Examination of Witnesses (Questions 40-59)
MR ARCHIE
HUGHES
21 NOVEMBER 2005
Q40 John Smith: On clarification,
as regards the recommendations of the investment appraisal, crisis
manning requirement played a key role; there is no doubt about
that. Presumably, the investment appraisal was based on certain
numbers of both military personnel and civilian personnel working
on the military operational bases. Consequently, would you agree
with me that if those numbers changed, then that would affect
the validity of the investment appraisal?
Mr Hughes: The single most important
driver of the decision "forward versus backwards" crisis
manning requirement, which—we could not go for a counter
argument because if you require the people occupied in the RAF
to do the work, then that is obviously a military priority so
to do. The numbers of CMR and in the investment appraisal affect
the incremental costs one way or another. From recollection of
the investment appraisal, the CMR numbers would have to be 50%
less for the decision to be reversed; and there were a number
of civilians built into the investment appraisal from the off
in terms of how many should be employed on the forward operating
base. I can get that for you. One thing that is sometimes lost—and
is related to something Dai said earlier—is that if a decision
had been taken to roll back Tornado GR4, the crisis manning requirement
would have rolled back with it and would have displaced almost
as many civilian jobs that we have got at DARA at this point in
time in any case, because there would not be enough work to sustain
CMR and the civilian workforce at DARA anyway. The costs associated
with rolling back that CMR was a large part of the decision to
go forward because you never had that cost in the roll-forward
scenario. DARA as we know it today, even in a roll-back scenario,
would have been significantly different, primarily due to that
CMR.
Q41 John Smith: An important
element of CMR quite clearly is surge capacity. I think that you
are not able to comment on the surge capability of the RAF, and
you are probably not aware that the frontline squadrons are being
stripped of technicians to support depth—to back up the
Harrier at Cottesmore; but how does DARA cope with surge? How
has it done that historically?
Mr Hughes: There are a number
of ways of coping with surge. We do not operate a 24-hour a day,
7-day a week facility, although we have a facility that can operate
7 days a week for 24 hours, so you can surge on the basis of increased
hours. Some of that you get through your existing staff by working
longer and harder than even they do today. Some of it you get
by utilising agency and contract labour to manage your peaks and
troughs of surge. Within DARA historically, given those two mechanisms
and other measures of efficiency improvement and so on, we have
been able to deal with it when surge has come our way.
Q42 Mr Crausby: Is DARA
St Athan still involved in repairing Harriers that personnel at
RAF Cottesmore have proved unable to repair?
Mr Hughes: DARA do not do any
Harrier aircraft, and have not done since January this year.
Q43 Mr Crausby: There
are some problems that have been experienced, have there not,
at RAF Cottesmore from the point of view of the repair of aircraft?
Mr Hughes: We have no direct knowledge
from a management point of view of how Cottesmore do their maintenance.
I have read similar reports that you may be referring to but personally
I have no idea how well Cottesmore are doing them.
Q44 Mr Crausby: So you
are not picking up any of that at all from the point of view of
DARA St Athan?
Mr Hughes: I pick up the same
information that you do. Our workforce believes that the work
at Cottesmore is not being done in accordance with the plans and
whatever. Personally, I am not involved in management of the maintenance
of the work at Cottesmore. I pick up and hear from the same sources.
I have no means personally of verifying one way or another as
to the accuracy of that statement, which I am sure you may question
others on.
Q45 Mr Crausby: How do
you think the skills of RAF personnel compare effectively with
the skills or your personnel at DARA St Athan?
Mr Hughes: Approximately half
of the people at DARA are ex-RAF staff, and therefore I believe
that RAF staff have the inherent skills in terms of aircraft fitting
technicians, whatever the work may be. They may not have the same
experience that DARA staff have got because we are doing on Tornado
the level of depth maintenance that has not hitherto been done
at the forward operating base. An RAF technician, who has had
an RAF apprenticeship and training—we have large numbers
of those in DARA. Obviously they have been through a different
culture change and improvement change processes that perhaps others
have not, but the inherent skills must be similar.
Q46 Mr Crausby: The Ministry
of Defence paints a picture of RAF Cottesmore: they claim that
they are delivering both time and cost savings in providing support
for Harriers, but the trade unions argue that the figures used
for comparison are not like for like. What do you think?
Mr Hughes: The trade unions are
quite correct. The work that is currently being done at RAF Cottesmore
is not like for like with the work that was previously done at
DARA. The programme that is carried out at Cottesmore is known
as a joint operating upgrade and maintenance programme, which
is different to the work that we have done historically at DARA
in terms of doing minor maintenance of Harriers. It is impossible
to draw a direct comparison between the work that is done at Cottesmore
and the work previously done at DARA.
Q47 Mr Crausby: Do you
accept that the experience of RAF Cottesmore provides a sound
basis for justifying the MoD's assertion that RAF Marham will
provide a better and more efficient support for Tornados than
DARA St Athan?
Mr Hughes: I cannot either accept
or reject the Cottesmore experience in relation to what is going
to happen at Marham. As I said, I do not have any direct knowledge
of the Cottesmore experience. At Cottesmore they are doing several
things similar to what DARA is now doing at Fleetlands in terms
of the organisation. How effective they are, I rely on the similar
sources to the unions and DARA workforce, who tell us that they
are effective and efficient.
Q48 John Smith: Relating
to this, Chairman, I appreciate that the Chief Executive is not
aware of what is happening at Cottesmore and that that is not
his responsibility, but part of this Committee's role is to find
out what is happening at Cottesmore. However, is he surprised
that six or possibly seven Harriers are now actually at BAE Warton
as part of the joint upgrade and maintenance programme being upgraded
to GR9, when depth support was supposed to be provided at Cottesmore?
This will be a personal view, obviously, not as the Chief Executive.
Mr Hughes: The programme always
envisaged that those aircraft would be done at Warton. I joined
the agency in January 2004. At that time the original proposal—the
numbers would be up to eleven, the first tranche of GR9 upgrades
were going to happen at Warton. There was a lot of debate at the
time about that. If you remember back then the Harrier decision
to roll forward was taken earlier than the full roll-forward decisions
in relation to other aircraft, and the decision was taken on the
basis of an operational imperative as well as investment appraisal.
I believe that at that time it was always envisaged that the first
series of aircraft would be upgraded, and I believe they are almost
finished, but I couldn't give you the detail on that.
Q49 Chairman: The question
of whether upgrade and maintenance should be combined into a single
activity may well be a source of many of the savings that the
Ministry of Defence claim. Were you given any opportunity at DARA
St Athan to combine the two programmes so that you were able to
do upgrade and maintenance at the same time?
Mr Hughes: Both on Harrier and
Tornado we put forward proposals for upgrade and maintenance together.
The JUMP proposal on Harrier, which had been put in before the
end-to-end process had been finalised and involved—DARA
did put in a proposal for JUMP Harrier. At the time of the End
to End decision rolling Harrier forward from an investment appraisal,
it is more costly to do at DARA than at Cottesmore, from an incremental
cost point of view, and from an affordability point of view, taking
into account DARA's proposal for JUMP jump, we were also more
expensive. In relation to Tornado, we have been involved in the
CMU programme, combined maintenance and upgrade, and we did work
on two aircraft at St Athan in terms of CMU, in parallel to them
being done elsewhere. We have absolutely no doubt, in terms of
effectiveness and competitiveness and efficiency, and quality
and performance in doing the work, that we would do it every bit,
if not more effectively, than other places. Again, there were
wider considerations than the ability of DARA to do the work.
Q50 Mr Crausby: RAF Marham
have made much of pulse line maintenance. For the record, can
you describe in lay terms what that is. Do you consider it to
be, as practised at RAF Marham, to be more efficient than the
traditional system that you use at DARA St Athan?
Mr Hughes: Pulse line is basically
a re-ordering of the maintenance activity into standardised pieces
of work in terms of time. You break it down into a number of pulses,
which add up to a full turn-around time. In each pulse you will
have a standard level of work; you will have some work that emerges,
and in that timescale you do the work and you move on to the next,
and it flows all the way through. In the process you can eliminate,
provided you set the support structure accordingly, a lot of waste
and you can do things in less miles hours and less time from the
turn-around time point of view. I do not know much about Marham,
but I do know that we have instituted pulse lines at our rotary
business down in Fleetlands and we believe that by doing that
we will have improved turn-around times for Lynx, Sea King and
Chinook. In addition to having improved turn-around times we will
do it in physically less hours. The consequence of that is that
it will be significantly cheaper. In relation to the St Athan
versus Marham versus Cottesmore, there is nothing that I see that
would have stopped us doing a similar thing at St Athan, were
we given the opportunity.
Q51 Mr Crausby: We have
discussed this to some extent on the site visit this morning,
but for the record can you tell us why you have not been given
the opportunity to introduce this at St Athan?
Mr Hughes: That is one of the
easier ones! The decision had been taken to roll the work forward
to Marham.
Q52 Chairman: Do you think
it is inherently risky to move an aircraft that is in a state
of disrepair?
Mr Hughes: It is risky to move
aircraft part way through a maintenance of that particular aircraft,
because when you move it half-way through the process you run
the risks associated with that. Provided you manage the process
with sufficient foresight, then you can minimise the risk as you
can with everything else. If you are talking about moving a whole
programme of work from one site to another, again there are risks,
but properly managed that can happen effectively. If you look
at the history of DARA, as a trading fund for example, we created
the engine business at Fleetlands by moving work from one site
to another, and similarly for the components business for example.
Q53 John Smith: We asked
this question of the trade unions. What reasons do you think the
MoD gave for not considering crisis manning requirement in the
same way for rotary wings as they did for fixed wings?
Mr Hughes: There were a number
of key differences between the rotary CMR and the fixed wing CMR.
First, the numbers were, by order of magnitude, less. There was
much, much less CMR associated with the rotary platforms than
there were with the fixed wing platforms, which was due to their
complexity, and according to military doctrine required more CMR.
So having less CMR in the first place was one major difference.
The second difference in CMR for rotary was that the DARA rotary
business is at Fleetlands, which is in a location that is not
too geographically disparate for the number of locations where
the RAF were operating helicopters from, and therefore the incremental
costs associated with throwing rolling the work back even with
the CMR—you did not need to create the type of military
infrastructure in terms of service accommodation and so on for
the rotary CMR that you had for the fixed wing CMR.
Q54 John Smith: In your
experience, do you think that the depth support skills are vital
and essential military skills for deployment to the front line?
Mr Hughes: Again, I think that
is a question for military people. Having never been deployed
to the front line, it is difficult for me to answer. There are
obviously different skills in the depth regimes, but the military
relevance of that would be for someone else to answer.
Q55 John Smith: What future
do you think there is for DARA Fleetlands or Fleetlands in terms
of rotary depth support after 2008?
Mr Hughes: I believe rotary support
at DARA Fleetlands has the opportunity to have a good future beyond
2008. A bit of work has to happen between now and then. As you
know, the Minister announced that he would be looking to take
the rotary business to market to see whether or not that offered
best value for defence as well as maintaining capability, as well
as giving longevity to employees there. Given that the Sea King,
the Chinook and the Lynx aircraft have rolled back and Fleetlands
is then the depth hub for those aircraft, then that business,
providing it continues along the lines of the rest of DARA, and
they deliver the improvements in efficiency, effectiveness and
are competitive, should be in a position to survive and do well.
Nothing is guaranteed, as I said before.
Q56 Mr Jenkins: We visited
the marvellous facility this morning. You have a highly trained
workforce and a very co-operative workforce, so what is going
wrong; why are you losing out?
Mr Hughes: Nothing is going wrong
in the sense of the people who work for DARA. I have said a number
of times that they have done everything asked of them from the
competitiveness point of view. In relation to the outcome of the
End to End and the announcements that had to be made, from a DARA
perspective we have lost out at St Athan. That is at the expense
of value-for-money for defence in a much broader context than
DARA. We obviously look at it parochially from a DARA point of
view and see if we can do that work and do it effectively and
efficiently. We cannot control the whole environment. In terms
of what has gone wrong, from the DARA viewpoint the question is
a lot broader than DARA in terms of what is the best value for
defence.
Q57 Mr Jenkins: On best
value, on a number of occasions you have cited that you have lost
out due to the cost effectiveness—you could not be cost-effective.
What is the main stumbling block to your lack of cost-effectiveness?
Mr Hughes: I do not think I said
that DARA is not cost-effective. I said that in an incremental
cost investment appraisal it was more cost-effective for defence
to go forward than back, which is a measure not of DARA in isolation
but DARA as part of a whole. For example, we cannot control the
cost of rolling back CMR personnel to St Athan. That is not in
any way a reflection of the performance and effectiveness of DARA;
it is the whole environment which was reviewed as part of End
to End.
Q58 Mr Jenkins: If you
ignore the crisis manning requirement, the MoD say they will save
money by putting this work with the RAF. Why? You have RAF personnel
come to you. You say there is a cultural difference. Does that
mean you have to slow them down or speed them up, or do they work
at the same pace?
Mr Hughes: In terms of why the
MoD will save money through this, it is clear to everybody involved
that there is over-capacity in the marketplace of military Fastjet
maintenance and repair. Historically, DARA have done it and industry
has done it. To a greater or lesser extent the RAF has done it.
The net result of this is that the only place this will be done
will be at RAF Marham. DARA will not be doing it and therefore
we unfortunately are the capacity that is being eliminated. Once
the work is rolled forward to RAF Marham, industry will not be
doing it either. There will be a single location for it. When
that was put into the investment appraisal and the affordability
studies, the MoD concluded that it would save quite a lot of money.
Q59 Chairman: Are you
satisfied, Mr Hughes, with the accuracy and sufficiency of the
investment appraisal?
Mr Hughes: DARA contributed a
lot of information through the investment appraisal, which took
into account a wide range of different criteria, both from a military
effectiveness point of view and from the cost point of view. In
terms of accuracy, the appraisal was done, I am sure very fairly,
by the Military Accounts Services (Army), the MASA team, who were
independently tasked with so doing. It was overseen by a senior
economic adviser on behalf of the MoD and was run through a central
department. Therefore, given that we contributed what we did,
and what we said was taken into account, we did not always prevail
in terms of our point of view, and neither did everybody else
prevail in terms of their point of view. Therefore, at the end
analysis we contributed, and the report concluded what it concluded.
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