Select Committee on Defence Minutes of Evidence


Examination of Witness (Questions 460 - 479)

WEDNESDAY 4 DECEMBER 2002

AIR CHIEF MARSHAL SIR MALCOLM PLEDGER, KCB OBE AFC

  460. Can you say of the DLO asset maybe in five years' time how much of it will be a provider activity and how much of it will be a decider activity?
  (Air Chief Marshal Sir Malcolm Pledger) More will be decider in balance, much more will be decider than today.

  461. So will it be 80% of the organisation?
  (Air Chief Marshal Sir Malcolm Pledger) As I say, I cannot answer that question because all that people will see then is a determination to reduce the employment of people in this particular sector, and it is not like that. It is a determination to go through the process analysis to deliver solutions on acceptable operational risk but with better value for money, and that is the bottom line and that is the process that we are applying and we have said how we are going to roll it out and that is what I am going to take back to them. One of the other points I make is this is not a file and forget document. I will be back to each of these organisations in three months' time to exchange my view of progress and to determine what their view of progress is so far.

Chairman

  462. I know it is a very disparate organisation, but have you worked out what the percentage of civilian to military personnel is?
  (Air Chief Marshal Sir Malcolm Pledger) It varies in the different communities. We come back to the culture issue, if I may. For example at Wyton it is a higher military percentage than it is in my headquarters at Bath. It is pointless saying overall it is X because it is an environmental and cultural issue and it is a feature, I have to say, of one of the areas that we are trying to develop which is to create diversity in our environmentally arranged solutions by virtue of attracting people from other parts of the smart acquisition community.

  463. If you can find some figures for us?
  (Air Chief Marshal Sir Malcolm Pledger) Overall?

  464. Perhaps individually, the ones that are relevant to us.
  (Air Chief Marshal Sir Malcolm Pledger) I can give them for each of the business units and the headquarters but they are different.

  Jim Knight: Noticeably you are supported today by suits and not uniforms and I would be interested within your support team how that pans out.

Mr Hancock

  465. In your Strategic Plan, Air Marshal, you highlighted the progress of the changes you were seeking and the problems associated with some of the legacy equipment and the way in which supplying those is in some cases was possibly going to hold back the sort of reforms you want to make, having to look after so much equipment which has such a long history associated with it much. What would your comment be about that position generally?
  (Air Chief Marshal Sir Malcolm Pledger) I think my first comment would be that that is just one of the panoply of challenges against the transformation that I have been describing. To use an example of difficulties, of course some of our earlier procurement decisions have meant that our ability to compete then in the support is constrained. In some areas, and this is not consistent across the DLO, but for example in "Air" we have organisations that currently are the design authority for the equipment, they have intellectual property rights and they also are, by virtue of airworthiness constraints, probably the only manufacturer of many of the parts that then support and help me maintain that particular fleet. The opportunities therefore to broaden this, go to output contracting and create competition are drastically constrained, and that will force us to move along a path of partnering such that I can through other means incentivise my supply chain whereas that is obviously not the case in some of the other environments. That is just one example.

  466. So what avenues are open to you then to influence the way in which some of your customers can make judgments for future procurements? How do you put your role into the role of being an advisor to your customer as well as a supplier to it?
  (Air Chief Marshal Sir Malcolm Pledger) Again my customers are at different parts along this path to intelligence in as much as they have different capabilities, different numbers of people embedded in their organisations. Again I think McKinsey showed a degree of horizontal overlap as well as, potentially, a degree of vertical overlap. So I would much prefer that the DLO is seen as the advisor to these customers of how to do things against their starting requirements, rather than this huge tension which currently emerges of very blunt targets set by those customers that are not reflective of what I am responsible for.

  467. So would you not say you are pushing at an open door there?
  (Air Chief Marshal Sir Malcolm Pledger) May I answer that hypothetically. If you were a customer that did not pay for anything I think your requirements and demands might be slightly different than if you actually had to use your resources.

  468. Is that a change that you would like to see in strategic planning?
  (Air Chief Marshal Sir Malcolm Pledger) I do not think it is a change that needs to happen for us to move along this transformation. What I am looking for is an engagement with my customers that recognises the reality of resource constraints.

  469. Would it improve the discipline they have and what they expect of you?
  (Air Chief Marshal Sir Malcolm Pledger) A personal view is it just must; that is human nature.

  470. Maybe you should push a bit harder because I am sure a lot of Members in this room would support that view.
  (Air Chief Marshal Sir Malcolm Pledger) I think I stressed earlier this is not just a transformation initiative that is going on in the DLO. We have got other strands going on sponsored by the main office and that particular solution is one that is being looked at again.

  471. If I could ask you to comment on the DLO's role with the PFIs. Since 1995 the Ministry of Defence have signed 45 different PFIs, totalling close on £2.5 billion. I am curious for you to tell us what you consider to be the main benefits of PFI in your particular area and, of course, obviously the pitfalls as well?
  (Air Chief Marshal Sir Malcolm Pledger) From a very parochial perspective I would say that the real benefit of PFI is the absolute requirement to look across life and determine what the outputs of that service delivery are going to be and face up to the consequences up-front because that is then the contractual arrangement. That gives me as, shall we say, the owner subsequently of the arrangements, greater faith that we will have bottomed out all the risks and be able then to support that regime at the level that it was originally expected.

  472. What are the problems associated with operating, as you do, 45 different contracts so far signed and some two dozen currently under consideration? Where do you exercise any real control over the way that they are properly managed and are operating in conjunction with what you are trying to deliver?
  (Air Chief Marshal Sir Malcolm Pledger) Again, I come back to the interoperability of the IPTs, first of all in the procurement arena and then subsequently in their moving across that divide into the DLO. Their dual accountability means that I get visibility and, indeed, the opportunity to influence that contractual arrangement earlier rather than later.

  473. Can I ask just one final question which goes back to something I wanted to ask earlier when you were talking about disposals. We are currently in the process of getting rid of 100-odd Challenger I tanks to Jordan. I think there will be something like 200 that will be gifted to them over a period of time. Obviously going with them will be all of the accumulated spares associated with having over 200 tanks around the system. Is that the way it works? Does the whole shooting match go or is it just the tanks and the transporters go and then we expect the Jordanians to buy the spares from other sources or do we supply the spares that we have on the shelves?
  (Air Chief Marshal Sir Malcolm Pledger) That depends on the organisation buying them.

  474. These are being gifted.
  (Air Chief Marshal Sir Malcolm Pledger) Some of them are being gifted.

  475. Over 130 of them.
  (Air Chief Marshal Sir Malcolm Pledger) In those cases, of course, it might well be in our interest to make sure that the spares do go because if they are bespoke to that particular organisation it would be pointless for us to retain them simply to sit on the balance sheet.

  476. My supplementary is will there be a suitable desertification programme going with those tanks?
  (Air Chief Marshal Sir Malcolm Pledger) We would not be what I would call upgrading them at our cost subsequently to transfer them, that would not be my perspective.

Chairman

  477. Perhaps you can drop us a note on this, please, because obviously it requires a little bit of detail. Perhaps you can supply that in due course.
  (Air Chief Marshal Sir Malcolm Pledger) Can I just be sure the inference here is that there is some MoD funded upgrade going on before?

Mr Hancock

  478. That is what I am interested to know. For the life of me I cannot understand why anybody would want 200-odd Challenger tanks unless they had been brought up to a standard which actually means they are able to operate in the desert, because we know from our own experience that they are not very good in sand. I thought Jordan was a strange choice for a tank that had not proved itself to be too effective in the desert.
  (Air Chief Marshal Sir Malcolm Pledger) I will talk to the Disposals Agency and come back to you, if I may.

Chairman

  479. They were designed for the Shah, the Shia 1 they were called, but he did not need them. They did operate in the first Gulf War.
  (Air Chief Marshal Sir Malcolm Pledger) As I say, let me talk to the Disposals Agency.

  Chairman: The point is we would like to know are we giving them the spares? Would that clear out two-thirds of your shelving? Are we charging them? Will your expertise go out? It would be quite useful to know.


 
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