Select Committee on Defence Written Evidence


Further memorandum from the Ministry of Defence

  Further information requested following the evidence session on 18 October 2005.[11]

FRENCH INVOLVEMENT IN UK CARRIER PROGRAMME[12]

  1.  The decision on which aircraft the French might operate from their future carrier is a matter for the French Government and their Ministry of Defence. However, we can say that we have no reason to suppose the French will not continue to operate the non-STOVL maritime aircraft currently operated from the Charles De Gaulle that is: Rafale M, the FR variant of the US E2C Hawkeye airborne early warning aircraft, Super Etendard and various helicopters.

PREVIOUS COMMENTS TO THE DEFENCE COMMITTEE REGARDING KEY MILESTONES[13]

  2.  The Committee has a record of formal memoranda submitted by the Future Aircraft Carrier Project Team during the tenure of the previous Team Leader. Regarding information given to the Committee outside this route, our records may not be fully comprehensive, but we believe that the previous team leader briefed the Committee in February 2002 and again in March 2003 in a "private and informal" session. In the first presentation an ISD for the first carrier of 2012 was mentioned and a procurement strategy outlined which aimed for Main Gate in 12/2003 and Contract award in 04/2004. In the second presentation, reference is made to the intent to "maintain ISD" and the forward programme repeats the dates from the previous presentation, specifically referring to the Main Gate date as "tbc" and the contract award as an "objective".

  3.  As Minister (DP) told the Committee on 25 October, we will not make the main investment decision (Main Gate) until we are convinced that risks are properly understood and actual in service dates will only be set following that decision point.

RAND REPORT[14]

  4.  The MoD commissioned the RAND Corporation to undertake an independent assessment of the Future Aircraft Carrier (CVF) programme. The report was published earlier this year and identified various options for reducing the costs of the programme both acquisition and support costs. The CVF specific report "Options for Reducing Costs in the UK's Future Aircraft Carrier (CVF) Programme" focuses mainly on reducing support costs and includes some options for acquisition cost savings.

Reducing acquisition costs

  5.  The RAND report identified several options that might lead to lower construction costs and the MoD is alert to the opportunities. To a significant extent the cost reducing options identified in the RAND report are being implemented.

Advanced outfitting

  6.  The CVF Build Strategy already incorporates the principles of advanced outfitting, including all systems such as electrical, piping and Heating, Ventilation and Air Conditioning (HVAC). A recent review of the Build Strategy by a team drawn from the wider industrial base, including commercial and offshore yards, has built on this assumption and, using the current technical description of the vessel, has undertaken an assessment of the potential early outfit levels that could be achieved at the build yards. This embodies the principles of off-ship modularisation which are being embedded in the ship design and build planning.

Equipment procurement

  7.  Through our prospective industrial participants, and prior to full alliancing arrangements being put in place, commercial best practice is being identified to drive savings in production processes and through-life support. Once the alliance is fully formed, programme efficiencies presented through close co-operation among the alliance participants, including in the procurement of equipments, will be incentivised by the commercial arrangements.

Build strategy

  8.  The build strategy has evolved since the commencement of the 100 Day Review resulting in a proposal for optimised work allocation and facility investment. Optimising the commencement of the second CVF is an integral part of the build strategy and requires the impact on the labour costs at manufacturing yards to be balanced against the costs of early production both in terms of resource profiling and storage and preservation; the manufacturing shipyards have been tasked to make proposals but this work has yet to complete.

Design reviews

  9.  A policy of comprehensive design reviews, involving all stakeholders, at intervals of 6-12 months has been adopted and will continue up until manufacture. The commitment to build will only be taken when we are confident the design is of sufficient maturity to allow construction.

Change management

  10.  The Aircraft Carrier Alliance has a robust process in place to manage change, thus ensuring that requirement changes do not have an adverse impact on the programme, particularly in terms of cost growth.

Use of commercial systems

  11.  CVF has been designed to a tailored set of standards, using civil or commercial standards in preference to military standards wherever there is no adverse impact on operations or safety. These principles have been extended to equipment selection, where commercial off-the-shelf (COTS) equipment has been incorporated into the design in preference to military standard equipment. Examples from this approach include:

    —  Ship structure (Lloyds Naval Ship Rules).

    —  Diesel Generators.

    —  Transformers.

    —  Steering gear.

    —  Mooring & anchoring equipment.

    —  Ships boats and davits.

    —  Waste management system.

    —  Modular cabin technology.

    —  Stores lifts.

    —  Ventilation ductwork.

    —  Fire fighting systems.

    —  Pumps & valves.

    —  Galley & laundry (albeit tailored to ship's power supplies).

Whole life costs

  12.  The report highlights two main areas where support costs could be reduced in the CVF: Whole life Cost (WLC) reduction and reducing manpower requirements. A detailed WLC model has been constructed which includes provision for measuring the impact of uncertainty in cost estimates. This model has identified the main in-service cost drivers for the CVF and is being used to focus design effort. The cost model has enabled CVF support costs to be profiled throughout the classes' life and is assisting the MoD to assess the long-term affordability of the CVF and Carrier Strike capability.

  13.  The CVF WLC model clearly confirms that manpower at approximately half of the total in-service costs remains the most significant area of opportunity for cost reduction. A number of initiatives to reduce the complement and options are identified in Chapters 7 and 8 of the report. These have been reviewed by the Aircraft Carrier Alliance (ACA). The majority of these align with design and operating principles that either have been adopted or are being considered for CVF. The remainder are not being pursued either because they do not align with Royal Naval Fleet wide operating policies such as the adoption of a broad skilled/cross trained workforce; or because investment appraisal has demonstrated that the initial acquisition cost and associated risk is not justified by the in-service savings. The potential for such situations to arise was recognised in the summary of the RAND Report. This has not, however, precluded taking an innovative and pragmatic approach in line with spirit of the report.

Maintenance

  14.  The second highest in-service cost driver in the CVF is maintenance of the vessels. To minimise this, work has concentrated on reducing the number and complexity of systems and selecting equipments with lower maintenance requirements. For example the adoption of an Electric Propulsion system has halved the total number of engines needed compared to CVS. Potential high maintenance activities associated with gearboxes has also been removed. Although the size of the vessels means that structural maintenance and in particular the costs of preservation (painting) are greater than on CVS current predictions indicate that the total CVF class maintenance costs could be as low as those of those of the CVS class despite the total tonnage of the class being nearly double. Capturing the financial benefits is still at a very early stage and will be progressively matured during the detailed design phase of D&M.

Contractor logistics support

  15.  The RAND conclusions stated in chapter 5 relating to Contractor Logistics Support are supported by the MoD. The project has considered the lessons gained from other maritime programmes of similar size and complexity and concluded that a contract based around whole ship availability is not likely to be value for money or affordable. It is currently envisaged that the support solution for CVF will be of a "mixed economy" nature, where responsibility for support and delivering availability is shared between various industry support providers and the MoD. A range of options with different levels of availability risk transfer to industry will be explored and compared for value for money against current approaches before any decisions are taken.

  16.  Maintenance reduction measures include the adoption of Under Water Engineering (UWE) techniques, which reduce the need for the vessel to dock; and the adoption of condition based monitoring (CBM) techniques rather than the traditional time dependent planned maintenance system. Additionally examination of the frequency of docking, currently driven by the periodicity of structural survey required by the classification society and the work to be achieved during these periods has reduced the maintenance burden. Preservation of the ship's hull is already identified as the most maintenance intensive element in the ship and work is being done to reduce the amount and frequency of such work by applying better paint schemes.

COMPANY INVOLVEMENT[15]

  17.  A list of companies which the Alliance is having discussions with as part of the Future Aircraft Carrier design evolution, including those involved in the current assessment phase is shown below.


TECHNICAL ASSISTANCE AGREEMENTS[16]

How many UK related Technical Assistance Agreements (TAAs) have been submitted?

  18.  To date, 298 have been submitted by US industry.

How many of these have been approved?

  19.  297 have been approved, whilst one is awaiting approval.

How many have been rejected?

  20.  None have been rejected to date.

  21.  The Defence Committee may wish to note that many of these TAAs have been amended more than once. As an example, TAA case number 1069-97 which was mentioned at the session by Mr Mogford as a major TAA covering BAES involvement in the JSF programme has already gone through nine amendments.

November 2005



11   Ev 1-20  Back

12   Q 42. Back

13   Q 98. Back

14   Q 106. Back

15   Q 77. Back

16   Q 128. Back


 
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Prepared 21 December 2005