House of Commons - Defence

Select Committee on Defence Ninth Report

NINTH REPORT

The Defence Committee has agreed to the following Report:—

MAJOR PROCUREMENT PROJECTS

Introduction

1. This is the third of our annual inquiries examining the progress of a selection of major equipment programmes, as follows:

Future Aircraft Carrier (CVF)
Future Carrier-Borne Aircraft (FCBA)
Type-45 destroyer
Ro-Ro strategic sealift
Bowman communications system
Tactical Reconnaissance Armoured Combat Equipment Requirement (TRACER)
Eurofighter
Beyond Visual Range Air-to-Air Missile (BVRAAM)
Advanced Short-Range Air-to-Air Missile (ASRAAM)
A400M and C-17 strategic lift aircraft

2. Each year we have focused on those programmes at particularly important stages in their development. Thus in our first report[8] in the series we examined the then recent collapse of the collaborative 'Horizon' frigate programme and its replacement by a national Type-45 destroyer programme, as well as the vessel's PAAMS missile—the other major component of the aborted Common New Generation Frigate programme—which was to continue. Our second inquiry[9] focussed on the Beyond Visual Range Air-to-Air Missile (BVRAAM) for the Eurofighter and strategic air-lift, the competitions for which had then just been decided, and the Bowman communication system whose competition was on the brink of having to be relaunched.[10]

3. In our latest inquiry we received a further memorandum from the MoD summarising the state of play with our ten tracker projects,[11] and we took oral evidence on 2 May 2001 from Sir Robert Walmsley, the Chief of Defence Procurement, and Vice-Admiral Sir Jeremy Blackham, Deputy Chief of Defence Staff (Equipment Capability).[12] On this occasion we have reviewed progress on: the Future Aircraft Carrier and its Future Carrier-Borne Aircraft; the Advanced Short-Range Air-to-Air Missile, intended for the Eurofighter and other aircraft; the Roll-on Roll-off ships providing a strategic sealift capability by means of a Private Finance Initiative programme; and enhancements to the UK's precision-guided bombing capability in the light of the lessons drawn from the Kosovo conflict.[13]

The Future Carrier Force

4. Our examination of the witnesses focussed on currently critical issues for each of these programmes. On the Future Carrier, the MoD was about to launch the second phase of the Assessment development programme, and there had been reports that BAE Systems (one of the two competing consortia) had offered an alternative timetable for that work which would increase its scope and duration. This proposal potentially had implications for continued competition for the project. This was also a good opportunity to review the progress of the collaborative US/UK Joint Strike Fighter—the MoD's preferred candidate for the Future Carrier-Borne Aircraft—after the MoD had signed up to the next phase of the aircraft's development in January 2001.[14] As the Chief of Defence Procurement pointed out, the aircraft is the more complex and expensive aspect of the package that goes to make up the future carrier force.[15] We therefore questioned our MoD witnesses, in particular, on:

The basis for the MoD's decision to continue with the next phase of the Joint Strike Fighter development programme, and the grounds for the selection of that aircraft as the preferred solution for the Future Carrier-Borne Aircraft.[16]

Progress with the JSF programme, and the United States' commitment to it.[17]

UK national requirements in the Joint Strike Fighter programme, and their potential cost.[18]

The relative advantages for the UK of the two possible variants of JSF—a 'Short Take-Off and Vertical Landing' aircraft, and a 'Conventional' carrier aircraft—and, if both remain available, at what point a decision needs to made about which to pursue.[19]

The requirement for two carriers, their affordability and their expected in-service availability.[20]

The progress achieved with the carrier's Assessment studies, being undertaken by the two competing bidders.[21]

Representations from industry about how the second phase of those studies might be taken forward, and the MoD's view on the way ahead.[22]

The interaction of the carrier and aircraft programmes, and their relative risk.[23]

5. We also discussed the latest position on the MoD's plans for maintaining competition on the Type-45 destroyer programme—another project in which BAE Systems had reportedly raised the possibility of dispensing with competition for the remaining work.[24] The MoD's review of procurement strategies for naval work, currently underway, will affect both the Type-45 and Future Carrier programmes. We would expect that that review [25] will feature in our successors' deliberations.

ASRAAM

6. We recently received information about technical problems with the Advanced Short-Range Air-to-Air Missile that had prevented the MoD accepting it from the contractor.[26] At that stage, the programme was already running two years late, and the new difficulties mean that a further delay in its now overdue in-service date would have to be set after a recovery programme had been devised. We accordingly questioned our MoD witnesses on:

The scale of the problem encountered with the missile programme, where the fault lay, and the remedial action being taken.[27]

The reporting of ASRAAM's likely performance in the Major Projects Report, and possible lessons for the way equipment programmes' capability is evaluated in that annual document.[28]

Lessons that might be drawn from the difficulties encountered in the ASRAAM programme for application to the 'Beyond Visual Range Air-to-Air Missile' to be procured from the same contractor.[29]

Strategic Sealift

7. We examined the witnesses on the Ro-Ro PFI programme. The MoD selected Andrew Weir Shipbuilding as the preferred bidder for this PFI contract, which will entail four ships being build in a German yard and two at Harland & Wolff in Belfast. However, the MoD has recently had to take over the contract for the construction of these latter two vessels, apparently casting doubts on the progress and viability of the programme and the rationale for pursuing the PFI route for securing this capability. We questioned our witnesses on:

The reasons for the MoD having to take over the construction contract for some of the Ro-Ro vessels, and the consequences for the management of the remaining stages of this PFI programme.[30]

The continued rationale for use of the PFI procurement route in this case.[31]

Lessons of Kosovo

8. We also reconsidered the equipment lessons of the Kosovo conflict, picking up some of the conclusions and recommendations that we made in our report last year on Operation Allied Force.[32] We questioned our MoD witnesses particularly on:

Progress with acquiring the Enhanced Paveway ground-attack weapon to satisfy the requirement for an improved GPS-based precision-guided bombing capability, and the latest progress with the delayed Tornado GR4 upgrade—the main aircraft to deploy that weapon system.[33]

The scope for upgrading or reconfiguring the MoD's submarine-launched Tomahawk cruise missile capability.[34]

The need for a review of the types and quantities of the various precision-guided ground-attack munitions.[35]

Future Work

9. An aim of our series of major procurement projects inquiries has been to inform the annual defence equipment debate. The next debate, however, will now fall in the next Parliament. To make the oral and written evidence gathered from our latest inquiry available for that debate, we have decided to publish it with this brief Report. We had intended to take further oral evidence from the Minister for Defence Procurement on 16 May, but the dissolution will now intervene. We hope that early in the new Parliament our successors will continue the examination of the issues relating to the programmes on which we have focused this year. We also hope that our successors will continue our series of annual inquiries, monitoring progress with the MoD's more significant procurement programmes and other programmes which may, from time-to-time, raise particular issues.

8 Eighth Report, Session 1998-99, Major Procurement Projects Survey: The Common New Generation Frigate Programme, HC 544 Back

9 Tenth Report, Session 1999-2000, Major Procurement Projects, HC 528 Back

10 Subsequently, the MoD reopened the Bowman competition in June 2000 (Ev p 39) Back

11 Ev pp 22-68 Back

12 QQ 1-153 Back

13 See Fourteenth Report, Session 1999-2000, Lessons of Kosovo, HC 347, paras 140-157 Back

14 The UK signed a Memorandum of Understanding with the US in January 2001 to take part in the next stage of JSF development beginning in October 2001 - 'Engineering and Manufacturing Development'. This allows UK to take part in the selection of the winning design, between proposals being developed by teams led by Lockheed-Martin and Boeing. Back

15 QQ 56, 66 Back

16 QQ 2-4, 10-12, 60 Back

17 QQ 8, 16-17, 59 Back

18 QQ 5-7, 9, 18-20 Back

19 QQ 13, 21, 25-27, 57-58 Back