Examination of witnesses (Questions 1
- 19)
WEDNESDAY 8 DECEMBER 1999
Air Vice-Marshal JOE
FRENCH, Group Captain STEPHEN
LLOYD and Brigadier PHILIP
WILDMAN OBE
Chairman
1. Thank you very much for coming. You will
be pleased to know that the subject has not excited wild media
interest, which is just as well because this will be a fairly
short public session. I regret to tell you I have not been "nobbled"
by Jack Straw to diminish even further the area of information
available to the public but you will appreciate the sensitivity.
So in essence we are going to ask a group of three questions in
open session. The first I will ask, gentlemen, which will be in
open session but we will come back to that first question in private.
So we will clearly demarcate what is open source and what is private,
and even in the public questions if you feel it is inexpedient,
unwise, to answer publicly, then we will have that. I really must
apologise for the rather clandestine basis of our questioning.
We are under a self-imposed obligation to look at two agencies
per annum, which means we will take a hell of a long time before
we get through the other 42; that will not be our problem. Your
two were chosen not at random. We made a visit, as you know, to
Huntingdon, which was very helpful, and this is the follow-up.
The first question I would like to ask, gentlemen, is this: what
was the rationale for the merger of JARIC and the Military Survey
which will take place next year, and what is the driving force
behind the future merger?
(Air Vice-Marshal French) If I could start off with
the overarching response as owner of the two agencies and I will
continue as the owner of the converged or combined agency as from
1 April next year, it is something that has been looked at over
a number of years but taking a slightly longer-term look, particularly
with equipment changes and particularly getting into what we call
the digital era, the use of computer soft-copy work and so forth,
it made sense to look again at whether there would be benefits,
given that much of the information source is similar, in actually
looking at a converged agency. The background for actually going
ahead with the merger, having done that study of which you are
aware, was really to look at common production management, given
that the source of much of the information is similar, actually
to look at the rationalisation of the storage and the handling
of information that we are dealing with in this process, also
to look at the production activities, the product, and also when
we look at purchasing equipment in the future again rationalisation
as between commercial off-the-shelf equipment and Government off-the-shelf
equipment, and also looking at the administrative functions of
the agencies to see whether there are economies there, which we
believe there are, in actually looking at the process. It was
also within the resources we have that could already see with
staffs from JARIC who work in Military Survey and vice-versa,
that this overlap, albeit not large at this stage, is there, I
think, to be developed in the future, that if we did not get on
with convergence we would not get the maximum benefits from overlaps
that already exist within the organisation. As for specifics,
perhaps I will turn to Military Survey first and then to JARIC
for their perspective.
(Brigadier Wildman) Mr Chairman, thank you. I think
the Air Marshal has covered all the broad points. We have a very
regular interaction with JARIC now. We are seeing, as we look
at our options in the future in terms of, let us say, our systems
capabilities, our equipment capabilities, that we have so many
processes which are in common, we have fundamentally some rather
different outputs, but many of the processes which get us a long
way there can be seen to be either very similar or in some cases
identical. We have also seen that if we look into what we call
the digital era, the era of computer-readable information, we
are producing information in database form which will go into
maps but is also of interest to intelligence staffs in other forms.
The detail of a townscape or the detail of an installation may
well appear in a map but in a database form may be of direct use
to the intelligence staffs. At the moment our systems really do
not provide for the maximum interchange here because we are two
separate organisations. I believe that the convergence will allow
us to develop common goals, common concepts of operation, which
will then allow us to generate a much more powerful and effective
response to defence.
2. There are very few mergers of academic institutions
or businesses go ahead without blood and often the higher one
goes the more blood there is. What kind of arguments were used
by those who wanted to retain the status quo and how were those
fears allayed or brushed aside?
(Brigadier Wildman) The inevitable first thought,
of course, is, what happens to me. Any change of that sort, as
you rightly say, creates uncertainty and thus consternation. Some
of the fears were that there would be wholesale change and immediate
change, for instance in terms of location. That is something which,
at least in the immediate sense, will not be in place. There were
the usual fears of, "Will we find all of the other lot getting
the more senior appointments?" In fact, what we have been
able to show, by being as open as possible in explaining the processes
of transition, explaining precisely what the future plans are,
explaining what the organisation of the headquarters will be,
is that we have been fairly even-handed in apportioning the posts
so that we have a mix of experience between what one might call
the traditional groups.
(Group Captain Lloyd) If I may, Mr Chairman, from
my perspective, yes, there was a fair amount of concern. Clearly,
as one might expect, it was a concern over the weakening of the
single discipline that I am involved in on that. As the Brigadier
suggests, through the process we went through we were assured
that the area of investigation was not actually the core business
of each of the business units; it was the overheads like the agency
issue, and there was a realisation coming out of SDR, the Strategic
Defence Review, that we needed to move our product ranges forward
and that the Strategic Defence Review and the outcome of that
was going to ask us for baseline inputs to a converged common
database, as it were, for defence, and out of that came a clear
recognition that the only way we were going to achieve those improvements
and meet that requirement was by producing the particular inputs
in partnership. Also, on the edges of this particular session
our allies were moving in that direction and there was a degree
of synergy which we could see from their experience preceding
us.
(Air Vice-Marshal French) There was inevitably upset.
The exercise, though, made sure that we consulted with the staffs
and appropriately with the unions so that they had the chance
to register their comments but it was not something that produced
any "show-stoppers", as it were. As both of them said,
to those who could take the broader look the long-term gains were
seen and, as I said earlier, the fact that the relationship between
the two agencies was strengthening for overall defence intelligence
and defence outputs, I think the sense of it was actually well
accepted by the staffs. As we develop the agency, inevitably the
question of collocation will come up and that is something we
have to be alive to. There is significant change within defence,
as you will appreciate.
3. Will any buildings be abandoned?
(Air Vice-Marshal French) The two agencies can speak
for themselves but at present we are looking again at our overall
estate. As you are probably aware, the Military Survey at the
moment occupy four sites and already within their estate development
plan we aim to get that down to two sites, so we are looking at
the moment as to how we fund that. That is the move of the Map
Depot at Guildford and also the library we have at Tolworth on
to the Feltham estate.
4. Are there any problems over Feltham? There
was enormous investment in that building. Is that going to be
retained?
(Brigadier Wildman) The Hotine building, Chairman,
is to be retained. I think that is the building you are referring
to, the very recent high technology building.
5. Will that be retained within the new structure?
(Brigadier Wildman) Yes, it will.
(Air Vice-Marshal French) Indeed in the Ministry of
Defence's estate rationalisation exercise, particularly within
London, which followed on from the Strategic Defence Review, Feltham
was one of what they called the "pegs in the ground"
in terms of deciding that would have a long-term future. Again,
that has influenced how we have gone about our estate in terms
of work. As for JARIC, it is a lodger unit, as you well know,
within the Brampton Estate which, until the formation of the Defence
Logistics Organisation, belonged to RAF Logistics Command. What
is to happen to that estate in the longer term is under review
at the moment, although we have no indication that JARIC's short-term
future is under any threat at all.
Mr Blunt
6. A question on your estate rationalisation:
you posed a question whereby you were not quite sure how you were
going to fund the move of your agency, Brigadier Wildman, down
from four to two sites. Can you tell us how this fits into the
target the MoD was seeking under the SDR £700 million from
estate rationalisation release of property? Do you have to score
the sites you sell towards that? Is that what is causing the problem
of how you find funding to deal with the consequences?
(Air Vice-Marshal French) No, not in the sense you
put the question. That is up to the defence estates organisation
to work out their savings. Our discussion at the moment is that
we rent the site at Tolworth from the Ministry of Agriculture,
Fisheries and Food. It is a matter of what they want to do with
the estate and whether we can continue to rent it for long enough
to see where the funding comes from within the Ministry of Defence.
We are in discussion with our central budget holder and the defence
estates organisation at the moment to see how the funding is found
from within the overall departmental allocation of resources.
7. Funding for what?
(Air Vice-Marshal French) For a building we will need
at Feltham to actually house what is at Tolworth at the moment.
8. You will simply stop paying rent?
(Air Vice-Marshal French) We will pay rent at the
moment, as long as we are there under the Ministry of Agriculture,
Fisheries and Food's ownership of it.
9. Are you paying a fair rent or an artificially
low rent?
(Brigadier Wildman) I am afraid I am not sure I would
be able to answer that question properly, whether it is fair or
artificially low. It is something that was part of a Memorandum
of Terms of Occupation from some time ago. I am sorry, I would
not have the experience to say whether such a thing is fair or
artificial.
Mr Blunt: If it is a fair rent then the
funding of rent would be enough money to pay for a new building.
That would be on some sort of PFI type scheme, would it not?
Chairman
10. Would there be any cost savings from the
re-organisation?
(Air Vice-Marshal French) Of the two agencies or the
estate?
11. Of the two agencies?
(Air Vice-Marshal French) We were asked to find £1.4
million or £1.5 million straight after the Strategic Defence
Review pre-empting that convergence would take place. At the moment
we have not been asked to take any further savings as a result
of convergence. The requirement for the products for both agencies
has actually risen quite markedly.
12. Would there be redundancies, transfers or
re-deployments?
(Brigadier Wildman) Not specifically due to the merger
itself. We are looking to reshape our civilian work force. We
are looking to offer early leaving packages to a number of people
over 50 in order both to reduce overall numbers and to shape the
pyramid of promotion in careers.
13. Perhaps you would not mind dropping us a
note on that as well. I hope there are no plans for a public/private
partnership? If the Government are prepared to sell off DERA there
is not the slightest ideological or practical reason why you should
not follow suit. Maybe in a year's time we will be talking to
Sir John French, chief executive of a semi-privatised agency.
I hope our MoD agent is taking strong notes.
(Air Vice-Marshal French) As with both agencies, private
partnering and certainly Military Survey is something that is
not new to us. The scale you talk about is not for me to comment
on. We already have private partnering contracts. We let one fairly
recently for the provision of information technology. I think
when we answer your question on manpower we will have to qualify
it in the context of convergence because some of what the Brigadier
has talked about are changes in manpower structure that would
have taken place even outside the convergence exercise.
(Brigadier Wildman) We are looking very hard at the
moment at the opportunities for PPP but in the estate sector—of
course that is not the area you are primarily concerning yourself
with in that point—we have traditionally put production
out to contract and continue to do so. We are careful to ensure
that the types of production that we put out to contract are the
sorts of things in which we can allow people to build a general
experience, and which are not, generally speaking, operational
this-weekend response times. I think there would be limitations
to how far I can go down a full PPP route in terms of the actual
delivery of the entire service.
14. I did not ask that question seriously, you
probably realised that.
(Air Vice-Marshal French) It was the thought that
the PPP is nothing strange to us.
Mr Colvin
15. Can I just ask, what difference, in practical
terms, joining the two together is going to make in the way you
actually operate and to the quality of the timeliness of your
outputs?
(Brigadier Wildman) Mr Colvin, firstly we do, as I
said before, collaborate and interact with our colleagues in JARIC.
I think the main benefits I would foresee under a single structure
are single corporate plans. Our merged training and career plans
are combined for strategic thoughts about our capabilities and
will develop, over a period of time, an organisation that is much
more able to share information—we are able, in the sense
of willing to share information, but our systems do not talk to
each other and share information of a technical sense as well
as they will in the next generation. This is a particular area
where we will derive significant benefit. I think there are psychological
benefits too. If you are part of one organisation it is natural,
in the end, to recognise much more formally that you are working
together. It is equally just as natural in two organisations to
have a sense of turf even though you also know you are supporting
operations together. I think there is a small psychological factor.
However, I think the principal one will be that we will be able
to improve our processes in a way which crosses the current boundaries
of the organisation and thus delivers more information and more
responsive information to Defence in the medium term.
16. That really leads straight into the question
of accountability targets and performance indicators, which I
was going to ask. I was not one of the lucky ones that went to
visit JARIC but when the Committee was there they did pick up
the sort of message, I think, that both agencies felt that a unified
DGIA was going to help quite considerably with administrative
burdens involved in managing the agency, which, at the moment,
are viewed by both agencies as being fairly heavy. Perhaps you
could tell us what difference has agency status made to the way
in which JARIC and the Military Survey plan, deliver and account
for their work? Has it made it easier to establish who needs what
and whether their demands are economically realistic?
(Air Vice-Marshal French) From an owner's perspective,
resource accounting and budgeting has helped us in that we can
get a better idea of what the money is being spent on and the
resources we actually have at our disposal. It also, from a customer
perspective, allows them to see how the money or the resources
are being utilised to assure them that they are actually getting
best value for money for what is currently going on in each of
the agencies. Indeed, we have been at pains in setting up the
agency to ensure that a steering group that I chair has got the
full customer representation so that they can have their say in
how we form it, but also lessons we can learn from how the customer
supplier interface has worked in previous years to make sure that
we can get the benefits of the lessons we have actually learned
from that and we will be making changes to that customer oversight
through my owner's advisory board and drawing particularly from
Military Survey, where at the moment they are both judge and jury
in terms of how their outputs are supplied. That is how it is
viewed. I am going to take that customer function away from them
so that they deal direct with the owner.
Chairman
17. Could we ask an additional question. You
have gone on one stage to what will happen with the new structure.
What about going back a little bit? What did agency status confer
by way of advantages on what had happened previously?
(Air Vice-Marshal French) We are coming on to that
now individually.
(Group Captain Lloyd) If I may, Mr Chairman, I think
it would be fair to say that my unit was run very much along military
lines rather than business lines before agencification. It was
a straight command decision as to how things went and I would
suggest what agency did for me and my predecessor was to give
a distinct visibility of what was actually going on in the shop,
as it were, from a business perspective which was not there before.
Out of that flow then were the tools like resource accounting
and budgeting, CAPITAL equipment for accounting, etc. It gave
me a management discipline and led me to look for management tools,
to seek those efficiencies in my building. That then enabled me
to prioritise the resources that I had available to me, to redirect
and rebrigade those resources, accruing some efficiencies along
the way, and the end result is that I have now got a system which
is much more closely owned, with customer requirements at the
national and defence level. So it is a discipline of doing my
business that I would say was the greatest gain within the process
we have been through.
Mr Colvin
18. Brigadier Wildman, would you add to that?
(Brigadier Wildman) Mr Colvin, I do not think I can
add very much to that. I entirely endorse the idea of this discipline.
The Military Survey Agency was formed quite early; I think we
were in the second phase of agencies in 1991. The Department has
pressed very hard on agencies to develop tools and mechanisms
and scrutiny for efficiency, for outputs, for relationships with
the customer, and I think that has been entirely helpful. It would
be nice to say that that discipline would have grown of itself
regardless of pressing, but the fact of the matter is that it
was seen that agencies had to develop these skills and we have
built on this incrementally over the years. What I believe is
also very helpful now is the introduction of the ideas of resource
accounting and budgeting, the ideas of customer supplier agreements
which follow those and which additionally tighten the relationship
between the customer and the supplier.
19. But each of your agencies has a separate
budget and targets to work to?
(Air Vice-Marshal French) Yes.
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