Examination of Witnesses (Questions 140
- 159)
MONDAY 15 JANUARY 2001
SIR ROBERT
WALMSLEY, KCB AND
VICE ADMIRAL
SIR JEREMY
BLACKHAM, KCB
140. Yes, but that takes us back to an issue
which has emerged as the afternoon has gone on and that is whether
or not the equipment which was supposed to come in at a previous
date—and this is a theme I have picked up on before—actually
keeps up with the technological change which has taken place.
If Bismarck were procuring a gun in 1871, I guess it did not change
very dramatically by 1881, but ten years for technology in terms
of a radio system or a missile system could almost be revolutionary
in the early 21st century.
(Sir Robert Walmsley) I absolutely agree with that
and that is partly why we acknowledge not just the possibility
but the certainty that the twelfth Type 45 destroyer will be of
much greater capability than the first one and why it is necessary
to envisage growing the capability through life, just as the Mavericks
have gone through successive generations.
141. Nevertheless, in the meantime, while that
is happening and we are getting better kit at the end of that
process, we are left in this situation where our forces now are
having to make do with equipment where time is passing them by.
If you take for example the BL755, Sir Jeremy said that it still
has a utility, but the report says that hostile tanks are now
four times more likely to survive an attack by that weaponry.
(Sir Robert Walmsley) And part of its utility was
against soft-skinned targets. We are buying the Maverick for special
circumstances.
142. I hope we are not being complacent in any
way. If we take another example, the report says of MILAN that
the system has an extremely limited ability to defeat modern tank
armour. I would not be very reassured if I were a tank commander
or one of the tank crews. Even if that equipment is working now,
it is not just about the technology which is at my disposal, it
is the technology which is at the enemy's disposal as well. It
is not just about offensive capability, it is about defensive
capability as well, is it not?
(Sir Robert Walmsley) One of the difficulties I have
at these hearings is that I try to explain what has happened.
If that ever sounds like complacency, then I am getting it seriously
wrong. I can explain; I am not complacent.
143. Okay; let us move on. I want to look at
the question of cost. If we are waiting for this equipment to
arrive, there are several options, are there not? One is to upgrade
the equipment we have, in the case of Maverick to buy off the
shelf to plug a gap. At the same time we have the cost of updating
the weapon which should have been coming into service much earlier.
One of my concerns is the question of who bears the cost and the
risk in these strategies. For example, does the taxpayer bear
an undue risk? If you take the upgrade of BL755, that was twice
as costly as it would otherwise have been, was it not, some £20
million?
(Sir Robert Walmsley) No, I do not think that is quite
fair. You did mention as you started that question the cost of
updating the weapon which should have come into service sometime
sooner. The Brimstone costs have not gone up. The cost which is
being referred to and which you have picked up on is the proportionally
higher cost of upgrading a smaller proportion of BL755s as a result
of the envisaged need to replace some RBL755s which might have
been used during the Kosovo conflict. What that means in essence
is that if you order a smaller extra quantity, it is probably
going to cost you more pro rata than if you ordered a large
quantity. Let me also say that in that procurement, the original
contractor who produced the devices, the radar proximity fuse
sensors, had stopped manufacturing them. The components were obsolete,
so we had to change manufacturer and defeat obsolescence. It was
not just a question of scale, it was also a question of going
round, finding somebody to do it and finding out how to get the
components to do it. That is why it cost more pro rata.
144. Two very quick points on that then. If,
while we are waiting for Brimstone, the model is in a sense being
updated, that is not being done by the manufacturer for nothing,
is it? There must be an additional cost which is presumably passed
on to the MOD.
(Sir Robert Walmsley) I know I have failed to get
this across. Brimstone is not being updated by comparison with
the performance for which we contracted in 1996. It will be delivered
to the performance for which we contracted then. What I have been
trying to say, and I know how much it annoys the Committee because
it sounds like complacency or an excuse, is that the Brimstone
for which we contracted in 1996 will have a very much better performance
than the Brimstone for which we would have contracted if we had
done it on time in, let us say, 1986.
Mr Rendel
145. I want to start off by coming back to what
does seem to be the nub of a lot of our arguments today which
is over paragraph 3.13 and just try to clarify a few further points
about that. Am I right in saying, Sir Jeremy, that you said earlier
to the Committee that you would not accept a ship into operation
in our Navy today unless it had sonar in it?
(Vice Admiral Sir Jeremy Blackham) I did say that.
146. I think that you said that the decision
to put sonar in the first three Type 45 destroyers had finally
been taken this year.
(Sir Robert Walmsley) That is true, but I would not
want you to think that we had not been trying for months to find
a way of squeezing it into the budget.
147. I am sure. On what date was that decision
taken?
(Sir Robert Walmsley) To be frank, I do not know.
I can only say it is this year.
148. We have only had two weeks so far this
year.
(Sir Robert Walmsley) Yes; we agreed it last week
but I cannot remember which day it was.
149. Very dramatic. So the decision was taken
to order the first three vessels on 20 December last year.
(Sir Robert Walmsley) Yes, that is the decision was
taken quite a long time before we actually placed the order on
20 December last year.
150. I beg your pardon. The order was placed
on 20 December last year. When the order was placed, they were
for vessels which did not have sonar but had the capability of
having sonar inserted at a later date.
(Sir Robert Walmsley) Exactly.
151. So we placed an order for something which
the Navy would not have accepted as it was at the time it was
ordered.
(Sir Robert Walmsley) We needed to place the order
because placing that order starts the design of the ship. I knew
that we did not need to take a final view on the sonar at that
stage. We did need to get the prime contract rolling otherwise
the ships were going to be late.
152. Did you know at that stage that you had
sufficient money in the budget in order to order the sonar later?
(Sir Robert Walmsley) I did not know until I settled
the contract; I did not sign it. Until I settled the contract
price, I did not know how much headroom we had to play with. These
are quite sensitive negotiations[7].
153. You settled the contract price without
knowing whether you had a budget which was bigger than that contract
price, did you say?
(Sir Robert Walmsley) No; until we settled the contract
price we did not know whether a sonar was going to be affordable.
154. But you settled the contract price presumably
before you placed the order on 20 December.
(Sir Robert Walmsley) Correct. We settled the contract
price quite late on 19 December.
155. You knew at that stage that the sonar was
affordable.
(Sir Robert Walmsley) I do not think I knew probably
until the beginning of this year as we started to run over the
ground. It would have been deducible at that stage.
156. When you came to discuss this Committee,
was it as a result of those discussions between the two of you
that this decision was finally taken that you would have to go
ahead with sonar?
(Sir Robert Walmsley) Yes, it was as a result of discussions
between us.
157. In preparation for this Committee?
(Sir Robert Walmsley) No, not in preparation for this
Committee, in reaction to the circumstances where we placed the
prime contract, what options were now open to us for managing
this ship.
158. Sir Jeremy, may I ask you when you first
noticed this line in the report which said these ships were going
to be brought into operation without sonar?
(Vice Admiral Sir Jeremy Blackham) When I really turned
to the report in December.
159. So you knew before the order was placed
that the ships were not going to have sonar on them.
(Vice Admiral Sir Jeremy Blackham) No. I do not think
I can improve on what Sir Robert has already said. I knew that
the order was placed on a certain basis for the ship's construction
which included the fitting of the ability to take a sonar. What
I did not know, because I could not know, was whether that price
would provide us with a chance to incorporate the sonar, nor did
I know whether I would have to go and think further about whether
I might divert money from some other part of the programme if
that were necessary, which as things turned out it is not. To
put the sonar in would have an opportunity cost. There is an opportunity
cost of everything we do. I would have had to react to that situation
had it been the situation, but happily we find that within the
price we can afford a sonar.
7 Note by Witness: The Type 45 overall budget
has always included provision for the fitting of a sonar under
an Incremental Acquisition Plan. However, until placement of the
Demonstration and First of Class Manufacture contract for the
first three ships it was uncertain that funding headroom would
be available early enough to allow the sonar to be fitted on build
to the First of Class vessel. Back
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