Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 220 - 239)



  Q220  Mr Borrow: On that point, you have confirmed what the Committee was told last week, which was that significant progress had been made in the last few months in terms of technology and information transfer. But, looking ahead, what is the strategy of the department and our government in terms of ensuring that we meet the challenges for technology transfer in the months ahead? Is there a clear strategy to ensure that it happens?

  Lord Drayson: Yes, there is a clear strategy and that strategy is to be mindful in looking at the project plan, as the project progresses, where certain lumps of technology transfer need to take place and at what point, and to have clear visibility—if you like, it is a sort of trigger to make sure that we are clear when those technology transfer points need to take place in the programme consistent with our long-term plan—and to have a very close eye on that, and if that is starting to slip to be expressing our concern on the specifics. It is moving from a general concern to one where we will have a specific concern on certain triggers if it does not take place. We have not got there yet but we have a clear plan to know when we do get there.

  Q221  Mr Jones: I am interested in the plan because I was in Washington at the end of July talking about this very same subject, and I accept that there are quite good relationships obviously between the two governments and at government level they are very good. But the issue here is not actually about government is it, it is about Congress itself? There are some very key individuals there who, from my meetings with them in July, including breakfast with Duncan Hunter, will not actually allow this technology transfer thing to go through Congress. So what is actually being done in terms of not just talking to government but also trying to tackle the issue around Congress? I know last week we talked about the sovereignty into the use of this, but the biggest concern I have is not in this programme but in terms of your industrial strategy, where does it fit? Because in future, if we are not careful, we are going to be in a situation whereby technology will go one way but it will not come the other way, and I think that is going to be important not just on this project but other projects as well, if we are going to do joint projects as you said we are going to.

  Lord Drayson: Chairman, I think you make a very good point. In my experience, working in industry it is very important for us to recognise that the process of innovation which takes place, over a number of cycles of technology, needs to be maintained in the long-term. The fact that we entered into this project with the Americans on this fighter, not on the basis of work share but on the basis that the best companies with the best know-how would get the work, the fact that British companies have a far greater proportion of the work than you would have otherwise expected on the basis of our numbers of aircraft, actually shows how strong the UK companies are today. We need to make sure that as we go forward technology transfer which is taken, for example in terms of the lift fan which is the thing that makes the STOVL aircraft work, that the relationship we have with the United States in the long-term ensures that the intellectual property base in this country is refreshed, maintained, such that in future programmes we still have industry which wins on the basis of this performance. That is something of which I am very mindful and something which I am looking to strengthen in terms of our overall intellectual property strategy with the Department, and taking this longer-term view of how we make sure in our international collaborations that over the cycles of equipment we do maintain that knowledge base.

  Q222  Mr Jones: I actually agree with you on that, but can I ask what work is being done to ensure that it happens? Because clearly in terms of this project there are problems still, and talking to some Congressmen quite clearly—even though they make nice-sounding noises about "our best ally" and everything else like that—what is actually needed is possibly a treaty which covers not just this project but a whole range, in terms of what you were just talking about, Minister, of technology transfers? If we do not do that then we will come up to this roadblock every single time, and it is important that we try to remove those roadblocks, which I do not think are in the administration in the United States but actually in Congress. Some of those people are pretty hard in terms of any transfer of technology anywhere, even to an ally like the United Kingdom.

  Lord Drayson: I think we absolutely need to recognise the reality of the structure of American administration, American politics. Notwithstanding that, though, I do think it is important for us to focus on gritty elements of projects where technology transfer is real and important at that point. That is what I would like the Department to focus on more—clarity, visibility about the specifics; to use its test cases. I note what you are saying in terms of a treaty but in terms of specific projects getting clarity where those projects are affected, and when, by specific areas of technology transfer, gives us the best chance of actually addressing this.

  Sir Peter Spencer: I wanted to put this into context because Mr Jones did point out that government to government relationship is good, and with the Under Secretary of Defence, Acquisition, Technology and Logistics, is about as close as I get to an equivalent. I have had some quite detailed discussions over the summer, most recently last week, and what he is keen to do is to recognise that far too much senior management and government ministerial time is taken up on relatively small bits of details, and he is looking at the processes by which the DoD interact with State Department, which is where the decisions are taken, and to make sure that industry is better briefed to understand the basis on which individual applications are made, all of which has hugely speeded up the process recently. I find all of that really very encouraging. But of course when it really comes down to it it is not so much individual members of Congress who are involved in the specifics, it is the State Department and staff officers who do have an obligation to comply with United States' law, as you would expect, but who occasionally do need to have a case presented to them in a way in which they feel they can give us what they need, what the United States need—because bits of design which are being done by UK companies are being done by all on behalf of the all the aircraft, including those, of course, that go to the United States. So it is not in the United States' interest if the programme is held up by delays in technology transfers into members of Team Lockheed, and that is very clearly understood both in United States' industry as well as in the United States government.

  Q223  John Smith: Last week the Committee was told that the most important area of technology and information transfer relates to operational sovereignty and I think we as a Committee absolutely agree with that. We can understand the point that was made clearly, that access to technology at the right time during the process of design and production is important, but surely access to information and technology that will guarantee operational sovereignty is vital, and it is vital now and not at some time in the future, because we could have the absurd situation where we have one of the most advanced jets in the world but we cannot operate independent of the United States, and no matter how great an ally they are to us I do not think it will be acceptable to this Committee or the British taxpayer. What are you doing to get the information required to ensure that we do have total operational independence for the Joint Combat Aircraft?

  Lord Drayson: We have set out the requirements that the United Kingdom needs, in terms of the key user requirements we need to see for the aircraft to meet our needs, for example work on our carriers. We also set out the requirements that we have in terms of the type of systems that the aircraft need to have within that, the interfaces between those systems and the weapons that the aircraft may carry. We also need to recognise that one of the lessons in the recent past is that the nature of operations that our Armed Forces are asked to go on has changed quite a lot in terms of the requirement on equipment to carry out a wider range of tasks. Therefore, it is not going to be possible for us to set out in 2005 all that these aircraft may be asked to do in 15 years' time. Therefore we need to be mindful of that in terms of the systems, the future up-gradability of those systems, making sure that we have an open architecture for the software, making sure that the links between the different types of missiles that the aircraft may be needed to use, we have those options open. Where it stands today, my understanding is that we do not have any concerns relating to our ability to meet those type of issues relating to operational sovereignty, but we are mindful of that and that is why we have made sure that we have visibility of when those issues are going to come up—that we have clarity of that—and that we make sure that those requirements are being met at that point in terms of technology transfer. My understanding is that we do not have an issue on that today but as we go forward with the project this is something that we have to monitor closely.

  Q224  John Smith: But if you do not have today a clear commitment to operational support it is not just major upgrades but the support of the aircraft, on the evidence we were given last week, and it would appear that we do not have the information to be able to guarantee that we do have future support for the aircraft in operations when it is in service. That appears to me, at least, to be pretty fundamental and certainly the evidence that we had last week would suggest that. It appears at this moment in time that we do not have that commitment from the Americans that we will have that level of independence with this aircraft, but I may be wrong.

  Sir Peter Spencer: We do, via the Exchange of Letters which were signed earlier on, have commitment from the United States government to the United Kingdom government that it understands the basis of the need to enjoy operational sovereignty, and it is spelled out in a number of key headlines, which are signed up to as general principles. The challenge now is to convert that into what this means down into the detail of what bits of technology need to be handed to whom and where and how, and some of that technology has not yet been invented. So this was the process I was referring to earlier, with the Under Secretary for Defence, where he is putting in place a process so that when these bits of information become available—and we understand the relevance—we then have the ability to process much more rapidly, and I think it will be a confidence building exercise over time. What has happened in the last year is hugely encouraging compared with our concerns 12 months ago. I believe that we need to work together in close harmony with the United States' administration and with our own industry and the American industry and continue to demonstrate that there is a process which would work, but, as the Minister has said, and you have echoed, we are right to be extremely alert here for signs that this information might not be arriving in the timetable that we need. But nobody is going to sign a blank agreement at this stage saying, "I will tell you everything that you need to know about Joint Strike Fighter, full-stop."

  Q225  John Smith: That is not what I am saying.

  Sir Peter Spencer: I know it is not what you are saying but that is how it tends to appear to some of the working level officials in State Department if a rather ambiguous or very broad request comes in, which has not been properly constructed, and that is where we are getting the help.

  Q226  John Smith: But the request is that we have this independent operational capability and that does not exist at this moment.

  Sir Peter Spencer: We have the agreement on the six provisions. Would it help if I read through the headlines to show the ground which is covered, because it does put some flesh on the bones?

  Q227  Chairman: If you could be very quick.

  Sir Peter Spencer: It will be very quick. Inter-operability with other UK national defence capabilities; rapid evaluation of air system effectiveness in UK specific scenarios; rapid integration or modification of UK-specific weapon and sensors; inclusion of national variations in elements of the mission system; satisfaction of UK-specific safety requirements and UK based logistic support infrastructure to safeguard national capability. As headlines that is good. That is agreed. The challenge is now to convert that year by year, step by step into a robust working arrangement at detailed level, and there is a lot of support that we are getting government to government to do that.

  Q228  Mr Havard: I am sure that Congressmen Hunter would have given Geronimo a treaty as well, Kevan, so I would not worry too much about that! What I am interested in is the process which you are describing, because we have the Exchange of Letters, which is the political description. I know in the Defence Industrial Strategy description that you have given me about how that work is being conducted that you talk about the technology matrix. We have been told in terms of this particular project that there is a technology matrix. Am I right in taking from this that there are process issues being put in place that will deal not only with this project—and you talk about who, what and where, but it is the "when" bit that is the real key, is it not? That is what you were saying, Minister. On certain things you are going to have that debate more than one time, but at least now you will have a process between the two governments at a lower level and the political level to actually process each technology as you need to process it. Is that what you are telling me?

  Lord Drayson: I am saying that, as Sir Peter has described—

  Q229  Mr Havard: Is that going to be a standing process?

  Lord Drayson: The principles are set out in the Memorandum of Understanding, as Sir Peter has just described. Those principles now need to be embodied in hard decisions around programme engineering facilities, as the project goes forward. We have a clear need to have operational sovereignty for these aircraft, and we have described the principles under which that needs to take place. What I will say in my earlier answer, relating to technology transfer, is that we need to make sure that we know where in the project those issues become "pregnant", if you like, and need to be addressed, and that we focus on those at that point and we make sure that the principles are being adhered to in reality on specifics as we go forward. I think that there are some opportunities, in the same way that we have done very well in terms of the UK's proportion, in terms of the build of the aircraft. There are some very innovative things I have seen coming into the Department in terms of which the RAF supports the aircraft in the field—stuff is being done on the Tornado, for example, at RAF Marham—and these are principles that we would like to also see applied to a future aircraft, such as JSF, and therefore we need to see this take place within this programme as it goes forward. It is about getting down to specifics at the point they come up within the programme and making sure that they adhere to the principles.

  Q230  Chairman: If we could go on to risks in this programme. What are the main risks to meeting the timetable for these aircraft and how are these being managed?

  Lord Drayson: I think the top risk, the technical risk, which came up a short while ago, in terms of weight of the aircraft has now been mitigated. Both the MoD and the United States are satisfied that the way in which that has been done has put us in a good position.

  Q231  Chairman: Mitigated but not solved.

  Lord Drayson: It is never solved until you actually have the aircraft built and flying. As it is known within aircraft development production, as aircraft go through the design and development phase you need to watch very carefully the weight growth, and therefore you maintain a contingency to make sure that as that takes place you can manage it. Where we stand today, the engineers are saying that, yes, that is now back under control, we have got back to the place where we needed to be to meet the key operating requirements of the aircraft. That does not mean to say that we can now relax; we need to maintain that focus as the design and development progresses.

  Q232  Chairman: And the other main risks?

  Lord Drayson: I think the other generic risks which you need to watch very carefully—the weight growth one is not unusual in fast jet development—the other one common to other aircraft, helicopters as well as jets, is what is going on with the software. We need to keep a very close eye in terms of the software development to make sure that the systems are properly integrated. That is an area that I know a lot of work is going into in terms of making sure that that is managed well.

  Q233  Chairman: Cost escalation?

  Lord Drayson: Within a programme such as this, recognising that this is an American programme which we are participating within, the way in which our elements within the programme—for example the work that is being done here in terms of the lift fan and so forth—the other elements of the systems which are being done in the United Kingdom, all of these need to be managed in the long-term to ensure that these risks are mitigated, that this is within an American programme, and we need to recognise that we are garnering the benefits from being part of that American programme in terms of the level of technology and the cost which we are accessing. As it stands at the moment my understanding is that the project is in good shape.

  Q234  Chairman: In good shape for the timetable?

  Lord Drayson: Yes.

  Q235  Chairman: You gave us a very helpful memorandum, which said that, "The In-Service Date will be set when the main investment decision for JCA is taken. Our previously announced planning assumptions based on an ISD of 2014 have not been changed."[1] Is that still the case, since you sent us this memorandum?

  Lord Drayson: Yes, that is still the case, recognising that we are in the assessment phase of this project, that we have not signed the contracts for the production and take-off of these aircraft.

  Q236  Chairman: So you have planning assumptions for the aircraft; do you have planning assumptions for the ship?

  Lord Drayson: The key difference in terms of the aircraft and in terms of the ship is that the aircraft is being done as part of the American programme. What is being done on the ship is part of what we are doing in terms of the evolution of maritime industry within this country. The decision that we are going to be taking on the Main Gate for the ship, the reasons which we have been through at some length this morning, will be taken on the basis of having clarity around the risks associated with that, and at that point we will set the In Service Date for the ships.

  Q237  Chairman: Really it was a question that was asking for a yes or a no, the question of whether you had planning assumptions?

  Lord Drayson: We have planning assumptions for the elements of the carrier strike, the way in which we bring together all the various elements of the carrier strike, the ships themselves, the aircraft within it; yes, we do have planning assumptions within that.

  Q238  Chairman: But you have no overall planning assumption for the carriers?

  Lord Drayson: We do have planning assumptions for the carriers in terms of the programme with which we are going forward. In terms of the commitment to In Service Date and the commitment for the various parties which are coming together, we have not set that date; but we have to maintain in terms of the way in which we manage the whole defence equipment for the various elements which need to come together for carrier strike, and maintaining that in the future, and, yes, we do have planning assumptions, which we are managing.

  Q239  Chairman: What is the planning assumption for the carriers?

  Lord Drayson: The planning assumption for the carriers is based upon our expectation of when the carriers will come in, together with the aircraft, together with the other aspects of the equipment relating to carrier strikes. In terms of publicly announcing a commitment to an In Service Date for the carriers, we will do that when I am satisfied that we have confidence based upon the investment decision that we will take.

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