Examination of Witnesses (Questions 60-79)
MR GUY
GRIFFITHS, MR
ROGER MEDWELL,
DR DAVID
PRICE AND
MR CHRIS
CUNDY
31 JANUARY 2006
Q60 Chairman: That was, though, the
question I was asking.
Dr Price: I understand that. I
think it is always very difficult with long life. Clearly one
of the classic examples on a submarine is the nuclear steam raising
plant where the technology gets gradually older and a requirement
for insertion of new capability is required to maintain your fleet
moving forward anyway, so I hope I have answered your question,
Chairman.
Q61 Chairman: No, you have said it
is very difficult to answer.
Dr Price: Yes, I think it is very
difficult. To answer your specific question can you retain capability
for a new design, because that is where difficulty comes, if you
take JSF, as a good example, if you look at a replacement of JFS
going forward, is it at all feasible for the UK to claim to be
able to retain the design for doing that on its own 40 or 50 years
from now?
Q62 Chairman: What is the answer
to that?
Dr Price: I think the answer is
probably no.
Chairman: I see, thank you very much.
Moving on to research and technology, Robert Key.
Q63 Robert Key: Does this Defence
Industrial Strategy provide you with sufficient coverage? Were
you expecting it to say anything different?
Dr Price: With respect to R&T?
Q64 Robert Key: Yes.
Dr Price: It is a very interesting
question specifically on R&T. I think there is and there has
been a lot of consultation with industry over a significant length
of time on the research and technology strategies. There is always
the problem that to maintain a broad width of capability the affordability
criteria of how much money goes into R&T is always under threat.
I think the Tower of Excellence and the defence university technology
centres have generally been welcomed by industry in terms of giving
clear focus of where MoD wants to put its investment. Probably
our biggest concern is that it is almost separated from the sector
technologies in terms of this industrial strategy. It is very
difficult, I would argue, from our perspective, particularly from
the smaller companies' perspective, to read the technology and
research part and to link it to what is in the main sectors. So
I think what it says is quite acceptable. I think where we find
difficulty is understanding how it links into the sectors. Are
my colleagues with me on that? Does that answer your question?
Q65 Robert Key: Yes. Given future
defence programmes are going to be about supporting and upgrading
existing equipment, what signal does that give you for your investment
in research and technology?
Mr Griffiths: I do not think that
necessarily tempers it because one can still see substantial opportunities
in the area of technology insertion and the upgrade of programmes
for new technology based on R&T investment to still have quite
an interesting financial payback for us. What I would observe
is that if one looks at the £300 million or so currently
spent by the MoD on R&T, then I think the question (which
bears on what you are saying) is whether or not there is adequate
linkage between the areas for which that spend is being targeted
and the future vision of actually needing to look at upgrading
and inserting technology into existing platforms, rather than
perhaps blue skies thinking aimed at completely new concepts of
military capability. I think that linkage is missing.
Q66 Robert Key: In their evidence
to us QinetiQ[5]
say that clearly the Government recognises that research and innovation
is very important but they are silent on the level of government
defence research. Do you think there should be more money spent
on defence research by the Government as opposed to private companies?
Mr Griffiths: At the moment in
statistical terms it represents about 1% of the combined EP and
STP budgets. Intuitively, that feels low but there is some interesting
analysis within the White Paper as to the payback in terms of
military capability from different projected levels of R&T
spend. I do not know if we are necessarily qualified to critique
it here but that analysis does indicate that perhaps the level
of spending they have today is at broadly an optimum level. There
is certainly no indication in the White Paper that there is an
aspiration to increase it substantially.
Q67 Robert Key: Do you think the
government is funding the right things? The government can accept
a risk which you might not be able to accept in terms of investment
and research. Have the government got it right?
Mr Medwell: With the current problems
we have in Iraq, we have not spent nearly enough on studying the
issues there in respect of our personnel and what we could do
to protect them. Things have skewed. We are still looking at Cold
War investment as opposed to peace keeping investment. There are
a lot of issues there and, had we known more about this, we could
have redirected that money and probably have saved lives.
Q68 Robert Key: The Defence Industrial
Strategy does say here that there is a need for further work in
2006 to inform our research and technology priorities. Are all
four of you involved in that further work to inform research and
technology priorities?
Mr Medwell: We have not yet participated
but we have been invited to participate in a number of think tank
sessions aimed at responding to that action during the course
of the first half of this year.
Q69 Robert Key: Are any of you members
of the UK Council for E-Business?
Mr Griffiths: The DMA has a number
of companies that are members of it.
Q70 Robert Key: What about the Transatlantic
Secure Collaboration Programme? Are you involved in that?
Mr Griffiths: Personally not.
Q71 Robert Key: We are told about
all these splendid organisations. The Transatlantic Secure Collaboration
programme is clearly very important, looking at the whole question
of other people's secrets and technologies that you are going
to be able to share critical bits of at critical times. Yet for
example, in paragraph B12.18, the Strategy is talking about the
development of a European Defence Agency, saying that EDA work
may lead in due course to a longer term strategy to consolidate
testing and evaluation capabilities across Europe. On the one
hand, you are looking at Europe and developing more of Europe
in that particular regard; on the other hand, we know the transatlantic
work with the United States is of critical importance. How is
the United States going to look at companies like you if you get
too involved with European companies?
Mr Griffiths: You will probably
have to ask them.
Dr Price: It is a difficult balance
but the ITAL waiver provision remains a critical issue with respect
to transatlantic technology.
Q72 Robert Key: That is interesting
because I certainly have been convinced that the ITAR waiver is
not as important as we thought it was. Am I wrong?
Dr Price: You still have the problem
with early research activity for companies that are operating
both sides, as obviously we do with 50% of our business in the
United States. It is very difficult with the TAA restrictions
on the transfer of very early ideas which often start the innovative
process going, where you have quite significant bureaucracy on
one side of the pond to start the discussions. That can create
a bifurcation of technology investigation which probably is to
the detriment of the UK side of the technology balance.
Q73 Robert Key: In the end, the employees
of our defence companies are going to be the people who deliver
these strategies. Investment in people is therefore critical.
Is the United Kingdom now capable of producing young people sufficiently
educated in science and technology to fulfil our dreams for the
future of defence in this country?
Mr Griffiths: There is no question
that they are capable of doing it. There may be concerns as to
whether, notwithstanding the pressures on the market here, we
are producing them in sufficient quantity. In particular, it is
a real theme for me within my own business when I look at the
throughput of young people through the A level system, perhaps
acquiring very high quality qualifications at that level in those
sorts of subjects that you think would be applicable through the
tertiary education system, to developing careers in this sector
and how many people with those sorts of qualifications are then
lost to the engineering community as a whole and perhaps take
preference in banking, accountancy, the legal profession or whatever.
Dr Price: The attractiveness may
be the most important thing rather than the skill.
Q74 Chairman: Dr Price, is it not
your view that the prospect of getting any meaningful ITAR waiver
is dead?
Dr Price: Yes. I am not waiting
for one.
Q75 Chairman: It is not a crucial
issue from your point of view?
Dr Price: Not in that sense, other
than the fact that it makes quite a big difference in terms of
your industrial strategy. That was the point I was making. It
makes a difference to how an industrial strategy from a company
point of view would unfold, compared to if it does not exist.
Q76 Chairman: Mr Griffiths, you said
that you thought from the Defence Industrial Strategy the figureI
think you are referring to the graph on page 30 under A58[6]for
research and technology spending in the UK suggested that it was
at an optimal level. That deals with 2001. Is it not right that
there has been a long term decline in UK spending on research
and technology?
Mr Griffiths: I cannot quantify
it but I believe that is the case, yes.
Q77 Chairman: Does that not, even
according to this graph, suggest that the future capability of
British defence equipment in, say, 15 years' time will be seriously
deficient?
Mr Griffiths: I think that is
true.
Q78 Chairman: That does not sound
optimal to me.
Mr Griffiths: I did not say it
was optimal. I said there was an argument within the White Paper
that suggested that the current level of expenditure shown on
that graph is the additional payback from increasing the level
because the shape of the graph was quite modest. If you see a
reduction in the level of that spend, you would fall very rapidly
down that graph.
Chairman: Finally, can we get on to the
crucial issue of implementation?
Q79 Mr Jones: The foreword to the
White Paper says that the strategy will not be delivered unless
the whole of the defence acquisition community, including industry,
is able to make the necessary shifts in behaviours, organisation
and business processes. What happens next? This document is quite
challenging to you in industry. Are there any signs that the same
tough questioning and hard decisions will occur in terms of DPA
who have not come out in the many years they have been in existence
with great valour?
Mr Griffiths: If I deal with the
second part of that first, it does present huge challenges for
the wider MoD, not just the DPA. Where do those challenges exist?
First of all, they are behavioural. We have talked about the fact
that the bedrock of MoD procurement policy now, as described in
this document, is on value for money for defence; whereas if you
went back to the 2002 strategy statement competition was the bedrock.
That does drive huge behavioural changes in terms of mindset within
the MoD and industry. It raises questions as to how you are going
to measure value for money for defence and those are not answered
in the White Paper. There is this emphasis on through life management.
I would observe frankly that if one is genuinely to take a through
life approach to this it begs the question as to whether the organisational
structure within the MoD, the DPA and the DLA is aligned to that.
5 Note: See Ev 77 Back
6
Note by Witness: He was referring to the graph on page
39, A5.8, not page 30, A58. Back
|