Select Committee on Defence Minutes of Evidence

Examination of Witness (Questions 400 - 419)



  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.


  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.

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