Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)




  80. The Ministry of Defence is quite insistent that companies that sell to them have adequate security, defence companies, Guild of Security Controllers, etc. Are there any standards that operate across these countries we are talking about to ensure that commercial companies, associated with British companies in certain collaborative projects, have security standards similar or better to ours? If there is an absence of those fairly common standards then you would have no guarantee that information transferred from a fairly secure British company to an insecure other company will not be divulged or acquired by some third party or government.
  (Mr Gould) Two things really. There are obligations in the Treaty as there are now on a bilateral ad hoc basis for both physical and personnel security to be applied in countries which are working on our projects or collaborative projects which acquire our information or information we regard as classified. We do fundamentally rely on the security structure and authorities within that country to apply appropriate standards according to their own national laws and national regulations. Our obligation is to make sure that those national laws and obligations are (a) adequate for the job and (b) are being applied. We do rely on the country to apply its own laws in the country just as other countries do to us. Of course, the list does not apply to all six of the countries, there are NATO conventions and regulations which apply here.

  81. This is outside the scope of my Chairmanship of the Committee but if there is any additional information of a non sensitive nature on this I would be delighted to be alerted to its existence.
  (Mr Gould) Sure.

Mr Viggers

  82. Can I just come back to one small supplementary. If it appears that one country is not passing on information for information purposes, what are the sanctions?
  (Mr Gould) I suppose ultimately the sanction is that the co-operation breaks down and we start withholding our information. That would frustrate the purpose of the Treaty. That is ultimately, I guess, the main sanction, that we withdraw our co-operation.

Dr Lewis

  83. Is the problem that the provisions are trying to tackle simply one of avoiding duplication of security clearance procedures in the countries with which a company is trying to deal? Or is it that inconsistencies in the approach to security of classified information has hindered industrial rationalisations or equipment collaborations previously? How will the provisions in the Framework Agreement in this area resolve the problems experienced in the past?
  (Mr Gould) They really provide a code of practice and they also provide an umbrella. It is rather like the Global Project Licence, that within the framework of the Global Licence, within the framework of this Treaty, it is easier, particularly at the industrial level, to move personnel around countries without having to wait for months in many cases to get a new security clearance simply because they have gone from one EU country to another EU country and have a different residence and so forth. At that level what we are aiming at is not, I think, to resolve inconsistencies in the level of security, because we would not be sharing the information if we were worried about that, it is actually to resolve inconsistencies in bits of practice which make it difficult for people to move around in Europe when they are working on this sort of project.

  84. It is actually inconsistencies in the different practices, it is not just the duplication, the fact that they have to be re-vetted?
  (Mr Gould) It is partly duplication, it is partly countries go about this differently. Some countries take an awful lot longer to do things than others, mentioning no names, and this just gets rid of a whole lot of that sort of difficulty.

  85. For the sake of clarity, what you are saying is the provisions of the agreement will then allow individual employees to carry their security clearance from one signatory nation to another without having to be re-vetted?
  (Mr Gould) That is right, they will.

  86. Finally, have other non signatory countries, including the United States, indicated that they are content with the provisions of the Framework Agreement for protecting classified information?
  (Mr Gould) I have had no indication otherwise from the United States, and I am pretty sure that I would have if they were not content with this. They are concerned with the protection of their information which comes to the UK through bilateral arrangements, whether it is government to government or US industry to UK industry. They are content that we have done nothing to imperil that security. In terms of not endangering security the answer to your question is yes, there are provisions which enable non signatory nation but EU nationals to benefit from some of the eased arrangements that I referred to earlier if they wish to do so.

  Chairman: We will move on to some questions on OCCAR. I cannot think of those acronyms without being reminded of our colleague, Michael Colvin, who was very knowledgeable and quite obsessed with OCCAR. Now the mantel has passed to Laura Moffatt.

Laura Moffatt

  87. I cannot even pronounce it.
  (Mr Gould) I cannot remember what it stands for. I know what it does but I cannot remember what it stands for.

  Chairman: All in French.

Laura Moffatt

  88. We are trying to get to grips with the shape and form of the agreement. Who is going to be involved? What job is it going to do? You yourself, Mr Gould, earlier in this session, said if it does not do anything better than we have got now there is little point and I generally agree. Clearly we have several concerns, as do many of the organisations who have contributed to our work today. Can I just hear from you. The net effect of the agreement, what do you hope it will achieve? Will it really harmonise the military requirement where other initiatives in the past have failed to do so?
  (Mr Gould) Harmonisation of military requirements has been going on for an awfully long time, probably almost as long as I have been working in this business, so that is quite a long time now. I think two things. First of all, we cannot produce and bring in to service high quality world class defence equipment unless we have high quality world class suppliers to provide them to us. As I have said in different context, a lot of that means that we will have to go on having co-operation programmes with the United States. A lot of our equipment does come from European co-operative programmes and needs to continue to do so. We have got to keep European industry on the track of becoming or maintaining world class competitive quality in Europe. If we cannot do that we bring the shutters down and try each individual country from, in real defence terms, a diminishing equipment resource, acquisition resource, money, to do the same on a national basis, the quality of equipment is the thing that will suffer. The creation of transnational companies both in Europe and, indeed, across the Atlantic is something which is essential to maintaining that world class competitiveness. With fewer companies doing this the range of differing solutions to military requirements will also diminish. Instead of, for example, whereas if you go back 30 or 40 years, you might for a combat aircraft requirement have had a choice of anything up to ten or more different types of aeroplane to do it, in the future we are coming down to two or something like that. That means that if we are going to get the kit that we need, we need to be pretty sure that the solution being proposed by those two is going to meet all our operational needs. One of the problems that we have had with particularly European collaborative programmes in the past is differing standards. Although a Tornado produced for the Royal Air Force might look on the outside very similar to one that has been produced for the German Navy, actually when you get down into the works you find that it does a very, very different job. We shall not be able to afford, I think, that kind of diversity as in the past. I think the restructuring of the industrial and technological base will force us to be a lot smarter about how we define requirements and make sure that we have them meeting our needs right from the start rather than adapting them later in the life of the project, this is not a clever thing to do in my view.

  89. I want to turn to the role of OCCAR and the whole process of harmonisation. Will it be OCCAR, will it be a prospective European Armaments Agency or another body that is going to do this job? What is going to be their role? If it is OCCAR that is at the heart of it, what about non OCCAR members?
  (Mr Gould) First of all, I do not see OCCAR as being at the heart of harmonisation of requirements.

  90. Why?
  (Mr Gould) OCCAR is first and foremost an acquisition organisation so it is not developing the requirement, it is, if you like, acquiring the solution for the requirement. Realistically, of course, it will be involved because in any procurement project requirement management is a very, very important part of the procurement process. Keeping the thing on track, making sure that people are not over specifying, making sure companies are not, indeed, under performing. It has a role there but not the major role. What will become the main armament agency, procurement agency? At the moment we have a number of different solutions, if you like. Each country has got its own procurement agency. In the case in my agency we actually are lead nation for the procurement of some European programmes, which is interesting, rather than OCCAR. My view is that we will not end up with one solution, but this is my personal view, personally speaking, we will not end up with one solution and I will explain why. Even if OCCAR succeeds as becoming the best multinational procurement agency, that is what it wants to do, even if it succeeds in doing that, and the proof of the pudding will be in its management of its early programmes, we will not always want to go down that route. Why? Because we will have things we want to do purely nationally for genuine security reasons, we will have things we want to do on a bilateral basis with the United States, for reasons which I have explained, and we will have a process of down selection of programmes which might involve procurement of a European based solution or procurement of a US/UK based solution. When we have had a competition between the two, depending on which solution we have chosen, that will indicate the procurement route for the future. I do not think we will end up with a one fits all solution here. I do think OCCAR, if it is successful, and we must work hard to make sure it is successful, has a lot to be said for it in terms of a European solution when that is the solution that has been chosen. A lot of the things which have made European collaborative projects difficult in the past are to do with things like very long chains of management for the project, large project boards which are made up of participants of all the participating nations, collective rather than individual responsibility, individual decision taking, work share, issues like that which make it very slow, very cumbersome to manage these projects. OCCAR gives us a chance of doing that in a much slicker way. As I said, it has got to earn its spurs.

  91. I am still slightly worried about from which end of the telescope we are looking at this. I am not sure what the Treaty is trying to achieve. Surely we must be looking at whether the services or whatever is procured from the UK and the European forces is what we need.
  (Mr Gould) Absolutely.

  92. How do you guarantee that?
  (Mr Gould) Because OCCAR, and any project run under the Treaty Framework, will only be procuring equipment which has been, in my case, specified by the equipment customer, which is the armed forces. It is they who actually set the requirement. These organisations here are talking about the supply side, the actual setting of the requirement is the demand side. There is a military interest in trying to get the demand side better harmonised because the extent we need to operate together as nations—I am sure you have heard an awful lot about inter-operability in the past, people tend to start talking about frequencies and things like that—actually the best way to get inter-operability is to have the same piece of kit as the person you are operating with. You do not do that unless you harmonise the requirement. There is a military interest. Ultimately the say as to what I go out and acquire through OCCAR or anything else is the customer, which is the armed forces.

  93. I am not still wholly convinced that we will not be just getting from the industry what they think we should have rather than us demanding the best from the industry and then producing the goods.
  (Mr Gould) Okay.

  94. That is where I have the difficulty.
  (Mr Gould) Okay. I can give a long talk on acquisition reform and how we do these things but I will spare you. I think one of the very best ways of making sure we get what we want rather than what industry thinks we ought to have, and I understand where you are coming from on this, is to use competition. That is why I think it is very, very important that we do not end up with something that looks like a European preference or, indeed, a US preference policy here, that we try and keep our market open but have a framework within which UK companies working with companies overseas, transnational companies, can actually benefit from that more open market. I think keeping alternative procurement routes open, making sure we are very good at requirement management, very good at requirement specification, all the things from the Smart procurement initiative that we have undertaken, continue to be done.
  (Mr Pawson) If I may just add. This is helped by the fact that the Framework Agreement applies not just to inter-governmental programmes but also to private ventures and industry led programmes. The opportunity for competition is still there in different structural forms but this is facilitated still by the Framework Agreement, even though it is not an inter-governmental co-operation.

  95. Which leads me to my next question because it seems to me that it all sounds terribly motherhood and apple pie. We want more harmonisation, more open barriers, but inevitably is that not going to be over ambitious and put the whole agreement at risk? Do you believe it is achievable?
  (Mr Gould) I think this is an agreement that will prove itself or indeed not, but I hope it does, step by step. I think if we try and overburden the working of this agreement too early that could really be a deterrent, I agree, but there is the danger that you describe. If we take it step by step I think we will be all right.

  96. Will the aim be to produce a kind of database of national requirements all putting in our little bit to the pot, this is what we want, or to inform industry in the way we were talking about before? How will the common requirement come together? How will that be expressed?
  (Mr Gould) There are two stages. First of all, it is to actually share information on our equipment planning assumptions, what are the requirements which we are generating before they have got too firm and to share information. All the countries do this differently. We all have different planning cycles, different mechanisms for doing it. We are not very good, as a matter of routine, at actually sharing that information. That is the first thing to get right. That is only information sharing, that is going to be a first step.

  97. Then you pile all your requirements in a pot.
  (Mr Gould) No, we cannot just pile it into a great big pot. We need to look at the planning cycles in each of the countries and see where there are areas where it looks as though there is a coincidence in planning cycles and, therefore, the opportunity to produce a harmonised requirement amongst two or more nations. We actually do that at the moment but it is informal and ad hoc, it happens now. Actually producing a harmonised requirement, which is the basis of something you can go to industry with a request for information or whatever, is a second step which is much more critical to the kind of thing that you have outlined. What I would like to see—but this is not going to be easy—is when you have a requirement which is not too firm that you do something more often that we now do nationally which is ask industry for information. This is the kind of capability we are looking for: "give us information on your ideas on how you produce this". The more you do that the more you help guide industry towards flexible thinking and the kind of requirement that you want. You get a better response to that, of course, if you do it on a European and North American basis than if you just do it on a European basis which is why it might not always be easy to do.

  98. That is interesting. If that process was in place throughout the framework, that would assume it would be demand led.
  (Mr Gould) Yes.

  99. Why do you feel so sceptical that it might not be industry saying "Come here, look what we have got for you"?
  (Mr Gould) That sounds a bit like Galbraith's military industrial complex, does it not? Saying we have got something, you have really got to have it, you have to pay for it.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 14 February 2001