Examination of witnesses (Questions 80-99)|
WEDNESDAY 2 MAY 2001
WALMSLEY KCB AND
80. What is your fallback position if the necessary
improvements which you are asking for do not happen?
(Sir Robert Walmsley) I do not envisage that. I do
envisage that we will agree the necessary improvements. If every
time we embarked on a development programme we developed fallbacks
and fallbacks to those we would never take any decisions at all.
It is for Admiral Blackham to explain to you how we retain the
operational capability in the meantime.
81. I can understand your irritation. On the
other hand, you can understand why because there are one or two
examples where the fallback situation, plan D, is absolutely necessary.
I do not want to rattle off the long list. We are not suggesting
this is what will happen but we have to explore the possibilities
because the possibilities sometimes become reality.
(Sir Robert Walmsley) I apologise for seeming irritated.
The point I was trying to make was that there is an operational
fallback which Admiral Blackham can explain. In terms of procurement
fallbacksi.e., procuring another missileI do not
82. I understand that so far you have got £19
million back because of liquidated costs from the contractor.
Is that correct?
(Sir Robert Walmsley) It is correct, within a million
83. £19 million out of potentially £500
million spent is not very much to get back. Are you confident
that you could get a larger amount back in future, if necessary?
(Sir Robert Walmsley) Putting "if necessary"
at the end allows me to say absolutely, because "if necessary"
would imply that we had cancelled the contract. We would only
cancel the contract if no capability had been delivered. In that
case, I believe our position is totally robust.
84. You and I had an exchange a year ago about
Bowman and I recall it very well because I had a constituency
interest in Bowman, as you know. I hope that we are not going
to get into another Bowman fiasco. Could I have your reassurance
that this is not potentially another Bowman?
(Sir Robert Walmsley) It is not potentially another
Bowman. Bowman was about getting the programme to contract. We
are now arguing about whether the thing performs to 100 per cent
of the contracted capability. I am very much concerned that my
perhaps rather petulant answers imply that I regard the questions
as trivial. I absolutely do not. This is right at the top of my
in-tray. What I am also trying to do is to tread a very careful
line between leaving you with the wrong impression that ASRAAM
is not an excellent missile. It is an excellent missile but when
we have contracted for 100 per cent performance that is what we
want to see. Those are the sort of lines I am encouraged to take.
We do not want to provide a missile to the Royal Air Force if
we are not clear that it is going to achieve all the capabilities
that Admiral Blackham's staff have specified. That is the line
we are sticking to. In the meantime, the aircraft are able to
85. In the meantime while you are waiting for
these things to be put right at some unspecified date, there are
costs of having to maintain Sidewinder longer than originally
envisaged. Who is going to be paying for that and who is going
to be paying for the additional costs incurred as a result?
(Sir Robert Walmsley) Liquidated damages are precisely
designed to put the customer in the position he would have been
in if the thing had arrived. They will contribute to the Sidewinder
costs. It is not clear what those costs, if any, are going to
be yet. It is clear that that is the purpose of liquidated damages
and that is where we should see them being applied, as we did
with the C-130J.
86. If we were to accept ASRAAM now, how significant
would be the shortcomings operationally?
(Vice-Admiral Sir Jeremy Blackham) They would be very
significant. We want ASRAAM but ASRAAM is designed against a threat
which we expect to develop over the next 25 years. In other words,
it is right at the top end of the market during the time in which
we expect to have it in service. At the moment, the aircraft we
have deployed, armed predominantly with Sidewinder are entirely
adequate against the threat which they are facing. That is not
to say that I do not want ASRAAM to its date which, as you have
already observed, has passed. I am satisfied that the capability
that our deployed aircraft have on the operations on which they
are deployed is entirely satisfactory. It would not be in ten
or twenty years' time but I confidently expect to have ASRAAM
long before then. As far as Sidewinder is concerned, we have always
planned that Sidewinder should be in service, particularly on
the Tornado GR4, until that goes out of service which is currently
thought to be about 2018. We are not having to maintain a missile
in service that we would not have had to maintain under our previous
plans. We may have to keep rather more of them operational.
87. Have you already received any ASRAAM missiles?
(Vice-Admiral Sir Jeremy Blackham) We have not accepted
88. You had to send some back?
(Vice-Admiral Sir Jeremy Blackham) There have been
a number of tests and trials. They were not offered to us.
89. What about export prospects? We understand
from the memorandum that the Royal Australian Air Force was interested
in buying the ASRAAM.
(Sir Robert Walmsley) It is more than interest. They
have signed the contract.
90. Will this export programme be affected as
a result of these delays?
(Sir Robert Walmsley) We stay in very close touch
with our Australian colleagues on the procurement side, as I know
Admiral Blackham's staff do on the equipment capability side.
They will take a similar view to us. We have been also extremely
anxious to make clear that we are operating at the margins of
the missile's performance and to other potential customers that
we regard this as the right air-to-air missile for the early 21st
century. I have had my Canadian counterpart here this week and
we have been discussing just that type of thing.
91. We saw this table of key user requirements
on page 37 of the Major Projects Report, the various performances
against approved key user requirements. Clearly, at that time,
you said that in all ten requirements currently forecast to be
met, yes or no, it is yes, yes, yes, yes, yes; and then, percentage
currently forecast to be met, 100 per cent. When did you first
realise that your forecasts were not going to be met, when ASRAAM
was not going to come up to scratch? Why does this report list
all ten key areas as being fully met when clearly something has
not been fully met; otherwise, you would have accepted ASRAAM?
(Sir Robert Walmsley) All spot on. This table you
are looking at was a prediction on 31 March 2000 as to what would
happen with ASRAAM. At that stage, we were doing test runs. This
missile flies well. It has hit targets. That is where we stood
at the time this report was prepared. The data that goes into
this Major Projects Report was prepared during the summer of 2000
and validated before publication in November of last year, but
essentially at the stage that this thing went to press we were
still hoping to achieve the December 2000 in-service date.
92. This is a wish list?
(Sir Robert Walmsley) No, it is not. These are the
predictions from the company. We absolutely know now which of
theseand I am not going to say that noware the ones
that we are arguing about. What I can tell you is that that is
dragging down the whole of the Defence Procurement Agency's performance
in terms of one of our five key agency targets. We were previously
delivering 98 per cent of the operational performance targets
set by Admiral Blackham's staff and this ASRAAM missile on its
own has brought it down to about 96 per cent. These numbers are
showing up in the Agency's performance; that is why it is at the
top of my in-tray. We got the predictions wrong. I would submit
that it was on the basis of data provided by the company of satisfactory
progress of test firing and we have come up against some problems.
93. Should we not then have another column as
well as having forecasts for actually achieved? Then we would
have more accurate information.
(Sir Robert Walmsley) You would and we could have
another column, except that I have never yet had a proposal to
remove information from this Major Projects Report. We have just
agreed a new format with the National Audit Office and the Public
Accounts Committee. For most programmes which are in their very
early stages, bearing in mind these things are only demonstrated
at acceptance, we would have a great column of not yet demonstrated.
94. I am not suggesting you remove information;
I am suggesting an additional column alongside the forecasts.
(Sir Robert Walmsley) What I was trying to do as politely
as I could was to say that, for the last few years, this report
has got more and more complex and there are always proposals to
put more information in.
95. I do not want to intrude into areas where
we have no responsibility, but during the negotiations with the
NAO and the Public Accounts Committee I thought we were part of
the loop as well. Could you politely suggest to them that if they
are in negotiation with the Public Accounts Committee and we deal
with defence matters on a permanent basis, not sporadically, we
would like to be informed. I am not criticising you, Sir Robert,
but it might be polite to us if the NAO talks to us as well as
their sister operation.
(Sir Robert Walmsley) I absolutely accept the point.
We will do that. I cannot remember; I thought we had told you
about the new format of the report.
96. Should I be able to take the other tables
in your performance report as being accurate? Is this a one-off
aberration or should I take all the tables with a pinch of salt?
(Sir Robert Walmsley) I do not think you should take
them with a pinch of salt. ASRAAM has been a formative experience
for me. Here we were, predicting that we would meet them all and
we found we did not. We do meet nearly all the performance parameters.
That is just a matter of record. As they go past their acceptance,
we do meet them. I think it is true that, because these are predictions
of performance at acceptance into service, it is very easy to
get yourself into a mind set where you are thinking, "Yes,
I know it is not right at the moment, but I think I know what
needs to be done to put it right. Therefore, I will give it a
tick." I think we have to be a little more self-critical
in our assessment of the predicted performance than perhaps we
have been. That is the lesson that I draw from this. How sure
can we be that ASRAAM is going to meet these performance requirements
or was it just that the contractor says so or we think it can
be fixed or whatever? I do not think we have been self-critical
enough and I think we need to be more so.
97. In that respect, did DERA have any role
in assessing these matters? Could they not have warned you if
there were some problems?
(Sir Robert Walmsley) They could. I do not know the
detail of that but the way we try to work it in assessing these
matters is that we should not be marking our own homework. What
I feel most comfortable with is if Admiral Blackham's staff, to
whom we do deliver this equipment, asks us for the evidence that
we are going to meet these key performance parameters at the introduction
into service. We all have something to learn from the ASRAAM experience
and we will get tougher questions next year from Admiral Blackham's
staff, I think.
98. Moving on to the current negotiations about
the BVRAAM Meteor contract, the letter from Baroness Symons that
I have already quoted also has an interesting statement about
that in which she says, "We are also determined to draw the
lessons from this programme when we sign the contract for Meteor,
the new Beyond Visual Range Air-to-Air Missile for Eurofighter,
which will also be built by MBD, to ensure that they deliver the
standard of missile we require when we need it." This is
quite significant: ". . . the Meteor contract will include
a series of key technological milestones, failure to achieve any
of which may lead to the termination of the contract with all
money being returned to the partners." What lessons can be
drawn from this ASRAAM experience for application to the BVRAAM
(Sir Robert Walmsley) Clearly, there are quite a few.
You asked me a question a few moments ago about whose fault it
was and I said we were clear in our position and the firm took
a different view. What I think that means is that one of the first
lessons we want to apply to BVRAAM is that there should be absolutely
clear, unambiguous acceptance criteria and how we measure conformity
or otherwise with those criteria at the moment of contract placement.
It sounds an obvious point but that in effect is what the dispute
is about. Quite a lot of this is done in computer simulations
rather than by firing against real targets. It is whether the
model is accurately representing real life. This is where some
of these arguments have their absolute nexus. We have already
mentioned key milestones, sometimes called golden milestones.
There are four of them that we planned during the BVRAAM development
contract. Because those are performance related, that is learning
a lesson too from ASRAAM. It is trying to get the performance
aspects of the missile under our belt relatively early in the
total development programme to essentially prove that it has the
basic building blocks to make a weapons system. There are industrial
lessons too. This contract was originally placed in 1992 with
BAe Dynamics, long gone now, now Matra BAe Dynamics and then,
on Friday of last week, it turned into MBDA where the "A"
stands potentially for Alenia, but I do not think it is mentioned
in particular, as the Italian competence comes into that company.
That gives that company a far greater industrial competence in
missiles than BAe Dynamics had. In particular, the company will
be staffed by people who have a total comprehension of the seeker
capabilities; whereas the ASRAAM seeker was done to some extent
as an arm's length purchase from an American contractor. What
that meant was the seeker was a little bit of a black box to start
with and it perhaps took them some time to understand how it performed.
One of the reasons we encouraged the formation of MBDA was to
give it a total missile competence from the seeker right through
to the motor. I think there is an industrial point there. Finally,
during the Meteor competition, we were offered some quite ambitious
in-service dates by all the contractors at various stages. We
have taken quite a cautious view of those ambitious offers in
setting the in-service date. That is a lesson learned too.
99. You took the decision to go for what could
be called a big bang approach as opposed to an incremental approach.
The Meteor was chosen on the basis that it would be an alternative
to Raytheon's incremental approach. Is there not a lesson here
about the danger of setting unrealistic requirements technically,
and companies making over-ambitious claims when they bid for MoD
(Sir Robert Walmsley) I cannot but agree with that.
The question is phrased in such a way that it would be wholly
unreasonable to disagree with it. I know I am like a dog with
a bone on this, but the point I would make is that, yes, Raytheon
offered us an incremental programme, but they only offered us
the first increment. It is one thing to offer a person an incremental
programme, where you define all the increments at the moment you
accept it; it is quite a different thing to offer them an incremental
programme which says, "Here is how far we will get you with
what you are buying from us. If you need to make it fully compliant
with your requirement all these things will have to happen."
We had no reliable determination of what all those things were
and how much it would cost. Re-engining a missile or whipping
out the seeker half-way through life is, as near as could be,
equivalent to buying a new missile.