Examination of Witnesses (Questions 320
- 339)
WEDNESDAY 8 MAY 2002
LORD BACH,
SIR ROBERT
WALMSLEY KCB, AIR
MARSHAL SIR
JOCK STIRRUP,
KCB, AFC AND MR
JOHN COLES
320. It would be possible theoretically?
(Air Marshal Sir Jock Stirrup) It would be possible
theoretically to look at a contractor on deployed operations or
a sponsored reserves arrangement under a PFI for all kinds of
services.
Chairman
321. It would be helpful, Minister, if you could
send us more considered brief on this matter. As you can tell
from the questions and from people expressing their views outside,
it is a very emotive issue. Has there been any attempt to try
to squeeze more efficiency out of existing fire service arrangements
prior to considering a PFI? There are other examples—we
shall talk about those later—where the trade unions felt
that they had not been given the opportunity to provide for greater
efficiency. Is that something that you are considering.
(Lord Bach) Many years ago there was an intention
to make the fire service more efficient as applied to the three
services. Alas, that does not seem to have been carried out in
full then. As part of the consultation and examination that we
are carrying out now on this potential PFI, we shall consider
whether we can make the present system more efficient and more
efficient than any PFI would be.
Rachel Squire
322. Minister, either now or perhaps in a written
response, can you clarify whether under existing arrangements
any private airfield fire support services are engaged for airports
and landing fields where we have aircraft that carry weapons?
Under the existing arrangements, are private firms used where
there are aircraft landing and taking off carrying weapons?
(Lord Bach) As you anticipated in your question, I
do not know the answer. It is a good question and I shall make
sure that there is a response.
(Air Marshal Sir Jock Stirrup) I think we should come
back to you on the details. Certainly at Valley, for example—one
of the airports that the Minister mentioned earlier—aircraft
land with training weapons and there are practice camps that have
live weapons. We shall return with the detail.
Jim Knight
323. At Kabul airport the airport support appeared
to be a multi-national arrangement, but the fire support was British
and had fantastic kit. I am interested in that kind of operation.
If we start to go down the PFI route and find that sending contractors
out to somewhere like Kabul is too difficult, shall we start to
go down a specialisation road where we end up using other countries'
services, where they have retained airport support services and
we cannot do it because we have privatised it?
(Lord Bach) Mr Roy, with respect to Mr Knight, touched
on that as well. The question around that comment is an important
one and one to which we need to have a clear answer. I have not
had the advantage, as you have, Mr Knight, of going to Kabul yet.
That is not a bad example at all. I think it is relevant to the
question to say that we often use foreign airfields, not necessarily
in the circumstances of Kabul at present, and we often rely on
a host nation's fire service. We always rely on host nation fire
services to ensure that our aircraft are protected. That seems
to work pretty well. On your actual point, we shall come back
to you.
Chairman: It is a sensitive area.
Mr Hancock
324. If I could have got in, I would have asked
one question on that subject. We have spent 20 minutes on it but
you did not give one good reason why you should do it. I was rather
surprised at that. Perhaps I can move you back to the PFI situation.
In an earlier answer you spoke about some of the PFIs and I want
to return to my first question about the tankers. I would be interested
to know whether you know of any civilian tankers that are currently
flying. I do not think that there are any. Presumably tankers
will have service crews flying them and frequently they have to
fly through hostile anti-aircraft flak and missiles, so the crew
would be in harm's way. I was interested to see the way in which
you dismissed that issue fairly quickly.
(Lord Bach) If you had asked the question that you
were not able to ask, I would have answered that the reason for
what we are looking at in terms of the fire service is that we
are looking for best value as always. We want best value for our
forces. That is how I would have answered that point. On FSTA
and the point you made about the dangers involved, that is one
of the reasons why we are using sponsored reserves as well as
aircrew. Sponsored reserves are what we have said they are. They
are people who, when in uniform, are under military discipline
and have some experience. It may be that a number of them will
turn out to be those who in the past were full-time servicemen.
That is why we would use them under a PFI system, rather than
a mere employee of a contractor who had no service experience.
325. How do you know that they are available?
(Lord Bach) As I understand it, it is part of the
agreement reached with the contracting company that there will
be sponsored reserves available at all times if and when the RAF
need the planes.
326. They are prepared to fly tankers through
hostile terrain?
(Lord Bach) Yes.
Mr Howarth
327. What happens if some of the civilian crews
say, "Sorry, from what I have read about this and seen on
television, I do not want to be involved"? The contractor
will not be in the position of a commanding officer who can say,
"You will be deployed".
(Lord Bach) I think any sponsored reserve who said
that would have a question or two to answer. Of course, I have
already stressed that there will also be service aircrews as well
to begin with, making up three-quarters of any crew.
(Air Marshal Sir Jock Stirrup) That questions the
whole essence of sponsored reserves. That is the reason why they
are sponsored reserves. If they are needed on military operations,
they will be called up. They will be military personnel, subject
to military discipline and military law. That is the point about
having sponsored reserves.
Mr Hancock
328. Who will call them up? Will it be the company
or the RAF?
(Air Marshal Sir Jock Stirrup) We will; the Government
will. On the point about availability of crews, I do not know
of any civilian tanker crews flying around, but I know quite a
lot of civilian crews flying around who used to be tank crews.
I think there are quite a lot of people out there who have the
skills. Training would be an issue for the contractor as well.
With regard to flying into hostile territory, it is absolutely
right that that would be necessary at times. We have a tanker
captain who, not long ago, was awarded the Distinguished Flying
Cross. As the Minister says, that is precisely the reason why
we need sponsored reserves as part of this overall contract.
329. I was also surprised by the suggestion
that you made about being in harm's way and that normally these
operations would not take people into harm's way. I thought that
that was rich coming 20 years after the sinking of the Atlantic
Conveyer. Presumably, that crew did not believe, when they
sailed from the UK, that they would be in the firing line and
sunk. There is a question about relying on PFI to supply your
Armed Forces when they are undoubtedly on occasions going to be
seriously in harm's way and there is the question of whether you
can guarantee that they will perform.
(Lord Bach) I go back to the answer that has just
been given. That is why in certain PFIs we are insisting on sponsored
reserves, in the same way that the Americans do. They use many
reservists themselves. That is why in those PFIs where we are
occasionally close to danger we shall use sponsored reserves;
for example, people who are reservists and have some experience
and knowledge of how the Armed Forces work.
330. Going back to what you said about the combat
support vehicles, I accept the reasons why you abandoned that.
Why did it take you three years to make that decision if it was
such an easy one to make?
(Lord Bach) I would rather make the right decision,
even if it takes longer, than make the wrong decision so that
I do not have to face a question like that. We are trying to get
it right.
331. What were you doing for three years? If
the contractors were telling you that there was too much of a
third market opportunity, what were you doing for three years?
Why did it take that long to come to the conclusion? I would imagine
that the service personnel were telling you that from day one.
(Sir Robert Walmsley) I never think there is a good
answer to why we did not do the right thing sooner. I can assure
you that the team were working very hard to try to bring the PFI
to a conclusion. As you do that, you work with the companies and
discuss matters with them, and quite often you are told in PFIs
that something will not work but that could be someone just positioning
themselves in the competition. So you do not take everything at
face value. A number of issues slowly became clearer as we engaged
with the companies, particularly on specifying the military features
of the vehicles which actually started to look more specialised
the longer we ran the procurement. It is never easy to decide
that you have not been pursuing a course that will lead to the
right result. We decided that and some of the companies were rather
surprised and others were absolutely sure that we had done the
right thing. So we faced a range of opinions. I personally wrote
to the chief executive of all the bidders and some wrote back
and said, "Thank goodness you have done the right thing",
and others wrote back and said, "We are rather disappointed;
we thought that that could have worked". There was a range
of opinion.
332. How many were you talking to?
(Sir Robert Walmsley) I honestly cannot remember.
I think it was three or four prime contractor consortia, each
employing lots of companies. Another interesting feature that
we may all remember clearly, was in regard to the wheeled tankers,
of which I think we needed about 500. They look like petrol tankers,
except that on a detailed inspection they do not. We also thought
that there would be a good market in the civilian, commercial
world for those vehicles. September 2000 taught us all a lot about
the elasticity of the petroleum products supply arrangements in
this country. It quite quickly became clear that the commercial
market does not want tankers some of the time, but it wants absolute
access to commercial tanking transport fleets, 24 hours a day,
seven days a week. The idea that one could defray that by turning
up sometimes with a notice of withdrawal began to look more fanciful
than it had when we had been at the whirling eyeball, PFI stage,
12 months early.
333. Was the crisis that we faced here when
fuel prices escalated and there was trouble at the various terminals
partly responsible for that shift? I think the timing was about
the same.
(Sir Robert Walmsley) Yes, the timing was about the
same. That is why I can remember it so clearly. It was in September
2000 that we went through this. It was not the price of fuel;
it was simply that vehicles were more specialist than we had understood.
334. Was it the fact that the Government would
have wanted 500 specialist fuel vehicles available for their use
and not having to rely on civilian tankers if there was an ongoing
protest at fuel terminals? They wanted the nation to have a supply
of tankers available to deliver fuel if the need arose.
(Sir Robert Walmsley) I am sorry, I misunderstood
the question. I can absolutely emphatically state that at no stage
in my consideration—I was the first chief executive in line—was
such a point put to me.
335. That decision was solely made on the commercial
viability of the product and the constructors ability to continue
with the PFI, and had nothing to do with any Government interference
at all?
(Sir Robert Walmsley) Absolutely.
336. Fine. What other ones are you thinking
about pulling away from PFI? What other projects are you currently
reviewing or looking at with a mind to changing any plans for
PFIs?
(Lord Bach) I think to answer your question directly
would be foolish in the extreme. We are looking at all the projects
that we possibly have in mind for PFI over a period of time. Some
are nearing decisions, others are further away and to pick out
individual ones now I do not honestly think would help this Committee
very much in its deliberations and it certainly would not help
us in what we are trying to do.
337. When you read the various reports on procurement
issues which have been done by the NAO, one of their criticisms
is the length of time it takes within the MoD to make a decision
when there is a move afoot. I do not know how much it cost the
MoD in the three years it took you to make a decision on the Combat
Support Vehicles, how much money was spent in that process which
was non-recoverable. I am interested to know whether the full
process on PFIs is going to be speeded up, so you start with the
idea, "We are going to do this", you realise it is not
going to work and you are out and you are back to the old style
of tendering process. I want to know whether or not lessons have
been learnt and you have speeded that process up, consequently
saving yourselves a lot of time and money.
(Lord Bach) Well, we are always trying to get it better
and faster too. Of course we are trying to do that, but I think
to pick out individual items as to what you were doing in individual
projects is not at all helpful.
338. Would it be possible for you to do us a
note on the ones where you have done it as opposed to the ones
you are considering?
(Sir Robert Walmsley) I can tell you now that the
two we gave up were these cargo vehicles, something like 9,000
vehicles, and, as I have prostrated myself in front of this Committee
I think perhaps on a day you were not here, survey vessels for
the Royal Navy. Those are two I can recall very clearly and the
formal position of course with all the others is until they pass
their main-gate decision point, it would be something for Ministers
to approve and for people like me to try to bring them to the
point of decision. Until they have passed that, they are not past
it, so to speak. They are not approved until they are approved.
All the ones we have got in play at the moment represent, in our
judgment today, viable PFI propositions, but the proof will be
in the eating.
Mr Jones
339. Could I just continue the question in terms
of PFI and its links with the front line. You actually said that
the aim was to take PFI as close to the front line as possible,
and then you just used the words "best value" and you
used the words, "which offer better value for money"
and "which are appropriate". What do you mean by "are
appropriate"? What would be inappropriate?
(Lord Bach) What—in terms of deciding what we
should use for PFI or not?
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