3 The procurement of the Chinook Mk3
20. In July 1995, the Department decided to upgrade
eight of the 14 Chinook Mk2 helicopters it was procuring as part
of its requirement for a Medium Support Helicopter. The upgrade
to an enhanced Mk3 standard would include improvements in range,
night vision, and navigation capabilities. The project was scheduled
to cost more than £250 million and the forecast inservice
date was November 1998. A subsequent change to the requirement
led to an avionics upgrade programme being put to contract in
1997, which entailed a hybrid solution, incorporating elements
of the existing analogue cockpit and new digital systems and displays.
The need to test the airworthiness of the aircraft together with
some programme slippage led to the setting of a new In-Service
Date of January 2002. When the aircraft were accepted from the
contractor in December 2001, the Department found that it was
unable to demonstrate that the flight instruments met United Kingdom
Defence Standards, as this requirement had not been specified
in the contract. Consequently, the aircraft could not be used
other than for limited flight trials.[31]
21. The Department said that there were three main
reasons why the helicopters remained grounded and were unfit for
their operational task. First, without access to the source software
codes held by the United States, the safety parameters of the
aircraft could not be tested in its current configuration. One
of the main contractors has now indicated that it would allow
access to some software data. The process of analysis is, however,
time consuming and expensive and there is no guarantee of success
because the legacy software is not amenable to the techniques
required to confirm the robustness of the software design. Secondly,
the specialist role envisaged for the aircraft had changed since
they were acquired. Finally, the aircraft needed to be fitted
with Health and Usage Monitoring Systems, a range of systems that
seek to monitor the progressive wear of engines, and better Defensive
Aids Suites.[32]
22. Despite the fact that all the aircraft accepted
from the contractor met, and in some cases exceeded, the contract,
the Department accepted that the taxpayer had not been well served
by the procurement of the Chinook Mk3. The contract did not specify
fully all of the Department's requirements (paragraph 23). The
Department acknowledged that the whole project was flawed from
the outset in 1995 and got worse after 1997. Figure 3 illustrates
the timescales involved in the project.[33]Figure
3: Timescales on the Chinook Mk3 procurement
23. A key factor in the delay in bringing the Chinook
Mk3 into service was the Department's failure to specify in the
contract what its requirements were for independently validating
the United States manufacturers' safety critical software codes
for the avionics systems. The Department had incorrectly assumed
that it could rely on a safety case based on the systems' similarity
with the avionics systems used in the Royal Netherlands Air Force's
Chinooks. The Department acknowledged, however, that, as with
the Apache Attack Helicopter, it was not always necessary to have
access to source codes to achieve adequate safety assurances.
The Department currently operates the C17 aircraft within United
States' safety parameters without having independently validated
the avionics software codes.[34]
24. In addition, the contract specified delivery
of only 45 of 100 "essential elements" outlined in the
requirement for the helicopter. In practice the helicopter design
met 55 of these requirements. Of the remaining 45 elements not
delivered, a number of capabilities could not have been included
owing to immature technology, some of which were planned to be
fitted later. But, in the majority of cases, the Department had
been unable to identify a clear audit trail to explain why the
remaining elements of the requirement were not embodied in the
contract.[35]
25. The Department had instigated a full review of
the procurement, which preceded the introduction of Smart Acquisition,
to ensure that mistakes were not repeated. The Department needed
to heed three lessons: there should be better risk reduction and
more understanding of what was being undertaken before signing
a contract; there should be more rigorous project review throughout
the period of the procurement; and there needed to be a better
understanding of the underlying safety issues, particularly where
there was a unique British requirement for the independent validation
of source software codes. The need to validate independently the
software codes for the Chinook Mk3 had been a British requirement.
Other countries, including the United States, were happy to fly
the aircraft. The Department was reviewing its management of safety
cases to ensure that its procedures were appropriate.[36]
26. The Department accepted that the procurement
principles drawn out by the review of the Chinook procurement
were not new. For example, during the procurement of the Sea Wolf
missile between 1987 and 1990 project management techniques, including
regular review meetings, assessments of risk, and measuring safety
parameters of the equipment, had all been used.[37]
27. Despite the acknowledgement that the procurement
of the Chinook Mk3 had been poor, no one in the Department with
responsibility for the project had been disciplined. Decisions
had been made collectively rather than any individual being responsible.
Faults lay with a range of people including the project team,
operational requirements staff and the safety authority. There
were also weaknesses in senior staff oversight. The Department's
review had suggested that people had acted with the best intentions
but had got things wrong.[38]
28. The Department had completed a Combined Operational
Effectiveness and Investment Appraisal and identified that to
rectify the aircraft's shortcomings was probably the best value
for money solution to the Chinook Mk3 problem. The Department
were to undertake a £13 million preparation phase to determine
the validity of this solution and expected to decide the way forward
in Summer 2005. Other options that were open to the Department
were to sell the aircraft to a nation that regarded them as acceptable
or to use the aircraft as a source of spares for the rest of the
Chinook fleet, which was undesirable.[39]
29. The Department had originally estimated that
to provide the capability required by mid2007 would cost
around £127 million.[40]
It was now, however, unsure of the final cost and the preparation
phase for the option to rectify the aircraft's shortcomings would
establish a more accurate forecast. This option would comprise
three elements: the replacement of the Chinook Mk3's avionics
to meet the requirements of the Department's airworthiness standards;
the provision of a Health and Usage Monitoring System and a Defensive
Aids Suite; and the provision of revised Special Forces' operational
requirements. The last two elements would have been additional
projects even had the original procurement been successful.[41]
30. Until a final decision on the way forward was
made, the Department had taken a prudent accounting measure in
writing down the value of the Chinook Mk3s by £205 million
in the Departmental Accounts. The value had been written down
to reflect that of usable spares only.[42]
31. The Department had considerable experience of
identifying lessons from procuring equipment but failed to learn
from this experience when acquiring the Chinook Mk3. The Department
said that it had now implemented the lessons from this particular
procurement project.[43]
These included the clear points of failure in the project such
as deviations from standard procures, identifying how Smart Acquisition
processes could have made a difference and the way in which the
need for Military Aircraft Release acted as a constraint. The
Department had formulated an action plan based on these lessons
and would review progress in mid-2005.[44]
31 C&AG's Report, paras 3.40-3.41 Back
32
Q 2 Back
33
C&AG's Report, para 3.41; Qq 1, 84 Back
34
C&AG's Report, para 3.41; Qq 1, 223 Back
35
C&AG's Report, para 3.42; Qq 20-21 Back
36
Q 1 Back
37
Qq 103-109 Back
38
Qq 42-44, 116-119 Back
39
Qq 149-150; Ev 14 Back
40
C&AG's Report, para 3.43 Back
41
Qq 5, 206 Back
42
Q15; Ev 3 Back
43
Qq 91-92 Back
44
Ev 26 Back
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