Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 260 - 279)



  260. If I gave that impression I did not intend to.
  (Vice Admiral Sir Jeremy Blackham) As I said, of course I regret it. My organisation stood up a year ago as part of a process to improve the way we are doing this. I am confident that we are doing that. I cannot defend mistakes that were made in the early 1990s. It is always a matter for concern when the necessary capability does not appear on time.

  261. It seems to me we are always in the situation where if we were confronted with a really serious military situation at this point in time, and it still applies if you look at this list, there are enormous areas where we lack the capability of giving support to our troops, the assistance to our troops and our servicemen that they are entitled to require.
  (Vice Admiral Sir Jeremy Blackham) I am not sure I accept that. You already mentioned the most likely operations we are conducting. The fact is they have all been conducted with great success and an extraordinary small casualty rate.

  262. They have all been conducted under the umbrella of massive American air support and systems support and intelligence support. It would be ludricous for us to pretend that we are in any way—you are not doing this—adequate in our own rights. In the situations we have been involved in it has not been because of our technical ability that we have come out with as few casualties as we have.
  (Vice Admiral Sir Jeremy Blackham) We always planned to fight with the highest range of allies, and most frequently with the United States. Certainly I am clear from my own contacts they greatly value the contribution we make.

  263. They are always on about burden sharing. They are glad to see us spending more. They are pressing the Europeans to spend more, they just do not want us to spend in a way they feel might be independent of themselves. As you know, within the NATO context there are ludricous propositions, anyhow, and we would still be dependent on the Americans there. The fact they are glad of what they get does not mean to say they do not want a heck of a lot more and better quality.
  (Vice Admiral Sir Jeremy Blackham) We all want better quality and, indeed, we are trying to get it. I am quite confident that the arrangements we put in place will ensure we have much better results in the future.


  264. Given what you said about the cannon and the Eurofighter, given the Americans have been through this with their fighter system, could you let us have a list of any other air forces who are buying fighters without cannon, Sir Robert?
  (Sir Robert Walmsley) Within our capability[7].

  (Vice Admiral Sir Jeremy Blackham) I do not think we can give you the reasons for it.

  Chairman: Leave the deductions to us.

Mr Steinberg

  265. Looking at the Report and looking at the conclusions on page 2 it is not very impressive, is it, it is not very inspiring, is it, for the National Audit Office to come up with these conclusions. If we look at paragraph 7, for example, it says that the average project delay is getting longer, slippage will increase, the risk that the department allowed for improval will materialise. In (iii) it says, "Most projects are expected to meet the military requirement". What is the point if they do not?
  (Sir Robert Walmsley) Mr Steinberg, I am entirely satisfied that it is your right to take your view of this paragraph, but for me a paragraph which says there are signs we are getting costs under better control, that is based on an actual cost reduction this year in the cost of our projects. That does go on, as I readily acknowledge, to talk about delays getting longer. I can go into the detail of the six projects that slipped this year in as much detail as you like, and then go on to say that projects are expected to meet the military requirement. To me this is getting a little bit close to two out of three is not too bad but the third one is no good. I accept that we have to do better on time.

  266. Answer the question regarding the projects expected to meet military requirements? As I say, what is the point? It should say, "Every project should meet military requirements", not "expected to". What is the point in having something if it does not have a military requirement?
  (Sir Robert Walmsley) Each project has ten key user requirements attributed to it. As part of the audit that went about preparing this report, for the first time ever, actually, the NAO looked at the justification for whether these ten key user requirements would be satisfied. That has not been done before. Is there evidence sufficiently available to predict that. They found on all 20 of the major projects, bar three exceptions, the projects are expected to meet their key user requirements. By expecting it is not as it is required to be, it means they are predicted to be—

  267. I am not convinced. It seems to me every project should meet the military requirement, otherwise there is no point in having it and you are wasting your money if they do not.
  (Sir Robert Walmsley) We have had a whole hearing on the importance of the acceptance process. I think we know from the statistics in that report that quite often projects do not meet all their key military requirements. Indeed, that may be quite sensible if, in fact, one turns out to be simply unachievable within the state of technology at the time. I do not think it is self-evident that every requirement—and there are 14,000 requirements associated with an Astute Class Submarine—has to be met, which is why we drilled it down to ten key user requirements.

  268. Looking at (vi), again it is not very inspiring, is it? "On some projects there are substantial cost and time variations from approval, which leaves scope for improvement." If I was a head teacher reading that I would have written, "Four out of ten, see me". Then we go back to (iv) "Delays have led to capability shortfalls on many projects". Following on from what Mr Williams said, I think the way the Vice Admiral answered that was complacent, to be quite honest, he was making light of it. If you look at the figure which has been referred to on a number of occasions, and that is the one on page ten here, you can see, for example, there has been a considerable affect on capability. You only have to look at some of the ones that have already been mentioned, look at the HVM and read that, "The delay in HVM ISD from December 1990 to September 1997 resulted in the first (UK) Armoured Division having no specific Very Short Range Air Defence capability". If you look at Spearfish, "The delay to Spearfish ISD from 1987 until 1994 resulted in a significant and extended capability gap in anti-submarine warfare and anti-surface warfare". If you look at ASRAAM it says, "The RAF plan to continue to use Sidewinder stocks for their short range air-to-air missile capability. The consequence is continued use of a lesser capability for longer." If you go on to the Nimrod, "The slip will delay the introduction of the improved Anti-Submarine and Anti-Surface Unit warfare capability". If you go to the Merlin it says, "The delay to the ISD has reduced the Joint Helicopter Command's operational capability and flexibility for moving troops and stores. Joint Helicopter Command are currently reviewing their plans to manage this capability gap." That sounds horrendous. For a layman like me, who does not have a clue about defence, and I read a report like this, I say to myself, we are lying in fear in our beds at night because we are not defended.
  (Sir Robert Walmsley) Admiral Blackham will speak about complacency, or otherwise. I would just like to make a very important point, quite a bit of this report has for me had a huge welcome focus on what has happened in the last 12 months. There has been a deliberate effort by the NAO, they said so in the report. Half, I think, of the projects you instanced, take Spearfish delays from 1987 to 1994, I remember personally authorising the out load of those four Spearfish torpedoes into HMS Vanguard. It met the requirement of allowing our first Trident submarine to deploy across the Atlantic to test flight missiles in time. That is all history now and there is nothing I can do to rewrite it.

  269. Do not get me wrong, I am not criticising yourself or Vice Admiral Blackham at all, because this has been going on for nigh on 20 years. The incompetence basically started 20 years ago when we had another government. I am not at all blaming you. All I am saying is that for a layman like myself to read a report like this it seems to me there is a huge gap in our capability, which has been going on for many, many years.
  (Vice Admiral Sir Jeremy Blackham) I must just say on the complacency point, if only because a number of my constituents will read the report, if I gave the impression I was complacent then I am very much at fault. I have said on a number of occasions that I always regret the delay of capability. Almost all of the incidents you quoted I can do nothing about. My job is to ensure that the situation in the future is very much improved. I am confident we will be able to do that, together with the Procurement Agency. The way we approach our business is quite different. I am also gratified by the remarks in this report which show that the key user requirements are expected to be met at 98 per cent. There are three single requirements in the 200 in here which at the moment we do not seem as though we are going to meet. Some of these requirements are at the very front edge of technology and I am not at all surprised they are difficult. I want them to be met but I am not at all surprised that they are difficult. The picture you paint of forces that are simply ill-equipped is simply at odds with the facts. All our military campaigns—and we conducted a number in the last decade, which we had not to do at all in the previous 30 years—have been conducted with great success, and very, very importantly, with almost no casualties, and that by itself tells us a great deal about the capability.

  270. I have written down, "We have been successful in recent campaigns". I also wrote, "It appears to me it is a good job that other forces had less capability than we had or we would have been in serious trouble".
  (Vice Admiral Sir Jeremy Blackham) One of our aims is to ensure that our capability is greater than `our enemies', that is what I am about.

  271. What happens when we meet somebody who has better capability than us?
  (Vice Admiral Sir Jeremy Blackham) I need to be shown them. I am not aware at the moment that we are faced by opponents of that sort.

  272. From the examples I read out it appears we had capabilities in the air, in the sea and on the land. The report we had from Monday's meeting—I am not sure whether I am allowed to go back to that again—that was an example where the anti-tank weapon replacement is ten years late and the present one does not meet the needs, yet the department want to retain it. Why do you want to retain something which does not meet the needs? Is that not just a pure waste of money?
  (Vice Admiral Sir Jeremy Blackham) We do not want to retain a system that has no capability, we want a new system. The Milan does have a capability, but it has greater difficulty against the most modern forms of armour, but it has plenty of capability against anything short of that.

  273. Basically what you are saying is that unless we keep this we will have nothing and, therefore, this is better than nothing. That is the argument. Then the report goes on to say, "It has had no effect on the operational impact". I find that very contradictory. If you have a weapon which cannot meet the capability that it is meant to in the first place how can the report then say, "It has no effect on the operational impact"?
  (Vice Admiral Sir Jeremy Blackham) There will be an impact in the delay of any new system. The question is whether that has had an impact on the operations that are in prospect or being done, and there has been no such effect. The Milan is capable of dealing with the most likely threats. To use Mr Williams' term, "We are going to meet it". It will, however, increasingly have difficulties against the most modern and most successful forms of armour. It is not, of course, the only anti-tank system we possess.

  274. That was one example. The other example I took at random, so to speak, was the ASRAAM. I do not have a clue what it does, apart from the fact what it tells me it does in the Report. I never heard of it until I read the Report. I quoted it before, how much less effective is ASRAAM and the Sidewinder to ASRAAM and the lack of capability in that respect?
  (Vice Admiral Sir Jeremy Blackham) The particular advantage of ASRAAM is its agility. It is a short-range missile designed to be very agile against other high performance fighters. Sidewinder is predominantly an infrared seeking weapon.

  275. It out of date.
  (Vice Admiral Sir Jeremy Blackham) ASRAAM is not out of date.

  276. Sidewinder is out of date.
  (Vice Admiral Sir Jeremy Blackham) I certainly hope not because we plan to go our using it for another 20 years, and so do the United States.

  277. I must be reading it wrong. It says, "The RAF plan to continue to use Sidewinder stocks for their short range air-to-air missile capability. The consequence is continued use of a lesser capability for longer".
  (Vice Admiral Sir Jeremy Blackham) We will go on using Sidewinder in a range of roles which are suitable. ASRAAM we want for, if you like, the dog-type fighting role, and I want it as soon as I can get it.

  278. Let us turn to page 8, paragraph, 1.14. It says here, "17 out of 20 projects slip by 567 months, an average of 28 months slippage per project". That does not seem very good reading. Why has this happened when times were set against the main investment point and they should be achieved on time. Why have they not been achieved on time?
  (Sir Robert Walmsley) Elsewhere in the report I think it analyses the predominant contributors to the reasons for delay. It is a point I made before this afternoon. Most of that delay was reported in MPR 1999 and, indeed, all of the previous MPRs. What is new this year is 63 months in total. I am not saying that is good, but what I am saying is we have not suddenly produced a delay of over 500 months in this report. The predominant cause of delay is technical difficulties. That means that we place a contract with industry and they find it hard to discharge their responsibilities under the contract. That is the single biggest reason. That is one reason. Coming back to the idea that we need to spend more money in the assessment phase, we need to be and we will be more cautious about accepting industry's promises. It is not satisfactory just to contain the financial aspect, which the cost constraints achieved do report. I accept that 5 per cent is 5 per cent too many, but compared with the high technology defence programmes undertaken in other countries my impression is that 5 per cent is a record somebody would be proud of. It does not mean that it is good, it just means it is a level of performance we have not seen in terms of cost constraint for a while. In terms of time that is our problem. There are many complex reasons for that, one of them is that we underestimate the real time that it is going to take to do. Others are to do with the fact you can contract for performance and you can contract very, very sensibly for price. We can constrain those two things. I do not think it is any accident that we are predicted to meet the performance requirements and we are not doing as badly on costs as, perhaps, we once did. We are not doing well on time. You cannot in English law have punitive contracts, that means to say that the disincentive to the contractor for failing to deliver on time is that he has to put us back into the financial position we would have been in if he had delivered on time. That is quite difficult to establish and takes many years, so we tend to have a preordained formula at something like half a per cent of the contract value per month delayed. What I do think we need to be more careful to do is to provide contractors with incentives to perform well. We have had a great concentration on sticks, which I thoroughly approve of, but we need to balance that with quite a few carrots. The Eurofighter programme includes some incentives for doing things on time. What we have done is not manufactured more money but we have essentially said there are retentions on the progress payments on the contract, which we plan to withhold to the end. If they deliver the first aircraft on time next June then they will get a bonus and if they deliver the eighth aircraft on time in December 2004 they will get another bonus. There is one more figure for the final Tranche 1 aircraft, that is a new approach to incentivise defence contractors. There are a number of carrots we have tried to introduce. I am saying absolutely guilty as charged on time but it is no good applying bigger sticks, we have to find better ways to incentivise contractors to perform, because that is where the biggest number of delays occur. I could go on about collaborative programmes—


  279. Please do not.
  (Sir Robert Walmsley) —it would take a long time and we have a report coming on that in a few weeks.

  Mr Steinberg: He has just talked me out.

  Chairman: Thank you, Mr Steinberg.

7   Note: See Evidence, Appendix 2, page 37 (PAC 00-01/62). Back

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