Munitions
100. The DIS states that in the general munitions
sector:
BAE Systems has the majority of the existing
business…. We have therefore adopted a partnership with BAE
Systems and are considering ways in which we can rationalise the
through-life management of munitions, without ruling out the prospect
of global competition for future projects at this stage.[177]
101. The DIS also refers to the importance of security
of supply:
we need to ensure that we can support equipment,
or produce expendables (e.g. munitions), in times of conflict
(predicated on an assumption that we understand the dependencies
within the supply chain, where in some cases we need to do further
work with industry). High levels of onshore technology and capacity
may often offer greater comfort in security of supply and the
ability to undertake modifications in response to short-term operational
demand.[178]
102. On 14 December 2005, a petition was laid before
the House from residents of Bridgwater and others requesting that
the House of Commons call upon BAE Systems and the Ministry of
Defence to save the former Royal Ordnance Factory (ROF) at Puriton,
in Somerset, and sent to us for our scrutiny.[179]
We sought comments on the petition from the MoD and from BAE Systems,
which now owns the ROFs. The MoD's observations briefly state
its confidence in the company's continued security of supply.[180]
BAE Systems' response regrets the closure of Puriton from the
end of 2007, with the loss of some 130 jobs, but states that it
was "no longer economically viable at a price that MoD would
be prepared to pay for materials that can be sourced elsewhere".
It acknowledges that the UK will in future be dependent on supply
from abroad, but states that:
the necessary materials can be sourced from a
number of secure alternative suppliers in allied countries, fully
meeting the requirements of appropriate sovereignty that were
described in the MoD's Defence Industrial Strategy.
The materials will be processed in the UK, at Glascoed.[181]
103. The trade union Prospect submitted evidence
to us in this inquiry expressing concern about the proposed closure
of the Puriton ROF and its sister factory in Chorley. Prospect's
memorandum outlines concerns about the ability of the MoD to obtain
security of supply, in particular for small arms and ammunition
and high explosive.[182]
104. We sought further information from BAE Systems
about its outsourcing policy. Their response explains that the
decision on whether to qualify one or more sources of supply to
ensure competition and improved security of supply would be taken
on a case by case basis. Land Systems Munitions will manufacture
strategic stockpiles to bridge the gap between in-house manufacture
and availability of the new source of supply. For each of the
products now made at Chorley and Bridgwater, BAE Systems' response
sets out the potential overseas suppliers. For high explosive
materials, for example, it states that a Request for Quotation
has been placed with Holston Army Ammunition Plant, in the USA,
and with Eurenco, a European Joint Venture between France and
Scandinavia.[183]
105. We sought assurance from the Chief Executive
of BAE Systems that the two ROF sites would not be closed until
such time as a secure alternative supply of those munitions had
been sourced to the satisfaction of the MoD. Mr Turner told us
"that is part of the process that we are going through now.
Absolutely".[184]
106. The Minister stressed that he had been looking
at this issue closely because it was important that the UK "retains
the ability, in terms of advance munitions like that, to be able
to source what it needs when it needs it".[185]
We pressed Lord Drayson on the security of supply, given that
the closures would require BAE Systems to procure certain munitions
from overseas. We sought assurance that the MoD was going to be
sure that there was absolute certainty of security of supply before
the two sites were closed.[186]
The Minister told us that he was "absolutely sure" that
the sites would not be closed until issues about security of supply
had been resolved. He said that he wanted:
to be absolutely sure, in terms of security of
supply of the elements coming in and…. absolutely sure about
the robustness of the manufacturing process that we are moving
to.[187]
107. We welcome the assurances given by the MoD
that the Royal Ordnance Factory sites at Bridgwater and Chorley
would not be closed until it was "absolutely sure" a
secure alternative supply of the munitions existed. We consider
that, in an area as vital as general munitions, the UK should
never be in a position where it cannot guarantee security of supply.
International issues
108. Chapter A3 of the DIS outlines the main characteristics
of the defence market at global and national UK levels. It considers
the consolidation which has taken place in the US and Europe.[188]
However, some of the evidence we received suggested that the international
implications of the DIS—and particularly the European dimension—had
not been sufficiently covered:
- The SBAC saw the need for more
discussion of the international implications of the DIS and considered
that there was "very little in the document on how international
collaboration will be handled under the DIS". It also sought
clarification on how the Government saw the European Defence Agency
(EDA) developing its policies and practice "on the European
defence market, the supply chain and European defence R&T".[189]
- Professor Hartley considered that "various
parts of the DIS refer to the EU defence markets, EDA and OCCAR
[Organisation Conjoint de Coopération en matière
d'ARmement[190]]. However,
there was no vision of whether and how such an EU defence market
might contribute to the future of the UK DIB".[191]
- Professor Taylor considered that "reconciling
the DIS with the aspirations of the European Defence Agency and
the European Code of Conduct on a European defence market is not
straightforward".[192]
109. We followed up these concerns, in particular,
about the European Defence Agency. Mr Paul Everitt, Director of
Communications, SBAC, considered that the EDA had a clear role
in opening up the European defence market and also thought, that
in terms of R&T, the EDA could have a role to build a better
understanding across Europe of which countries are looking at
which technologies and what they are trying to develop.[193]
Mr John Howe, Vice Chairman of Thales UK, also considered that
the EDA had a very useful potential role in energising international
programmes to address gaps in defence capability, and if it succeeded
in this objective, it would be "a big plus". He thought
that the international context was an important one and he hoped
that further dialogue would be developed with the MoD.[194]
110. The Minister considered that the EDA needed
to show that it could add value and that in some ways it had begun
to show that, but he thought that the Agency should start small
and demonstrate success before it grew larger.[195]
Feedback from the UK's international partners had been very positive
about the DIS. Lord Drayson told us that "they have found
it useful to have clarity, whether it is in the direction of the
United States or the direction of Europe". He considered
that the DIS set out clearly to the UK's international partners
the way in which the UK wanted to business.[196]
111. We consider that international co-operation
is vital and that the European Defence Agency is likely to have
an important role in the future in many areas covered in the DIS.
170 Cm 6697, para A1.21 Back
171
HC Deb, 15 December 2005, col 1463 Back
172
Q 291 Back
173
Ibid Back
174
HC (2005-06) 554, para 107 Back
175
Q 242 Back
176
Q 299 Back
177
Cm 6697, para xxxiv Back
178
Ibid, para A9.6 Back
179
HC Deb, 14 December 2005, col 1407; Supplement to the Votes and
Proceedings, 16 December 2005 Back
180
Supplement to the Votes and Proceedings, 27 January 2006 Back
181
Ev 120-121 Back
182
Ev 97 Back
183
Ev 122 Back
184
Q 265 Back
185
Q 292 Back
186
Q 293 Back
187
Q 294 Back
188
Cm 6697, pages 25-33 Back
189
Ev 83-84 Back
190
OCCAR was established by Administrative Arrangement on 12 November
1996 by the Defence Ministers of France, Germany, Italy and the
UK. Its aim is to provide more effective and efficient arrangements
for the management of certain existing and future collaborative
armament programmes. Back
191
Ev 104 Back
192
Ev 91 Back
193
Q 148 Back
194
Ibid Back
195
Q 312 Back
196
Q 313 Back
