's conclusion.
As the Committee recognises, the ability of the C-17 to lift a
Main Battle Tank is of limited operational benefit unless enough
such aircraft are available for deployment by air of a coherent
force of heavy armour. We could not afford that. Other European
nations have made a similar judgement, reflected in the European
Staff Requirement for the Future Large Aircraft, which did not
specify the ability to carry Main Battle Tanks. The planned enhancements
to the strategic sealift capability will help us ensure that the
heavy equipment which may be needed to support units deployed
forward by air can be delivered in a suitable timescale.
(Paragraph 40) In that context [that a capability
to carry a worthwhile heavy armoured force by air would not be
a sensible use of MoD's resources], we welcome the selection
of the A400M for our long term airlift requirements, as an effective
way of rapidly deploying the lead elements of the Joint Rapid
Reaction Force cost-effectively. In the meantime, the introduction
of the four C-17 aircraft from next year will give us an early
and effective boost to our capabilities.
The Government welcomes the Committee's conclusion.
The A400M represents an effective aircraft that will enable us
to meet the long term airlift requirement, satisfying both strategic
and tactical roles and at an affordable price - the programme
will cost some £3.5Bn. The C-17s clearly meet the shorter-term
requirement, and their introduction from next year will allow
them to participate in the major exercise SAIF SAREEA 2 in Oman,
and substantially increase the capability available for crisis
deployment. The C-17 will be supported through Foreign Military
Sales case contracts with USAF, and will be operated to USAF procedures,
greatly aiding interoperability and with significant cost savings.
(Paragraph 40) What is welcome on this occasion,
however, is that (we presume) the leased C-17s will be handed
back when the A400Ms come on stream, and in the case of the C-17s
a large part of the support infrastructure will be provided by
the US (though on repayment terms). Furthermore, as a package
these two strands of our airlift capability unusually offer the
MoD the best of all worlds. They hold out the prospect of acquiring
an effective aircraft for the UK's long term needs, which would
improve and standardise this important European military capability,
and could provide a possible vehicle for further consolidating
the European defence industry. At the same time, the lease of
the C-17s gives the Department an insurance policy, in that if
the A400M remains on the ground the UK's capability need not.
Airbus and our A400M partners would do well to take this on board
as they endeavour to take the programme forward.
The Government welcomes the Committee's conclusion.
The acquisition of A400M by the UK and its seven partner nations,
who publicly confirmed their commitment in the Farnborough Declaration
of 27 July, represents a great step forward in European military
capability. Like sealift, strategic airlift has been identified
as a critical capability shortfall by NATO's Defence Capabilities
Initiative and is particularly important for the successful fulfilment
of the EU Headline Goal. The UK's decision to purchase A400M will
substantially enhance European and NATO capabilities in this area.
The decision by the UK and subsequently its partner
nations to commit to the A400M has undoubtedly strengthened Airbus
Military Company, sending a clear signal that Airbus is trusted
to take on this key military project as a player in its own right
in the European defence industry. To this extent the Government
believes that the A400M programme has already contributed to further
consolidation of the European defence industry, and acknowledges
the potential for it to act as a possible vehicle for even more
consolidation in the future.
Our current planning assumption is indeed that the
C-17s will be returned to Boeing when the A400M has entered service.
The Government is confident that A400M will be delivered on time
and will provide the capability and effectiveness the RAF needs.
The commitment of our seven partner nations in the Farnborough
Declaration of 27 July to a total offtake of 225 aircraft is well
above the threshold for the programme's viability. Using state
of the art virtual environment techniques, Airbus Military Company
have already been able to design and test the plane, and we are
confident it will be available to meet our, and our partners',
requirements. But we acknowledge the risks in developing and delivering
a new aircraft design, which were considered in the selection
process. If Airbus cannot offer us and our partners an affordable
and manageable programme in the requisite timeframe we will look
to purchase Boeing C-17 aircraft as an alternative. The Government
agrees with the Committee that we retain a viable option should
the A400M programme fail to meet expectations, and this and our
continued involvement in the procurement process should ensure
that Airbus' feet are kept to the fire.
BOWMAN
(Paragraphs 42, 43) [Bowman's] progress has been
woefully slow, however, since the MoD first defined its requirement
in 1988 . . .
In dealing with the complexities of the technologies and the problems
over competition, the planned in-service date has regularly slipped,
and is now running eight years behind its original schedule . . .
Bowman remains a very good example of the antithesis of smart
procurement - with over-ambitious requirements, inadequate competition
and a lack of clear leadership (though on industry's side more
than the MoD's).
The BOWMAN programme has suffered from a number of
problems, including technical difficulties, changing defence priorities,
and industrial re-arrangements impacting on the procurement strategy.
Since its introduction, the Smart Procurement Initiative has allowed
us to deal with the problem in a controlled and managed way. The
freedom that SPI gives to trade requirements in search of a more
cost-effective solution enabled us to seek `fallback' options
in case the Archer Communications Systems Limited (ACSL) bid failed.
This revealed that there were realistic alternatives to ACSL that
could be pursued rapidly. Given our decision to terminate ACSL's
preferred bidder status, we have therefore been able quickly to
reopen competition in search of value for money rather than stopping
the programme and starting again from scratch, delaying BOWMAN
for many more years.
(Paragraph 44) To replace the Clansman radios
before the delivery of the mainstream Bowman system, the MoD is
now running a competition to produce nearly 44,000 'Personal Role
Radios' for the infantry. They will not greatly improve capabilities—their
transmission will not be encrypted—but they will be an improvement
on Clansman's poor reliability and maintainability.
Using the flexibility provided by the Smart Procurement
Initiative (SPI), we decided to separate the procurement of the
stand-alone Personal Role Radio (PRR) from the total BOWMAN requirement
in order to deliver these radios earlier to the front line than
otherwise would have been the case. PRR is not a replacement for
Clansman, but is the introduction of a new capability not provided
by Clansman, that forms part of the Bowman requirement. BOWMAN
will introduce a range of services which Clansman cannot provide,
including a secure voice and data service, electronic protection
measures, increased security and significantly increased VHF and
HF capability for all three services. We are currently running
a competition to produce nearly 45,000 `Personal Role Radios'
primarily for the infantry which will provide an important new
capability which was not previously provided. Although these radios
will not be encrypted, they will offer low probability of intercept
and commercial levels of protection, and will provide a major
improvement in tactical awareness and operations. Particulary
in the street-fighting and similar operations envisaged for its
use, where the operational value of intercepted data quickly diminishes,
the new radios are intended to provide a less expensive and early
contribution to part of the Bowman package.
(Paragraph 50) . . . it is remarkable that
Bowman's requirements have been established without close regard
to their practicality or cost ...
The original requirement was defined, and has subsequently
been developed and amended, in close consultation with industry,
in order to ensure its realism and affordability. Since the formation
of ACSL in 1997, we have worked with industry in developing the
requirement. An extensive Affordability Review in summer 1999,
conducted in full and open cooperation between the Equipment Central
Customer, the DPA and industry, simplified and reduced the requirement
further, resulting in what is now known as the 'BOWMAN Lite' requirement.
Regrettably, we have nonetheless had to conclude that the original
preferred bidder could not achieve the outcome we need.
(Paragraph 50) In Bowman's case, we were glad
to have the MoD's assurances that the revised requirement still
fully meets the needs of the Army. The MoD must however guard
against reducing the capabilities sought for the new communications
systems (in order to make its delivery more assured), if the result
is a capacity with a functionality little advanced from its predecessor
or unable to counter the new and sophisticated communication threats
it will have to deal with.
BOWMAN is a complex and involved programme but the
requirement is well understood by industry who have been involved
with it for several years. In 1999 a major review of BOWMAN was
undertaken allowing potential solutions to the requirement to
be significantly simplified. In line with SMART procurement, there
are areas within the requirement where there is flexibility but
this will not be allowed to detract from the overall capability
of the system.
(Paragraph 57) In giving itself an option of launching
a new competition, the MoD now has a sound strategy for putting
Bowman back on track—the disappointment is that the Department
had not resorted to this course sooner. The constant changes and
delays in the programme so far have had damaging effects not only
on the armed forces but on the potential suppliers of equipment,
and their employees in turn, for whom the lack of firm future
work has resulted in staff being laid off. The prospect of a new
competition appears to have been a factor in Archer's improving
performance over the last few months. If Archer's proposals do
not cut the mustard, the MoD should run a new competition without
delay. The consortium has not earned any right to merciful treatment
by its performance so far.
The Government accepts the Committee's recommendation.
The Ministry of Defence announced on 25 July that it had decided
to remove preferred supplier status for BOWMAN from Archer Communications
Systems Limited (ACSL) and that a competition would be launched.
We had been constructively engaged with ACSL for a considerable
time but after careful consideration of ACSL's interim bid for
the BOWMAN contract, we were not convinced that they could deliver
a communications system that met our requirement in the time required,
or that represented value for money. Achieving an early in service
date was the key to this decision. We are confident that a new
competition now offers the best prospect for delivering the best
value for money and lowest risk solution to the BOWMAN requirement.
We have taken a difficult decision to bring the BOWMAN project
back on track. This is what we mean by Smart Procurement—taking
tough decisions to ensure our Armed Forces get the equipment they
need when they need it.
(Paragraph 59) We welcome the new approach to
the definition of in-service dates being adopted by the MoD, and
we recommend that it be universally applied, including to Eurofighter
whose in-service threshold is currently defined by the wholly
misleading criteria of the delivery of the first aircraft by the
manufacturers.
We note that the Committee welcomes the new approach
to the definition of in service dates. We will be looking to use
this definition in the majority of cases. There may, however,
be a small number of projects where it might not be appropriate
to do so, including Eurofighter where the definition has long
been agreed with our collaborative partners.
OTHER PROGRAMMES
Type 45 Destroyer
(Paragraph 64) We were pleased to be told that
[the Type 45 destroyer] is 'being designed from the outset to
allow the fitting of a vertical launcher suitable for a variety
of weapons (including missiles such as the Tomahawk) to every
ship in the class, should a funded requirement be raised for this
capability.
We note the Committee's comments about the progress
being made on the Type 45 programme. As the Committee recognises,
the Type 45 design incorporates margin to allow for a longer Vertical
Launch System, capable of supporting a variety of missiles, to
be fitted, should a land attack capability be required for the
Type 45 class .
The Future Carrier and the Future Carrier Borne
Aircraft
(Paragraphs 67-68) The short take-off and vertical
landing version of the US-led Joint Strike Fighter (JSF) programme
is currently 'a strong contender' for the FCBA. There have been
press reports that the US Department of Defense are encountering
technical and industrial problems with the JSF programme and may
delay their selection between the bids from the Boeing and Lockheed-Martin
consortia . . .
we were assured that at the moment the US remains committed to
the STOVL Joint Strike Fighter'
Although other options are still under consideration
the US-led Joint Strike Fighter (JSF) remains a strong contender
to meet the UK's Future Carrier Borne Aircraft requirement. While
no decision has yet to be taken as to whether the UK should enter
Engineering and Manufacturing Development (EMD) phase of JSF development
we recognise the Committee's concern over progress on the JSF
development programme.
There have also been concerns in the US Congress
about the technical risks associated with the Concept Demonstration
Aircraft. These have led Congress, for the budget cycle beginning
October 2000, to redirect JSF provision to extend the JSF demonstration
effort. Congress require that the exit criteria for the current
Concept Demonstration Phase be satisfactorily demonstrated, with
appropriate analysis and reports to Congress, before approval
can be sought to the next phase, Engineering and Manufacturing
Development. These requirements have led to the start of the source
selection process for the Prime Contractor being delayed from
November 2000 to an earliest predicted January 2001, with entry
into EMD now being predicted for no earlier than October 2001
(from April 2001). However, this delay is not expected to affect
the JSF ISDs which would meet UK requirements.
Ministry of Defence
3 October 2000
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