House of Commons - Defence

Select Committee on Defence Sixth 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 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.[1]

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,[2] 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 MK4
'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.[3] These include:

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 programmes—Joint Strike Fighter and Eurofighter/Typhoon.

6. Last year, in addition to specific equipment programmes, we examined the Defence Industrial Policy,[4] 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 DPA—The agreed way forward',[5] 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 respectively,[6] along 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,[7] the Defence Industries Council,[8] the Defence Manufacturers Association,[9] Intellect,[10] Northern Defence Industries Ltd,[11] the Defence Engineering Group,[12] and the VT Group.[13] 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.