Examination of Witness (Questions 400
- 419)
WEDNESDAY 4 DECEMBER 2002
AIR CHIEF
MARSHAL SIR
MALCOLM PLEDGER,
KCB OBE AFC
400. But it does happen?
(Air Chief Marshal Sir Malcolm Pledger) It does happen.
401. On a fairly widespread basis.
(Air Chief Marshal Sir Malcolm Pledger) Well, only
to a level that is acceptable to my customers. I think there is
a point here that my customer—and I stress "my customer"
is at a certain level in this organisation—has signed up
deliberately to the outputs that I have to maintain. Some of those
are on availability regimes, some are on what I will call old-style
"You are to have this, that and the other". As of last
week—and I think I know the location you visited about two
weeks ago.
402. How surprising you knew about that!
(Air Chief Marshal Sir Malcolm Pledger) I also understand,
of course, that the people on what I ill call the shop floor were
saying that this is an unacceptable process. However, in terms
of availability of spares, we are actually in the vast majority
of cases meeting the stated requirement.
Mr Jones: That is not what we were told.
I am sorry.
Chairman
403. Going back a long way to the Cold War,
we were allegedly on 30 days' supply of equipment. That seemed
to me to be based on the fact that at the end of 30 days our holding
of front-line equipment would have been very, very sharply reduced
and, therefore, 30 days was only predicated on the principle that
the military would have rather less equipment than they would
at the beginning. I can imagine the problems of shelving all of
this pretty elderly stuff, and much of our equipment is elderly.
Therefore, what appears to be obsolescent is still relevant. What
I would like to be assured of—and maybe you can write to
us and give us details—is the criteria you used (the point
that James raised) as to which equipment you dispose of, how you
dispose of it—who you give it to or sell it to—and
reassure us that even though some items might take up a lot of
shelving and be very costly to retain a short war can consume
ten years of peace-time equipment and ammunition. There is not
much point in the MoD expecting you to clear the shelves if only
to find that we are engaged in a longer war than anticipated and
after four days of firing certain missiles the shelves are empty
and then we have to go grovelling around to countries and hope
that they will supply us with that equipment. It would be helpful
if you could give us rather more information on what yardsticks
you use, what stuff you have, what have you got rid of, who do
you get rid of it to, and can you give us assurances that, despite
any pressures that you might have from the MoD, if we are engaged
in any conflict the supplies of equipment are going to be readily
available?
(Air Chief Marshal Sir Malcolm Pledger) Of course,
Chairman. Could I just add one aspect to that, against planning
assumptions.
404. And there are some planning assumptions?
(Air Chief Marshal Sir Malcolm Pledger) Against the
MoD's sound planning assumptions.
Chairman: Please let us know what the planning
assumptions are so we can make a judgment as to whether those
assumptions are valid or not.
Mr Cran
405. Therefore, against the background of the
question I asked you, I am prepared to accept what I have been
told, which is that combat readiness is not affected by the moving
around of equipment from one tank or aircraft to another. I would
become worried if defence commitments escalated beyond what we
entertain at the moment. How do you answer that question about
combat readiness against escalation of commitment?
(Air Chief Marshal Sir Malcolm Pledger) And I think
I would want to describe that as the further development of these
customer-supplier agreements to deal with the range and the agility
required by the military today in their operational and operating
environments. We need to build that scale and agree the risks
that the front line would be willing to take against the tools
and the techniques that I want to apply in supporting that regime.
406. That is a managerial and, if I may say
so, very clever argument but it does not answer the question that
I asked. I asked the simple question which is that if I accept
that at the minute combat readiness is not affected by this moving
around of equipment, how am I to be assured if we escalate our
commitments you are going to be able to cover that because there
are a lot of arguments which would say you could not in the short-term
because it is sophisticated equipment we are talking about?
(Air Chief Marshal Sir Malcolm Pledger) Absolutely,
and you can make an argument about a specific occasion where I
do not doubt you would be right. My point is that we have to make
assumptions as to the degree of that agility, we make assumptions
about time lines of readiness in military capability terms for
conflict, then other assumptions about readiness for a particular
conflict and then we take risk judgments against the degree of
resilience in the support chain.
407. I would need a very clever barrister after
the event to work out what all of those words mean, but you still
have not given me an answer to the question that I asked and I
doubt if I am going to get one. Can I move on and ask the question
another way. Which major equipments in your view are most affected
by simple shortages? Any individual in your business would know
that off-hand. Have you got the top five that you could give us?
(Air Chief Marshal Sir Malcolm Pledger) We have an
arrangement by which we measure our delivery against the customer's
stated objectives, against the CSAs, and you will not be surprised
to know that we do that across each of the CSAs every month. The
only significant shortfalls against equipment supplies that I
registered at the last such assessment were in the land area and
some of the assemblies and spares support particular to Challenger
II were below the levels that my customer required. We have already
taken that up with the supplier in order to improve his delivery
capability.
408. You cannot give me the top five shortages
which you have?
(Air Chief Marshal Sir Malcolm Pledger) As I say,
that at the moment is the only one that would feature on what
I would call my risk register and balance score card approach
to managing this arrangement.
409. And we could be assured that there are
no major shortages in relation to our combat aircraft?
(Air Chief Marshal Sir Malcolm Pledger) No. If I may,
again I think you are taking my words beyond what I stated. I
said that against the customer-supplier agreements currently in
place the significant shortfall in equipments—
410. I heard the words. One last question. What
lessons did we learn from Saif Sareea in your business terms?
(Air Chief Marshal Sir Malcolm Pledger) A whole host.
411. Give us some.
(Air Chief Marshal Sir Malcolm Pledger) I think you
have already heard a host of those from others. If we want to
go into desertisation, I think we learned a great deal about better
preparation for particular locations, which I stressed earlier,
being prepared for a particular conflict rather than being prepared
for conflict in the round and that, of course, is clearly informing
the way that we provide the agility I described earlier at an
acceptable risk given that we do live in a real world where the
conditions will be different, the environment, the reach, the
line of communication, etcetera, because I cannot predict and
nobody will predict exactly where and when that next operation
will fall.
Mr Cran: You have worn me out. I now give you
to the wolves.
Mr Jones
412. I do not want to re-open the issue about
targets, but I do not know how you can over-achieve the target
if you do not know how you set it in the first place. At Marham
we were told that aircraft were being cannibalised to keep front-line
aircraft and I accept the position that both the Station Commander
and the MoD have said that combat readiness was effective, but
the issue raised with us directly by the people who are dealing
with it was the fact that there was a problem with spares and
the 20% figure was mentioned. The thing they raised with us is
that there is actually a cost involved with that because if you
take equipment out of one aircraft and put it into another occasionally
it breaks, therefore there is a cost. So you might be saving 20%
down the supply chain but there are problems with your supply
chain of spares. You have got a cost at the front end if you are
actually breaking equipment when you are trying to cannibalise
it. Is that taken into account at all in terms of the 20% savings?
Clearly if you are actually involved with more expense at the
front line because you are having to carry out operations which
you would not have to if you had the spares then surely that 20%
does not really count for anything, does it?
(Air Chief Marshal Sir Malcolm Pledger) Your observation
obviously needs to be tested in each of the environments.
Mr Jones: We were told this by people who were
actually dealing—
Mr Hancock
413. Ask the Navy.
(Air Chief Marshal Sir Malcolm Pledger) I was going
to say, what this leads to is another initiative that we are now
prosecuting which is called an end-to-end review of the logistic
process. There are currently different divisions between the DLO
and the customer in terms of who does what and therefore where
the responsibility and the costs associated with that fall and,
not surprisingly in that kind of regime, there is an interesting
debate that goes on across the border as to whether or not processes
in one organisation impact on the effectiveness of the other.
Mr Jones
414. There clearly are in the Army and the Air
Force.
(Air Chief Marshal Sir Malcolm Pledger) In the Navy's
case, of course, that is the furthest forward and there has been
a recognition of the difference between what I would call front-line
activity, which in the Navy's case tends to be the surface vessel
and its collective systems, and the other Services, for example
my own where we have a more interesting and irregular division
somewhere between what we would call second and third line. By
looking at this end-to-end, which is what is going on at the moment,
it does not necessarily need a change of ownership, but we can
actually get to grips with the kinds of potential inefficiencies
that you describe.
415. They are not potential, they are actually
happening.
(Air Chief Marshal Sir Malcolm Pledger) I do not know
whether they are or not because the point is that you may say
that costs more money in that particular endeavour. Of course,
those people were already in place so, shall we say, we were simply
using an HR that existed and countervailing if we provided a greater
resilience in this then that would have had an up-front investment
and I go back to questions asked earlier about slow turning inventories.
That balance has to be made visible such that the decision is
the right one having looked at both perspectives.
Mr Hancock
416. In your reply to James it was difficult
to grasp what you were actually saying. I think you had difficulty
in agreeing with what he said because he was talking about how
the efficiency savings you were making in your organisation were
suiting targets that you had been set and you were working to
an agreement with your customer, the front-line element of the
Forces, but you were unable to confirm to him whether or not that
arrangement was actually having an adverse effect at the front
line. I would suggest to you that the targets you have been set
must be having an adverse effect at the front line, they have
got to be. You cannot take 20% out of an organisation, even if
it is the cannibalisation of one Tornado, to keep another one
in the air, there has to be a knock-on consequence of that. You
said you have to have good relationships with yours customers,
the front line, but you also have to have a very good relationship
with your supplier to ensure that when you need these parts in
quick time they can deliver. There has to be a cost to that. This
is not the cosy arrangement which was there 20 years ago where
there was an on-going contract. You will ask them to supply x
number of parts when you require them in a much shorter time.
That must have an increased cost. What is it?
(Air Chief Marshal Sir Malcolm Pledger) Again I think
you have jumped, if I may say so, to the wrong conclusion. Yes,
of course we need a relationship with both my customer and my
supplier. What I am saying is that there are different ways of
satisfying my customer's requirements to the DLO. If we are to
engage in a productive way from both sides we have to understand
the logistic process from end-to-end and he has to show to us
the costs associated with his practices such that we can take
those into account at our end of the spectrum. My point being
at the moment that that is not the way that it works in the particular
instance that we are quoting. We have to have that visibility.
By taking what I would call some of the peaks and troughs out
of some of the training arrangements you can have a much more
regular flow of the support to that front line that is better
and more efficiently delivered by our suppliers. At the moment
in many areas they are having to be prepared for the peak and
we are paying for the peak. So this is a different relationship.
It is an understanding, therefore, of what they need to deliver
their military capability requirements and risk abilities, but
it is also a relationship that understands the costs of doing
it that way and the potential for changing the way we do it such
that the organisation will still be ready.
417. How do we get an accurate reflection then?
I have spoken to some of your suppliers and they tell me you are
trying to push the price down whilst at the same time you are
requesting them to deliver something to you in an even shorter
period and they are saying that that very thing pushes the cost
up and in the end the MoD has to give way and accept the increase
in cost. I want to know how Parliament is able to judge the 20%
efficiency savings which you have achieved against the MoD's overall
budget of actually being able to deliver what the nation thinks
of them? We are not 20% fitter in the MoD because you have saved
20% on what it costs to supply the Armed Forces, are we? We are
not fitter at all in that respect.
(Air Chief Marshal Sir Malcolm Pledger) Again, I do
not agree with that.
418. Where are the cost savings then?
(Air Chief Marshal Sir Malcolm Pledger) As I say,
the cost savings are by doing things differently and by incentivising
our suppliers and our customers to do things differently that
will create better value for money.
419. Air Chief Marshal, I would need convincing
that your 20% savings must represent a 5% overall saving to the
MoD somewhere and that 5% is then spent on other things. I think
it should be spent on paying more for the product in the first
place.
(Air Chief Marshal Sir Malcolm Pledger) Part and parcel
of what we have embarked upon is to be able to show the benefits
associated with these changes in a processed way end-to-end and
of course in some instances that will need an investment to gain
those benefits, but we need to provide that evidence and then
subsequently show people like you but, I have to say, more importantly,
my customer who subsequently owns that military capability, that
these are effective answers to the operational risk that he carries.
| 
