Examination of Witnesses (Questions 160-179)
SIR PETER
SPENCER KCB, DR
IAIN WATSON
AND LIEUTENANT
GENERAL ANDREW
FIGGURES CBE
12 DECEMBER 2006
Q160 Mr Jenkin: Can I ask you a very
general question about what is known as the "procurement
bow wave". Does that affect the speed at which these programmes
go? If there is a pile-up of carriers, Joint Strike Fighter, Typhoon
and so on, is there room in the budget to do FRES in a shorter
timeframe if we wanted to or is it just that we do not have enough
funds and that is one of the reasons why the in-service date is
slipping? May I just say I think you have been very honest with
us about the in-service date and if you do not know what the in-service
dates are you are quite right not to give us in-service dates.
Sir Peter Spencer: The bow wave
has been a major problem in the past. Four years ago when we looked
at why the McKinsey reforms had not been implemented consistently,
one of the major shortcomings was over-programming which led to
a tendency to try and under-call the costs of programmes which
then ended in disaster once we had made the main capital investment
decision. In the last planning round a great deal of that over-programming
was taken out. We are just in the middle of the latest planning
round and it will be very important that we get realistic costings
on the table so that we do not go back into previous habits of
deceiving ourselves about how much a programme will actually cost.
This is something which will need to be acted on because the Department
will have to determine how it is going to sequence its major investment
decisions.
Q161 Chairman: In which year do you
see the greatest problems arising in relation to this bow wave?
Sir Peter Spencer: I did not say
that there was a bow wave at the moment because we are still putting
the programme together. What I am saying is we need to make sure
that we do not allow there to be a bow wave and we construct the
programme in a different way.
Q162 Chairman: Can you not see in
the early part of the next decade a large number of programmes
suddenly coming on stream at the same time and suddenly requiring
a lot of money?
Lieutenant General Figgures: Chairman,
it is my business to manage that to ensure that I match the ability
to supply with the ability to pay. To go back to Mr Jenkin's question,
have we made an appropriate allocation in the plan, my proposal
in this planning round is that we will have enough money to achieve
what Sir Peter is capable of achieving, if that is not too Delphic.
Q163 Mr Holloway: What are the Americans
doing in this area? How tied in are we with them?
Lieutenant General Figgures: In
terms of understanding their future combat system we have very
close links with them. In terms of understanding their requirement
and understanding the means by which they have generated that
requirement and the means by which they have traded and so on,
as you might expect from allies we have had good visibility. In
terms of the procurement side I will defer to Sir Peter on that.
We have had good linkages in terms of co-operation with the United
States.
Q164 Mr Holloway: Are we determined
to create our own vehicle?
Lieutenant General Figgures: I
think this goes back to the discussion we had previously.
Sir Peter Spencer: We are buying
a capability which consists of three families of vehicles and
16 variants and, as you will know professionally, the Americans
fight in a very different way, their doctrine is different, so
we are responding to a requirement which is set by the British
Army and there will be a lot of the technology which is potentially
relevant, certainly it is vital that we remain interoperable,
but there are no plans at the moment to do a co-operative programme
based on FCS with the Americans.
Q165 Mr Holloway: Why not?
Sir Peter Spencer: Because we
do not believe that it solves the requirement of the British Army.
Q166 Mr Holloway: The Bradley is
not desperately different from the Warrior and the Challenger
is not desperately different, essentially they do the same job.
Why do we always have to create our own things from scratch?
Sir Peter Spencer: We do not always
have to create our own things from scratch.
Q167 Mr Holloway: We are in this
case.
Sir Peter Spencer: No, because
we are looking at vehicles which are already in development elsewhere,
so we are not creating something from scratch at all.
Q168 Mr Holloway: That does not answer
my question though. If the Americans are developing something
that in the end will be broadly similar to what we do, why have
we got all this expense?
Sir Peter Spencer: It will not
be broadly similar because the requirement is very much more ambitious
for the American requirement and it is not something which the
British Army has said that it wants to do. I respond to the requirement
as it is set out for us. We will look at those areas which we
have in common with the Americans, and it is quite possible that
American technology will feed in and will be appropriate, but
it is quite possible that technologies from other countries will
feed in as well because armoured fighting vehicles are designed
and made elsewhere in the world. Furthermore, we are not just
looking at the vehicle as a vehicle, we are looking at its total
capability, particularly communication, data, sensors, defence
systems, and the ability to integrate. All of that NEC type integration
into the order of battle for the rest of the assets in defence
has to be optimised to be integrated with the UK but remain interoperable
for coalition operations.
Q169 John Smith: Do you anticipate,
therefore, any intellectual property rights issues? Will we want
UK sovereignty in terms of the intellectual property rights for
this product? Will there be any technology transfer issues? We
have already heard that major American companies like General
Dynamics could be a principal bidder. How are we going to avoid
any JSF type issues?
Sir Peter Spencer: That is a very
good point to raise. As you will have seen in the addendum to
the memorandum which we sent in which describes the Defence Industrial
Strategy, IPR is central to this and operational sovereignty is
central to this, so there will be preconditions as to access and
use of technology and IPR and if those conditions are not met
then somebody who wanted to bid would be ineligible. The intention
is to ensure that we secure the necessary IPR to deliver operational
sovereignty through-life.
Q170 John Smith: You mentioned through-life
management and support which fits in with the Defence Industrial
Strategy. During this assessment phase, have you reached any conclusion
on how that will be delivered by the winning company, a joint
effort with the MoD?
Sir Peter Spencer: We certainly
expect from the outset to define what our requirements are going
to be over and above just delivering the vehicles and the other
capability to the Armed Forces. Looking at the models which have
developed in the Defence Logistics Organisation we would anticipate
to be contracting for availability and capability over life and
to make the economies that have already been scored in existing
programmes. It is also going to be important that we design into
the vehicles from the outset those things which will give us economies
and logistic support to make sure that we do get high reliability,
to make sure we do get the right sort of instrumentation, do the
right sort of instrumented upkeep and maintenance and to go for
open systems architecture for the electronics so that we can be
vendor independent and have "plug-and-play" in play
as we go through life to respond to changing circumstances.
Q171 John Smith: You mentioned in
response to an earlier question about not being held captive to
a single line supplier. Is that also being addressed in terms
of through-life logistical support and maintenance support?
Sir Peter Spencer: That is certainly
a major component. It is particularly important in terms of upgrades.
We will want to partner through-life with an industrial entity
which will provide us with support. There will always be in any
partnership exit criteria if it does not turn out well.
Q172 John Smith: Export potential:
is this something that is also being considered in the assessment
phase which you are now going through?
Sir Peter Spencer: Yes, it is.
As the Acquisition Strategy makes clear, the first priority is
to meet the needs of the Army and the second is to maximise export
potential. The export potential of this type of capability is
judged by the head of defence export sales and by various companies
as being very promising.
Q173 Chairman: Talking of the Acquisition
Strategy, could you possibly make available to us the letter from
the Minister for Defence Procurement to industry which outlines
the strategy?
Sir Peter Spencer: I will obviously
have to ask him to agree that, yes.
Chairman: If you could I would be grateful.
[6]
John Smith: On reflection, do you think
FRES was the correct acronym—Future Rapid Effect System—in
light of the evidence we have heard today about timetabling, in
light of the vehicle changing from a 17 tonne highly mobile vehicle
to a 30 tonne vehicle? I wonder whether there is a case for renaming
this project.
Q174 Chairman: Do you wish to answer?
Sir Peter Spencer: I think the
central part of the doctrine remains unchanged, which is that
if you are dealing with heavy armour it does take much longer
to deploy into theatre of operations. The "Rapid" here
applies to deployment, not to the acquisition phase, which I think
is the point you are making; a nice touch of irony. The fact of
the matter is we would be able to deploy into theatre quite rapidly
some very capable vehicles. In the business of preventing something
from getting worse in terms of "fire fighting" the opportunity
to do that still has a very high value in military thinking, but
clearly that would be the first phase potentially of something
we would need to follow up. Even if you are deploying by sea,
the logistic deployment of FRES vehicles will be very much less
and easier to manage than the logistic footprint of Challenger
2, for example.
Q175 Mr Hancock: You were reluctant
to give us the in-service date and I think at least half of the
Committee is probably supportive of your reasons why, but can
you give us the actual date when there was an agreement between
you and your customer of what it was they actually wanted? That
is the first question. I want to know the date when you agreed—
Sir Peter Spencer: Can I clarify
that I understand the question. What they wanted in terms of capability
or what they wanted in—
Q176 Mr Hancock: When there was agreement
between both of you that you both understood exactly what you
wanted and that you could deliver. It would be helpful if we could
know that agreed date of when that process then started the clock
ticking. My second question, if Dr Watson is trying to find that
date for us, is there a general reluctance on the part of the
Ministry of Defence and your agency to buy off-the-shelf solutions
to significant problems as opposed to smaller issues which are
readily acceptably coming off-the-shelf? Is there a pre-emption
on your part that it is always better to develop rather than buy
in?
Sir Peter Spencer: No, quite the
reverse.
Q177 Mr Hancock: Is there evidence
to support that approach?
Sir Peter Spencer: C-17 aircraft.
Q178 Mr Hancock: Nobody in the UK—
Sir Peter Spencer: Tomahawk missiles,
Chinook aircraft. We do buy substantial platforms from other nations
and avoid incurring the non-recurring expenditure where we can.
I respond to the requirement. If the requirement is stated in
a way that an existing capability does not meet it we then have
to make a judgment as to whether or not we do a development programme
nationally or enter into some co-operative arrangement with like-minded
nations. There is no predisposition against it. In fact, from
a narrow perspective of how we deliver procurement results we
are much more likely to deliver on time and on cost with an off-the-shelf
solution than we are with something which has a substantial amount
of development in it.
Q179 Mr Hancock: Is part of the problem
the length of time it takes for your customer to decide exactly
what it is they want? Your predecessor told us that time and time
again things were delayed because one or other of the Armed Forces
continuously changed the parameters of the equipment they were
seeking him to deliver for them. Is that part of the problem,
that they are not clear enough?
Sir Peter Spencer: I have not
detected that here. I think there has been a journey which we
have gone on together over the last two and a half years where
we discovered that the degree of protection needed was very much
greater than originally anticipated and that challenged the fundamental
concept of rapid deployment. In the case of the C-130, as was
pointed out earlier, it meant that frankly it was something which
was not achievable. Nonetheless, we have continued to test the
extent to which this type of capability remains relevant, and
all of the operational analysis demonstrates that it does, but
it has taken us that time to define those parameters in greater
clarity formed by ongoing operations in the Middle East.
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