Examination of Witnesses (Questions 80
WEDNESDAY 28 MARCH 2001
TEBBIT, CMG, MR
OBE, AND SIR
80. But even where it is a recognisably national
project which can be put into, for example, a British yard and
a British yard is a prime contractor, if you have a project such
as, for example, an aircraft carrier, the British yard may well
be the prime contractor but the reality is that bits of that could
be built elsewhere or the equipment could be coming from elsewhere.
(Mr Tebbit) Almost certainly.
81. What I am getting at is to what extent are
these projects taking on a life of their own and becoming collaborative
projects even though they might appear to be national projects?
(Sir Robert Walmsley) Could I just try something on
shipbuilding? The Government's policy is, and has been for a very
long time, to have warships procured and built in the United Kingdom.
There is no prospect that that is going to change for the carrier
or for anything else. It does not mean it will not. It means that
there is no prospect whatsoever of that changing. The distinction
on RO-ROs is not because it is PFI but because they are not warships
so they will not be flying the White Ensign.
82. The point about something like the carrier
is that even though they can and will be put into British yards,
nevertheless there will be a collaborative and a trans-national
element to it.
(Mr Tebbit) It may well be that bits that go on to
these things, albeit built in British yards, will come from a
foreign country because the industry at the moment is trans-national.
83. The consortium that gets the project may
well be and in fact is likely to be trans-national.
(Mr Tebbit) To that extent it is possible, which is
why the Letter of Intent is so important, because the Letter of
Intent ensures that we have security of supply if sub-components,
bits and pieces, may be coming from abroad, not least because
even British companies these days operate on a global basis. That
does not change the point that Sir Robert Walmsley made that warships
will always be built as warships in United Kingdom yards. The
nature of the industry these days is global, which is why we have
to make sure that we have things like the Letter of Intent in
place, so that it is absolutely clear, even on a national project,
that where we need help from overseas that is forthcoming and
84. In the modern era when did collaborative
projects begin? How far do they go back?
(Mr Tebbit) I will ask Sir Robert Walmsley to answer
that. I have said too much already and he is very expert on this.
(Sir Robert Walmsley) I noticed in the report, and
it was news to me, that collaboration on the Harrier started in
the 1950s, so my guess is that, following an awful lot of collaboration
on various weapons programmes beginning in the Second World War,
it really took off after that. As the R&D costs accumulated
people wanted to find ways of sharing.
85. How much are delays and cost overruns dictated
by the country with the most cumbersome bureaucratic procedures?
(Sir Robert Walmsley) That is a very difficult question
to answer because sometimes there is a real surprise. Countries
that have apparently cumbersome procedures have on occasion said,
"We agree", and they can circumvent them. Part of the
cumbersomeness of their procedures is that they do not adhere
to them always. It is quite surprising to me how quickly agreements
can suddenly crystallise from countries which are apparently quite
86. It is surprising to me because your answer
to Mr Steinberg was that it could be five weeks before one of
the experts of one of the countries can move from one country
(Sir Robert Walmsley) That is a feature of the formality
of security clearances. I know that nobody in this Committee (or
anywhere else) would want us to hazard our security of very important
87. You were the one who was critical of the
(Sir Robert Walmsley) It is the administration of
it that needs to be speeded up.
88. What about requiring export licences for
parts that are sent here from Italy or Germany for assembly as
part of collaborative projects?
(Sir Robert Walmsley) Exactly. Collaborative projects
in general can have an umbrella licence just as we have started
to negotiate with the United States, which means that you do not
have to seek a new licence for every piece.
89. If we have got this history going back 40
years why did we not sort this out before? We have got 64 projects
running now and this does not operate on any of them.
(Sir Robert Walmsley) Those projects, which are subject
to international collaborative remits, do not have to seek export
licences for every single piece that crosses a border. The purpose
of the Letter of Intent of course is associated more with national
projects where a component is coming from abroad, not under a
collaborative agreement, and provides a new framework agreement
so to speak for the component to be exported without having to
go through very cumbersome procedures.
90. We have now got Declarations of Principles
being agreed. My question is, why did not we agree them ten or
15 or 30 years ago?
(Sir Robert Walmsley) It is never too late to do the
right thing, and equally it is always very difficult to predict
why you did not do the right thing sooner.
91. It is easy to predict why we did not do
the right thing.
(Mr Tebbit) I think with the Declaration of Principles
it would not have been possible to have got those agreements with
the United States Government earlier. We have had a much more
helpful and forthcoming United States Government over the past
92. What has been the cost of these delays?
(Sir Robert Walmsley) I do not have an estimate. In
general the delays occur during the decision making period. We
have talked about stages of an international collaborative programme
before and the delays occur through getting everybody's decision
processes to the point where we can all say yes, so we are not
spending money during that period. I agree, however, that there
is a hidden cost, because the taxi meters are running in the industries
of all the countries. It is not a cost that is obviously visible
to us. It is merely reflected back in overhead rates etc.
93. Which collaborative projects have been the
poorest value for money?
(Sir Robert Walmsley) I could not possibly answer
that except possibly by hazarding that they are those which we
have pulled out of. We have pulled out of long range TRIGAT.
94. How much did that cost us?
(Sir Robert Walmsley) It is in the report. I am not
going to try to remember a number that is in the report.
95. Two hundred and something million?
(Sir Robert Walmsley) I think that is right, and medium
range TRIGAT we pulled out of and that is a hundred and something
million. Those are the worst.
96. But if you look at that what retrospective
analysis have you done to work out whether it might have been
better to allow our Army to have an anti-tank missile like TOLE(?)
available a decade or so ago?
(Sir Robert Walmsley) It is the lost operational capability.
If you are extremely fortunate, as we generally were during the
Cold War period, the Army is not required to undertake active
operations and therefore there was as a matter of fact no operational
serious consequence, but there could have been and the risk we
ran of course was very substantial.
97. In terms of the analysis that you make on
the success of collaborative projects, tell me some of the procedures
you go through.
(Sir Robert Walmsley) All the standard ones for a
national programme. We first of all want to be absolutely clear
that we are not attempting the technologically impossible, and
so when we get a proposal from a company we are able to pass that
proposal through to the Defence Evaluation Research Agency experts.
They scrutinise it, as they did in spades on the METEOR proposals
and on the ERAAM+ proposal for that. They then crank it through
a computer in models and predict the performance.
98. Have you cranked through TRIGAT versus TOLE?
(Sir Robert Walmsley) No. In a sense, having made
the TRIGAT decision, we were then stuck with it. It was the decision
of the Government to participate in the TRIGAT programme. We then
came out of it and we are now running a new competition, not with
TOW but with two separate systems.
99. Have you analysed the relative merits of
efficiency of it all in terms of the MRC Tornado GR1 versus the
(Sir Robert Walmsley) The US F111 competition was
run and announced in around September 1962, almost simultaneously
with the Cuban missile crisis. I have to say that it would be
very difficult now to go back and look at what would have happened
if we had participated in that programme. It is just too long
(Mr Tebbit) I think it is fair to say that we would
not expect the TRIGAT problem to arise now that we have OCCAR
which is a much more efficient management system for delivering
these sorts of projects. That is one of the reasons we have OCCAR,
to prevent the sort of thing we had with TRIGAT or indeed with
the Type 45 Frigate from recurring. You cannot guarantee it will
not but you can put in place systems which minimise the risk that
this will happen again.