Examination of Witnesses (Questions 160-179)
MINISTRY OF
DEFENCE
25 OCTOBER 2004
Q160 Mr Davidson: This is correct, is
it not, that it was expected to save £80 million over 15
years and now the savings, with half the time gone, is down to
£10 million?
Sir Kevin Tebbit: As I have explained,
we have changed the nature of the contract because we have required
a higher level of output from the contract.
Q161 Mr Davidson: I understand all that.
Sir Kevin Tebbit: It changes the
figures obviously.
Q162 Mr Davidson: But you have accepted
this, though; you have accepted this Report.
Sir Kevin Tebbit: Yes.
Q163 Mr Davidson: And the expectation
was that you would save £80 million and it is now down to
£10 million. Savings, as I understand it, mean the savings
of having the PFI as distinct from doing it in the traditional
manner and presumably the changes that you have made, upgrading
and the like—improvements as distinct from re-writing—and
improvements would have been done under the existing system, and,
therefore, to compare like with like we still find ourselves in
the position where the 80 has come down to 10?
Sir Kevin Tebbit: I think it is
very difficult to compare like with like in the way that you are
suggesting because, as I say, so many changes have been made to
the original contract that it is very difficult to separate it
in the way you are suggesting.
Q164 Mr Davidson: Is it not a reasonable
way to read this paragraph, to which you agree?
Sir Kevin Tebbit: Yes. The savings
have come down, as you say, from an estimated £80 million
to the £10 million here. You asked me whether I thought that
at the mid-term checkpoint these savings would come down further,
and I said that there is no evidence to suggest that that is the
case.
Q165 Mr Davidson: We will wait and see,
shall we? Can I clarify, in paragraph 3.17, where it is saying
that there is an issue as to whether or not the contract provides
sufficient incentives to the contract to react to new events,
presumably this would not be a difficulty if the contract continued
to be held in-house since, presumably, the incentive to react
to new events would be the exigency for service?
Sir Kevin Tebbit: It is not in-house,
so it is a hypothetical question.
Q166 Mr Davidson: It has some relevance
obviously for when they are considering these other things in
the future, does it not? The paragraph says, as I understand it,
that basically the contractor has to be bribed or incentivised
to respond to new events or to correct deficiencies. If the contract
was in-house you would not need to incentivise, would you, you
would be able to instruct?
Sir Kevin Tebbit: One of the benefits
of not having it in-house is that it is run as an independent,
separate activity, so that despite all the pressures of our operational
demands, like Operation TELIC, the through-put of pilots through
the Flying Training School was not affected in any way. That was
sustained as a completely autonomous activity because it was what
was under the contract.
Q167 Mr Davidson: Would you not have
been capable of doing that, had you been running it?
Sir Kevin Tebbit: I am not sure
that we would, actually. If we had to run it all as a totally
integrated operation it may have been more difficult. I do not
know the answer to that question.
Q168 Mr Davidson: That is a question
of priorities. Maybe I can ask Mr Luker, surely it would have
been possible, if this had been given sufficient priority, to
have continued to run it as an independent unit?
Air Vice Marshal Luker: I think
what we have seen from it is that it has freed up some of our
people to go and do things that we need them for on the frontline.
So you would need to take that into account as well. But, frankly,
it does not sit under my purview, so I am not really an expert
who can answer it.
Q169 Mr Davidson: Moving to the question
of a common approach on air worthiness, again this reminds me
of what the situation used to be in the shipyards, where you used
to have enormous lines of demarcation, all based on vested interest,
rather than having the efficiencies that we now have through flexibility.
Does it not seem here that insufficient progress has been made
in moving forward to best practice in terms of reducing the three
separate streams and that, effectively, you are paying extra—we
are paying extra—as a result of this insistence upon continued
restrictive practices? Sir Peter, are you the best person to answer
this?
Sir Peter Spencer: What I can
say is that we are moving in the direction of a much more integrated
process along the lines that you have described, and it has already
shown to have worked well in the case of the Attack helicopter
which was going through it at about the same time. So it is a
further indication that the management of Chinook Mark 3 was not
as tight as it should have been, which is a point which has been
conceded several times this afternoon already. I am continuing
to take a very close look at that because clearly unless we engage
people right from the outset to understand the safety issues and
the airworthiness issues, and factoring and understanding the
risks and shape the management of the projects accordingly, then
we are not going to succeed. All of this is part of the risk reduction
studies as we take this programme forward.
Sir Kevin Tebbit: We are moving
in the direction you are seeking; we are now harmonising it.
Q170 Mr Davidson: Absolutely. I think
you are. But do you both understand why we are somewhat frustrated
when we find that the progress that you make on many of these
areas is much more gradual than we would wish? It is a point that
some of my colleagues made earlier on about lessons not being
learned speedily enough; that we find difficulty in getting to
terms with the reasons why the MOD, as a learning organisation,
seems to be much slower at learning than many of the other organisations
with whom we deal?
Sir Kevin Tebbit: I think the
reason is that we do have to have strong governance in safety
is that the sort of things that the Ministry of Defence has to
do do carry much greater risks than are normal in ordinary civilian
life. So there is a need to ensure that people who are going to
authorise—
Q171 Mr Davidson: It sounds like an alibi
rather than an explanation.
Sir Kevin Tebbit: No. So what
happens is that you have one organisation that sets the football
field, the pitch, if you will, within which the various Release
to Service Authorities can play, and they define an area within
that pitch that is relevant to their particular operations. It
is not because they are single services, it is because of the
specific roles that the particular aircraft or aircraft type is
going to perform. So at the moment we have three different Release
to Service Authorities.
Q172 Mr Davidson: I understand that.
Other organisations deal with complex objectives.
Sir Kevin Tebbit: I do not think
it is a problem, Mr Davidson. We are aligning those three processes.
Q173 Mr Davidson: We are not really getting
very far. Could I just ask finally, Chairman, of the five recommendations—and
I have only really touched on two of them, (b) and (c)—does
the Department accept the thrust of the five recommendations on
page 5? And, if so, when can we expect to see progress? Again,
my concern is that lip service is often paid but progress is mighty
slow.
Sir Kevin Tebbit: Mr Davidson,
this is merely a Report about what we are doing. This is mainly
picking up what is happening in the Ministry of Defence, commending
us for it, and saying, "Can you go further in certain areas?"
Q174 Mr Davidson: Look at (c), "
. . . the Army practice of using non-commissioned pilots".
Basically, we are saying that you should consider doing this and
you give me waffle—
Sir Kevin Tebbit: That was not
waffle at all. I said we have considered it, we have looked at
it thoroughly, a report has been done—
Q175 Mr Davidson: And you are not doing
it.
Sir Kevin Tebbit: There are 36
RAF pilots who came through from the NCO stream that are now officers.
One-third of the Naval officers were NCOs originally. I agree
with you about equal opportunities, but the idea that there is
an old-fashioned anachronistic issue here is really not relevant.
The reason for not changing is that it would create another large
structural change for two Services—
Q176 Mr Davidson: So that is a "no"
then?
Sir Kevin Tebbit: And there is
not much value for money in it, as far as I can see.
Q177 Mr Davidson: That is a "no"
then, is it not? That is a "no" for (c).
Sir Kevin Tebbit: That is not
now; it is a "not now".
Q178 Mr Davidson: It is a "not now".
So how many of the others are "not nows" and what I
would see as "no"?
Sir Kevin Tebbit: The first one,
"Streamline flying training consistent with flying standards,"
yes, indeed, we are doing this, we are continuing to do it.
Q179 Mr Davidson: That is a "yes",
is it?
Sir Kevin Tebbit: Yes. And the
UK Flying Training System will help there.
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