Examination of Witnesses (Questions 60-68)
MR ARCHIE
HUGHES
21 NOVEMBER 2005
Q60 Mr Havard: You made
a statement which I found very interesting, that essentially there
was over-capacity; a shake-up has gone on; DARA is the one that
drops out; so in the future there will only be the RAF—but
it is not only the RAF that will be doing it, is it? What we saw
at Marham is a very different and new relationship between the
two primes and the RAF; and effectively the efficiency gains that
are coming, from what I can see, in terms of planning the operation
at that location, were coming from the two primary contractors
who were showing the RAF how to do it. The RAF may claim that
they were not, but that is essentially what was going on. So there
is a very different relationship that has been established; and
it is not a case of it just being the RAF that are going to do
it; it is the two primes in concert with the RAF, which is a very
different model.
Mr Hughes: I did not mean to infer
that it was just the RAF that was doing it; I meant that it would
all be done in the one location, which happens to be Marham, as
opposed to all the different locations in which it was done previously.
You are right that the operation of Marham and the way in which
it is going to be carried out is done through a partner arrangement
between the RAF, BAE Systems and Rolls Royce as the main prime
contractors; and through that they will be able to do it more
efficiently and save a lot of money. We would have preferred that
it be done at DARA, but that was a decision for others.
Q61 John Smith: Would
you share my surprise in the statement by the Minister for the
Armed Forces last week when he could not say how depth support
for the new generation of aircraft, joint combat aircraft and
joint strike fighter or where it would it would be provided? Indeed
he said it might be on military operational bases rolled back
centrally or would remain in industry.
Mr Hughes: In relation to the
new aircraft coming through, each of them has its own individual
support arrangements. It does not really surprise me that that
is the status today, because there were also some contractual
negotiations going on between various parties as to what the final
solution would be. What I can say that is as part of the end-to-end
review, Typhoon and Joint Strike Fighter, DARA would obviously
have liked to do those platforms as well as Tornados and Harriers;
but they were reviewed as part of the end-to-end review and it
was clear that they would not be coming back to DARA. I believe
that the locations for Typhoon was part of the end-to-end, and—JSF
was in, but I thought Typhoon had been decided, but I have been
corrected. We will give you a note on that. However, part of it
is contractual, so I am not surprised because there are all kinds
of contractual negotiations that go on for that activity.
John Smith: I meant Typhoon.
Q62 Robert Key: Is there
enough maintenance work with the VC 10s for St Athan to remain
viable?
Mr Hughes: DARA St Athan in its
current state is not viable just with VC 10. We are obviously
closing the Fastjet at DARA, which has implications for the Red
Dragon facility. That is not to say that the VC 10 on its
own, in a different construct, could not be viable in the future.
I believe VC 10 as a contract is a viable contract moving forward.
That is why the Minister announced last week that he would look
to see whether or not there was sufficient market interest to
purchase and/or run that contract on behalf of the MoD. It is
certainly not enough in its own right to maintain St Athan.
Q63 Robert Key: DARA's
annual report said that Morgan Stanley were going to determine
market interest. Can you tell us what progress has been made in
market testing the DARA business?
Mr Hughes: The Morgan Stanley
work has been completed in terms of determining market interest.
It was done on behalf of the MoD, not on behalf of DARA, but basically
they concluded that there was interest. There were a number of
players out there interested in different parts of DARA to a different
extent. That formed part of the advice to the Minister who was
able to say, "now I know there is some interest I will take
it to market. He has not said he is going to sell it because you
have to test that market interest and find out what value can
be obtained by taking it to market and then taking in the round
the value for defence, together with maintaining of capability,
together with looking to get a long-term future for different
bits of the business and making a decision whether to sell it
or not.
Q64 Linda Gilroy: The
recent decision by ATC Lasham and TES Aviation Group to move to
St Athan is clearly a positive development. Are you in negotiation
with any other aerospace companies about locating in St Athan?
Mr Hughes: Particularly ATC Lasham
we were very, very involved in. As you know, we moved some of
our platforms from one hangar to another to enable them to come
in. DARA, together with the MoD, are involved very closely with
the WDA and the Welsh Assembly Government, and have set up a team
looking at a whole range of different options. There are no discussions
going on at this point in time that are of sufficient maturity
that you would say they are ready to bring in ATC Lasham, which
is not to say they were not talking to a whole range of people,
trying to encourage them to move to St Athan.
Q65 Linda Gilroy: How
much DARA money was put into the Red Dragon project?
Mr Hughes: I believe something
of the order of 20 million of DARA money put into the overall
Red Dragon project. That was primarily related to project costs
in running the project together with the post final commissioning
of the building, putting in equipment and various other facilities
that went with the new hangars. In terms of overall DARA money,
it was of the order of 20 million.
Q66 Linda Gilroy: We heard
earlier that it would recover its costs over the period that it
is open, but do you also consider that the project, with its upgraded
facilities, will enhance St Athan's ability to attract commercial
and civil work in the future?
Mr Hughes: Yes, I agree with both
of those statements. Because of the positive improvements we mentioned
earlier, it will recover its costs. Given that we have a modern,
state-of-the-art facility at St Athan, it is an asset that
could be used to sell the site and attract people in for the future.
If it had not been built, then we would not have had an asset
to attract people; we would only have had the facilities that
we had, which I do not think were as an attractive proposition
as having this new facility that we have got.
Q67 Linda Gilroy: We saw
this morning the paint shop and the workshop that makes one-off
pieces. It is a bit difficult to see how that can be replicated
elsewhere. Do you envisage that that can be done somewhere other
than St Athan for the deep maintenance of the Tornado?
Mr Hughes: Both the one-off manufacture
and small batch sizes can obviously be done somewhere else. We
have become particularly adept at dealing with that type of work.
Particularly when you maintain aircraft, you find things wrong
that you never suspected, and we have the ability to recover them.
I am sure there are other mechanisms by which that service could
be provided. Similarly, we have the most up-to-date modern facilities
for Fastjet painting anywhere in the country. It will be done
elsewhere, but it will not be done in the same fashion.
Q68 Linda Gilroy: In your
judgment what should MoD do to ensure that DARA Fleetlands and
Almondbank have viable futures?
Mr Hughes: I think it should follow
the strategy I have outlined and see whether or not taking the
business to the market offers the best solution.
Chairman: Mr Hughes, thank you very much
indeed for coming to give evidence to us. It has been very helpful.
I would particularly like to thank everybody who has respected
the need to keep quiet at a time that is extremely difficult for
many of you—I do recognise that. We would like to thank
you all very much indeed for the evidence you have given and for
helping us today.
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