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 sixth report in
that series, and is aimed at informing the next debate which we
expect to be held in the autumn. We have taken as our starting
point a survey of fifteen major procurement projects whose progress
we have monitored. Our aim in each inquiry has been to examine
and report on a selection of the more significant of them, as
particular programmes come to key points in their progress.
2. Last year we examined the Nimrod MRA4 maritime
patrol and anti-submarine/anti-ship attack aircraft, and the Astute
attack submarine programmes which had both experienced substantial
problems. The contracts for both these major projects had to be
re-negotiated because of difficulties stemming from poorly managed
risk. We also examined the Future Carrier, Watchkeeper and Future
Rapid Effect System programmes.
3. 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. Our starting
point, as with our previous inquiries, was to request a detailed
memorandum covering these projects from the Ministry of Defence
(MoD), which we publish with this report,
covering the following programmes:
- A400M military transport aircraft
- Advanced Short-Range Air-to-Air Missile
- Light Forces Anti-Tank Guided Weapon System
- Apache WAH 64 Attack Helicopter
- Type 45 Anti-Air Warfare Destroyer and its Principal
Anti-Air Missile System
- 'Meteor' beyond visual range air-to-air missile
- Astute submarine
- Nimrod Maritime Reconnaissance and Attack Aircraft
- 'Bowman' communications system
- Typhoon (formerly Eurofighter)
- 'Watchkeeper' Unmanned Air Vehicles
- Future Joint Combat Aircraft (Joint Strike Fighter)
- Future Strategic Tanker Aircraft
- Future Rapid Effect System
- Future Carrier
4. Since the publication of last year's procurement
report, there have been key developments on a number of the projects
on our tracker list.
- the signature for the Development
and Production contract for the A400M military transport aircraft.
- the start of manufacture on HMS Daring, the First
of Class Type 45 destroyer.
- the signature of the amended contracts reflecting
the Agreements between MoD and BAE SYSTEMS on Astute and Nimrod.
- the achievement of the Bowman in-service date
ahead of schedule in March 2004.
- the delivery of the first Eurofighter Typhoon
and acceptance by the RAF.
- the selection of the AirTanker consortium as
the preferred bidder for the Future Strategic Tanker Aircraft.
- the approval for the Future Rapid Effect System
to go forward to the Assessment Phase.
5. In this year's inquiry, we have once again examined
the progress of the Astute, Nimrod, Future Carrier, Future Rapid
Effect System and Watchkeeper programmes. We also examined the
progress on two fighter aircraft programmesJoint Strike
Fighter and Eurofighter/Typhoon.
6. Last year, in addition to specific equipment
programmes, we examined the Defence Industrial Policy,
a paper produced jointly by the MoD and the Department of
Trade and Industry (DTI) in October 2002. We also took evidence
from the then newly appointed Chief of Defence Procurement, Sir
Peter Spencer and were impressed with his determination to make
Smart Acquisition, launched as part of the Strategic Defence Review
in 1998, truly agile and responsive to equipment customer needs.
He appeared to share our view that Smart Acquisition needed to
be periodically refreshed. This year we decided to revisit both
of these key areas. We were particularly interested to examine
the proposals for refreshing Smart Acquisition which are set out
in the Defence Procurement Agency's 'A Stocktake of Smart Acquisition
in the DPAThe agreed way forward',
which Sir Peter forwarded to us in January 2004. With regard
to the Defence Industrial Policy, we were keen to examine
the progress made in implementing the Policy, since its launch
some 20 months ago.
7. In undertaking our inquiry, we took oral evidence
from representatives of the Defence Industries Council (Sir Richard
Evans and Mr Nick Prest, Chairman and Vice-Chairman of the Council
with Mr John Howe, Vice-Chairman of Thales UK, and Mr Simon Frost,
Chief Executive Officer of Claverham). We also took evidence from
Sir Peter Spencer, Chief of Defence Procurement, and Lord Bach,
Minister for Defence Procurement (who was accompanied by Sir Peter
Spencer and Lt General Rob Fulton, Deputy Chief of Defence Staff
(Equipment Capability)heads of the MoD's 'supplier' and
'equipment customer' organisations respectively).
8. We received written evidence from a number of
organisations in the defence sector including MoD,
the Defence Industries Council,
the Defence Manufacturers Association,
Defence Industries Ltd,
the Defence Engineering Group,
and the VT Group.
We are grateful to all those who contributed to our inquiry. We
were assisted in our inquiry by our specialist advisers Mr Paul
Beaver, Professor Michael Clarke, Rear Admiral Richard Cobbold,
Professor David Kirkpatrick, Air Vice Marshal Professor Tony Mason
and Brigadier Austin Thorp. We are also grateful to them.
1 Defence Committee, Eighth Report of Session 2002-03,
Defence Procurement, HC 694 Back
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Ev 80 Back
Policy Paper 5: Defence Industrial Policy, Ministry of Defence,
14 October 2002. Back
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Sir Richard Evans is also Chairman of BAE Systems, and Mr Prest
is also Chairman and Chief Executive of Alvis. Back
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