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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 57-v House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE DEFENCE COMMITTEE
Wednesday 7 January 2004 MR TREVOR WOOLLEY, MR PAUL FLAHERTY CBE and MR DAVID WILLIAMS LT GENERAL ROB FULTON, AIR VICE MARSHAL STEPHEN DALTON and MAJOR GENERAL DICK APPLEGATE Evidence heard in Public Questions 1851 - 1995
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Defence Committee on Wednesday 7 January 2004 Members present Mr Bruce George, in the Chair Mr Crispin Blunt Mr James Cran Mr David Crausby Mike Gapes Mr Mike Hancock Mr Kevan Jones Mr Frank Roy Rachel Squire Mr Peter Viggers ________________ Witnesses: Mr Trevor Woolley, Finance Director, Ministry of Defence, Mr Paul Flaherty CBE, Civil Secretary, Permanent Joint Headquarters, and Mr David Williams, Director, Capability, Resources and Scrutiny, Ministry of Defence, examined. Q1851 Chairman: Thank you very much for coming, gentlemen. Mr Woolley, we would like to start with a question on net additional costs of operations. We are interested in getting information in order to understand the concept of net additional costs of Operation Telic: that is, those costs over and above those that would have been incurred if the operation had not taken place. Could you set out for us what costs are included and those costs that are excluded from your assessment of the costs of Telic? For example, how are pension costs for the families of service personnel or compensation payments treated? Mr Woolley: The costs that are included are the additional costs of, for example, pay; the allowances of servicemen who are deployed that would not otherwise have been incurred had the operation not taken place; the cost of the salaries of mobilised reservists that would not otherwise have been incurred; the cost of movements, air and sea charter; the costs of stock consumed - ammunition, fuel, clothing, food - that would not otherwise have been incurred. We also take into account certain non-cash costs, such as the depreciation of equipment, for example of urgent operational requirements that have been procured for the operation. The depreciation of those capital items would be included in the overall net additional costs. We net off against that any savings that we identify of activities or consumption that did not take place as a result of the operation - although that is a relatively small figure. In terms of compensation claims, yes, we would seek to capture any such costs and claim for those as part of the additional cost of the operation. Q1852 Chairman: Is there any document that lays down these ground rules, which I presume will be settled by a bloody conflict between the MOD and the Treasury - which of course the Treasury will inevitably win? Is there anything that we could see that would say what is on either side of this equation? Mr Woolley: There is no very detailed document that sets out the ground rules. It sets out the principle. The principle - which, to be fair, the Treasury is fully subscribed to - is that if a cost is incurred as a consequence of the operation, of whatever sort, then it is a cost of the operation that is reasonably charged to the reserve. It is therefore really a case of applying that principle to any particular case. In particular instances we may have a discussion with the Treasury about whether a cost represents a genuine net additional cost; but it is the principle which is set out, not any detailed instructions in relation to particular items of cost. Q1853 Chairman: It cannot be as simple as that. Nothing is as simple as that. Is there any case law which shifts from conflict to conflict, in which you would say, "This falls into this category" or "This falls into that category"? Mr Woolley: The principle is straightforward. Q1854 Chairman: I can understand that, but the practice may be much more complicated. Mr Woolley: The practice is relatively straightforward as well. The only areas where one might have some debate are the extent to which activity levels have reduced as a result of the operation, and what the particular cost of those activities that did not take place would have been. When you are talking about something which has not happened, it is often more difficult to quantify the costs involved. There might therefore be a debate as to exactly what the offsetting saving in a particular case may be, but in general we have not found the definition of what constitutes a net additional cost of the operation to be a major issue, either internally or with the Treasury. Q1855 Chairman: It would be helpful if you could trawl your files, Mr Woolley, and give us a little more information. I am thinking in terms of compensation for families whose loved ones have been killed. How would that formula actually operate? I presume that people would die even if they were not in a conflict. Is there any unseemly haggling over how many people you would expect to die in a normal, non-military environment as opposed to a military environment? Is that susceptible to negotiations? Mr Woolley: In a sense that particular issue is not central, because pensions are paid outside the departmental expenditure limit anyway. It is not an affordability issue for the defence budget in that particular case. We can certainly let you have a copy of the relevant internal instructions, if you wish. Q1856 Chairman: If you would not mind, please. The second question is do you have any plans to make an assessment of the full cost of Operation Telic, rather than just the net additional costs? Are there any plans to report the results of such an assessment? If not, what are your reasons for not doing so? You only give a partial picture in that sense, as the National Audit Office have pointed out. Mr Woolley: Our view is that attempting to calculate the notional full cost of the operation would not actually provide any very useful information, either for us in the way we manage the defence budget or indeed for Parliament and the public. It would be an exercise in attribution. It would be attributing costs that the defence budget would in any case have incurred and simply attributing them to an operation. We wonder what value or interest that would have. For example, we would have to attribute the salaries of all the soldiers, sailors and airmen who had been engaged on the operation; we would attribute that to the operation. I am not quite sure what valuable information that would tell us. Equally, we would get into slightly esoteric debates about attributing the depreciation of each equipment that was deployed to the Gulf to the operation, to give us a notional full cost of the operation. Certainly internally that would not help us manage the defence programme or the defence budget any better, and that is why we do not do it for internal purposes. My own view is that for external purposes it would not provide any terribly valuable information either. Chairman: We will need some time to digest that answer, Mr Woolley, to see whether we wish to come back. Maybe the example you chose was a good one to sustain your present position, but we will see if we can think of any examples where it does not sustain that position - but thank you for your comments. Q1857 Mr Viggers: In December, the cost of Operation Telic in the year 2003 to 2004 was estimated at £1,187 million, but it was thought that that figure would change. Can you tell us what the current figure is and how you expect the figure to go into run-off? Mr Woolley: The figure that we are likely to be asking for in the spring supplementary estimates is a total cost of the order of £1.5 billion for this financial year. In other words, an increase of around £300 million from that which we had sought and had voted in the winter supplementary estimate. The main reason for that increase is, partly, we have included some estimate of the costs of recuperation that we will be incurring this year which had not previously been included in the figures, and we have also included some provision for the non-cash costs of the depreciation of the urgent operational requirements which we procured for the operation and which had not been included in the previous figures. There are also a number of other refinements, but those are the main components of the increased estimate. Q1858 Mr Viggers: Have there been any areas where the amount required is less than you expected? Mr Woolley: There have been one or two small reductions. For example, we had previously estimated accommodation costs at £77 million and our estimate now is £71 million. So there are a number of small changes in each component category as compared with our previous estimate. Q1859 Mr Viggers: Can you give us an idea of the timetable on which you will be moving to certainty on this? Mr Woolley: In terms of certainty, we do not really get certainty until we do our accounts - until the accounts are audited by the National Audit Office after the end of the year. So a definitive figure will not be available until our resource account is published in around August next year. What we are doing at this stage is estimating, for the purposes of parliamentary supply, our best guess of what the cost is likely to be - as the spring supplementary estimates, which I think that Parliament will vote in February, will obviously be the last occasion on which we can get parliamentary authority to spend up to this limit. Q1860 Mr Viggers: £300 million is quite a significant move in one month, is it not? You have mentioned that this is recuperation. This is equipment that has come back which has required more enhancement than you expected. Mr Woolley: It is not so much that these figures have changed as that previous estimates did not include them. I think we made clear at the time - certainly we made it clear to the Treasury at the time - that when we put forward our winter supplementaries it did not include any provision for those two items, because we felt at that stage that we were not ready to make an estimate as to what they might amount to. Even now it is quite difficult to make a good estimate for those two items. Q1861 Mike Gapes: I understand that the Department issued guidance on how to take the costs of the operation to all your top-level budget holders in December 2002, but the National Audit Office report, published in December 2003, said that there were "marked differences between top-level budget holders' interpretations of what should be included or what costs should be deducted to arrive at the net additional costs of the operation". Why did that inconsistency occur? Mr Woolley: I did read the National Audit Office report and I was slightly surprised by that statement. At the time of the operation I was the Command Secretary at Land Command, so I was working in a top-level budget. Certainly as the recipient of the instruction from the central Department, I did not feel that there was any ambiguity or any room for differences of interpretation. What may be the case - and what I think the NAO report went on to say - was that the extent to which budget holders were able or did identify offsetting savings to the gross cost of the operation varied from one budget to another. I think that it specifically said that in the case of Fleet there were no offsetting savings identified, whereas in the case of Land there were. My own view is that that is not so much a case of the guidance being interpreted differently, but merely the nature of the different TLBs, the nature of the different commands, was such that in some cases there were offsetting savings and in other cases there were not. Q1862 Mike Gapes: So you are telling me that the National Audit Office got it wrong? Mr Woolley: No, I am not saying that they got it wrong, but I am saying that I do not myself recognise that there was a difference of interpretation. I have not myself had evidence that there was a difference of interpretation. Q1863 Mike Gapes: If I put it to you that the conclusions of the National Audit Office undermine the overall figures that you have given in earlier answers, what would you say? Mr Woolley: I would say that the National Audit Office themselves audited the figures for the net additional costs of the operation last year and they have their sanction. Q1864 Mike Gapes: You are fairly confident then? You are not prepared to say, "There might be a margin of error; there may be some issues where some things should have been included and are not; other things were not taken into account and therefore there is a margin of error in our own figures", or are you saying that you are totally satisfied with the figure you have given? Mr Woolley: I could not put my hand on my heart and say that the figure of £847 million - which is the figure for 2002-03 - was absolutely the right answer. All I can say is that that is the figure that the National Audit Office have agreed is a fair and reasonable estimate of the cost of the operation. One could never say that there were not elements of cost overlooked or elements of saving overlooked. All I can say is that we and the NAO believe that that is as good as we are going to get. Q1865 Mike Gapes: Do you think that there are any steps which should be taken to make the process more robust? Have you already put in place any action to address this problem that was identified by the National Audit Office? Mr Woolley: We have not put in place any new processes, in the sense that I myself as finance director have not had budget holders or their finance officers saying to me that they require additional guidance on these matters. Having said that, I, as finance director, at each quarter scrutinise each TLB's forecasts, both for the main elements of the defence budget and also for the costs of operations, and I and my colleagues interrogate them as to the basis for their estimates, the assumptions underlying their estimates, the consistency of their estimates, and so on. So it is not a case that I sit back complacently and just accept whatever numbers are fed to me: we do have a process by which we challenge, and by that method try to ensure, that all the right questions are being asked by those who assemble the figures. Q1866 Mike Gapes: Do you think that there is a case for your revising the guidance that you issued in December 2002, so that the interpretations by your budget holders at top level are more consistent with each other? Mr Woolley: As I mention, my own experience has not been that there is ambiguity in the guidance; nor is it the case that my finance officers at the various top-level budgets have asked to have difference guidance. I would need to check whether we have indeed put out additional guidance since December 2002. It is possible that that was the case, although I do not think that it would have been significantly different, because this is a well-established routine. We have been in the business of accounting for the extra costs of operations for many years now, so it is not something that is new or contentious in relation to this particular operation. Q1867 Mike Gapes: Perhaps you will write to us if you have any further information on this? Mr Woolley: I will certainly do that. Q1868 Chairman: Normally when the Defence Committee produces a report we ask the Ministry of Defence to comment upon it before we release it. Otherwise, it would be very substantially rewritten - or the whole lot would be expunged from the public record. That is perhaps taking it a little too far, but it is the principle. When the National Audit Office produce a report, as you implied, they send you a preliminary copy and then you argue your case. So when you said you were surprised at the inclusion of something that you slightly disagreed with, did you, in your response or riposte to the National Audit Office, question this? Did they then override what you said and print something that eventually surprised you? Mr Woolley: I am afraid I cannot answer that question. Personally, I was not involved in the clearance of that report. I took up this appointment in the middle of October. I think the clearance of that report preceded that date. Q1869 Chairman: You would not know if your predecessor ---- Mr Woolley: That is something I would need to check. Chairman: I am sorry that we keep asking you for more documentation, but it might be helpful. Q1870 Rachel Squire: Can I ask you about some of the comments contained in the MOD's report, Lessons for the Future, concerning equipment and stocks? The report states, "It will take time fully to assess the costs of stock consumption and of damage and losses to equipment. However, initial estimates suggest that the cost of recuperation may be in the region of £650 million". Can I ask you why it is taking so long to assess the costs of stock consumed and equipment lost or damaged during the conflict phase itself? Mr Woolley: One of the reasons is that when, for example, ammunition is returned from the theatre to this country, it is often not clear whether or not it is still usable or whether it may have been damaged in some way. That is one reason why that is the case. A second reason is that when we are looking at capital assets we have to consider the extent to which the life of the asset, and therefore the amount of depreciation, may have changed as a result of damage in the conflict, which is also not entirely straightforward. I think that it is also fair to say that those engaged in theatre, unsurprisingly, do not regard it as their highest priority to make these assessments. What we did last year was to send out a special team of army management accountants to look into the position as at 31 March last year, to look particularly at stock consumption issues and asset damage issues, in order to support the work we were doing to present the defence resource account. We shall be doing that again this year and should therefore have a much better idea later this year. At the moment, however, our estimates - although we have made estimates for the level of stock consumption and for the level of asset damage - are subject to some further refinement. The costs of recuperation are then slightly different in any case, because the issues there are not so much about the impact on the value of the assets: it is about the cost of repairing assets and the extent to which we decide to replace assets. These often give rise to different procurement decisions in different cases. So it is quite a complex judgment, quite a complex calculation; but I would accept that we are not as far advanced as we might be in bringing this to a conclusion. Q1871 Rachel Squire: In view of what you have just said, can I ask you whether, in that broad consideration, you have made any identification of inadequacies in your stores or financial information systems, or whether so far you have been satisfied that those are not areas where you need to seek room for improvement? Mr Woolley: We are reasonably satisfied with our information systems. Ever since we moved on to a resource accounting and budgeting basis, the National Audit Office have identified shortcomings in our systems - which have progressively reduced. There was only one area in which, in commenting on our last resource account 2002-03, the NAO had reservations about the quality of our systems, and these related to Air systems logistics. That is a known area where we need to improve and we have plans in place for improvements in that area. In other areas we are reasonably confident about the quality of the financial information that our systems are generating. Q1872 Mr Blunt: Could we follow up this point by illustrating it with regard to guided weapons and bombs? There is a net book value for the guided weapons fired and bombs dropped during the conflict in 2002-03 of £61 million and, for ammunition, of £32 million. What proportion of that will be replaced? At what cost and over what timescale? Mr Woolley: Mr Williams may be able to help on some of the details but, as far as the guided weapons are concerned, there are different answers in each case. Some of our guided weapons that we have expended have already been the subject of subsequent urgent operational requirements to replace them. In other cases, where there are very long production runs, the issue is whether we would add on to the end of the production run when we came to it. Perhaps Mr Williams could comment a little more on that? Mr Williams: There were three specific UORs, stocks of which we agreed earlier in the year to replenish. The air-launched munitions specifically - Paveway, Maverick and the CRV7 rockets. The total value of those three measures is around £40 million. Those three measures are sufficient to recuperate the stocks that were actually used during the operation. In terms of weapons such as Storm Shadow, we are in the process of bringing that missile into service and therefore will be replenishing the missiles that we use as part of the normal production run there. I think that pretty much covers the air-launched munitions' side of the house - so UORs of a value of around £40 million covering those three stores. Q1873 Mr Blunt: You are linking UORs here to the net book value. How do you depreciate ammunition and guided weapons to arrive at a net book value that will then relate accurately to the UOR you then issued to replace the ammunition, guided weapons and bombs you consume? Mr Woolley: It is certainly the case that, as far as guided weapons and bombs are concerned, the replacement cost will be greater than the net book value of the items written off, because we will have depreciated the items. Q1874 Mr Blunt: So the net book value is, to a degree, an artificial part of resource accounting and budgeting to try to identify the right cost. You have given us and we have produced the public figures of the net book value of ammunition, bombs, et cetera, consumed in 2002-03. I am about to ask you a question about what you think the figure for 2003-04 will be. In essence, however, the reality is the cost of replacement, is it not? That is the figure the Treasury should be being invited to supply. Mr Woolley: Indeed it is. For the replacement orders in relation to the Paveways, for example, the Treasury will be funding that urgent operational requirement - which is the means by which it is being procured - at the cost of that urgent operational requirement, which is the replacement cost. In a sense you could say that our scoring of the cost of the operation is double-counting, because we score the cost of the value of those missiles that we have written off - which is the net book value - and that is part of the cost; in addition, we are scoring the cost of replacing them at the replacement cost. In a sense, therefore, we are scoring it twice. That is how it appears in the accounts. In the accounts, in our operating costs statement, it appears as a write-off value. It also appears that the replacement cost is a cost against our capital departmental expenditure limit. It therefore appears twice in our accounts in different places, but in both cases the additional cost is covered by extra provision from the Treasury. It is not as if we are being short-changed by the Treasury. It is not that the Treasury, as it were, fund us for the net book value of the write-off but then require us to pay the difference between that and the replacement value. They fund us in that section of our accounts which deals with write-off costs for the cost of the write-off and, in that section of our budget that is dealing with new capital expenditure, for the cost of the replacement missiles. Q1875 Mr Blunt: Can I ask you to give us your estimates for 2003-04 for the cost of guided weapons fired, bombs and ammunition? Mr Woolley: I am afraid that we do not have those figures to hand. We will in due course have those figures, but at the moment we do not have them to hand. Q1876 Mr Blunt: Perhaps you could send them to the Committee when you have obtained them? Mr Woolley: Yes. Q1877 Mr Cran: I think that you have answered one or two of the questions I was about to ask but, as with brain surgeons, nuclear physicists and finance directors, you always have to have a lot of time and a wet towel around the head to understand what is being said! Perhaps I could take an example from 2002-03. I think that the written-off amount of equipment was something in the order of £30 million. I will not go into what that was. I guess you know that better than anybody. I think that the Committee would be interested in knowing the basis on which the cost of lost equipment is calculated. I know that in the private sector, where I come from. It may be different in your sector. Mr Woolley: The figure you quote of £30 million is the net book value of the equipment. That is the value of the equipment that was held on our books. We no longer have the equipment, and therefore that is the cost that sums the £30 million. It is not the replacement cost. Q1878 Mr Cran: So that is a written-down cost? Mr Woolley: Yes. Q1879 Mr Cran: That is what it is? Just to get it into my head. Mr Woolley: Indeed. Q1880 Mr Cran: Of the equipment that was lost, I think that it was two Sea King helicopters, a Challenger 2 tank, Tornado aircraft and various other things. Which of these equipments will be replaced? At what cost and in what timescale? This may not be something that you, as finance director, are responsible for, and I doubt if you are, but could you talk us through that process? Mr Woolley: In answer to your question, the Sea King helicopters will be replaced, in the sense that Sea King airframes that we already have will be equipped with the Searchwater radar to perform the role that the lost Sea Kings undertook. So we have plans to purchase new Searchwater radars to integrate into two Sea King airframes. That is a decision which has been made. We are not planning to replace the Challenger 2 tank that was lost. We are not planning an extra Challenger 2 tank, or an additional Tornado to replace the Tornado that was lost. We will be planning at some stage to have additional UAVs to replace the Phoenix that were lost, but they will not be Phoenix. We have not yet made a decision on the precise equipment. Mr Williams: In due course the Phoenix capability will be replaced by the Watchkeeper programme. As I understand it, the production line for Phoenix has closed anyway, so the option of getting more of the same is not there. If we need to purchase an interim capability to meet operational requirements in advance of Watchkeeper coming in, to make good that shortfall, then we will certainly require that. Q1881 Mr Cran: You have been able to answer the questions of course, which we would have expected you to do, but I take it that these are corporate decisions taken within the MOD - by whom? The director-general of purchasing or whatever? And you are merely presented with the bill? Mr Woolley: They are decisions taken ---- Q1882 Mr Cran: It is interesting that finance directors always giggle when you mention the bill! Mr Woolley: The decision as to the type of equipment and the requirement for a commitment will be taken by the equipment capability organisation. You will be talking to General Fulton and his team later. It is his organisation which would take that decision. Because this is a consequent cost of the operation, it will be the Treasury rather than, as it were, me who is paying the bill, and therefore the Treasury will need to approve those procurements. Q1883 Mr Cran: I now understand that. To tie down what you said, Mr Williams - in the case of equipment which is no longer in production, such as the Tornado, you would automatically go for the nearest option, would you? Or is it just a bit more complicated than that? Mr Williams: It would be a bit more complicated than that. Q1884 Mr Cran: Talk us through why that is. Mr Williams: In the case of Tornado, I think the view is that the number of aircraft we currently have in service - which in any case will have been sized to reflect assumptions about attrition through life - are sufficient to meet our future requirements, and therefore there is not a capability gap as such that we need to fill. For the Phoenix UAVs, it may well be that we would want to do something to fill that capability gap earlier than the replacement programme, Watchkeeper, that we already have in train - at which point we would want to consider precisely what capability it is that we need to fill and how best to meet that, either by purchasing a different model UAV or by looking at other potential equipment or other solutions, as appropriate. It becomes a standard investment decision, based on an identified capability gap and consideration of arrangements for possible solutions. Q1885 Mr Cran: This opens up a whole range of questions which we do not have time to ask, and so I will not - but maybe on a future occasion. My last question is this. If we think about Operation Telic that we have just gone through - it has not finished, of course - what major equipment will be written off and at what value? Are you in a position to tell the Committee anything about this? Mr Woolley: They are the ones that we have already mentioned - the Sea King helicopters, the Challenger 2 tank, the Tornado, and the Phoenix. Those are the major equipments that will have been written off. Q1886 Mr Cran: I had that in my notes under the 2002-03 accounts, but that is not the case, is it? It will be 2003-04? Mr Woolley: In 2003-04, I am not aware that there are any additional major fighting equipments to be written off in addition to those which, as you rightly say, were in the 2002-03 accounts. Q1887 Mr Cran: Will you get to that point? Is that a definitive answer? Mr Woolley: That is not a definitive answer. In the sense that I am sure I would have been made aware if there had been any others, I think that it is reasonably definitive. What is not a definitive answer is what the total value of equipment written off as a consequence of the operation will be in 2003-04, because obviously there may well be minor equipments; there may be individual vehicles, and so forth. There is also, as we touched on previously, the cost of the guided missiles that were used, for which we do not yet have a figure. Chairman: From personal experience, should the MOD want any advice on frugality and how not to spend money, then Mr Cran is your man! He redefines frugality! Q1888 Mr Roy: We know from an answer given to a parliamentary question in October that other nations drew from our food and fuel supplies, and obviously we would expect that those other nations would pay the appropriate moneys back to us. How are such costs now being recovered? For example, we know that 40 per cent of the fuel dispensed by the UK's air tanker fleet was given to US Navy and Marine Corps aircraft. Has that money been recovered? Have there been any problems with the United States or indeed any other nation? Mr Woolley: I will ask Mr Flaherty to comment in a moment on the more general points about cost-sharing in theatre. As far as the particular case you raise is concerned, I am not aware that there has been a problem here. There are longstanding arrangements by which, where we buy or sell fuel between countries that are on operations, this is reimbursed. Mr Flaherty may wish to comment on the in-theatre cost-sharing arrangements more generally. Mr Flaherty: We have arrangements in place in our AO in southern Iraq which were agreed at various contributors' meetings, which are basically in proportion to the number of people in HQs and, if they are taking meals, they are noted. We are in the process of finalising MOUs with each of the countries, but actually the arrangements are already happening and money is feeding through. So there is a system and a process up and running in theatre now. For example, in Cyprus we certainly identified the fuel costs and are in the process of getting that money back from the US. Q1889 Mr Roy: How long is that process? How do you define the timescale? Mr Flaherty: I am sorry? Q1890 Mr Roy: You are in the process of getting the money back from the United States. We already know that 40 per cent of the fuel was given over from the air tanker fleet. What is that process? It is a huge proportion. Mr Flaherty: There are two slightly different issues. In Cyprus we had a fixed amount of fuel that was there and we know exactly how much the US used. We have spoken to them and have an agreement with them that they now need to give us that money back. We are in the process of getting that back, and I hope that will be finalised in a few months. Some of the fuel that we dispensed through our aircraft was not necessarily our fuel. It was not UK-bought fuel that we were dispensing. We picked up fuel from Kuwait, for example. So it is not necessarily a cost to the UK. We may well have dispensed fuel that was American fuel that we picked up. Doing that was not necessarily at a cost to us. Q1891 Mr Crausby: The MOD report, Lessons for the Future, told us that Operation Telic was "the first major operation to be costed under full resource accounting and budgeting principles". It went on to tell us that it "created some additional challenges for finance staff". You have already said that the National Audit Office identified some shortcomings. From your point of view, however, what problems were encountered for finance staff and in what areas is there need for further work in order to address those problems? Mr Woolley: The first thing to say - as indeed may have been apparent - is that resource accounting and budgeting is a very much more complex way of managing finance than the old cash system that we used to use. It has many advantages, but it is more complicated. For example, we have to account for consumable stock at the point at which it is consumed. Under the previous cash regime, we accounted for consumable stock at the point at which it was purchased. Similarly, we have to identify the value of all our assets, and the write-off value of those assets when we lose them, and record those in our accounts and in our budget. We have to reconsider the life of our fixed assets and therefore the rate at which they depreciate, if they have been damaged, or if they have increased - in the case of an aircraft, for example - their fatigue life during the course of an operation as compared with what had previously been assumed. So there are all these additional complications, these additional considerations, which we have to take into account in resource accounting and budgeting. We have both to estimate as best we can what these costs will amount to and we also have to account for those costs. These are all additional challenges for finance staff. Finance staff are now reasonably familiar with resource accounting and budgeting and therefore none of this, conceptually at least, is necessarily terribly difficult. However, in terms of actually assembling the figures and assembling the right numbers it is both complex and time-consuming. It is why we have tended to seek definitive numbers - particularly in these more difficult areas which are concerned with the non-cash costs of the operation as opposed to the cash costs of the operation, which are reasonably straightforward to capture - to address these principally in the course of assembling our resource account at the end of the year. Essentially, those are the challenges. In terms of where improvements and lessons may be apparent, I think it is principally a case of ensuring that our finance staff are properly trained and that, as part of that training, the operational dimension and the need to ensure that all operational costs are properly identified are well recognised. I think that it is well recognised, but this is something we have constantly to re-emphasise to people. Q1892 Mr Crausby: In the light of the Operation Telic experience and given that war-fighting is something unique, do you still believe that it is an appropriate system to be used in these circumstances? Mr Woolley: Parliament requires us to provide our accounts on a resource accounting basis. So in a sense it is not a decision that the Ministry of Defence could take, even if it wanted to, to account on a different basis. Mr Crausby: You can express an opinion though. I asked for your view. Q1893 Mr Cran: From someone who was once Private Secretary to the Secretary of the Cabinet! Mr Woolley: Resource accounting and budgeting has many advantages and many disadvantages. It has disadvantages in the sense that it is more demanding on resources for financial processes. We would not need so many people doing finance if we did not have resource accounting and budgeting. On the other hand, it does provide us and Parliament with information that is relevant and useful. I think that the unique nature of the Ministry of Defence and defence business makes the application of resource accounting to it, in some cases, slightly strange. We have to have certain work-arounds to make sure that resource accounting and budgeting works in relation to the Ministry of Defence. Q1894 Mr Crausby: Was that a yes or a no? Mr Woolley: That was an opinion, which is what you asked for. Mr Crausby: I think that I will give up! Q1895 Chairman: On behalf of Parliament, may I say that it was not our responsibility. It was Treasury-driven, MOD-endorsed. We voted for it (a) without understanding it and (b) without any responsibility. So to pass us the blame is disingenuous, and maybe you could drop us a note or talk to us privately on what you really feel. Mr Woolley: I would prefer the latter, I think. Q1896 Mr Viggers: The Comptroller and Auditor General noted that "the Department's chart of accounts is not designed to record automatically the cost of individual operations". Given the fact that it is likely that the number of operations will increase, how do you propose to address that issue in future? Mr Woolley: The chart of accounts as such does not, but we have processes which have the effect of providing us with that information. As we have indicated, we are reasonably confident that those processes are robust. I do not think that we therefore have any plans at the moment to alter our chart of accounts. Q1897 Mr Viggers: The system of financing which takes the capital cost and puts a charge to it does give an incentive to run down capital stocks. How would you respond to suggestions that have been made that the Ministry of Defence may have run down stocks in order to reduce the cost of capital? Mr Woolley: I fully accept your point that the cost of capital charge that is applied to all assets, including stocks, is intended to give visibility to the notional cost of holding assets in the form of stock rather than in the form of cash, and therefore the notional interest that you might be able to earn on that cash if it was in the form of cash rather than the form of stock. So, yes, it is indeed there to identify the cost of holding stock. Having said that, I am not aware that that in itself has significantly affected decisions about levels of stock-holding. It is only 3.5 per cent. It is a relatively small element of the total cost of procuring new stock, for example. Until 1 April this year, when we move on to stage 2 resource accounting and budgeting, it fell outside the control regime, outside the departmental expenditure limit. Chairman: Rather than to keep you hanging around for 20 minutes, gentlemen, we will have to draw stumps. We have a number of questions to ask you, which we will write to you about. Rachel Squire: I wanted quickly to follow that up and maybe to take it on advice. I was going to ask you this. What would your response be to what we have heard, both during our visit to Iraq and in the subsequent visits we have made in this country, that resource accounting is the prime reason why supplies were delivered just too late rather than just in time? However, I accept that the Chairman wants to ask you to write in response to that and other issues. Chairman: Please do. Thank you very much. The Committee suspended from 16.02 pm to 16.40 pm for a division in the House.
Witnesses: Lt General Rob Fulton, Deputy Chief of Defence Staff for Equipment Capability; Air Vice Marshal Stephen Dalton, Capability Manager (Information Superiority); and Major General Dick Applegate, OBE, Capability Manager (Manoeuvre), Ministry of Defence, examined. Q1898 Chairman: The MOD's documents First Reflections and Lessons for the Future and the National Audit Office report on Telic were all very positive about the performance of major defence equipment during Operation Telic. Which major equipment exceeded your expectations and which major equipment systems did not perform as well as expected? Lt General Fulton: What I would like to do is deal with a couple of examples of each of sea, land and air environment. Starting with the sea environment, I think the Cruise Missile T-LAM was a conspicuous success. Q1899 Chairman: How many did you fire to make a judgment? Lt General Fulton: I would rather not answer that. Q1900 Chairman: So the one or two you fired worked pretty well? Lt General Fulton: Yes. Also, in terms of equipment, the mine counter-measures capability, enhanced by the UORs, was a success. It was definitely a strength of the United Kingdom, and something that we were certainly able to bring to the operation that the Americans were not. My third one in the sea area was the performance of the Sea King Mk 7, which was alluded to in the last session, purchased initially for its search water radar and its ability to search across ocean, but actually, its ability across the desert terrain was also a revelation to many people and certainly provided the Commando Brigade with excellent visibility of the area round them. On land, I know that you have heard from General Brimms that he had a number of key stars: Challenger 2 enhanced by the desertification UOR, Warrior, AS90, and he also singled out Phoenix as a great success. To that list I would add that we were delighted with the performance, even though it was expected, of the SA80 A2 with which the force was equipped. That was enhanced by the dismounted close combat capability, in particular the night vision capability, which we were able to extend from what we had learned in Afghanistan, and we were able to get some of that brought forward in time for some of the forces, though not for everybody. Also in the land environment, the Bowman personal role radio was a conspicuous success, to such an extent that the United States Marine Corps have also purchased some 5,000 of those. In the air, what the operation proved was the success of the multi-role platforms GR4 and GR7 in particular. The second area which we were very pleased with was the performance of the air-delivered precision weapons. Storm Shadow in particular was brought forward, but also enhanced Paveway and Maverick were great successes. It was the performance of air power that enabled us to achieve what we did with the numbers that we had, and I know that you went over that with Air Marshal Burridge. I would also point to the information-gathering capability Raptor. It was Raptor's first exposure to an operation, and we were pleased with the performance of that. Equally, the performance of the Nimrod R1, much better known to us, was a great success, and finally C17 proved its worth. In terms of shortcomings, we were not entirely surprised, but nevertheless the availability of the Combat Engineer Tractor, which was below 50 per cent, was as I say, not unknown but was a disappointment. There is a programme to replace that. The shortcomings of Clansman are known, but nevertheless a number of people described Clansman's ability to hold up pretty well, within its own limitations. Of those that we had, that would be my summary. There are a number of gaps which you may want to discuss in more detail, but at this stage I would highlight the robust and resilient CIS, which has been talked about in the past, inventory management and asset tracking has certainly been talked about and I am sure we will talk about that again, and I think also high speed data transfer to tactical data links in order to make the best use of our reconnaissance assets and get the information fed to our offensive platforms. Q1901 Chairman: You put two systems in that did not exceed your expectations. Clansman was an easy one to throw in; everyone in the world knows that is almost as old as we are. You have been very cagey in that list. You cannot tell me all of your systems worked wonderfully well or well. This is not a public relations exercise for British, German or French companies, but there must have been systems that performed less well, and I think we are entitled to have your response on those that you felt should have done rather better. Lt General Fulton: I am not sure that I could add to that list, but I will ask my two colleagues if they can in a moment. We do have to remember that the equipment was being used in very particular circumstances. There were very particular characteristics of this operation, which in some cases did not test the equipment to the extent that we might have expected it to be tested had we been fighting a more capable enemy or an enemy which fought us in a different way. We also have to remember that we were fighting in conjunction with the United States, and therefore there are also aspects of operating in a coalition which mean our equipment was not tested to the extent that it might have been had we been fighting on our own. What I am saying is that the parameters within which we conducted the operation were less than the most testing parameters against which we would specify equipment. Chairman: We would have been in a more advantageous position to rationally comment on weapons system performance if we had been given access to the reports sent to the Ministry of Defence by the senior officers, who I am sure would have told you very frankly. However, despite being a Committee representing the taxpayer, and being a Committee of the House of Commons, we have been denied such access. We are seeking answers in something of a vacuum based on innuendo, part-information and reading newspapers, all of which is a pretty unreliable guide to what really happens. Through you, I must express on behalf of the Committee our immense irritation at being denied proper information upon which to make a judgment. I now ask my colleagues to add their own "bête noirs". Q1902 Mike Gapes: Can I put to you perhaps two other systems that should be on your poorly performing list and see what your reaction is? I understand that some chemical weapon detection devices were not particularly good performers and gave false readings. Would you like to comment on that? Lt General Fulton: I am aware that there were difficulties over the supply of NAIAD, the nerve agent detector, which is not normally held in units but was issued. It is in the process of being replaced by a new system which is due in service now. We have a programme to replace that, and the equipment will be coming into service very shortly. Yes, it did not work as well as the new equipment will when that comes into service. Q1903 Mike Gapes: As a result, there were false readings, and some of our people thought they might be under a chemical attack when they were not. Lt General Fulton: I have read that, yes. Q1904 Mike Gapes: Would you confirm that that is the case? Lt General Fulton: I have read that. Q1905 Mike Gapes: I take that as confirmation. It may be other people will come back on that. The second one is the mortar, the LH40. Were there problems with that? Major General Applegate: Not that I am aware of, no. Lt General Fulton: Not that I am aware of either. Major General Applegate: Could you tell me the sort of problems you have heard about? Q1906 Mike Gapes: I understood that it did not work properly and that the thermal sight brackets did not fit properly on the weapons. Is that correct? Major General Applegate: Are you really talking about a mortar? Thermal sights on a mortar sounds not what I would expect. Q1907 Mike Gapes: Were there problems with brackets on other equipment? Major General Applegate: Not that I am aware of. Lt General Fulton: Did this come out of one of your visits? Q1908 Mike Gapes: I am not revealing my source. Lt General Fulton: We are not aware of it. Q1909 Mike Gapes: I am just asking you whether you had any problems with any of your other equipment. Lt General Fulton: Not that we are aware of. Q1910 Mr Blunt: I am slightly surprised that, as a Royal Marine, you did not list the hovercraft, in light of the information we received yesterday, when we went to visit HMS Ocean. They contrasted the very high availability of helicopters for transporting Royal Marines on to the Al Faw peninsula with the extremely low availability and reliability of the hovercraft on the ship. What was slightly more alarming was that they then informed us that these hovercraft were quite old and were being replaced, but you had just had to refuse the replacements because they are not delivering the reliability that should be expected of new hovercraft. Were you aware of this as an issue? Lt General Fulton: I think you are referring to the small personnel landing craft, not the hovercraft. I am aware that there have been problems over the acceptance of the new landing craft to replace those on HMS Ocean, yes. Q1911 Mr Blunt: Were there issues around the availability of hovercraft in the Gulf, or was it just these landing craft that were inadequate? Lt General Fulton: The only issue that I am aware of in terms of the use of hovercraft on the Al Faw peninsula were the large America cushioned air vehicles which were to have landed some of the Commando Brigade. Q1912 Mr Blunt: Are you saying we do not have any; we just have landing hovercraft? Lt General Fulton: We did not have any out there, no. Q1913 Mr Blunt: I meant the landing craft, not the hovercraft, for purposes of clarity. Can you reiterate whether you were aware of their inadequate availability? Lt General Fulton: I am aware that the current generation of landing craft are very old and are in the process of being replaced, and I am also aware that there are difficulties with the acceptance of the new landing craft, yes. Q1914 Mr Blunt: Did they not appear on your list because you knew they were not any good when you went out there, and therefore they performed to expectation, which was not very high? Lt General Fulton: Correct. Q1915 Mr Blunt: What other equipment falls into that category that you have not told us about? Lt General Fulton: I have cited the CET as one that had availability lower than expected. I do not think I can put my finger on any others that were conspicuous. I think there were problems with the availability of helicopters; dust affected helicopter availability. Once again, that was to be expected, and that is why I did not put them on the list. Q1916 Chairman: What about combat identification? We had a few disasters. I do not know whether Boards of Inquiry have been concluded, but are you in a position at this stage to say whether the failures and the loss of life or accidents were due to equipment failure or human error or any other factors? I obviously do not want you to say anything that would be premature, but as we are asking about equipment, combat identification is clearly a sensitive area. Lt General Fulton: It is clearly a very important issue. It is one that we had been working on before the operation. It is one that great attention was paid to during the operation, and indeed, a lot of work has gone on since the operation to identify the causes. I will ask Stephen Dalton to answer the question. Air Vice Marshal Dalton: Mr Chairman, we are currently doing four Boards of Inquiry into the various incidents that happened, and none of them have completed their inquiries yet. A lot of that is due to the detailed nature of the technical evaluation on equipment which is, of course, quite badly damaged, as you can imagine from the nature of the accidents. What we can say is, of course, that combat ID is a range of factors from technical equipment through techniques, procedures, tactics and human intervention, and all those need to be investigated before we can finally say what was necessary if there was a single cause of any of them, or whether it was a combination. Chairman: Do you have any idea when these inquiries are going to be concluded? I am asking because we will be producing our report in a couple of months, and it would be quite helpful. We are not trying to speed up the process but we would be grateful if you would arrange that, when each of them is published, it is made available to us as quickly as possible. A follow-up question on helicopter availability. The National Audit Office report says the total fleet averaged 66 per cent. We will be coming on to helicopters later, so bear in mind that we will be looking at figures: Sea King 66 per cent, Puma 65, Lynx anti-tank 52. The figures do not look very impressive, unless you tell us they are what is to be expected in that kind of environment. I am just flagging up what we will be asking later. If you have any further inspiration or willingness to confide in us, you know our address. Q1917 Mr Viggers: What about the Oscar strategic communications system? Did that perform as planned? Air Vice Marshal Dalton: The system that you are talking about was effectively bought by the Ministry for an exercise requirement rather than an operational requirement, therefore the system was not designed and we did not buy it to be put into operational use. Because it was a success in the exercise, it was then pressed into operational use because it filled a particular niche capability, and did produce some good results but also some unsatisfactory results. Part of the cause of that would be the fact that it was not design-tested to the extremes which might be used operationally as opposed to in a straightforward exercise training need. Q1918 Mr Viggers: I was reading today's Jane's Defence Weekly, which says that the Oscar strategic communications system was procured for Operation Telic under an £80 million Urgent Operational Requirement. Air Vice Marshal Dalton: That is not technically correct, as I understand it. Q1919 Mr Viggers: Can you please say what is being done to rectify the poor availability of the Combat Engineer Tractor and the Lynx anti-tank helicopter? Major General Applegate: Really, with the Combat Engineer Tractor, as was mentioned, that is an old piece of equipment, which came in in the Seventies. At the moment we are planning to introduce Terrier, which I think you are aware of, with an in-service date of 2008. It causes us concern, certainly, that the availability of the current system is not what we would expect but we have plans, and that is the timescale in which we are planning to introduce the replacement for that particular piece of equipment. As far as the Lynx is concerned, clearly, we have a fleet which is ageing, and one of the things we are hoping to do is that the particular element which Lynx is fulfilling as far as the attack element is concerned out there - and you are aware that they fired a number of Lynx TOW - is replaced, obviously, by the Apache, which will be taking on that particular task. So the remaining Lynx we have will be conducting the utility tasks in a less stressing environment. Obviously, we have other programmes which we are hoping to bring on as far as a replacement for the light-utility helicopter and the future helicopter mix which we are thinking about at the moment. Q1920 Mr Viggers: Is it correct that sand and dust filters were ordered late and that this may have contributed to the low availability of the Lynx? Major General Applegate: My understanding is that that is not true. I think in fact that one of the lessons that was clearly understood from the previous Gulf conflict was the requirement for sand filters, and my understanding is that a conscious decision was taken on the number of helicopters that could be deployed depending on the availability of sand filters. If you would like me to come back on that, I will. That is my understanding. Q1921 Mr Viggers: Yes, because my supplementary question was to ask whether the Treasury blocked the funding for this item and other critical items. Major General Applegate: Not that I am aware of. Q1922 Mr Viggers: Sir Kevin Tebbitt, the Permanent Secretary at the Ministry of Defence, sat there with a straight face and great charm and told us that there were no disputes at all between the Treasury and the Ministry of Defence. If so, that is unprecedented. I just wonder whether there were debates and discussions between the MOD and the Treasury, as a result of which MOD did not press applications because they knew the Treasury would block them? Lt General Fulton: We will follow that one up, but my understanding is exactly the same as General Applegate's, that it was not the issue of the funding availability for it, but the availability of the filters themselves and the ability to fit them in time, and a conscious decision that there was no point in sending aircraft that did not have the filters fitted. We will send you a note on that. Q1923 Mr Viggers: Can you please say whether all requests for extra equipment were granted by the Treasury? It is not in the Treasury's nature simply to nod through requests from different departments. Lt General Fulton: As I think you know from the note that we sent to you before Christmas, there were 190 UORs approved, and the ones that were not approved were those whose delivery would fall outside the timescale within which we needed to have the equipment in order to either complete the operation or indeed complete that part of the operation for which they were required. There were some examples of things like Temporary Deployable Accommodation, which we did not need for the start of the operation; we needed that for later on. The issue of funding only became an issue with the cut-off of things that would not be delivered in time. Major General Applegate: There is a point I might add here as well. You have highlighted the Treasury, but of course, one of the things we have to do is determine whether the UORs being requested make sense in the nature of the operation. One of the things about this is that that is an iterative process: as the operation unfolds and where it is going to be mounted from, how many forces are going to be engaged, what our role might be within the force, as that changes over time, that has an impact on what equipment we would wish to introduce and what requests are made or the priority assigned to those, and a determination as to when we can go forward and take some action to ensure that industry can provide them. There is not a magic date when we can say that from now on we know all the equipment is going to be this, and there is a final prioritisation; it develops over time. It really depends on which one you are talking about and when it was regarded as being high priority. Q1924 Mr Hancock: Can I just take you back to your answer to Mr Viggers about Oscar? You said it was a piece of kit for training, but if you read this article, it would all have to be wrong. Like you, General, I have just read this, and there is no suggestion here that it was training kit. If it was, why did it feature so heavily in what you were doing there, if it had not been tried and tested, if people had not been trained on it, and the communications generally were so appalling that one of your colleagues is quoted in here as saying, "You just can't wait till the last minute. You need to train and turn your equipment into a capability before you go to war"? Come on, Air Marshal, you must do better than you have already with that answer, surely? You cannot take a bit of training kit to war and then say it was only for training really, if it was all you had. Air Vice Marshal Dalton: The piece of equipment, in the first instance, was requested and was purchased for an exercise requirement. The fact that it then proved to be effective... Q1925 Mr Hancock: Where was that proven to be effective? Air Vice Marshal Dalton: During the exercise. Q1926 Mr Hancock: Which exercise was that? Air Vice Marshal Dalton: That was held in December 2002. Q1927 Mr Hancock: Where? Air Vice Marshal Dalton: In the Middle East. That exercise then meant that the people who were part of the organisation found it effective, and when it then became apparent that it would be useful for the operation, it was pressed into operational use. This is not the first time we have done that sort of thing, although maybe not in the communications field, where we have found something works well in training and we have used it subsequently. Q1928 Mr Hancock: What was it used for? I cannot get to the bottom of how you transformed this from a piece of training kit into a significant part of your communications network. Air Vice Marshal Dalton: The big element of this operation that was vastly different to anything else we had done was the requirement for communications. Both the quality and quantity were of an order that was unprecedented, therefore a lot of what we were doing was using communications equipment some of which was very old - and we have talked about Clansman - which turned out to be actually more capable this time than we had proven in previous exercises and operations. It is all to do with making the best of what you have in those situations. That is what was happening here, with this particular piece of equipment. There were other things added on in the communications world throughout the build-up to, during and subsequently to the operation to match particular requirements as they came up. Q1929 Mr Hancock: Would you say there was a significant breakdown in your ability to communicate from the UK to forces in theatre, and from commanders in theatre to their colleagues who were maybe a bit closer to the action? Air Vice Marshal Dalton: There undoubtedly were occasions when the communications were not as robust and reliable as they should ideally have been. That is due to a variety of factors, not least of which, as I mentioned, is the fact that the volume and the sheer quantity of communications that was required was so much larger than we had anticipated or had been shown in the past to be the requirement. Chairman: Thank you. Perhaps you could drop us a note on the methodology you use to evaluate equipment performance. You did touch on one factor, General Fulton, which is who you are fighting against. You might have done pretty well against one group of opponents, but had you been up against somebody else, that system might not have performed as well. If there is a rational methodology for evaluating, that would be quite helpful to see. Q1930 Mr Viggers: I would like to come back on dust filters. I am sure what the General told us was entirely correct, that as and when the time came for a UOR on dust filters, there would not have been time to produce them, but is it not a fact that the Army Air Corps actually asked for dust filters in the summer of 2002, and the reason there was not time was that the first application was rejected? Lt General Fulton: I cannot say whether the application was rejected. What I can say is that the time at which we started the UOR process is one that I know you have talked about at some length, and was certainly contained within the note that we sent to you before Christmas. We were constrained for both operational security reasons and also for the reason that other avenues were being pursued in order to solve the problem, to not starting formal work on UORs until September/October, and indeed, the first UOR was signed off on 17 October. Any request that had been submitted earlier than that would have been taken account of in the normal departmental short-term planning and equipment planning process, and therefore it would have been assessed against other priorities at that time, and if it was submitted in June, as I think you said, it would have been taken account of in the planning process that was going forward at that time for the equipment plan that would finally have been signed off by Ministers in March of this year. So the Urgent Operational Requirements did not start being processed until much later in the autumn. Mr Viggers: The point that would cause us concern is if financial constraints cause equipment which the armed forces would like to have not to be made available to them because people imagine that Urgent Operational Requirements would take account of it, and then, with a UOR, the equipment arrives, but there is no time for training or use. Q1931 Mr Hancock: Are you the "senior officer" quoted in this article, General? Lt General Fulton: I have not read the article, I am afraid, Mr Hancock. Q1932 Mr Hancock: What is quoted in the article is virtually verbatim what you just said. Lt General Fulton: I was not aware that I was being quoted. If you would tell me what the article is, I could check. Chairman: Perhaps we can ask the author! We are now going on to a block of questions on UORs, so you have not escaped this subject yet. Q1933 Mr Cran: Of course, Urgent Operational Requirements is a fairly important issue, is it not? I understand that pre deployment, 190 of them were approved, at a cost, from memory, of about £510 million. The first question I would like to ask you is simply this, and I know what your initial answer is going to be, but let me nonetheless ask it. As we walk around the MOD estate, as it were, and we get below your level, I am bound to say to you that the implication I receive is that this is a pretty good device to use either pre-operation or during operation to get what the unit, whatever it is, cannot get in peacetime. I said I knew what your answer would be, and you would pooh-pooh that, of course. If you do, what devices do you use to ensure that that does not happen? The example given by my colleague was the 0.50 machine gun for the Royal Marines. Lt General Fulton: Clearly, as you say, the whole point of the Urgent Operational Requirement is to give us equipment that is task-specific, role-specific or theatre-specific, that has assumed increasing importance because of the particular operation that is going to be happening. That has to be seen against the background of the normal, day-to-day business of the equipment plan, formulating the equipment plan and then delivering it. In formulating the equipment plan, we have to take account of the whole balance of requirements across defence. We have to take account of high-intensity conflict and peace-keeping. We have to take account of all theatres, we have to take account of a whole range of tasks, and we have to balance that out. Inevitably, some equipment that people would like to have falls below the line and does not make it into the equipment programme. Thereafter, along comes a particular operation, which has specific requirements, and clearly then the requirements of that particular piece of equipment are assessed, either because of the climate or the terrain, or because of the particular role that a particular unit is going to be engaged in in the forthcoming operation. Then the weighting or the importance that one might attach to that piece of equipment would go up. General Applegate referred earlier to the need to assess what is being asked for, the purpose to which it is going to be put, the circumstances under which it is going to be used and how many of them are required. That is how we do the normal planning, but we also have to take account of the particular circumstances of the forthcoming operation. Q1934 Mr Cran: There is an awful lot in that, and I think I understood it, but it does not really answer the question that I asked you, which was: as we wander around the estate, I do not know about my colleagues but it has certainly been told to me that this is a grand device to get what you cannot get in normal peacetime conditions. I was merely wondering if you are quite sure that, of the £510 million that I spoke to you about in relation to the pre-deployment UORs, that some of what the lads are saying did not creep through under your defences. Lt General Fulton: We are absolutely sure that the equipment that was provided had been scrutinised, not only by my staff, who are people who themselves have come out of those units, but also, firstly, it comes up from a unit, through the front-line command - be it land, fleet or strike - it has to then come through the Permanent Joint Headquarters, so that they are sure that it is applicable to the role that they envisage for that unit for this operation. It then comes to us as an urgent statement of user requirement. We then assess whether it can be provided in time - and of course, clearly some cannot - whether it is relevant to that operation, and whether we can go out and acquire it. I am satisfied that there are sufficient filters in the process. Of course, the more filters you put in the process, the greater the risk of slowing the process down, and therefore there is a fine balance, in our view, between putting so many filters in and making sure that we can deliver what the front line needs before it crosses the line of departure. I know that you will also have been told as you went around that people found that to begin with they only had a few of the things that they had asked for because we were processing them, and then they came with a rush later on, which, of course, brings its own problems, as you say, in terms of assimilating that into time to train and so on. What we have to do is to draw the very fine balance between going through a laborious process of scrutinising everything - we clearly have a responsibility to make sure that the money is spent properly and wisely, so we have to scrutinise it - and holding it up, which we do not want to do. Q1935 Mr Cran: I will accept that for the purposes of the minute. The Committee would also be interested to know how much of all the equipment involved in these UORs is retained after the operation is finished? Is it all retained? Is it sold off? What happens to it? Lt General Fulton: After this operation, we have been very careful to make sure that we look very critically at what equipment can and should be retained in service, because by nature of an Urgent Operational Requirement, it does not come with support funding; you buy it and that is it. So the first issue is whether we can afford to take it into the normal equipment programme and provide it with sufficient support funding so that it can then be sustained through life. The second question that we have to ask is what proportion of the fleet of, let us say, vehicles have had that UOR applied to them, what proportion, for example, of the Challenger fleet have been desertised, because you then have to deal with the issue of a fleet within a fleet. Can you afford, for example, to apply that UOR to the whole of the rest of the fleet? It may be counter-productive to have various elements of the fleet with various modifications, as we have done with Afghanistan, for example, on the one hand and Telic on the other. So there are a number of questions that we have to ask ourselves, but ultimately, what it comes down to is the affordability of retaining that capability in-service, and that is when you have to come back round the loop and ask what its wider applicability is. It may have been specific to Operation Telic in the Iraqi desert in those months of that particular year, operating in that coalition alongside the Americans, but does that buy it a place in the wider equipment programme? What we have to do then is assess what it should replace in the programme, because clearly there is not extra money to keep that in the programme. There is a fine balance, and that is why we are going through it as part of the normal long-term equipment planning process at the moment, to assess how many of those 190 we can afford to keep and how many we cannot. Then the issue is, if there are some that we cannot afford to keep, the Chief of Defence Logistics would be very keen that we take them out of service, so that we do not have unsupportable equipment in the inventory that he cannot then maintain. Q1936 Mr Cran: What does "take out of service" mean? Mothball? Lt General Fulton: For example, there might have been special communications fitted to helicopters. For example, over the years various specific communications fits have been put into Chinook helicopters. If they are left there, at a time when we now want to bring Bowman into service and we therefore want to change the communications system in the Chinook helicopter, if we are not careful, we will be faced with many different variants of that, and in the case of, for example, the desertisation of Challenger, it might even mean taking that desertisation off. Clearly, there is a balance between that and understanding when we might need it again, because clearly, the last thing we want to have to do is spend another £500 million on the 190 next time round. So there is a balance to be struck. The final thing I would say is that in some cases what we have been able to do is buy the latest technology off the shelf, or in the case of some of the mine counter-measures, lease the latest technology. It may therefore be advantageous to give it back, knowing that we would be able to lease a newer generation of technology next time around, should that be required. What I am trying to portray is a situation where there are many factors which have to be balanced out. Q1937 Mr Cran: Chairman, there are so many questions one could ask about this because there is a sizeable amount of money involved. I wonder if you could give the Committee, if for nobody else's benefit than mine, a note about this, the timescale of the decision making about the questions I have just asked you, implications for cost? Lt General Fulton: Can I try one answer? Q1938 Mr Cran: I would rather you would not, because my colleagues have a lot of questions to ask. I wish you would just put it down on a piece of paper. Lt General Fulton: Can I just say that all of that is included in the Equipment Plan 2004 process, which is ongoing in the Ministry of Defence at the moment, and will be signed off by the Secretary of State in March, at the end of the SDP EP round, so it will all be contained within that. Q1939 Mr Cran: We will have a look, and if it does not give us what we want, we will come back to it. A specific case of UORs is the case of the AS90 self-propelled artillery with enhanced air conditioning. It came in late. Would you like to say why, and were there many instances where UORs were in fact late for the operational phase? Major General Applegate: As far as the AS90 is concerned, first of all there was an impact of when we could start doing the planning. As I mentioned earlier on, at certain stages the plan clearly says "we are going to use this equipment." Up until that stage, wish lists may come in but they are just that, going back to your point about the units. Yes, of course, you are warned for an operation, and the first thing you do is put in a wish list. It is up to others to decide whether it is relevant or not. We had to wait to get the approval to go forward with the AS90 work. The second piece of the story would be that actually, we were planning for the end of March/beginning of April for that work to be conducted, which at that stage was the planning assumption, and based upon the advice we were getting with regard to the plan. That was sensible, because the majority of the work to be conducted on AS90 was to do with the very hot conditions, because the gun was purchased primarily to operate in north-west Europe. We had contingency plans before we started to do this work based upon Saif Sareea, and it was part of the plan we were intending to conduct for about 2005 along with Challenger. My point is it came in after the operation; it did not affect the operation because the temperatures did not get up to the high levels that were expected, but work began on the tail end of the war fighting operations to ensure that the AS90 could remain in operation in the theatre, as it has been until recently. Does that answer the question? Q1940 Mr Cran: Yes, it does. The other question was were there many examples? Lt General Fulton: There were some that were deliberately late. I mentioned Temporary Deployable Accommodation because we did not want it then. Also, the stocks of enhanced Paveway and Maverick were designed to backfill the stocks that were used. Ones that straddled the time at which they would have been used: we did not have a full set of the thermal imagers, Lion and Sophie, and the head-mounted night vision system at the time that the first troops crossed the line of departure, and we did not have a full complement of Minimi machine guns, and the underslung grenade launcher also. We had most of the launchers themselves, but there was an issue that I think you are aware of about the release of ammunition. So there were a number of areas where there were numbers of pieces of equipment, of which we had some but did not have a full complement. Q1941 Mr Jones: Can I just ask about Urgent Operational Requirements that were not accepted. One that I saw recently on a visit was the Royal Marines with the mounting of general purpose machine guns on the top of PVs, where apparently there is a bracket that you can acquire to do this, and this was refused and ended up with the adaptability of the Royal Marines, using pieces of wood and other home-made brackets to fit the general purpose machine guns on top of their PVs. Why would a request like that be refused? Certainly the men I spoke to said it did not do a great deal for morale, the fact that this simple piece of kit, which would have solved the problem, was not provided. Lt General Fulton: I am pleased that ingenuity won the day. I have to say I do not know, and I would have to check and let you know. Q1942 Mr Roy: What lessons can be learned from the UOR process to improve the MOD's normal equipment acquisition arrangements, which by perception seem to be very problematical? Lt General Fulton: I do not think, as you would expect, I necessarily agree with the premise that our acquisition system is problematical. Nevertheless, if there are lessons from the UOR process, I think we should learn them. The answer I gave to Mr Cran was designed to explain that there are differences in the way in which a UOR is conceived and the way it can be dealt with in terms of being specific to that operation, and therefore it can be looked at in a very specific way within very small parameters. Clearly, one of the key issues about a UOR is that it has to be available to be bought off the shelf, because of the timescales, therefore it has to exist. There are clearly issues associated with anything that is very complex, for example, integration. One of the reasons why a number of UORs did not succeed was because there was complex integration involved. I do not think that is the answer to Mr Jones's question about the GPMG, but here I am thinking about defensive aid suites and secure communications for aircraft, for example, where the integration required would exceed the sorts of timescales that we are talking about. There are lessons that we can learn in terms of the handling of business cases within the Department, but I think it is important that when a piece of equipment is brought into service for the long term, all the ramifications of owning that piece of equipment are taken account of, that it has a fully funded support line and that it is fully integrated not only into the piece of equipment that it is designed to work inside, but also that it fits into the totality of the equipment plan, that it is, for example, interoperable with all the other elements on the land battlefield, for example, with which they may want to interoperate. Q1943 Mr Roy: Can I take you back to something you said: you said the UOR would be bought off the shelf. If it has to be bought off the shelf, how does it perform in relation to anything else that is procured through the normal MOD systems, which would be by definition made to measure? Because you have to take it off the shelf, is it better or worse or the same? Lt General Fulton: I do not think you should necessarily take the view that other things that we buy are made to measure. Some are, but clearly there are some systems which are built of component parts which are bought off the shelf. I am thinking, for example, of the Watchkeeper UAV system, which we have discussed with this Committee before, where it is something that we would define as buying it off the shelf, although it takes time for all the component parts to be integrated together. In the case of these UORs, I think some of them were buying more of things that we knew about already. We had already started the programme of the thermal imagers from Afghanistan and what we were doing was buying more of them. The Minimi machine gun was very much a known quantity. One of the reasons why it was bought was because the drills were very similar to the general purpose machine gun, and therefore training time would be minimised. So there are areas which bear a striking resemblance to things that we know about. Q1944 Mr Roy: We will bear in mind all that you have said about the off the shelf and the made to measure and it is good enough and such like. How are these lessons being applied to MOD's smart acquisition arrangements? Lt General Fulton: Certainly we had already, as part of the smart acquisition programme - I was not involved but my guess is that it had been happening before - increasingly been buying equipment off the shelf, in the sense that Bowman is a system bought off the shelf in that it has been bought from a company which has already provided a similar capability to another country. Increasingly, we want to buy equipment off the shelf, where it is available and where it is capable of doing the job, but clearly there are also issues for more complex equipment - aeroplanes for example - which are not amenable to that approach. On the other hand, many communications systems are amenable to that approach. What smart acquisition tries to do is to look at the particular thing, whatever it is, that we are trying to buy, and determine the most appropriate procurement route. I am not sure that the UOR process makes us either more inclined or less inclined to do that. If the equipment exists, there is not a lot of point in us trying to design our own, unless it is a particular capability or a particular skill that we wish to retain in this country. There are things that we want to continue to make in this country, rather than buy off the shelf from the United States, for example. Q1945 Mr Roy: If you say that you can increasingly buy off the shelf, what ramifications does that have, for example, for the much maligned "just in time" - or "just not in time" as some soldiers describe it? Lt General Fulton: I think I am right in saying that when the Chief of Defence Logistics was here he did not like the "just in time" phrase. He talked about "lean logistics" and perhaps this is not the moment to argue the semantics of that. Q1946 Mr Roy: He did not believe in just in time; it was not just that he did not like it. Lt General Fulton: He certainly is the expert on logistics supply. One of the potential advantages of buying equipment off the shelf is that if you can buy into a long production run, you do not necessarily need to buy all of it up front. I know that in the last session, for example, the question of replacing Tornado and Challenger came up. It is not a practical proposition to re-open the Tornado production line, and therefore the Tornado aircraft were all bought at once. I know it is an extreme example, but one of the advantages of long production runs is that we can buy it when we need it, provided we are sure production is going to go on and we are going to be able to come back to it, rather than having to buy it all at once and then hold attrition stocks. Q1947 Mr Roy: You can pay for it when you can afford it. Lt General Fulton: Yes, rather than having to pay for the whole thing up front. What I am trying to do is paint a picture that one size does not necessarily fit all, and the true essence of the "smart" in smart acquisition is being smart enough to know what is the best route to solve that particular problem at that particular time. Q1948 Mr Jones: Can I just pick up on a point? You mentioned integration and the importance of buying things off the shelf that worked. Can I ask about quad bikes, which I understand were very useful, for example, on the Al Faw peninsula and places, but why did you buy quad bikes that ran on petrol, which created some problems in terms of being able to get fuel? We saw a warehouse full of them in Iraq, getting ready to be shipped back to the UK for disposal. If we are thinking about integration, for example, with the rest of not just equipment but also something as basic as fuel, why did we buy quad bikes with a problem with fuel? Lt General Fulton: Why we bought petrol quad bikes as opposed to diesel quad bikes I do not know, and we will have to find out. The second part of the question is interesting, because it bears on the answer I gave to Mr Cran earlier in terms of deciding what should be retained in service and what should not. There clearly is an issue of whether we should retain quad bikes as part of the UK inventory, whether we should expand the use of them across the whole of defence or whether we should buy them for that particular operation, knowing that they are the sort of thing that we could go back and buy as each operation comes up. So it is that fine balance between what we want and need to hold in the inventory for the whole gamut of tasks, and what can we afford to hold in the inventory for the whole gamut of tasks, and what are specific to a particular type of operation. Q1949 Mr Jones: I accept the point you are making, but certainly yesterday, when we were in Plymouth to visit 42 Commando, they said they were very useful, certainly on the Al Faw peninsula; they were very useful in the desert situation. We were told when we were in Iraq that they were being disposed of, and the only reason why they were being disposed of was not because people did not think there was an operational need for them in the future, but the fact that they ran on petrol. Lt General Fulton: As I say, the petrol question we will certainly have to come back on. To take quad bikes as an example, what we would need to do is, if the requirement for quad bikes for the whole of the UK armed forces came up as a potential equipment enhancement, we would have to look firstly at what the requirement was and how that stood up against all the other competing claims on the equipment programme. If we then got it into the programme, there would then be an issue about buying the right quad bike. Actually, if you take it away from being specific to quad bikes, the capability you want is small, light, individual personal mobility for stores at a low level. That is a legitimate aspiration for a unit to want and perceive a need for. As I say, it has to be balanced against all the other equipment enhancements that other people might need, which might well get into the programme ahead of that. Mr Jones: Could you let us have a note on the petrol/diesel issue and the reason they were purchased? I do want to emphasize the fact that certainly the Marines we met yesterday said they were very useful and a very good piece of kit, especially on the Al Faw peninsula. Q1950 Mr Crausby: You have already said, General, that there are some capability shortfalls that are not amenable to UORs, because they are too complex and there are too long lead times, aircraft, warships, etc. Lessons for the Future makes that point, but then it goes on to say that "We need therefore to consider war fighting capabilities and review the equipment programme to ensure that we can deliver them within planning timescales." What analysis have you done to further that hope, to ensure that different capabilities could be procured, delivered and fitted, to help inform the process? Lt General Fulton: It is an aspect of equipment planning which is becoming increasingly apparent through the experience of Kosovo, Afghanistan and now Telic. In terms of the capabilities that we do put into the equipment programme, our recommendation to the Defence Management Board and the Secretary of State is to put into the equipment programme those things that deliver the most capability to defence. We are increasingly aware that there is this other aspect in terms of a discriminator. If you are trying to discriminate between spending the money on capability X or capability Y, it is, we recognise, increasingly important to take into account, if we did not put it into the programme, how quickly we could get it if we needed it. Another aspect of this, which you may well have come across in your discussions, is fitting for but not with. One of the things that we would increasingly seek to do where we can is, if we cannot afford to equip all of the fleet, be that the vehicle fleet or aircraft fleet or ships, if we cannot afford to equip everybody with it, but nevertheless there are complex integration issues, one way round it is to do the integration but leave the fitments there for the equipment itself to be either transferred from another ship and plugged in when necessary or indeed bought off the shelf and plugged in. That, of course, is dependent on ensuring that the equipment that we can buy off the shelf is compatible with the integration that we have already done some time before, because one of the disadvantages of commercial off the shelf technology is that it moves on at a pace, and therefore we have to make sure that the manufacturer or the country from which we are going to buy it has not developed two more marks on downstream and therefore the integration work that we did has been nullified. It is not a panacea and it cannot solve all our problems, nevertheless fitting for but not with is potentially one of the ways to ameliorate the problem. Q1951 Mike Gapes: I have a number of questions about communications and information systems. To begin with, when we visited 42 Commando yesterday, one issue that came up was the question of how you deal at division level with the intelligence that you get which might be available at brigade level, and whether there are gaps in terms of the time it takes for people to be able to analyse the information that is pouring in and is dealt with. Clearly, this is a serious question for actual combat operations, and I wonder if you have any comments on lessons that you have already learned from that and what might be done to address that issue, and then I have some specific questions relating to the question of communication and information systems. Lt General Fulton: Clearly, the issue of making information available to all those who need it has been a perennial problem throughout history. As we go forward, one of the features of modern operations is that the amount of information is increasing exponentially. I have briefed the Committee in the past on network enabled capability, and that is a phrase that has come through in the lessons learned and in the White Paper. What that says is that any capability, be it a soldier on the ground or an attack helicopter or whatever, is going to be that much more capable if they get the right information in the right form in a timely way so that they can make use of it. It is no more magical than that, though actually delivering it is quite difficult. What you say is exactly right. It is not a new problem, and arguably the problem is getting worse as the amount of information goes up, and in particular operating alongside the Americans with American intelligence gathering assets adds to it, and therefore the key issue is being able to do the information management that will allow us to find that needle in the stack. Q1952 Mike Gapes: You said "timely". Is that not the real problem? You might have the information at brigade level, or the Americans might have it, but there is a firewall and there is an inability to analyse that information in time, so that by the time the people who might need that information get it, the assets that you are trying to target have moved on because it has taken so long for that information to get to the people who can make use of it? Lt General Fulton: There has always been a tension between passing on raw information, unprocessed, quickly, and analysing the information and then passing it on more slowly. Very often, the issue is that until you have analysed it, you do not know who can make use of it. The last thing, I am sure, that the Commanding Officer of 42 Commando would have wanted is the entire intelligence dump of everything that the Americans had managed to collect, and therefore, finding the nugget that was really the information that he needed is a heck of a challenge. I freely recognise that. Q1953 Mike Gapes: I now have a number of specific questions. The MOD's First Reflections, Lessons for the Future and the National Audit Office report on Operation Telic have all highlighted shortcomings and serious problems with communication and information systems. I understand that First Reflections says that not all systems were compatible with each other or with US systems, which led to interoperability problems, and the NAO report says that there was sometimes difficulty in maintaining strategic communication between the UK and units in theatre. Clearly, these are very serious problems and they have very serious implications for the effectiveness of our forces. What are you doing to address these problems, and how quickly can we expect significant improvements? Air Vice Marshal Dalton: The overall view that is given by the reports is correct. As I mentioned earlier on, there were some very high demands on communications, and some of them did not stand up to the test of time. There is no doubt about that. What we are doing about it for the future is that the compatibility work we talked about is work that we are taking very seriously. We have a number of strands of work, both directly with NATO partners and also with specific countries, the US in particular, to try and make sure that our communications that we are bringing in over the next few years, literally the next two to three years, are compatible with their systems. An example there would be actually making sure that we put the wave form patterns from our radios into the software programmable radios that the Americans are buying for the future for their equipment as well, so that we are interoperable and compatible with their systems. In terms of strategic communications, yes, there were significant problems there, not least of which was with our now ageing Skynet 4 system, where a particular satellite in the net which was critical to it did give us problems, and the management system had to be changed to try and make use of other satellites that were available, including the Inmarsat system, which became at one point the critical communication system because the others which we had in place proved to be unreliable. So there were problems and things were being done about it. What we are doing for the future for that side of things is that we are at the moment in the process of launching the Skynet 5 system satellites, which will be up over the next four to five years, which will then give us a new, modern satellite capability to provide the strategic comms that we need. Q1954 Mike Gapes: But between now and four or five years' time, if we are involved in a serious operation of the kind that we have just been involved in, we are still going to be dependent on Skynet 4. Is that right? Air Vice Marshal Dalton: Correct. Q1955 Mike Gapes: Which, as you have said yourself, was inadequate and let us down. Air Vice Marshal Dalton: It is not inadequate itself, but it did let us down on the day, yes. Q1956 Mike Gapes: Do you have any contingency plans to fill the gap between now and then? Air Vice Marshal Dalton: There are a number of contingency plans in place to use NATO satellites, other nations' satellites if necessary, to give us that strategic communications if we need it. They are all, of course, dependent on the time of arranging them to meet the specific requirements. Q1957 Mike Gapes: In short, when will we have reliable, secure, timely and effective communication between all parts of our operations and our allies or stakeholders? Air Vice Marshal Dalton: That is a difficult question to answer in terms of when, because all of the factors you have put in there demand a perfect working system. What we are seeking to do is to put in place a capable, reliable system that will meet the needs that have been specified to do it. When that will all be in place with all our allies is a difficult question to answer specifically in terms of dates. What I can do is come back to you. Q1958 Mike Gapes: Give me a rough idea. Are we talking about five years, seven years, ten years? Air Vice Marshal Dalton: It is a continuing process, but certainly within the next four to five years we will have a much more reliable system, which will enable us to meet the requirements both of our allies and for our own national uses, yes. Lt General Fulton: What we also have to bear in mind is that the demand for communications is increasing exponentially as well. I think we would be unwise to say that in five years' time our successors would not be having a very similar conversation, not because we had not done anything in the mean time, but because demand for communications, demand for instant access, demand for the ability to handle ever greater quantities of information the ability to have streaming, video, tele-conferencing, all hours of the day and night and so on and so forth, will all, I think, place greater demands on communication channels than we will actually be able to achieve. I think we are some way off the perfection that you describe - in fact, I think we are a long way off the perfection you describe - but I would say we are in this situation because, frankly, we have not invested sufficient over the years in the enabling functions that allow us to do these sorts of things. It has only really been since the Strategic Defence Review of 1998 that we have started to invest in enablers as well as in what you might call the front line forces. Communications traditionally has been very much the poor relation and is catching up. There is a lot of investment coming but it is going to be a few years yet. Q1959 Mike Gapes: Is that then why it was so necessary to have UORs to improve coalition interoperability, when in fact anybody should have thought years ago that we needed to be fighting alongside the United States and therefore we should have interoperability built into everything that we plan? Air Vice Marshal Dalton: Certainly in terms of interoperability we have been thinking about it for many years in terms of communications as well as other bits of equipment, because we design things to a series of standards, particularly set out by NATO, so that at least all the NATO parties are all working to the same technical requirements for equipment and it is through designing the standards that we enable ourselves to at least specify to industry what technical standards we want them to build the equipment to. So from that point of view, we have been thinking about standardisation to do that. With the Americans, again, what I think we have to acknowledge is the fact that they have moved on in generational terms as to how they were going to fight the particular campaign that we have just been through. That meant that, particularly in terms of communications, they had moved much faster ahead than we had been able to keep pace with, because they had invested significant amounts of money in that particular area of capability which we could not hope to match in specific terms and in that timescale. Q1960 Mike Gapes: So the answer is that we should not really have been doing UORs; we should have been keeping as close as possible to the Americans and buying from them? Is that what you are saying? Air Vice Marshal Dalton: No, because by doing the UORs, we were able to be interoperable with them to the limited extent that we could in the timescale that was available. So the UORs gave us that limited capability. Q1961 Mike Gapes: Because we had fallen so far behind? Air Vice Marshal Dalton: Absolutely. There is no question that we had fallen behind because of the amount of investment that is needed to keep up with the volume of communications, not least of which is the number of satellites you need. Q1962 Mr Hancock: I am curious about this issue about interoperability and the ability to talk to each other and friendly nations working with you. The answer you gave to Mike Gapes's question about whether we should buy American was not, I do not think, very satisfactory. I am interested in knowing whether or not you have done any assessment of their communications set-up, whether it was satisfactory or whether they themselves had significant problems. If they did not, there is a substantial case to be made that it is a cheaper option simply to buy what they are using. They have done all the research and development, so we buy - this goes back to your point, General, about when is the off-the-shelf version the cheapest option. I was rather nervous about your suggestion, Air Vice Marshal, about us buying other equipment which could be adapted to become compatible with the American systems. Surely there is a case to be made to simply buy what they are using. Air Vice Marshal Dalton: Two things. First of all, they were not satisfied with their own communications system in terms of the capability, the volume, and the rate at which it could transfer information. They themselves are planning to continue to put an extraordinary amount of money into improving and increasing their communications capability. Because of the demand, as General Fulton mentioned earlier on, for increased volumes and rates and timeliness of those communications, we are not looking to buy American per se. What I was trying to say was that we are making sure that the equipment that we want to buy, for instance, the Bowman land digitisation system and radio, is probably the leader in the world at the moment in terms of its capabilities in what has been designed to be introduced over the next few years. What we need to make sure is that that system, which will be with us for probably 10, 15 even 20 years, is compatible with what the Americans themselves are purchasing and have got in service. Q1963 Mr Hancock: If it is not, we have a big problem, do we not? Air Vice Marshal Dalton: That is why we are making sure we are doing the work to make sure it is. Q1964 Mr Hancock: Surely we should have been doing that talking before we got into the position of making our decision to move ahead. Are you saying we have not done that? Air Vice Marshal Dalton: To a certain extent we have done that, as I mentioned, through the NATO standards system, to make sure that technically they are interoperable bits of equipment, but the rate at which the American communications, particularly the strategic communications, have moved ahead was outstripping anything we could hope to keep up with. Q1965 Mr Hancock: It is a pretty worrying situation, is it not, something we as a Committee ought to be taking very careful note of, otherwise we are going to be in a position of some real difficulty if we were faced with this five years from now? Lt General Fulton: If I may say so, I think you have put your finger on a very pertinent point, which is that yes, we wish to operate alongside the United States, but we cannot hope to match their investment in this area, and therefore we have to ask ourselves some very searching questions about what does operating alongside and with the United States mean and how far are we actually going to be able to either operate alongside and de-conflict from them, operate closely with them or even integrate with them, because the further you go up that tree, the more demanding it becomes and, clearly, the more expensive it becomes. As is set out in both the White Paper and Lessons, for future large-scale operations we do see ourselves operating with the United States, but this brings with it some questions, in particular in terms of exchange of information, of affordability and the amount that we are able to do it. Technology is to a certain extent coming to our help, because now, with the generation of software programmable radios, it is possible to buy radios from different sources but make sure that the wave form of one is programmed into the other and therefore you can exchange information in the same way as mobile telephones from different manufacturers can work. So digital technology is taking us in a direction where this is going to be easier, but nevertheless, the way in which the Americans foresee themselves exchanging information in the future is something that we cannot hope to match. What we have to do though is to ask ourselves so what? What is the shape of the plug that we need to have to fit into the American socket so that we can take those bits of information that we need? Coming back to Mr Gapes's point earlier, we do not need all their information, but we do need the bits of information that are pertinent. So it is a question of asking ourselves, "So what? What does operating with the Americans mean in the future?" Q1966 Mr Hancock: Are you sure, General, that the Americans are prepared to give you the knowledge to know what shape plug to buy? Lt General Fulton: We have invested a lot of time and effort in doing just that with the Americans, making sure that the technology gap is not exacerbated by us waiting until they bring something in and then us following, because actually, as Air Vice Marshal Dalton has said, there are cases where we are half a generation ahead. Our Bowman system is coming in half a generation before their joint tactical radio system, therefore we had committed ourselves to Bowman before they had made a decision on the joint tactical radio system, therefore what we need to do is get them to change - and they have been willing so to do, at some expense to themselves - so there is token. But I think the Americans would also say that they do not themselves always operate in a direct straight line, and one of the other questions we have to ask ourselves is to make sure that we are not following them down a blind alley, out of which they can afford to come because they got it wrong and they want to go off in a different direction. So they themselves say, "Be careful, don't follow us too closely," but they are nevertheless willing to share the information with us in terms of where they are going so that we can make a decision. But there are still going to be some difficult decisions for us. Q1967 Mr Hancock: Let us hope that those words do not come back to haunt your successor in five or six years' time, General. Let us hope that what you say is right. The Chairman was good enough to ask the question I was going to ask earlier, and you promised to write on combat effectiveness. The question of combat identification is an important one because, as you have said, Air Vice Marshal, there are four inquiries going on at the present time, and you did invest quite a lot of money in trying to overcome the issue of friendly fire. Were you in the main - four incidents aside, and maybe some near misses as well - happy with the progress that is being made in that field? Air Vice Marshal Dalton: Two things, if I may. First of all, progress is being made. It would always be advantageous, particularly when a conflict is just about to come along, if we could move faster in making sure that we had a combination, as I mentioned, of tactics, techniques, and procedures, as well as the technical equipment that would enable us to be as confident as we can that combat ID is something that we had got pretty well sorted out. I must make the point though, of course, that I do not believe we will ever have a situation where there will not be instances of blue on blue, for a variety of reasons, not least of which is the human factor in all of those situations. So progress is being made, there is lots more progress needed, some of which will be on the training side, some of which will be on the technical side. It is very much a live issue and one which has got very high-level attention in the Ministry of Defence, not surprisingly, and which a lot of work is being put into now to try and make sure that we progress things as quickly as is possible, but there are some technological barriers and there are some human factor issues that we need to get sorted out. Q1968 Mr Hancock: Is there a willingness among our possible coalition partners now and in the future to work down the same road as us on that, so that there is a compatible facility which is readily available to all forces and can be put on aircraft and vehicles very quickly if the need arises? Air Vice Marshal Dalton: Yes indeed, as was the case this time. A system was leased from the United States to make sure we had better awareness in terms of where our forces were and where the coalition forces were. On top of that, we are doing specific pieces of work with the United States and elsewhere to look at some technological demonstrators on pieces of equipment to try and identify what is the best and most reliable solution to the problem, to give us at least the technical end of it, as well as also doing work with them to make sure that the training and recognition aspects are taken care of with our most likely ally. Q1969 Rachel Squire: Helicopters. Firstly, General Fulton, you have already praised the performance of Sea King Mk 7 and how the search water radar proved effective not only over water but also over desert terrain, and we certainly heard that from 42 Commando when we visited them yesterday. Can I ask you whether that additional capability is something that you are planning to exploit in the future, and whether it is considered to be possibly a universal capability or perhaps one that is only suitable either to the sea or the desert? Secondly, we are all aware of the Sea King's vulnerability to ground to air threats, particularly when it is carrying out that sort of desert terrain surveillance. What are the plans to try and address that? Lt General Fulton: If I could pick up the point about land surveillance first, and then come to vulnerability in a moment, one of the things that the Sea King Mk 7 shows is something that comes through time and again, which is that the true strength of the UK armed forces is the ability of our people to take in equipment that was designed for one purpose and apply it to another when the situation changes. The Navy, 3 Commando Brigade, the troops on the Al Faw, did not have anything that was designed to achieve that, and nevertheless worked around it. The first point I would make is that one of the fundamental things that we have to do is to take that lesson - we already knew it but I think it is a very good example of it - which says that actually, capability only comes when you get equipment plus people plus training, and therefore the equipment must be sufficiently adaptable - we must try not to have equipment that is designed just for one role and one role only - so that good people can take it and apply it. That would be my first point. My second point, to answer your question whether we would do the same again, yes, of course and, as you heard earlier from the Finance Director, we do intend to replace those two because they are vital pieces of equipment in their primary role, but also clearly, were there to be another circumstance, it would be applicable. But we also know that that has been a weakness in our inventory and therefore we already have the Astor programme, which is due to come into service in 2005, which will provide a similar stand-off picture of the battlefield, which would have been better than the picture that they got from the search water radar because that is what it has been designed for, and also the Watchkeeper programme, which has been much discussed in this Committee in the past, will also provide a very flexible way to do the same thing. So yes, we understand the gap, and yes, we have means in the programme to do it, but I come back to the basic point, that I would guarantee that, were we to do another such operation, we would find another example where good people took something that was designed for a completely different purpose and found that that was the way to solve the problem, which is the importance of training, which therefore means that when we look forward at what lessons we should learn, there will be some difficult balances between whether the Department should spend the money on the equipment or whether we should spend it on the people or spend it on the training, because the people and the training we can make good use of. Vulnerability: Sea King is vulnerable, and has had a long life, and there is a limited amount that can be done in order to make it less vulnerable. Therefore, we do not think that a great expenditure on protection of the Sea King is the right way to go, but rather to concentrate on using it in such a way as to minimise its vulnerability. So we are trying to limit its vulnerability through use rather than through technical means. Q1970 Rachel Squire: My second question, coming back to the points being made about communications, the Defence Aviation Flight Safety magazine reported that helicopter communications in theatre were extremely poor. Can you be specific on what action is being taken to improve helicopter communications? Air Vice Marshal Dalton: This is on the Sea King. I will have to come back and let you know on that one. But if I turn to the Chinook and Puma helicopters that were used out there, there are different radio systems. New radio systems have been put into those two particular helicopters to try and overcome that particular problem, mainly because it is caused by the heat and the environment as well as some limited effect of terrain. It is mainly the heat and the environment out there that reduces the range of the radio frequencies they are operating at. Action has been taken, new radios have been put in, and in fact ground services have been put in as well to try and make sure that they are in communication for much longer. It is a known physical issue. It is a technical issue that is going to be difficult to overcome because of the law of physics. Q1971 Rachel Squire: Finally, can I come on to the Apache? A number of articles again have commented on the United States' Apache helicopter's vulnerability to small arms fire during Operation Telic. Have lessons been identified for the UK's Apache helicopters in the light of that experience and is action being taken or being planned? Lt General Fulton: Very definitely. We are very interested in what has been the American experience of Apache and through UK liaison officers that are with the American aviation forces back in the United States, we have gone through their report with some care. I will ask General Applegate to talk about the detail. Major General Applegate: If I expand a little bit on that, with the Apache, some of these articles are quite interesting. The Apache was clearly tremendously successful in 1991, in the first Gulf war, if you compare it. Some concern was then raised over its employment in Kosovo. If you have read General Wesley Clark's book, you can see that there are other reasons why it may not have been deployed rather than problems with the helicopter or the crew. There are clearly issues also about the speed of deployment, etc, and I do not think that relates particularly to what we are talking about in this operation. With the current operation that occurred in the Gulf, really the main criticism focused round one particular attack against elements of the Medina division,, in which a tremendous amount of damage was inflicted on the Apaches, but I would point out first that actually, it may have absorbed a lot of damage, and actually all except one returned and went back into combat two days later. It reflected what was the experience in Afghanistan, when again the Apaches were used in very close support to infantry on this occasion, in the Shahi Kowt operation, where again they suffered a lot of damage, but to be frank, they won the day in what was pointed out to me by an American as the most intense and most sustained air assault operation since the Vietnam War in Afghanistan. Going back to this current Gulf operation, I think it is important also to remember that apart from that one operation, the Apaches were used both in further deep strikes, in air assault tasks, up to 500 km, for example, when going into Mosul. It was used also in conjunction with ground forces for dams and other tasks. They also carried out, rather as one saw with the Marines and their Cobras, close support to infantry or other ground forces. So a wide variety of tasks. From our perspective, a point I would emphasize is that I think the Apache has demonstrated, particularly in Afghanistan and more recently in the Gulf, that it is still appropriate and we are getting a weapons system which is still the sort of thing which we will use widely in operations. It has the ability, which our current helicopters do not, to absorb a lot of damage. I would also say that that one particular instance against the Medina division also reminds us that there is no such thing as some "silver bullet" type of equipment system; you have to use tactics, techniques and procedures, you have to combine the effects of other weapons, and you cannot necessarily just sail in and expect that somehow you will roll over an opponent. There were clearly problems with tactics, techniques and procedures on that day. So in summary, I would say that we remain very happy with Apache. Over some two years we have taken a number of measures which we have funded to ensure that the Apache becomes even more capable of being operated in these new sorts of operations we find ourselves in. What I mean by that is the ability to more rapidly deploy it over strategic distances to get it into operation, to improve some of the targeting systems, to make sure we have capability which is better than the United States to actually tune the defensive aid suites on the helicopters very quickly to the threats in theatre, and I think we are also looking at what we might be doing as the system comes on in five or ten years to make sure it maintains its edge. So in sum, a good weapons system, vastly over-exaggerated through one particular report, and I can only wonder what agendas may be running in the United States, but perhaps that is a question you should ask some of the people who wrote those articles. Q1972 Rachel Squire: Thank you very much. I think you have explained very well why, in spite of that vulnerability and the problem with the Medina division, the United States army is intending to increase the number of Apaches in each unit. However, I also understand, in spite of the very strong case you have just made, that the MOD may be planning to decrease the number of Apaches as a cost-cutting measure. We can argue about that, but is that indeed the case and if so, why? Major General Applegate: With regard to that, at the moment the future army structure work, which I think you are aware of, is ongoing. We are still buying the same number. One of the issues is quite how they might be employed in organisational terms to make best use of them and what we might do as far as maintaining that fleet over time. Those issues have not been resolved as yet, so I cannot give you a definitive answer whether there will be two regiments, three regiments, four and a half regiments, five regiments etc. Does that answer that question? We are not reducing the purchase. We still maintain the investment. We are trying to make sure that what we buy are the best. Rachel Squire: It is clearly an area for a lot of argument in the weeks to follow this meeting. Chairman: In terms of vulnerability, we are now going on to a really vulnerable instrument. Q1973 Mr Jones: Gentlemen, can I ask about UAVs? Certainly they played a key role for our allies in Operation Telic, and also in Lessons For the Future they feature quite highly in terms of future operations. In terms of Phoenix, I understand that there is an attrition rate of something like 25 per cent. Could you first tell us generally about how effectively Phoenix operated, and secondly, is losing 23 out of 89 what was expected and will they be replaced? Lt General Fulton: In terms of effectiveness of UAVs, yes, the Americans made a lot of use of them. The Americans, as we know, have a much greater variety of them and they have developed them much further than we have, but nevertheless, there is a great deal of investment going in in this country to improve or to increase the use that we make of them. As far as Phoenix is concerned, Phoenix has been a much maligned equipment in the past, but was identified by General Brimms as one of his war winners and he certainly found it extremely useful, with all its known shortcomings. Yes, the attrition rate was high. Eighty-nine air vehicles went, 138 flights, and 23 lost or damaged beyond repair. I cannot do the maths in percentage terms in my head, but that is significant. In terms of causes of loss, technical reasons are believed to account for the majority of those that were lost. Q1974 Mr Jones: Is that because of the theatre you were fighting in, the desert conditions? Lt General Fulton: To a certain extent, yes. I have not seen an analysis of what all the technical reasons were. There were also on some occasions conscious decisions to fly them to destruction, to get the benefit from them, and sacrifice the air vehicle. There were a range of reasons, but Phoenix is very much a last-generation air vehicle and a last-generation system and, as was pointed out in the last session by the Finance Director, we are not going to go out and buy more Phoenix. Watchkeeper is due in service in 2005-06 and will provide a two-step change in our capability in the information-gathering capability that will be provided. Q1975 Mr Jones: So have any lessons been learned from the way you used Phoenix or Watchkeeper for future operations, for example, how you used them or any adaptations that need to be made to Watchkeeper? Lt General Fulton: I am not aware of any changes. I can answer the question more specifically than that. We are very keen, for reasons which I have explained to the Committee in the past, not to make changes to the Watchkeeper requirement, so that we do not keep chasing the latest requirement, and we do not fall into the same trap we fell into with Bowman, which is every six months to change your mind, because that way it will never be delivered. So we are absolutely sure that we want to nail the Watchkeeper requirement and to make sure that the companies deliver that which we have asked for. But clearly, we have taken the lessons, not only of Phoenix but also of what the Americans have learned from UAV operations, and incorporated those in the Joint UAV Experimentation Programme, which is where we are doing the work to look at what son of Watchkeeper or future developments of Watchkeeper, future developments of UAVs might boast, what smaller variants, larger variants, might offer us for the future. Q1976 Mr Jones: There was a report in The Times on 30 December 2003 that the MOD had purchased US Desert Hawk and US Buster UAVs. Is this the case and how do they fit into the Watchkeeper programme? Lt General Fulton: They do not fit into the Watchkeeper programme. We have been looking at whether there are specific requirements related to current operations in Iraq where a mini UAV, something very much smaller than anything we have had in the past, might help the current forces out there, but it is not in service yet. Q1977 Mr Jones: Ten out of ten for not answering the question. Lt General Fulton: Yes, we are buying something called Desert Hawk. No, it is not in service yet. Q1978 Mr Jones: Where does that actually fit into Watchkeeper? Does it fulfil a different need? Lt General Fulton: We are talking about a very much smaller air vehicle, very much less capable, with a very much shorter range, very much lower, the sort of thing that the American Marine Corps use, something that is therefore man-portable, to see whether that can help with some of the surveillance requirements that exist at the moment. But for exactly the same reason I described earlier, it does not fit into the Watchkeeper requirement which would provide the sort of battlefield surveillance that Mrs Squire was talking about earlier. Q1979 Mr Jones: I accept that, so where does it fit into the overall programme in terms of UAV development for the British Armed Forces? Lt General Fulton: It is a UOR and so there is exactly the same question; in other words, it comes with no support funding, it is a very small number of air vehicles with a very small number of ground stations for a specific purpose at a particular time. Then there is a discussion, which the JUEP, Joint UAV Experimentation Programme, will look at to see whether a micro-UAV has a part in the overall mix. If it does, then, for exactly the reasons we described earlier, we will have to decide where a micro-UAV sits in our priorities against all the other lessons that we would like to learn out of the present conflict. Q1980 Chairman: I go back a long way; I remember the report we produced on Phoenix, which was one of the worst procurement decisions we have ever made, and I am glad it is now operating in a way that is satisfying the MOD. I have two small supplementary questions to what Kevan was asking. We were told that 13 were damaged or lost, but there were quite a number that were reparable. Were they reparable in theatre or reparable on return to the UK? Lt General Fulton: The figures I have are that 23 were lost or damaged beyond repair and 13 were repaired in theatre and then returned to action. Q1981 Mr Jones: You said you ran Phoenix to destruction. Did you ever use them to actually draw fire, as actual targets? Lt General Fulton: I do not know. I would have to ask the people concerned. Q1982 Chairman: How many do we have left? We cannot afford many more wars before they all go. My concern is that they will be gone before anything comes in to replace them. They do have a tendency to crash without any fire. Lt General Fulton: Yes. Technical reasons were the cause of a high proportion of the losses. Sixty-six air vehicles are left, but the key issue for us is accelerating the Watchkeeper programme as fast as we can. Q1983 Chairman: We deployed all the ones we had then? Lt General Fulton: I would have to check but I would be surprised if we did not. I will let you know. Q1984 Mr Crausby: Do you expect to make changes to the equipment programme in response to the lessons learned and the experience of Operation Telic? Lt General Fulton: I think that we would certainly expect to take account of the lessons. That is not a way of not answering the question, but what I would be very keen to do is to make sure that we take the particular lesson, assess it against the whole of the tasks that we are likely to be set, and see whether it is applicable. I think what it does do is it underlines the importance of certain aspects of the equipment programme. I think it has underlined for us the key enablers. We talked earlier about CIS. I think this Committee will know that that is something that I certainly have been pushing for some time, because I think it is a clear weakness and we were reminded of it. I think therefore the importance of logistics and logistic asset tracking has been flagged up and therefore, as you know, that has a high priority. Whether it has a high enough priority to get into the equipment programme we will have to see. I think the key enablers have been important. Rapid deployment was important; I think it underlined the success of the C17, and I think you know we are looking at how far we can retain those in service once the lease has expired because they have proved their worth. So I think it has underlined for us the importance of certain aspects of it, but what I would not necessarily expect to see is a wholesale change of direction. Q1985 Mr Crausby: I know that "when" is always a difficult question, but can you give us any indication as to what sort of timescale we are talking about as to when you make those decisions and indeed when they will be announced? Lt General Fulton: They are being considered. The lessons have been taken into the current planning round of, in my case, EP 04, which is due to go to the Defence Management Board this month and then goes to Ministers the following month. There is also other work going on as part of our normal equipment programme to see how whatever we are unable to do this year we can take forward into future planning rounds as well. So it has certainly been factored into the process which we have within the equipment capability area of where we get the best value capability from investment in the equipment. Q1986 Mr Cran: The Defence White Paper Delivering Security in a Changing World I am sure all three of you have read every line of. One of those lines said this: "Experience shows that the current mix of heavy and light capabilities was relevant to the battles of the past rather than the battles of the future" and of course, that is what caught the headlines when the document was published. The question the Committee is interested in knowing the answer to is did the experience of Operation Telic contribute to that conclusion or not, or only partially, or is this driven by something else? Lt General Fulton: No, I think it certainly played a part, and I will give my view and then ask General Applegate to add to it. What Telic did is it certainly underlined the importance of heavy forces and the contribution that heavy forces can make. In particular, I think what it drove home to us is the importance of mixing heavy forces and light forces. There were a number of cases - and I do not know whether 42 Commando cited them to you yesterday - where the ability to reinforce light forces with heavy armour had a decisive effect. What we have learned on light and heavy is that light forces have their utility but they are vulnerable - that was certainly driven home - and that heavy forces as a force of decision also have their utility. Major General Applegate: What you are probably referring to, which I think follows on from that particular document, were some discussions about changes in the nature of the structure and also the introduction of a medium weight capability. The core of the medium weight capability is FRES (Future Rapid Effect System). What I would say is that what has been reinforced by this operation is that we will have less time to act, we believe, in the future. We will probably have to act more frequently, perhaps though at a lower scale, and if we are going to do that, we are going to have to make sure that the force we have is deployable in such a way that it arrives in theatre and can achieve early effect, either to try and snuff out a problem before it actually develops and goes into flame, or perhaps to win a particular conflict and then get into stabilisation. We are part of the way down that route. There are various elements which we are bringing in. Some of the enablers that we have been talking about are absolutely critical to enable us to deploy, to know what we have deployed, to get into theatre quickly and in such a way that we can then ensure people have the right equipment and can use it. There are bits that are still missing. For example, FRES would be one of those. What we are saying though is that we are not therefore giving up light or giving up heavy. What we want there, I suppose, to use that old term, is a few more golf clubs in the bag really, and it is that medium element which we lack currently, and that is where FRES and a number of other programmes are very important. But the overall issue is we want that ability to deploy rapidly, effectively and have forces that can deal with a range of potential tasks, depending what the situation might demand. Q1987 Mr Cran: Let that situation work itself out. Last question: you mentioned FRES. Where are we with it and when is it going to come into service? Major General Applegate: As far as FRES is concerned at the moment, I think we are still keen to make sure that we get a FRES series of vehicles, but the simpler ones first. The timescale is 2009-10, depending what is available. One of the issues about which particular route we will go will depend upon whether we can actually have a solution which has stretch potential, growth, and meets the sort of requirements I have just been talking about. Where is it? In fact, this is more in the DPA area than my own, but currently there is an intention to go to industry to ask for their responses in the relatively near future for the first stage. Chairman: Thank you. First of all, having waited 100 years to produce a good tank, I am loathe to see it jettisoned, but it seems to me - this is a personal view - if we need, as I would have thought, a large number of tanks, desertised, rather than mothball one block of them, in case we actually use them, what it shows to me is heavy tanks are very important in urban warfare. Warrior is wonderful, but it is frightening you if you get Challenger 2 bearing down on you. Q1988 Mr Jones: I accept it is not your area of direct responsibility, but I am rather sceptical about whether the date of 2009 will be met. If it is such an important part of future deployment, and it was certainly given a lot of credit in terms of the White Paper, why was the development phase taken away from Alvis Vickers, and we are now at the stage we are at at the moment where we are looking at a systems house to come up with a concept? We have already spent God knows how many millions with Alvis Vickers. Why was the decision taken to take it frpom them and put it into this tendering process we are going through at the moment in terms of the systems house? Major General Applegate: I do not really think I should answer that question in this environment because of the commercial issues that are related to it. Q1989 Mr Jones: Why? Major General Applegate: Because the decision that was taken with regard to Alvis Vickers and elsewhere is one that I do not know the detail of, because it is taken down at the DPA and not directly with us, and was before the time I was there. Also, I am not sure whether, in this open environment, it would be appropriate to mention those particular elements of the decision as to where it might go, what other companies may be in place at this stage, this sensitive stage. Q1990 Mr Jones: I accept it is not your area of responsibility, but there are some very serious questions here, are there not? The Secretary of State has told myself and other Members that 2009 is still the in-service date. We are at a stage now, I understand, where you are going to have to tender to a systems house where it is a corporate concept, even though I cannot remember how many millions have been spent, but I did ask a parliamentary question about it, with Alvis Vickers. If it is such an important piece of kit, and we are not going to meet that date, why is it that we have actually suddenly changed course, having spent several million pounds with one company already working up concepts? Major General Applegate: Let me answer in my line of responsibility. One of the things we are quite clear about is the requirement to meet this capability need in that sort of time frame, but the actual decision as to what the acquisition strategy might be and where it is going to be developed over time is one of those things which is not immediately in my area to answer. Q1991 Mr Jones: Can I do two things? First, can I ask you to put those questions and to get sensible answers if you can, because I accept it is not your area, but as a professional soldier and someone who is clearly au fait with procurement, are you confident we are actually going to have a vehicle in service in 2009-10? Major General Applegate: What I can say to you is that I will be pushing damned hard to make sure that there is a minimum amount of delay and that we learn from what we have done in the past and that we develop, hopefully, and take into service a solution that is robust and meets our needs. What we have been absolutely clear about over the last few months is the specific amount of those needs, explaining the trade space and explaining the urgency. Q1992 Mr Jones: You can also understand from my particular point of view why this is very important. Clearly, in the White Paper, where it is stated that Challenger and others will be taken out of service, there is obviously a certain nervousness that something is possibly not going to be replaced until 2009, and if that is not met, there may be a gap there. Lt General Fulton: I do not think the White Paper said anything about taking Challenger out of service. It underlined the need to ensure that we retain a heavy armour capability well out to 2020, and I would confidently expect that we will see Challenger, Warrior AS90 and the heavy force in place all the way through. What FRES and what the medium weight force seeks to do, as General Applegate says, is to plug the gap in the middle, which is a capability that we do not have at the moment, but it would also seek to take out of service some of the older vehicles that are currently filling some of that middle gap, some of the 430 series, some of the Saxon and so on and so forth, so it is those that we would see coming out of service, not Challenger, Warrior and AS90. Q1993 Mr Jones: It is not much good, is it, if we have Challenger but we cannot deploy in rapid effects, which is exactly what this new vehicle is supposed to be? If you read the preamble to the White Paper, the entire thing is that the new theatres of operation are actually going to be dependent upon this ability to deploy forces at quite short notice and sometimes over large distances. Lt General Fulton: And very much developing a capability to meet the sorts of things that we foresee happening, not that would necessarily have had quite the same applicability to Telic, for example, where it was fought at a time, place and pace of our choosing, and the heavy forces, alongside the United States, had a very clear part to play. The medium weight force argument sits in that wider balancing issue within the equipment programme of working out what should be done specifically that would enhance that which we had for Telic and that which we might want on the wider stage for the other tasks. Q1994 Mr Jones: Perhaps you could get them to send us a note on FRES. Major General Applegate: Can I just ask for clarification? One of the things I just mentioned: is it a question on FRES or is it a question about the medium weight capability? One of the issues about timing is that there are a number of other improvements that we are hoping to do, in other words, you have heard today with regard to improving the information surveillance target acquisition reconnaissance, the digitisation, the precision long-range fires, all the sorts of things that might make FRES capable of being successful. Q1995 Mr Jones: General, I know you do not want to answer the question - you possibly cannot answer the question because it is not your area of responsibility, and I understand the sensitivities of giving us an answer which somebody else is going to say is wrong. I do not want you to do that. All I want you to do is to put the questions I have put to you to them and get an answer. I am sure the civil servants sat behind you have got points. If I do not get the answers, they will get more parliamentary questions. The key point about it is where are we with FRES, why have we spent the money we have spent already on it and changed course, and is that in-service date still there? Major General Applegate: We will provide you with an answer. Chairman: Thank you very much. The award of the day must go to the poor shorthand writer, who had the fastest speakers I can ever recall. Thank you very much for giving some pretty good answers. |