House of Commons - Defence

Select Committee on Defence Eighth Report

1 INTRODUCTION

1. Since the introduction of annual defence equipment debates in 1998, we and our predecessors have undertaken annual inquiries to inform those debates. This is the fifth report in that series, and is aimed at informing the next debate which we expect to be held this autumn. On each occasion we have taken as our starting point a survey of about a dozen or so major procurement projects whose progress we have monitored. Our aim in each inquiry has been to examine and report progress on a selection of the more significant of them, as particular programmes come to critical points in their progress.

2. Accordingly, over the four previous inquiries, we and our predecessors have focussed on a range of programmes at various times, as they were at particularly important stages in their development:

In the first report[1] in the series, in 1999, our predecessors examined the UK's then recent withdrawal from the collaborative 'Horizon' frigate programme and its replacement by a national Type-45 destroyer programme. They also examined the vessel's Principal Anti-Air Missile System which was to continue as a collaborative programme.
Their second inquiry[2] in 2000 focussed on 'Meteor' (the beyond visual range air-to-air missile for the Eurofighter Typhoon) and the strategic air-lift programme, the competitions for both of which had then just been decided, and the Bowman communication system whose competition was then on the brink of having to be relaunched.
Our predecessors' third report[3] in their series reviewed progress on: the Future Aircraft Carrier and its Future Joint Combat Aircraft; the Advanced Short-Range Air-to-Air Missile, intended for Eurofighter and other aircraft; the Roll-on Roll-off ships.[4]
Last year, we mainly examined the MoD's division of work between shipyards for the Type-45 destroyer in the context of a review of the future capacity of shipbuilding in the UK, and the decision to decommission the Sea Harrier before the Future Joint Combat Aircraft comes into service.[5]

3. Our last but one inquiry also allowed us to consider equipment aspects of the Kosovo campaign, in particular the need for enhancements to the UK's precision-guided bombing capability, supplementing our predecessors' main inquiry on that conflict. In a similar way, we used the opportunity of this current inquiry to ask the Minister about the process by which equipment lessons would be taken forward from the war in Iraq, which is the subject of a separate ongoing inquiry. We do not comment on the Iraq war, however, in this report.

4. We have continued with our procurement monitoring exercise this year. In selecting our projects for tracking, we have retained many on our list from previous years, because they remain important in their own right but also because they allow us to continue to track the progress of important specific capabilities identified in the Strategic Defence Review (SDR), such as the Future Carrier and Ro-Ro ships. However, this year we expanded our list to take account of the growing importance of particular military capabilities linked to last year's SDR New Chapter white paper,[6] to include Watchkeeper and the Future Rapid Effects System. Our starting point, as with our previous inquiries, was to request a detailed MoD memorandum, which we publish with this report,[7] covering the following programmes:

Future Aircraft Carrier
Future Joint Combat Aircraft (currently planned to be the F-35 'Joint Strike Fighter')
Type-45 destroyer
Ro-Ro strategic sealift
'Bowman' communications system
Future Rapid Effects System
Eurofighter Typhoon
'Meteor' beyond visual range air-to air missile
Advanced Short-Range Air-to-Air Missile
A400M strategic airlift
Nimrod MRA4
Light Forces Anti-Tank Guided Weapon System
Swiftsure and Trafalgar submarine Update
Astute submarine
'Watchkeeper' unmanned aerial vehicles

5. This year, we have also sought to examine the Defence Industrial Policy, a paper produced jointly by the MoD and the Department of Trade and Industry last October.[8] We took oral evidence from representatives of the Defence Industries Council, with whom that Policy paper had been negotiated (Sir Richard Evans and Mr Nick Prest, chairman and vice-chairman of the Council respectively,[9] along with Mr John Howe of Thales-UK and Mr Colin Green of Rolls-Royce). We also took oral evidence from Sir Peter Spencer (Chief of Defence Procurement) and Lord Bach, Minister for Defence Procurement (who was accompanied by Sir Peter and Lt Gen Rob Fulton, Deputy Chief of Defence Staff (Equipment Capability)—heads of the MoD's 'supplier' and 'equipment customer' organisation respectively).

6. We received written submissions from the Defence Industries Council[10] and the Defence Manufacturers Association,[11] and we took advantage of an offer from Lord Bach to have a briefing from MoD/DTI officials on a recently agreed waiver from US licensing procedures for unclassified technology transfers to the UK (which we discuss later in this report).

7. In the process of our inquiries over the last few years we have sought to keep under review the progress made with the Smart Acquisition initiative, launched as part of the Strategic Defence Review in 1988. Our session with Sir Peter Spencer gave us the opportunity to hear the views of perhaps the key player in the MoD's Smart Acquisition initiative, only a month after he took up the Chief of Defence Procurement post. One of the suggested 'core tasks', agreed by the House last year,[12] is for select committees to examine key new appointments in the government departments they monitor. We were able to examine what approaches Sir Peter hoped to bring to his new post and his views on current procurement issues. In similar vein, in last year's inquiry we took evidence from Air Marshal Sir Jock Stirrup, Lt Gen Fulton's predecessor as DCDS(EC), soon after his appointment. Outside our annual procurement inquiries, we have also examined several other new appointments in recent years.[13]

8. Since our inquiry last year, there have been significant developments with the projects on our tracker list,[14] many of which might have warranted closer examination:

the selection of the Short Take-off and Vertical Landing variant for the UK's Joint Strike Fighters.
signature of the Ro-Ro ship PFI contract, with delivery of the six vessels.
the contract award for the Javelin anti-tank missile.
the announcement of an 'alliance' approach for developing the Future Carrier.
the maiden flight of the Typhoon series production aircraft and its delivery last month to the RAF.[15]
the extension of the Bowman contract to provide, in due course, an operational planning and control package and an integrated commander's terminal for armoured vehicles,[16] and connectivity with the Apache attack helicopters.[17]
the revision of contracts for the Astute and Nimrod programmes.
the down-selection of two firms as possible prime contractors for the next stage of the Watchkeeper UAV programme.

9. In this year's inquiry, however, we have focused on those projects with particular relevance to aspects of the newly-published Defence Industrial Policy. So, in regard to the management of risk, an aspect covered by the Defence Industrial Policy, we examine the lessons of the Nimrod, Astute and Future Carrier programmes. And in looking at how the Smart Acquisition initiative might be taken forward after last year's Defence Industrial Policy and SDR New Chapter, to make it more responsive, we examine how the Watchkeeper and Future Rapid Effects System programmes are being managed. But first, we examine the basis on which the Defence Industrial Policy was produced, and the prospects for developing a more open defence market in Europe and with the US, to match the UK's open market approach set out in the Policy.

1 Eighth Report, Session 1998-99, Major Procurement Projects Survey: The Common New Generation Frigate Programme, HC 544 Back

2 Tenth Report, Session 1999-2000, Major Procurement Projects, HC 528 Back

3 Ninth Report, Session 2000-01, Major Procurement Projects, HC 463 Back

4 This inquiry coincided with the 2001 general election, and without an opportunity to produce a substantive report the Committee had to content itself with putting the evidence it had taken in the public domain before it might be lost at the end of the Parliament. Back

5 Fourth Report, Session 2001-02, Major Procurement Projects, HC 779 Back

6 The Strategic Defence Review: A New Chapter, Cm 5566 I, July 2002 Back

7 Ev 63-113 Back

8 Policy Paper 5: Defence Industrial Policy, Ministry of Defence, 14 October 2002 Back

9 Sir Richard Evans is also chairman of BAE Systems, and Mr Prest is also chairman and chief executive of Alvis-Vickers. Back

10 Ev 126 Back

11 Ev 113 Back

12 HC Deb, 14 May 2002, col 715 Back