Examination of Witnesses (Questions 120
- 139)
TUESDAY 18 OCTOBER 2005
MR TOM
BURBAGE, MR
STEVE MOGFORD
AND COMMODORE
SIMON HENLEY
MBE, RN
Q120 Mr Havard: If the RAF get hold
of it, they will.
Mr Burbage: The plane is designed
to a set of requirements. The requirements are identical for the
US and the UK.
Chairman: One of the important issues
of the aircraft is the technology of the whole thing, not least
the Stealth technology. I wonder if we could move on to general
information sharing. Kevan Jones?
Q121 Mr Jones: Can I say, no, they
are not the same and the reason why they are not the same links
into this question about information sharing. One of the great
concerns that I have got, and I think a lot of people have got,
is whether or not this is a completely joint project in terms
of information sharing. It is not just Members of this Committee
but also the Air Chief Marshal, Sir Jock Stirrup, who in Aviation
Weekly of 11 July this year, said, "There is clearly
a growing urgency in addressing technology access and the related
ability of independent support of the aircraft. Whilst Stirrup
remained optimistic that the outstanding areas can be satisfactorily
addressed, any indication that this is not going to be achieved
will result in the UK having to think pretty hard". I was
in Washington at the end of July meeting congressmen and also
Lockheed and BAE Systems. From BAE Systems' point of view there
is a clear problem here. The answer to your question is that they
are not same aircraft because there are aspects to the American
aircraft which we have not got access to at the moment because
of technology transfer issues, even though we have quite happily
transferred technology on, for example, Rolls-Royce engines to
the US. Where are we at with this? Clearly there will be a groundswell
of opinion including from Jock Stirrup, and I for one will be
arguing and saying if these points are not addressed I cannot
understand why we are buying this aircraft.
Commodore Henley: We have a policy
of progressive release of information and progressive understanding.
We have an agreement signed between the US and the UK at Secretary
of State level called "exchange of letters" which lays
out the UK's need to be able to operate this aircraft in a sovereign
capability when the aircraft is in service. That is clearly a
shared aim between the US and UK and what we have in place is
a strategy to turn that from a high-level agreement into the individual
technology licences that transfer that piece of information.
Q122 Mr Jones: But how are you going
to do that?
Commodore Henley: We have defined
the capabilities that we will require in the UK—and maintenance,
repair and upgrade is but one of those—and we understand
the technologies that will be needed to underpin that capability.
We need to have those under sovereign control. They could either
be in government or in the hands of US industry under direct contract
with us or they could be in the UK industrial base. We are working
with the US Government to understand exactly where that will lie.
Mr Jones: The problem, with the greatest
of respect, is not the US Government. It is the actual Hill who,
frankly, will not agree to the transfer of this technology. Having
met some of my counterparts on the Hill, including my dear friend
Congressman Hunter, there is no way that this agreement between
two governments is going to get through Congress. I say first
as a UK taxpayer why should we go into a joint project if we are
not going to have people able to access to upgrade. I think it
is going to get to the point soon in this country where I will
be saying, and I think other people will be saying, why are we
going to procure this aircraft if the Americans do not trust us
on basic technology. On the stealth phase which is something Mr
Key raised, it is quite clear, they are not identical aircraft.
Q123 Chairman: I think the Commodore
should be allowed to answer that and then John Smith.
Commodore Henley: I have to bow
to your superior knowledge on the Stealth characteristics because
I am not aware—
Q124 Mr Jones: It was Lockheed who
were briefing me when I was in Washington.
Commodore Henley: I think it would
be into the realms of speculation as to where we may get. We have
made considerable progression with technology exchange. We have
laid out to the US Government the path that we need to follow
and we are making progress along that path. Beyond that we are
in negotiation with the US to achieve our aims.
Q125 Mr Jones: I do not question
your commitment from a UK point of view but let me quote Jock
Stirrup again. He "remains optimistic that outstanding areas
can be satisfactorily resolved. Any indication that this is not
going to be achieved would result in the UK having to think pretty
hard." When are we going to have to start thinking pretty
hard on this because, frankly, I came away from Washington in
July pretty depressed that any movement had been made on this?
If it is not, not only us as a Committee but other people perhaps
who have got interests in other aircraft types should be saying
to the UK Government, clearly if we do not have access to this
on a joint basis why should the UK procure this aircraft? I agree
with the Air Chief Marshal on this.
Commodore Henley: And I brief
the Air Chief Marshal fairly regularly. Significant progress has
been made.
Q126 Mr Jones: He looks not very
happy.
Commodore Henley: And we have
set ourselves some milestones in the future, points at which we
measure that achievement and take a judgment. Right now we are
making progress and we have made progress in the last few months.
The US understand what it is we have to deliver and we are making
progress along the line towards delivering it.
Q127 John Smith: To help us a bit
could you tell us how many requests for technical licences have
been requested? How many of those requests have been approved
and have we received all the technical information we require
from those requests?
Commodore Henley: The progress
to date on work that has been contracted to be done in the UK
on behalf of JSF—and at the moment because we are in a development
programme that is what the licence has been there to support—the
programme has not been held up for the want of a licence and the
subsequent transfer of technology. The issue that is being talked
about here is looking ahead into the future as to what is the
UK's capability to support this aircraft on sovereign operations.
The US licensing process has a time limit issue to it. They will
transfer information when it is required. Each individual piece
of information has to be defined what that information is, why
you need it and when you need it. There is therefore a timeliness
issue that we are not going to have this aircraft in service in
the United Kingdom before 2012, therefore why do we need the technology
transfer now? That is precisely the issue that we have tried to
tackle with the exchange of letters, laying out the requirements
we have for the aircraft in service, understanding the technology
we need to support that and then looking for indications that
we are going to get the transfer when we need it.
Q128 Mr Borrow: I think we do need
to probe specifically about these licences because in every briefing
that I have had with BAE Systems over the last 12 months this
question of technology transfer has been at the heart of those
discussions and the failure of that technology to be transferred.
Saying there is a system where it will be transferred when it
is needed is not really the answer. What I want to know is, following
up John Smith's question, how many requests for information have
been made, how many of those requests have been acceded to and
on how many occasions when requests have been acceded to has all
the information requested been transferred and on how many occasions
has inadequate information been transferred. I want the actual
figures. If you cannot give those figures now can you make sure—
Commodore Henley: We will certainly
be able to give you a note on the number of licences that have
been processed and passed through.[6]
Could I ask Steve to pick that up.
Mr Mogford: I think from a BAE
Systems' perspective to put it in context, normally when you are
dealing with technology assistance agreements like this it tends
to be very much on a single issue basis. As Commodore Henley said,
with the Joint Strike Fighter programme we have had a progressive
succession of licence applications which increase access to technology.
I think we would have to give you a note on the specific details
on all of the applications for requests there,[7]
but generically we have had something like nine series of applications
as we have gone through the programme and Commodore Henley is
quite correct when he says, as of today, we have had approvals
for release of information which allows us to meet the contract
obligations. I think also as Commodore Henley said, because we
have been testing the system through this progressive stretching
of the envelope we have caused the system in the States to be
tested in terms of speed of response, but it is fair to say that
as of today we have all of the approvals we need to meet the contract.
Q129 Mr Borrow: Could I just follow
up on that. This is not so much the technology needed to construct
the plane now but the technology that will be required for maintenance
and possible upgrades. Evidence was given earlier on that decisions
had not been made as to how that technology would be available
for the UK and whether it would be within the MoD, within a UK
company or whether it would remain within a US company contracted
to the UK. I would be interested in your comments on my observation
that it would go down very badly amongst those constituents of
mine who work for BAE Systems if that technology were to remain
within a US company and they were not to be allowed to have that
technology to be in a position to maintain and upgrade the aircraft
in the future.
Commodore Henley: If I could perhaps
lead off with the response to that, Mr Borrow. We are buying into
this programme in a large way to provide an affordable solution
for the UK's future needs and part of that affordable solution
means that we want to be part of a 3,000-odd aircraft run, not
have 150 one-offs in the UK. That means we intend to stay in the
joint common configuration with all nations throughout, which
means staying as part of the partnership we have at the moment.
Therefore, the need for sovereign capability for the UK in the
first place falls on the shoulders of Lockheed Martin as the prime
for Team JSF. BAE Systems are clearly part of that partnership
and are ideally placed then to act as the UK front end of Lockheed
Martin's provision of support in the UK. We are in negotiation
with both companies at the moment and the US Government to bring
that partnership to fruition. How that ends up in terms of the
division between government and industry and then the way JSF
plays that out between their partner industries is still in negotiation.
Q130 John Smith: Chairman, this is
pretty fundamental stuff. I can understand the answers regarding
the timeliness of technology transfer, as and when it is needed
so it does not delay the project unduly. We do not want to see
that; we want to see the in-service date met. However, operational
sovereignty sounds pretty fundamental to me and not only the employees
in BAE Systems, as my colleague rightly pointed out, but also
the taxpayers of Britain are clearly going to be concerned. I
have to tell you I am concerned if there is any question mark
whatsoever over the operational sovereignty and independence we
have on the second largest aircraft procurement project in the
next decade. I would have thought this was something that should
be resolved fairly early on because it will be too damn late when
these aircraft are delivered or are in need of upgrade or major
overhaul or indeed front-line maintenance and we are not in a
position to maintain them. It strikes me as fairly fundamental.
Commodore Henley: Mr Smith, I
do not think my position would be any different from yours, not
least because I wear a uniform and I am responsible for and have
been responsible in the past for putting people into these aeroplanes
and sending them out. I do not think anybody would say we are
going soft or being soft on this approach. We have a strategy
in place. I think Mr Burbage would probably turn round and say
we have been extremely aggressive. We have some measures of success
that we are measuring ourselves against to ensure that we are
content with where we are going. That is precisely the briefing
and where the Chief of the Air Staff is coming from.
Q131 Mr Havard: I have a technical
question about the matrix. The Ministry of Defence are saying
you are doing this exchange of letters process and that you will
jointly develop a UK/US technology matrix which sets this out
in a very detailed letter. Is that a one-off shop and is it closed
or is it going to be able to continue to be developed as you go,
because if it cannot be then clearly these questions about future
technology are a closed issue and the concern from us about protectionism
from America, call it what you like (and I can go into the political
invective if you like) is a question of confidence as to whether
that is an open process or whether it is closed. Is the matrix
now developed and shut or is that the vehicle you are going to
use in order to continue for that to be an open process?
Commodore Henley: The technology
matrix is in place now and it is the vehicle around which we are
conducting discussions at the moment. I do not regard it as closed
because, as you say, the nature of the aircraft will change and
the technology will change but it is right now the area where
we have been able to reduce ourselves, if that is the right word,
to a level of detail that allows genuine discussion to take place.
When you are up at the high level it is quite easy to get promises;
it is harder to see whether you are going to get real delivery.
That is why we spend a great deal of time breaking this down into
individual technologies and saying, okay, against this technology
are we going to be able to get transfer? We have got to the level
where we have been able to discuss at a technology level what
the issues are that get in the way when the first look is, no,
we are not very happy about that. We are making progress on identifying
the stoppers to those technologies and then finding ways to work
round those stoppers to get us to the capability that we need.
I cannot understate the fact that sovereign capability for this
aircraft is the most important aspect.
Q132 Mr Havard: You have removed
all the stoppers where they have popped up, have you?
Commodore Henley: Not all to date
but we are working on it and we have made significant progress.
Chairman: We regard information sharing
as absolutely central to this programme and we will be holding
your feet to the fire and I hope you will be holding others' feet
to the fire on this very important issue over the next few years.
Moving on to production and support for the aircraft, Mike Hancock?
Q133 Mr Hancock: Can I ask about
the negotiations that are going on at the present time, which
we were led to believe are taking place, with regard to the production
and sustainment phases of the Fighter. How sure are we that we
are going to meet the dates you gave for December 2006 for a memorandum
to be signed on that?
Commodore Henley: The memorandum
that is under negotiation at the moment is a nine-nation memorandum
and the time-line for it is driven by the US requirement to have
the partner nations on board before the US Government then commits
to the first low-rate initial production phase. Their commitment
is roughly January 2007 and therefore the target date for negotiations
is December 2006. We have had two formal negotiation sessions
to date and at the moment there are no indications that we will
not meet that 2006 time-line.
Q134 Mr Hancock: You must have done
a risk analysis of what the risk would be if that date was not
met regarding the UK's capability.
Commodore Henley: It depends on
what the knock-on effect is into the US programme. If the US decided
that the nations had not signed up but they would still authorise
the first batch of low-rate initial production aircraft, which
are only US aircraft, then the impact on us would be small. If
it then knocked on to the whole programme then there would be
clear implications for us.
Q135 Mr Hancock: If the US do not
get all the partners on board, what are the implications for us?
Not having a plane?
Mr Burbage: The UK airplane is
the same as the US Marine Corps airplane. The only partner that
is even looking at a STOVL airplane today is Italy and that is
about 18 airplanes so they are very minor player in the STOVL
configuration. The partners represent a block of airplanes that
potentially could be between 600 and 700 aeroplanes for all seven
of the partner countries, not counting the US and the UK. The
US buy alone is of the order of about 2,500 airplanes so on a
relative scale it is about a third as between the US and UK airplanes,
so it is significant in terms of fly away cost, in terms of annual
production rates and total quantities, but it really is not significant
to the configuration or to the early production lots. The first
two lots are US only. The third production lot is when the UK
planes enter. There are a couple of international test airplanes
in the third and fourth lots. The rest of the international airplanes
are further out.
Q136 Mr Hancock: It will not have
an effect. So what can the UK expect to have in the way of build
work and maintenance on these aircraft?
Mr Burbage: This gets down to
trying to capitalise on the economies of commonality and scale.
There is going to be a global support solution in place to maintain—
Q137 Mr Hancock: So we might repair
the American Marine Corps aeroplanes?
Mr Burbage: Quite possibly yes,
sir.
Q138 Mr Hancock: You answer the question.
Mr Burbage: The plan is to put
in an affordable and efficient support structure. Where partner
countries want to have additional capability to that, that comes
at their cost. Remember, the US/UK is part of a baseline programme
so if additional international partners want to add to infrastructure
that comes at their cost if it is not part of the baseline.
Q139 Mr Hancock: But we are the only
level 1 partner you have got so we must be entitled as of right
to part of the build and some guarantee of the maintenance, surely?
What are British taxpayers getting out of this?
Commodore Henley: This is not
a work-share programme. One of the things Joint Strike Fighter
did to break the cost spiral of future aircraft was to say we
would not be entering on the basis of work share. What we get
for our level 1 partnership is that the UK requirements are embodied
in the major contract. What we have got into the UK is because
of the competitiveness, particularly of BAE Systems but other
companies as well notably Rolls-Royce and Smith's, a significant
amount of work, not on a work-share basis but on a global best
value basis. They have been the best companies to deliver that
into the programme. The result is to date for development and
the low-rate initial production runs the UK is getting about $6.75
billion-worth of work back for our $2 billion investment.
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