Examination of Witnesses (Questions 80
WEDNESDAY 10 JANUARY 2001
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.
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.
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
(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
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.
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
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.
(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 nationsI
am sure you have heard an awful lot about inter-operability in
the past, people tend to start talking about frequencies and things
like thatactually 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
(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 seebut this is not going to be easyis
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
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
(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.