Further Information following the Evidence
Session from the Ministry of Defence on DARA becoming a Trading
Fund (27 February 2001)
Q 20When was the interim or temporary status
of the Headquarters' location at St Athan first made public?
The interim status of the Headquarters has been
communicated to the workforce through Mass Briefings by the Chief
Executive, Monthly Team Briefings and through recruitment literature.
The policy has always been that the Headquarters would remain
at St Athan until Trading Fund status was achieved. After Trading
Fund it would be reviewed but any final decision will be subject
to a full Investment Apprisal, Trades Unions consultation and
ultimately, approval from Min (AF).
Q 24What is the current level of manpower
in the Aircraft Business Unit at St Athan and how does that compare
with the manpower likely to be required under each of the options
being considered for its workstatus quo, refurbish at St
Athan, new-build at St Athan, and relocate to a greenfield new-build?
A 24As at 15 February 2001, the level
of manpower in the Aircraft Business Unit at St Athan was as follows:
The manpower numbers likely to be required under
each of the options being considered for the furture of the Aircraft
Business Unit Work at St Athan will not be greatly affected and
any reductions will be achieved through natural wastage. Clearly
if we were able to join all of the Aircraft Business Unit functions
into a single entity there would be some potential cost savings
in terms of manpower. In this case we would anticipate the future
size of the Aircraft Business Unit at St Athan to be around 1400
QQ 80/81With the launch of Trading Fund
status, what is the value of work that will be allocated to DARA
without competition, and for how long? What proportion of the
MOD's aviation deep repair work does this represent?
AA 80/81The Trading arrangements between
MoD and DARA are set out in the Terms of Business Agreement (TOBA)
and makes reference to indicative values that are protected for
a three year period.
DARA prepared a Financial Projection for the
purpose of the Trading Fund approval process and the turnover
numbers contained therein were endorsed by MoD. Such Turnover
numbers are however, subject to some variation until pricing is
finally agreed. At least 90% of the value of the Turnover is allocated.
The relevant indication is therefore as follows:
|F/Y||Turnover for Year Projected £M
||Assumed Commercial Content £M
||Deemed allocated by MOD £M
||Value of 90% allocated £M
During the three-year period DARA will seek to convert the
allocated order book to other longer-term contractual arrangements,
and where appropriate through competition.
Some 50 per cent of Aviation Deep Repair work is currently
placed with DARA by the Defence Logistics Organisation (DLO).
Q 82How many Service Personnel were included in DARA
at 1 April 1999 and currently and how many are likely to be included
at 1 April 2002 and subsequently when any envisaged reductions
have been completed?
A 82The total number of Service Posts in DARA as at
1 April 1999 was as follows:
Source: Corporate Plan 1999
The current number of Service Personnel as at 31 December
2000 was as follows:
Note: The Service Numbers have reduced significantly because
we have transferred 132 from the GRSC Sealand to DCSA and 315
to the RAF Support Unit at St Athan. The remaining difference
is because the actual complement when the Agency commenced business
on 1 April 1999 was higher than the actual strength. We have now
taken action to align the complement with the strength.
The number of Service personnel employed in April 2002 will
depend on the business needs of the RAF and DARA. Work is currently
underway in this area.
Q 95The Committee would like an explanation of the 11%
under-funding of DARA's budget referred to in answer to Q 95;
including its rationale, its originator, the years involved and
its implications for MoD expenditure, DARA's output achieved and
any operational implications?
A 95In common with general MOD (and Industry) working
practice, DARA has, historically, balanced their consideration
of Customer Requirements with the need to produce taut, realistic
forecasts within a strict financial framework. An element of risk
or "underfunding" has thus always been required to place
a financial value on the amount of programmed work which may not,
in the event, be completed due to contractual or physical progress
delays or other unforeseen occurrences.
The introduction of financial (cash) risk has been an important
tool in injecting greater realism into the aggregate cash requirement
of subordinate budget holders. It has been used for many years
at many levels in the Ministry of Defence as a means of constructing
taut budgets and to offset a historical propensity, demonstrated
in some areas, for over-optimistic forecasts of project completion
and payment. Experience has shown that such risk management mechanisms
do not impact adversely on operational activities or the delivery
of MoD Final Outputs. A risk level of 11% entirely within acceptable
At the end of the FY00/01 financial planning exercise DARA
was allocated resources to a level such that risk over the period
2000/01 to 2002/03 was no higher than 9.5%. Further resources
were made available during FY 2000/01 such that DARA are currently
forecasting an underspend of £1m (circa 0.4%). This very
small forecast variation against budget FY 2000/01 suggests the
risk assessments and judgements made during the previous planning
round and in-year will have contributed to successfully engineering
full utilisation of the final budget allocated.