Select Committee on Defence Third Report


2  Changes to aircraft support

RAF aircraft support arrangements

7. Until the Minister's announcement of 16 September 2004, aircraft maintenance was carried out at four types of location: squadron (known as first Level), station (second level), major repair facility (the Defence Aviation Repair Agency) (third level) and manufacturer (fourth level). Minor maintenance, incorporating the first and second levels and ranging from minor repairs and minor regular servicing, was carried out at the RAF station. Depth support, known as the third level, and incorporating more significant damage repair and scheduled major servicing of aircraft, was carried out within the Defence Aviation Repair Agency (DARA). Support requiring aircraft design authority knowledge, and involving the complete overhaul and modification of aircraft, known as the fourth level, was undertaken by the aircraft manufacturer.

8. The changes to the provision of aircraft support, announced by the Minister on 16 September 2004, had particular impact on DARA, the provider of third level depth support, which was to lose its status as the provider of depth support for Tornado GR4 fast jets. DARA had, until March 2004, also been responsible for providing depth support for Harrier fast jets, but lost the contract for future support to RAF Cottesmore.

The Defence Aviation Repair Agency

9. DARA was formed in 1999 following a recommendation in 1998 in The Strategic Defence Review (SDR)[8] that the Naval Aircraft Repair Organisation (NARO) and the RAF Maintenance Group Defence Agency (MGDA) should be amalgamated to form a single Agency. The SDR stated that the new Agency would become a Trading Fund "as soon as practical".[9] DARA became a trading fund, with MoD as the shareholder, on 1 April 2001.

10. An important role of the DARA trading fund was, according to its first Chief Executive, Mr Stephen Hill, to provide MoD with an "industry benchmark" to compare cost and quality of services.[10] In January 2001, our predecessors on the Defence Committee held an inquiry into the decision to make DARA a trading fund. The Committee's report welcomed DARA's change of status but also noted that:

    If DARA cannot deliver reduced prices and better performance, the MoD might be increasingly driven to place more of its repair work directly with industry, which would effectively leave DARA to wither on the vine.[11]

11. DARA currently comprises five businesses spread over four sites: the fixed wing depth support business at St Athan, Vale of Glamorgan; rotary wing support and the engine maintenance business at Fleetlands, Hampshire; the electronics business at Sealand, Flintshire; and the components business at Almondbank, Perthshire.

Changing strategic context

12. DARA was established during a time of changing assumptions about the role of the UK's Armed Forces. MoD, in common with other NATO countries, was still adapting to the end of Cold War certainties where Western Armed Forces were configured and equipped to meet large scale conventional and nuclear threats from the Warsaw Pact. By the end of the Cold War in the mid-1990s, there was an acceptance that UK Armed Forces would need to adapt to meet new threats such as asymmetric warfare and world terrorism, within budgetary constraints and domestic calls for a realisation of a post Cold-War peace dividend.

13. A key assumption of the 2003 Defence White Paper, Delivering Security in a Changing World: Future Capabilities, was that the Armed Forces should be capable of deploying forces to multiple, concurrent, small to medium-scale operations over a wide geographical area.[12] For the RAF, this has resulted in a switch of emphasis from operating from fixed main bases to a focus on enabling the swift deployment of aircraft as part of an expeditionary task force.

14. Within this changed strategic context the RAF is being asked to do more with fewer people: the number of RAF personnel is being reduced from 48,000 to 41,500 by 2008 and the number of RAF fast jet aircrews will be reduced from 210 to 170. It is assumed that future war fighting will be conducted by mobile expeditionary forces using high tech equipment. The RAF personnel we met at RAF Marham told us that this required enhanced flexibility and agility throughout its supply chain.

End to End Review

15. In 2003, MoD commissioned the management consultancy McKinsey and Company to conduct a review of its RAF logistics provision. MoD commissioned the End to End Review because it had reached the judgment that:

The Defence Logistics Transformation Programme (DLTP), led by the Chief of Defence Logistics, was the programme responsible for implementing improvements to logistic support identified in the Review.

16. The End to End Review, which had been presented to MoD in July 2003, identified three broad options for future support of RAF aircraft. To concentrate "forward" certain aircraft platforms to RAF Main Operating Bases (MOBs); to concentrate "backwards" the same platforms to the Defence Aviation Repair Agency (DARA) sites; or a hybrid solution with some platforms concentrated forward and others concentrated backwards.

17. On 24 March 2004, the Ministry of Defence announced that the Harrier Joint Upgrade Maintenance Programme (JUMP) would be located at RAF Cottesmore, Lincolnshire, an RAF MOB, rather than at DARA St Athan, which had been responsible for Harrier maintenance. The Minister of State for the Armed Forces told the House the following day that "This decision has been taken at this point, because of the need to protect the critical operation in-service date for the Harrier GR9".[15]

18. Further key points relating to air logistics resulting from the DLTP were announced by the Minister on 16 September 2004.[16] These were:

  • The existing four lines of aircraft maintenance (described in paragraph 7) would in future become two: "forward" and "depth". Forward support would be carried out by RAF tradesmen employed on operational squadrons; and depth support, comprising what used to be called 2nd to 4th line support, would be carried out by RAF tradesmen at RAF MOBs, supplemented by civilian contractors from the aircraft design authority;
  • Reaffirmation of the March 2004 announcement that the Harrier JUMP programme would be concentrated at RAF Cottesmore;[17]
  • Depth support for the Tornado GR4 aircraft would be concentrated "forward" at RAF Marham, Norfolk;
  • In contrast, support for rotary wing aircraft (Lynx, Chinook and Sea King helicopters) would be concentrated "back" to DARA Fleetlands, Hampshire;
  • The MoD would explore with the Welsh Development Agency and other Government Departments alternative options for DARA St Athan, South Wales, previously the hub of Harrier and Tornado GR4 depth maintenance.

19. On 8 November 2005, the Minister announced that all fast jet support would be relocated to RAF MOBs in April 2007, a year sooner than previously announced.[18] The Minister also announced significant changes to the configuration of DARA:

  • Confirmation of the end of fast-jet support at St Athan in April 2007 (resulting in 500 job losses);
  • support for the VC10 would remain at St Athan but opened up for market testing;
  • the closure, by April 2007, of the engine maintenance business at Fleetlands (resulting in 225 job losses);
  • rotary-wing support would be concentrated at Fleetlands and opened up for market testing;
  • the rotary wing component business at Almondbank, Perthshire, would be opened up for market testing;
  • the retention under MoD ownership of DARA's electronics business in Sealand, North Wales, employing 600 people.[19]

20. MoD told us that it expected these changes to result in the reduction of 1,500 RAF posts and 700 jobs at DARA.[20] The Minister told the House that "Consolidating support for fast jets and helicopters will deliver net savings of some £70m over the next four years, with recurring annual savings of £40m thereafter."[21]

Principles behind the new arrangements

21. MoD has based its decision on the future arrangements for depth support for RAF aircraft on two major considerations: Crisis Manpower Requirement (CMR) and cost effectiveness.

CRISIS MANPOWER REQUIREMENT

22. MoD defines CMR in the following terms:

23. CMR levels have changed significantly over recent years in line with the RAF's changing role from operating from fixed bases to one capable of deploying as an expeditionary force. MoD told us that the operational environment now demanded that all deployed tradesmen be adequately trained in military skills to defend themselves and their working environment.

24. The need for the RAF to augment the front line in times of crisis and conflict is clear. MoD judges that keeping its CMR on the front line in peacetime would be a wasteful use of resources, and that therefore CMR must be deployed from the depth support environment.

25. We asked MoD to provide a generic model of how CMR is calculated and received a detailed memorandum explaining how CMR is calculated for deployments of varying duration.[23] MoD told us that factors taken into account included the likely degree of support available from other sources at the deployment base and the number of aircraft deployed. MoD also told us that there was a residual manpower requirement to satisfy training, other operations and continued maintenance at the main operating and other bases.[24] We found MoD's arguments based on CMR unconvincing in some respects. This is discussed further in paragraphs 75-79.

26. The RAF also explained during our visit to RAF Marham that its tradesmen would gain vital experience and skill enhancement by rotating between the depth and forward environments and that by locating both forward and depth tradesmen at the same location, family disturbance on rotation would be considerably reduced.

THE PULSE LINE

27. RAF MOBs are to operate a system of maintenance known as the "pulse line". According to MoD:

This contrasts with the traditional maintenance method, used at DARA St Athan, whereby the aircraft remains stationary throughout its maintenance and components and personnel move to the aircraft.

28. During our visit to RAF Marham, we saw a Tornado GR4 pulse line in the early stages of development. We were told that the timely availability of spare parts was critical to the success of pulse line. This would be achieved by the prime contractors being given incentives to take responsibility for the control of the supply chain and ensuring that component parts were available. The benefits of pulse line working were described by Air Vice Marshal Thornton:

    you have a predictability over the spares arising. An aircraft moves down the line: for the Harrier it is every 16 days. You know you are going to need component X every 16 days. You can work with your supply base and give them a predictability of spares arising that you cannot when you have got lots of aircraft all coming, not in a planned progression to the same point, it is more of an ad hoc basis—so there is a lull for quite some time and then there is a crisis of demand—and so there is far more predictability with the pulse line.[26]

29. During our inquiry we encountered strong support for the principles behind pulse line maintenance from personnel at RAF Marham and from both the former and current Chief Executives of DARA.[27] MoD suggests that the main advantage of the pulse line over the traditional on-aircraft repair carried out at DARA St Athan is that in the pulse line work can be pre-programmed more easily and the need for parts predicted with more confidence.

30. On the other hand, the trades unions told us that pulse line had significant risks because it involved the movement of aircraft through the pulse rather than personnel moving to aircraft. Catherine Speight, Amicus Regional Secretary, told us:

    We know from the investigations and evidence we have from the RAF system that one aircraft has been structurally damaged because it was moved on a jig when it should not have been. That is the difficulty when you build things on a pulse line. Mistakes like that can happen, whereas at St Athan the aircraft is stationary the whole time it is being worked on, and the manpower moves around it.[28]

31. Although there are clearly inherent risks associated with moving highly sophisticated and expensive aircraft through a maintenance pulse line, if the risks are managed properly the benefits of quicker maintenance turnaround times and reduced costs may outweigh the risks. In any event, pulse lines could have been introduced at DARA St Athan (as they have been at DARA Fleetlands) and pulse line maintenance in itself is not a convincing reason for the decision to concentrate support at RAF Marham.

32. We welcome MoD's decision to embrace modern production techniques that are designed to achieve savings and efficiencies. The performance of the pulse line system can only be judged over time. The success of the pulse line will be dependent on industry's ability to ensure aircraft components are readily available. Any delay in the availability of components would severely undermine the effectiveness of the pulse line. The RAF will have to ensure this risk is managed robustly.

33. Given that MoD believes the pulse line will deliver significant improvements to the provision of support to RAF aircraft, it is surprising that it was not introduced sooner at St Athan. We recommend that MoD carefully monitor and evaluate its pulse lines supporting aircraft, giving particular attention to ensuring that supplies of components and technical support are provided in a timely fashion.

LEANING

34. During our visit to RAF Marham much emphasis was laid on the fact that they had introduced "leaning"—the reduction of waste by eliminating redundant practices in the support process. We were told that these "redundant practices" had been identified by RAF workforce and BAE Systems personnel, who had also designed their work systems and processes. We were told that this "bottom-up" approach had encouraged the workforce to take ownership of the new work systems.

35. We were impressed by the evident commitment to leaning shown by the RAF and industry personnel we met at RAF Marham. Leaning, like pulse line, is not new and industry has many examples of 'rationalisations' to particular work processes and systems. Equally common are examples of such leaning programmes, despite the best of intentions, losing focus over the medium term with inefficiencies and waste creeping back in. We note the apparent success of the leaning programme at RAF Marham. We also note that this is still at its early stages and that the full transfer of Tornado support has yet to take place. We are concerned about the sustainability of leaning once it has done so. We are concerned that leaning programmes either have a tendency to lose impetus with inefficiencies re-entering the system or prove counter-productive in leaning out vital processes.

36. We recommend that MoD continue to seek out and eliminate inefficiencies in all its aircraft support processes but that it ensure that leaning does not go so far that the quality of maintenance is undermined by efforts to meet efficiency targets.

RELATIONSHIP WITH INDUSTRY

37. During our visit to RAF Marham we were struck by how closely RAF tradesmen worked with tradesmen from the two prime contractors, BAE Systems and Rolls Royce. We saw a mixture of Service and industry personnel working side by side servicing a Tornado GR4 and also working in a Pylon Bay. It was made clear to us that the RAF was embarking on a much closer relationship with industry than had previously been the case. Features of this closer working were described to us as facilitating knowledge transfer and "Gain-share" agreements whereby the RAF and industry shared both benefits and risks associated with aircraft support. Air Vice Marshal Thornton explained the advantages of "Gain-share" in the following terms:

38. The potential benefits for the RAF of closer working with industry are clear, in particular the reduction of the perverse incentive that the more unreliable a piece of equipment was, the more industry benefited, as described by Air Vice Marshal Thornton. But so are the risks. These risks include a potential conflict of interests over the medium term between the RAF, which is seeking quality support at minimal cost, and its commercial supplier seeking to satisfy its shareholders by maximising profit. Whist these aims are not necessarily mutually exclusive, and may be compatible because it is in the interests of both the RAF and industry to have a long term partnership, there is a risk that "Gain-share" will quickly result in tensions. The potential for tension was acknowledged by Air Vice Marshal Thornton who told us "I would expect over time that it becomes more difficult to get to gain-share. I do not think, by any stretch of the imagination, we are in the most effective position yet."[30]

He also said that:

    What this does is give industry a long-term business portfolio. It gives them long-term survival ability, which is vital to me in terms of supporting today's aircraft through to their out of service dates.[31]

39. We recognise that close partnerships with industry in the provision of aircraft support through "gain-share" agreements may result in real benefits for the RAF and value for money for the taxpayer not least by reducing perverse incentives for industry. We note Air Vice Marshal Thornton's concerns about the difficulties of sustaining gain-share over the long term and we expect MoD to monitor and evaluate these agreements very carefully. Beginning in January 2006, we intend to consider the wider issue of MoD's partnerships with industry in our inquiry into MoD's Defence Industrial Strategy.


8   Strategic Defence Review, Cm 3999 Back

9   Ibid Back

10   Ev 44 Back

11   The Draft Defence Aviation Repair Agency Trading Fund Order 2001, Fourth Report of Session 2000-01, HC 261 Back

12   Cm 6041 Back

13   Operation Telic refers to the deployment, war fighting and initial transition to peace phases of United Kingdom operations in Iraq in 2003.  Back

14   Streamlining End to End Air and Land Logistics, 1 July 2003, J J Dowdy McKinsey & Co. Back

15   HC Deb, 25 March 2004, c 1144 Back

16   HC Deb, 16 September 2004, c 164-165 Back

17   The JUMP programme will upgrade all Harrier GR7 to GR9 aircraft. Back

18   HC Deb, 8 November 2005, c 161 Back

19   HC Deb, 8 November 2005, c 161 Back

20   Ev 49 Back

21   HC Deb, 8 November 2005, c 161 Back

22   Ev 49 Back

23   Ev 62 Back

24   Ev 62 Back

25   Ev 52 Back

26   Q 151 Back

27   Q 50, Q 84 Back

28   Q 9 Back

29   Q 163 Back

30   Q 165 Back

31   Q 165 Back


 
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