Examination of Witnesses (Questions 1
- 19)
MONDAY 15 JANUARY 2001
SIR ROBERT
WALMSLEY, KCB AND
VICE ADMIRAL
SIR JEREMY
BLACKHAM, KCB
Chairman
1. This week we shall be taking evidence in
two hearings on the Ministry of Defence's progress with major
defence equipment projects. Later this week, on Wednesday, we
shall take evidence on Parts 1 and 2 of the National Audit Office
Report on the Major Projects Report 2000, which examines the MoD's
progress in procuring its major equipment programmes to cost,
time and performance targets. Today we are going to take evidence
on Part 3 of the Major Projects Report 1999, which examines the
impact of slippage on operational capability and costs on four
case study projects, and Part 3 of the Major Projects Report 2000
which updates those. The main witness today is Sir Robert Walmsley,
Chief of Defence Procurement and Chief Executive of the Defence
Procurement Agency. Would you like to introduce your colleague,
Sir Roger?
(Sir Robert Walmsley) Vice Admiral Sir
Jeremy Blackham, the Deputy Chief of Defence Staff, Equipment
Capability, but also my customer.
2. Welcome and a happy new year to you both.
You are at least familiar with the procedure, Sir Robert, more
than anyone else I know. I shall start with paragraph 3.23 of
the Major Projects Report 2000 which records the probable write-off
of £115 million of Medium Range TRIGAT development costs
and paragraph 3.32 records that between £35 million and £102
million has been wasted on BOWMAN while delays on the Type 45
Destroyer and Brimstone programmes will cost the department an
additional £565 million and £48 million respectively.
That adds up to about £800 million across four projects.
How will that affect the provision of defence capability more
widely and can you assure the Committee that it will not result
in vital funding being cut elsewhere in the budget?
(Sir Robert Walmsley) That is an enormous question,
as I know you understand. Three separate major programmes.
3. We shall deal with the details of them shortly.
(Sir Robert Walmsley) I understand. You did mention
£800 million and I would say £500 million of that in
round numbers derives from the Type 45 Destroyer programme. You
can see that those costs have not yet been incurred and, as the
report makes clear, those additional support costs have been accompanied
by a deferral of the procurement expenditure. I would submit that
the problem there is deferred introduction of capability: it has
not resulted in a loss of money because we have not spent the
money yet and we have not incurred the cost yet.
4. That was my question. How will it affect
the provision of defence capability? What you are telling us is
that it will in terms of deferral.
(Sir Robert Walmsley) In terms of deferral, not money.
5. You have put off things we would otherwise
have.
(Sir Robert Walmsley) I put the TRIGAT position in
a different category. That is the £115 million. We have spent
that on a collaborative programme which has hit the buffers. We
withdrew. If the programme had not been conceived at all, then
I am absolutely confident that Admiral Blackham or his predecessor's
predecessor's predecessor would have required my predecessor's
predecessor to have embarked on an alternative anti-tank guided
weapons system. I do not believe that the effect on the budget
would have been so substantial. The problem is that the front
line of the armed forces is today relying on MILAN when they had
a reasonable expectation they would have a modern anti-tank guided
weapons system.
6. That one really is a loss, is it not, because
it is a write-off?
(Sir Robert Walmsley) It is an absolute write-off
but as to the effect on the defence budget, if we had not started
on TRIGAT we would have been asked to start an alternative anti-tank
guided weapons system.
7. It might have worked.
(Sir Robert Walmsley) That is why I say the problem
is that the front line are relying on MILAN when they should have
been relying on a better system today. BOWMAN is in a different
category. We spent the money, we started off down the wrong track
and, depending on which contractor wins the competition, so will
depend the value of the write-off. I hugely regret that we have
written that money off. It is a waste and the consequences of
course depend on the size of the write-off. In terms of your accounting
units, as I remember them before, of one frigate, then the minimum
level of write-off is at least in the form of 20 per cent of a
frigate.
8. Let us pick up BOWMAN. When you gave evidence
at the Major Projects Report 1998 hearing earlier this year, you
assured us that you had "the best industry people in the
world" working on BOWMAN and that "they were close to
a cost-effective solution". Yet paragraph 3.25 of the report
says that the competition has been re-opened, some 12 years after
the requirement was first raised. Can you explain to the Committee
why you did not see the difficulties with the ARCHER collaboration
earlier and why it has taken so long for you to decide what to
do on this?
(Sir Robert Walmsley) I do not think the answer will
satisfy you. What I can say is that ARCHER did come extremely
close to satisfying the Ministry of Defence. They were completely
re-energised in 1999 as a result of the consortium being managed
properly by BAE SYSTEMS. They brought in new staff, they were
supported by their consortium members, both from the United States
and from France, with the best people that could be found. We
were very keen though to make sure that we based a decision on
whether to continue or not with ARCHER on the substance of their
final bid, which came in in June. Right until the last few days
of that bid, it was not clear to me whether it was going to be
satisfactory or not, but the very fact that ARCHER Communications
Systems Limited put so many changes into their bid in the last
few days caused us to look very closely indeed at whether they
would be able to live up to the promise suggested in those changes.
I also told the Committee last year that we would be very, very
careful about extravagant promises given to us by contractors,
particularly when they gave them in the closing days of either
a competition or a single source of procurement on the basis that
it had become a must-win project for them. Of course I wish we
had stopped with ARCHER sooner because there is no point in pretending
it has been a good thing for it to go on until July last year,
but having had the final bid in late June, 23 June in fact, we
announced that we had stopped with ARCHER on 25 July. From the
Ministry of Defence's point of view, that is moving extremely
fast on a very serious programme to terminate with ARCHER.
9. I leave aside any comments on glacial timescales
but we shall move on to another aspect of the session we had on
the Major Projects Report when we talked about Brimstone. You
argued that project which is now expected to enter service will
be better than the missile which would have entered service had
there been no delays. Paragraphs 3.9 and 3.10 of the Major Projects
Report 1999 say that the required capability was not available
during the Kosovo conflict, while paragraph 3.9 of the 2000 report
shows that the delay has cost the department an extra £48
million. In your opinion, to what extent can improvements in capability
which arise almost as an accidental outcome of delays ever be
a mitigation for the operational and cost penalties associated
with the delayed introduction of equipment? After all it missed
an entire operation in effect here.
(Sir Robert Walmsley) I shall ask Admiral Blackham
to comment on the operational consequences, but I should like
to make the point that these improvements have arrived not as
an accident of the delays but as a consequence of the delays.
10. Inadvertent consequences.
(Sir Robert Walmsley) I accept "inadvertent".
I would just make the very important point that image recognition
which allows the missile to discriminate between various different
targets would not have been available if the missile had been
introduced at the time it had been originally planned. That is
just a fact.
(Vice Admiral Sir Jeremy Blackham) It is probably
fair to say that as things turned out in the Kosovo operation
the non-availability of Brimstone was probably not critical. The
reason for that lies in the nature of the Brimstone weapon itself.
Brimstone is what the jargon would call a "fire and forget"
missile, but it is a missile which acquires its own target after
it has been released by the pilot. That has some advantages if
you are facing massed armour on a plain or in a desert, which
is of course the scenario for which the Brimstone missile was
originally conceived, and if you are flying above cloud or in
circumstances where you cannot see the target. But the circumstances
in Kosovo were rather different from that and the rules of engagement
were rather different. It was important to be able to identify
targets quite precisely before they were engaged. Although the
Brimstone missile will identify with a very high degree of accuracy
a tank or heavy armoured vehicle, it is also the case that it
cannot be guaranteed to reject a target which is not one of those
things.
11. Like a tractor.
(Vice Admiral Sir Jeremy Blackham) I think it would
actually reject a tractor because the actual system it uses is
very much more precise than that, but you could not be certain
it would reject a non-tank type vehicle. Consequently, its use
in Kosovo would have been somewhat restricted in the campaign
which was actually fought. Whether that would have been different
had we had to embark upon an opposed entry into Kosovo, it is
rather hard to say and would be pretty speculative. In fact the
operational consequences of not having Brimstone were not particularly
painful.
12. Speculative, yes, but quite important when
you are talking about armed forces who have to be able to cope
with opposed entries. Last time we spoke on this particular issue,
I did ask you about the alternative at the time of Maverick. I
note from paragraphs 3.5 and 3.7 of the 2000 report that the department
has placed an order for Maverick G missiles which are seven times
more effective than the BL755 cluster bomb Brimstone will replace.
They also, as an aside, meet the consideration that Admiral Blackham
raised of being very precise in terms of their targeting. Why
did you not decide to buy Maverick earlier to fill the capability
gap caused by the delay of Brimstone instead of upgrading BL755?
(Sir Robert Walmsley) It is always very difficult
to work out why you did not do something. My inclination is—
13. It just looks obvious, that is all.
(Sir Robert Walmsley) I do recall your advice at the
last hearing.
14. It was a question, not advice.
(Sir Robert Walmsley) I would say that in Brimstone's
favour is the fact that the aircraft can carry up to 18 Brimstones
whereas it can only carry six Mavericks. Brimstone as a weapon
is more effective than Maverick because of this target discrimination
capability, because it is a "fire and forget" weapon,
it does not expose the pilot to risk. Mavericks, however, cost
twice what Brimstones cost each and we have always got to bear
in mind that Brimstone's in-service date, currently October 2002,
has slipped so that at the time we took the decision Brimstone's
in-service date would have been even closer and Brimstone was
placed on contract in late 1996. So the in-service date when we
first started with it was about five years away. That is quite
a narrow window when it would have seemed sensible to buy Maverick.
I would also say that I am extremely pleased that we are buying
Maverick. I do not in any way resile from that decision. I would
just make the point that Maverick itself has evolved hugely over
the now nearly 30 years since it first started service with the
United States Air Force. Maverick has been an enhancing capability,
so it has always looked more attractive to get the next one, but
as you get closer to the Brimstone in-service date more difficult
to make that decision.
15. I might observe that most of the complex
weapons systems you buy from America do tend to develop under
your feet as it were: Maverick, Tomahawk, whatever. Let us move
on to paragraph 3.17 of the 2000 report which notes that the UK
withdrew from the TRIGAT project on 28 July 2000, some 20 years
after beginning the programme in the face of the uncertainty facing
its future. What lessons have you taken away from your withdrawal
from the Medium Range TRIGAT programme and how are you applying
those to other programmes to ensure that you do not face similar
difficulties?
(Sir Robert Walmsley) One of the first lessons is
that we should not specify how to solve the problem. We specified
with TRIGAT that it was to be a laser designated weapon and it
was therefore to follow a line of sight to the target, which meant
that it was attacking the strongest part of the target's armour,
instead of allowing the weapons system designer the freedom to
recognise that infrared-type seekers which allow the weapon not
to follow a fixed line of sight, which do not require any intervention
from the firer after he has launched the weapon and which are
far less amenable to countermeasures than a laser-designated weapon,
all of those things militated against TRIGAT. So we, the procurement
authorities, specified, with guidance I may say from the operational
customer, that a laser-designated weapon was to be the solution.
We do not do that any more and time and again I will come back
with that as a lesson learned. Do not specify the solution: specify
the requirement.
16. One detailed point on TRIGAT. One thing
paragraph 3.18 of the 2000 report tells us is that you started
your industrialisation and production in 1999 and that you considered
conducting a Balance of Investment study into the future of the
requirement before doing that but you did not do so. Since there
have been doubts over the suitability of TRIGAT for some time,
why did you not conduct the study then which might have pointed
to an earlier and cheaper withdrawal?
(Sir Robert Walmsley) The answer is that in 1999 we
had only 12 months previously completed the strategic defence
review which confirmed the place of this weapon, but that was
presumed on the basis of a collaborative programme which was going
to perform. What happens is that if you withdraw before the collaborative
programme has had the chance to perform you would precipitate
its destruction. In the event of course I agree we should have
done just that because our partners did not sign up and we ourselves
eventually had to withdraw a year after we had signed up.
17. Maybe we were less wise than they.
(Sir Robert Walmsley) They do not have weapons either
and they have spent that money.
18. Neither of us has. Paragraph 3.14 of the
2000 report tells us that the first three Type 45 destroyers will
not have a full capability when they first enter service. How
will their initial capability compare with that planned for the
Common New Generation Frigate? How long will it be after entering
service before the ships are brought up to full capability and
at what cost?
(Vice Admiral Sir Jeremy Blackham) The first thing
to explain, although I know you have had it explained to you many
times, is what the purpose of this ship is. The purpose of this
ship is to provide air defence to the fleet and in order to do
that it is going to deploy the PAAMS missile system, which was
the centre of the CNGF programme when it was running. That is
overridingly its most important duty: to take that system to sea
in order to allow the retirement of the Type 42 destroyers which
are old and increasingly unable to match up to the threat. That
it will do and that is its most important function. Of course
no ship can allow itself the luxury of only being suitable in
one scenario, so we have to think of other things it might do.
The Type 45 will be able to contribute to naval gunfire support,
at the moment through a gun, although you may wish to investigate
what other possibilities there are there. It will be able to deploy
helicopters in a range of roles, it will have an ASW sonar and
it will have space on board to carry troops in order to conduct
operations ashore. It will have quite a wide range of capabilities.
The CNGF had a substantial range of capabilities which were actually,
as it turned out, unaffordable and moreover the ship as a ship
has collapsed. We then found ourselves with an urgent gap to replace
the Type 42 destroyers and it is a remarkable thing that within
not much more than a year of the collapse of the CNGF we actually
have on order a programme of ships which will deploy the PAAMS,
do the other things I have already indicated and allow scope for
future development of weapons systems and other capabilities as
time goes by and as technology and circumstances show us we need
to develop them.
Chairman: Albeit the ships may be a little handicapped
later on.
Mr Leigh
19. I want to ask you just a few questions about
the Type 45 destroyer. Paragraph 3.10 tell us "In April 1999,
the Defence Ministers of the United Kingdom, France and Italy
decided not to proceed with the collaborative Common New Generation
Frigate" and we decided to go it alone with the Type 45 destroyer
as a national solution. Could you explain to me why you so decided,
especially as Italy and France have continued to collaborate,
have they not?
(Sir Robert Walmsley) The first reason was that we
did not have an offer from a prime contractor on which to base
a contract to deliver a ship. We had struggled for many years
to develop a prime contractor but we did not have a prime contractor,
we had a grouping of companies, nominally led by Marconi, then
of course BAE SYSTEMS. Having had our collaborative partners agree
that Marconi could lead it, the concept developed by the industries
of France and Italy was that Italy would take the platform as
a total sub-contract and France would take the weapons system
as a total sub-contract or perhaps it was the other way round,
it makes no difference, and that GEC/Marconi would be left taking
all the risk and with none of the work which means that the person
taking the risk would not be able effectively to manage it. The
companies had tried to get themselves into a real structure; they
had not done so. Secondly, there was no prospect of the ship becoming
affordable. Admiral Blackham has already spoken on that subject.
One of the reasons for that is that there was a great deal of
tablecloth tugging going on in each country. Some countries were
specialist in gun-based anti-missile systems, others were specialists
in missile-based anti-missile systems. Some countries wanted a
huge communication system. Whatever any country wanted tended
to be loaded into the requirement, that was why it became unaffordable.
It is also right to say that there was a huge degree of concern
in the Navy about our ability to deliver this thing in any knowable
timescale. For those three reasons, timetable uncertainty, unaffordability
and no real prime contractor, we were quite right to pull the
plug.
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