Examination of Witnesses(Questions 140-159)
SIR KEVIN
TEBBIT KCB, CMG, LIEUTENANT
GENERAL JOHN
REITH CB, CBE AND
MR JOHN
OUGHTON
MONDAY 21 OCTOBER 2002
140. It does not say that in paragraph 6, does
it?
(Sir Kevin Tebbit) No, it does not.
141. It says that the operation ". . . did
not set out to demonstrate readiness".
(Sir Kevin Tebbit) It does say that and
that is why I am apologising, because I should have read it more
carefully. It was the deployment that it did not demonstrate;
it did demonstrate readiness. We brought the units up to their
readiness states in accordance with the Joint Rapid Reaction Forces
concept.
142. Are you happy that both of these important
parts of the concept are already tested? You are not planning
any other events to test them.
(Sir Kevin Tebbit) That is correct. We
did actually demonstrate considerable agility during this exercise:
we were doing real-world operations at the same time.
143. I understand exercises of this kind give
you the chance to demonstrate all sorts of things which are good.
Can you tell me why planning was so uncertain? Paragraphs 3.2
to 3.4 range over the history of this planning phase which began
in 2000 with funds of £32 million for an exercise in the
United States, then it shifted to Oman, then doubled in size,
then was considered for cancellation, then changed again. In paragraph
3.3, "The Department stipulated an `absolute' cost-cap of
£48.1 million" and ended up spending £90 million.
Can you take me through how some of that happened, because it
did affect value for money of the whole exercise, as the report
says?
(Sir Kevin Tebbit) You are quite right,
it did change a lot over the three-year period and it changed
from an original plan which was going to America to exercise and
to demonstrate this, which would have been much cheaper and much
easier, to this much more arduous test. Over a three-year period
a lot happened in the Department. We deployed several real-world
operations. The Kosovo operation was extremely demanding. Although
in the end we did not have to fight our way in, we were about
ten days away from calling up very large numbers of reserves.
It was very demanding indeed. and we had to cope with other operations
at the same time. We also had to cope with a budget which was
under a great deal of pressure throughout this period. We were
having to make judgements as we went along about the exercise
in relation to real operations and how much we could spare in
order to demonstrate the JRRF concept through exercises and about
the other demands on our budget. For that reason we continued
to adjust the provision for the exercise. There were two different
Spending Rounds which happened during the period of planning this
and therefore it is not surprising that we made adjustments as
we went along. The difference in cost growth between the £48
million and the £90 million, the outturn, is going to be
about £85 million is due to three things. First, revised
policies which changed during that period and realism. Exchange
rates and fuel costs moved by £3.7 million. We introduced
an operational welfare package for our people, the main element
of which was a lot more telephone time home. That was not there
to start with; it was a policy change which came in late on. It
was very successful. That cost £8.8 million. Then we gave
people some leave while they were planning the exercise, because
of the length of time they were out there in the very hot period.
That was £300,000. Then, to meet our medical guidelines on
the conditions we should ensure our people were treated in, as
a result of what we found in Sierra Leone and Kosovo, added another
£1.5 million. That is £14.3 million for realism. Then,
and this is quite an irony really, we decided to run our tanks
more heavily than we had originally intended. We added 600 kilometres
of track mile. The spares package, the support package for tanks
is measured by track kilometre. We shifted that amount of extra
tank activity from exercises which would have happened in that
year, but did not because of foot and mouth. We could not use
our tanks in Canada for a while because of foot and mouth; the
Canadians stopped us sending them in. We had extra potential which
could not be used elsewhere, so we added it to the exercise. We
did more with our tanks than we otherwise would as it happens.
That was an extra £11.7 million. Then there was cost growth.
144. How much do you estimate cost growth at?
(Sir Kevin Tebbit) The cost growth was
about £16 million. There were oversights in our original
estimates, which were proved to be wrong. One of them was about
how much commercial air lift we would need to use. We used rather
more commercial air lift than we had originally planned.
145. Because of the uncertainties of planning
which you have just explained—and I do not think anyone
would want to criticise the pressure that the department was under,
especially in real-time operations with the work being done in
Kosovo at the time—but you managed to get yourself into
a situation where over a three-year planning period extra amounts
of cost were incurred for last minute cancellations of hired transport
and also not hiring and cancelling things and then having to hire
at the last minute and a range of changes which increased cost.
(Sir Kevin Tebbit) Most of the changes
decreased cost, although there were cancellations. Sorry, I had
not quite finished.
146. I have some more questions to ask.
(Sir Kevin Tebbit) You did ask me the
difference and I still have about £10 million to do. There
were oversights in the original estimates from air lifts, and
from food. We thought we would be able to get more food locally
and it proved not to be safe to do so, so we bought more food
in from the UK. We changed our rules on separation allowances
in that period and that meant we needed another £6.1 million
for that. We ought to have been able to plan for that, because
we knew the dates, but we failed to do so. Then there were in-theatre
costs for generators and air conditioning units because we had
not estimated well enough how much that would be. That adds up
to £90 million. Sixteen million of that was real cost growth,
which we should have contained better. We have introduced new
systems for capturing the cost of exercises so that we will plan
them better in future and not make these sorts of errors. I am
not very pleased about the cost growth and at various stages during
the planning both I and the Secretary of State summoned the then
CJO and interrogated him about the cost increases in the exercise.
147. That is good to hear. In paragraph 3.5 there
is reference to how much stuff is still missing. The report says
in paragraph 2.49 that initially £46 million of equipment
was sent over for the exercise and that £27.7 million was
returned, but there is this issue of Afghanistan. How much was
actually lost or misplaced or used or not returned if you take
Afghanistan out of the equation?
(Sir Kevin Tebbit) I am afraid I cannot.
We are talking about the ground force stuff, the army equipment.
We do not have a tracking system which enables us to do that.
I expect, when you think about it, that is not entirely surprising.
We do not capture the cost of equipment moving into an exercise
like this and out again and certainly not moving from an exercise
like this and into Afghanistan and out again.
148. So we do not know what, if anything, has
gone missing.
(Sir Kevin Tebbit) It has not gone missing,
it is a question of the usage attributable to the specific exercise
which is our difficulty.
149. The asset tracking systems were shown to
be not adequate for purpose during the exercise. That is one of
the things the report shows. How can you be so certain that significant
amounts of equipment—and I do not mean Challenger tanks;
you might notice if they went missing—of supplies have actually
gone missing or disappeared?
(Sir Kevin Tebbit) You are quite right,
I could not tell you down to the last ten pence whether things
have gone missing.
150. You cannot tell us at all, can you? It is
not down to the last ten pence.
(Sir Kevin Tebbit) No. An asset tracking
system can only do so much anyway. You are quite right that we
did not do a sum which deducted what we were then sending to Afghanistan
from what had gone to the exercise and what has now come back
from Afghanistan because a lot has not come back yet from Afghanistan
because we have left a lot behind, even though we have withdrawn
or are about to withdraw quite a lot of the troops. You are quite
right. Our systems are not good enough yet to track stuff as precisely
as that. I am not sure whether we will ever capture precisely
that; in other words separating an exercise from our general usage
rates, because it is probably disproportionately costly. You are
quite right in saying that we still do not have a good enough
system to expedite, to know exactly where things are coming out
to deployments. We are putting in place systems to improve that.
151. So we do not actually know how much equipment—clearly
petrol is going to be used up—we have consumed during the
exercise and we do not know the cost of running all of that, as
you would expect. You do not really know how much money you need
to spend to replace so you can get your capacity back to where
it was before the exercise took place and therefore we do not
actually know the cost of the exercise, do we?
(Sir Kevin Tebbit) The replacement system
we have would have automatically started replacing what was taken
out there. This is the army system, which is different from the
other services. With the air force, most of it came back, all
but about two or three per cent came back. With the navy, ships
deploy ready for war and when they come back to port, they then
see how much they have used, so there is a delay factor there.
It is usually not until they return that the navy know. They work
on a broad judgement of about 50% re-supply.
(Mr Oughton) What we can be clear about is that of
those items which did come back, containers of equipment not used,
a very high proportion was engines and major assemblies which
were not required to repair tanks in the desert or whatever, reinforcing
the point we were making earlier that in this case the equipment
difficulties with tanks related to changing simple spare parts,
tank filters, not replacing main engines. We did provide a very
significant stock of main engines and main assemblies, also for
helicopters and other equipments, and they returned. The difficulties
we have with asset tracking systems relate to the fact that although
we have very good static systems for capturing the information
about our inventory, we do not yet have very good systems for
tracking the consignment of those assets from our static locations
in the UK into theatre. We have some information, some bar coded
information, which is available to the logistics supply chain,
but typically that information is not always available to the
commander in theatre. The new systems Sir Kevin is talking about
are designed to raise the confidence level of the Commander in
theatre to know that those items he has requested or his subordinates
have requested are in transit, will be delivered, he can have
certainty that they will arrive. Our new systems are intended
to plug that gap.
Mr Williams
152. Sir John, this is very much a NAO point.
Are you happy with the progress which is being made in tracking
or do you feel that there are lessons which could still be learned
by the Ministry from this report?
(Sir John Bourn) It is quite clear from
the report and the points Ms Eagle has made that there is a long
way to go and Sir Kevin has substantiated that. I am satisfied
that the Ministry of Defence understand the difficulty and the
problem and that they are making progress with it. It is an area
we shall continue to examine as they take the matter forward.
Mr Jenkins
153. I shall try not to ask the same questions
but I do have one question which still bothers me a little bit.
I do not understand, when you say a judgement was made with regard
to modifying the equipment for use in the desert in an exercise
and that you were not going to put this equipment into a condition
for a conflict situation, how the exercise was a success. I wonder
how you know the exercise is a success if the equipment was not
in a position to fight as in a conflict situation. If we did not
do that and did not get the results, albeit because of world problems
and having resources elsewhere, how can you put hand on heart
and say the exercise was value for money?
(Sir Kevin Tebbit) Because although we
had reduced availability of tanks, we took out some of the tanks
from the exercise for the last phase, that did not detract from
the value of the exercise as a whole because we still had enough
assets in there. We deployed about 50% of our land assets which
are in the Joint Rapid Reaction Force headquarters formations
into this exercise, the same for the naval forces and about one
third of the air capabilities. As the report itself says at paragraph
2.55, these operational objectives were indeed met and we are
satisfied. Paragraph 2.60 says, ". . . the Department believes
that the Exercise provided valuable training experience".
The military authorities, the chiefs of staff, have certified
to me that they are absolutely certain that it provided valuable
training experience. So you do not have to have all the elements
there doing all the things in order to demonstrate the key elements
of the concept.
154. So if I divorce the military side, because
I do not understand about tanks, big guns, little guns, and take
the helicopters where availability is 55% which, in your words,
is very good, very high, I find that amazing. If I were buying
a helicopter which was only available 55% of the time, it would
go back to the manufacturers rather quickly. I would want a higher
availability than that. A simple question which springs to mind:
if I was running an exercise and I was changing air filters in
tanks every four hours—I do not know how much a tank filter
is but it might be 50 pence or it might be £150—how
much would it cost to run the exercise, run the tanks, use up
the filters? Was that cost evaluated against the preparation cost
of putting the tank into a more warlike condition?
(Sir Kevin Tebbit) A very good question.
I wish you had not asked me that question, because I think I can
probably answer it as we spent quite a lot of time looking into
this issue. Tank filters cost about £1,000 a go; they are
expensive things, they are big things.
155. So not 50 pence.
(Sir Kevin Tebbit) No, about £1,000
each. This means that you have to measure these costs quite carefully.
The full desertisation of the fleet will have cost about £20
million.
156. For one tank?
(Sir Kevin Tebbit) No, for the total
fleet. The air filters were not being used at this rate for all
of the exercise. It was one particular part of the exercise where
they were used at that high rate. If you ask me to make a value
for money judgement, I think I would have done other things for
the tanks as well. One of the lessons we have learned from this
is that basically we should have made modifications to the tanks
before we sent them on the exercise. I am accepting that. What
I have been challenging is the proposition that the tanks broke
down, did not work, or anything like that. They did, but we had
to change the air filters too often and it is an expensive business.
I am entirely agreeing and accepting what the report says, that
we learned the lesson there,: it would have been helpful for us
to have done the modification. If you ask me to do a cost-effectiveness
thing, it is quite tricky, because there are other factors than
just money. There was also the operational consideration of needing
possibly to fight wars and that was why we kept back these skirts,
the up-armoured sides to the tank, giving extra protection against
warfare; we did not deploy them with the tanks. Had we done so,
we would not have had this problem. This is why I keep coming
back to it. It is a combination of operational considerations
and cost which led us to make certain compromises in doing the
exercise, which gave us valuable lessons and we are learning from
them. The implication should not be drawn, as some of the Committee
have drawn, that this means the equipment itself is bad or that
we failed to demonstrate our concepts.
157. I do not want to ask about the equipment,
I want to ask about the cost and the fact that someone sat down,
spent three years planning this and they must have done a risk
assessment, they must have done mathematical models, all these
calculations about the cost of doing A, B, C and D and now we
realise that A is going to be more expensive and that has been
fed back into the model, that is an assurance.
(Sir Kevin Tebbit) That is right. They
made a judgement at the time that it was not necessary to do anything
about dust ingestion and desertisation. They made the wrong call.
That lesson has now been learned.
158. When they talk about the cost of the actual
exercise—and it was £48 million and then it was £98
million—that is the MOD's costing system, is it not? This
is the additional cost, not the real cost. The real cost in resources
is manpower . . .
(Sir Kevin Tebbit) Yes, it is not the
full cost.
159. The full cost is much, much higher.
(Sir Kevin Tebbit) Yes.
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