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).
— Mooring & anchoring equipment.
— Ships boats and davits.
— Waste management system.
— Modular cabin technology.
— 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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