Select Committee on Defence Written Evidence

Seventh memorandum from the Ministry of Defence

1.   The number of DPA staff employed when the current CDP took up post and the number employed now [Q127].

  In FY 03/04 when I took over running of the Defence Procurement Agency, there were 4,618 Full Time Equivalent persons employed in the Agency (both Civilian and Service). At the end of September 2006, this had risen to 5,398. However there has been significant change in the way the organisation has been operated, particularly the joint working with the Defence Logistics Organisation (DLO) which has culminated in the development of plans for the formation of Defence Equipment & Support from April 2007. Joint working has created common teams supporting both organisations, specifically the People Team and the Technical Enabling Services; these are "hosted" by either the DLO or the DPA. The growth shown is a result of transfers between the two organisations, principally the setting up of the Technical Enabling Service. Overall there were net 1,000 (approx) transfers into the DPA from the DLO and this increase was partially offset by a reduction of 220 staff in other DPA activities. If the transfers are discounted, on a like-for-like comparison, there has been a reduction of 4.76% (ie 220 personnel) from our baseline in FY 03/04.

2.   The progress in identifying skills gaps for the merged DPA/DLO organisation and how these are being/will be addressed, including whether the required training funding has been committed [Q139].

  Improving skills across our the workforce is an essential part of implementing the Defence Industrial Strategy. Within the DPA/DLO, a number of initiatives have been launched building on successful activity in both organisations in recent years. Skills Champions in five key areas (Commercial, Project Management, Financial, Logistics and Science & Technology) are developing skills growth plans. We do not underestimate the substantial change programme required and while the level of investment required to deliver this is still being assessed it is likely to be significant.

  Specific actions to date and planned are as follows:


  The Defence Commercial Director is responsible for developing an MoD-wide commercial skills improvement programme to provide the business with high performing people with the requisite commercial acumen, now and in the future. The programme contains a number of initiatives including additional recruiting from outside the commercial function and the targeted deployment of specialist commercial resources from within MoD and from the interim market. It will also address the key issue of reward and recognition.

  We have been running a Commercial Business Graduate Scheme since 2002 and 46 people have successfully graduated. The scheme will continue until at least until FY 07/08 during which we expect to take on a further 20 graduates. Each graduate costs approximately £57k to put through the scheme over a two year period. These are talented people and our seed corn for senior commercial positions in the future.

  In addition we are investing in home grown talent through skills development and Continuous Professional Development (CPD). So far, in FY06/07, MoD has spent about £750K on internal commercial courses delivered by "Defence Procurement Management Training—Centre for Acquisition Training" (DPMT-CAT).

  The professional "standard" for the Commercial function is professional attainment of the Chartered Institute of Purchasing and Supply (CIPS). In FY06/07, CIPS funding held centrally totalled £235K. This is for individuals to undertake Professional CIPS qualifications and Certificate of Competence examination fees. Currently MoD is sponsoring 54 students through their CIPS qualifications and 80 individuals sat the certificate of competences exams in April 2006, with an overall pass rate of 88%.

  We have invested £340K in a Blended Learning package that was launched in September 2006. This provides a mix of classroom and e-learning capability for commercial and other acquisition team members. So far we have had about 500 registrations to undertake training and initial feedback has been very positive.


  Increasing the professionalism and skills amongst our finance community is a major work stream and we see this as key to improving management of the business as well as supporting the wider initiative for Professional Skills in Government.

  We have established the skills requirements for senior finance posts in Integrated Project Teams across the DPA and DLO and have undertaken work to identify where shortfalls exist. We have then targeted appointments to these posts to ensure they are filled by suitably qualified and experienced staff and sought to provide appropriate skills training for others.

  We already have some 280 professionally qualified accountants across the DPA and DLO and a further 100 at various stages of training for formal CIMA qualification. However, we have identified the need to increase the numbers of qualified and suitably experienced personnel more quickly than we can get those under training qualified. As a consequence we have undertaken two external recruitment campaigns. These have resulted in three appointments to date. In addition we have established and funded a Graduate Recruitment Scheme for Trainee Accountants to provide a pool of people able to fill senior posts in the future. We have 11 graduates on the scheme—which started last year—and currently plan to recruit up to 10 a year.

  The funded programme of specific DPA and DLO finance training we currently have in place is aimed at improving the skills of both finance specialists as well as the broader acquisition community in areas where our analysis tells us we have the biggest need. This is underpinned by a wider MoD training and licensing scheme—The Certificate of Resource Management—which is administered in conjunction with Association of Accountancy Technicians. To date, 2,298 licences have been awarded across the DPA and DLO.


  We plan to implement a Project Management Licensing Scheme across all Project Managers in the DPA and DLO. A pilot of this scheme has been successfully completed with some 170 project managers. The costs for full roll out have been identified and are currently being prioritised.

  We will redevelop the Programme and Project Management (PPM) training and education within MoD to provide a blended learning solution taking account of the inclusion of PPM as a core element in the Department's Single Skills Framework and increased MoD-wide need for PPM training.

  Currently the DPA and DLO spend approximately £1.5 million per year on centrally funded Project Management training delivered in-house. Individual IPTs also fund training specific to their needs from within their individual budgets: this amounted to approximately £.5 million for 2005-06. Approximately £120k per year is allocated centrally from the DPA for the Project Management Development Programme (PMDP) which is currently supporting 80 active members. PMDP members follow a structured development programme that includes professional qualification through the Association of Project Managers (APM). Numbers on the scheme are increasing by 50 members per annum

3.   Whether the route clearance package UOR for Afghanistan outlined by Mr Lancaster [Q151] was the only available one on the market [Q152].

  There is currently no formal UOR for the procurement of either "Buffalo" or "Husky", which are equipments currently used by US Forces. The requirement for a route clearance capability to support current operations is being assessed by the Equipment Capability Manager and this may lead to a UOR in the future if required.

4.   How the Astute class submarines differ from the existing classes of submarines with regard to replacing components [Q187].

  The Astute Class is easier to maintain than current classes of SSN. Improvements to the existing processes for replacing equipment are detailed below:

    —  The design of the boat has ensured that repairable equipment can be accessed or replaced with minimum disturbance to other equipment.

    —  Larger access hatches have been fitted. For the first time in an SSN there is a logistics and an escape trunk in the main machinery space which allows for easier movement of equipment.

    —  There is no requirement to refuel the nuclear plant at mid life as the reactor is fuelled for its full 25 year life.

    —  More reliable equipment has been fitted which has improved efficiency, namely the Main Static Converters which are solid state and have replaced the rotating motor generators.

    —  The maintenance routines are based on reliability-centred maintenance analyses which produce optimised maintenance/replacement regimes which reduce non-operational time and support costs. This application of reliability-centred maintenance will lead to increased platform availability of around 75% for Astute compared to 69% for the current Trafalgar class.

5.   An explanation of the decision which has resulted in job losses at Rosyth [Q200].

  The combined size and scope of the three upkeep packages (HM Ships LIVERPOOL, CHIDDINGFOLD, and GRIMSBY) to be undertaken by Babcock Support Services Limited at Rosyth is broadly comparable to that originally specified by the Department in February 2006, although some of the tasks did change, for example to take account of additional repair work on HMS GRIMSBY. Along with the upkeeps of HMS CUMBERLAND (to be completed by Devonport Management Limited at Devonport, Plymouth) and HMS IRON DUKE (to be completed by Fleet Support Limited at Portsmouth), this work is part of the "Liverpool 5", the first work package to be managed under the developing Surface Ship Support arrangements. The Department is not aware of any specific decision that resulted in 90 job losses at Rosyth. These were deferred from earlier in 2006 and do not represent any additional job losses on top of those previously announced by BSSL, the owners of Rosyth Dockyard.

  In addition to this work, Babcock is a member of the Aircraft Carrier Alliance and is currently playing an active part in the Demonstration Phase of the Future Carrier project. The shipbuild strategy announced in December 2005 currently envisages one of the lower blocks being built at Rosyth, where the ships are also planned to be assembled.

6.   Confirmation as to whether or not the MoD pays for Spectrum charging on overseas operations [Q212].

  To date we have not paid any spectrum charges for deployed operations; although there have been suggestions from certain countries that we should pay for use on exercises, this has not progressed further.

7.   An explanation of what Plan B is in relation to the JSF programme and the status of Plan B [Q208].

  The Joint Strike Fighter is our "Plan A" for the Joint Combat Aircraft programme. We continue to work closely with the United States in order to ensure the UK's operational sovereignty requirements are met so we can sign the Production, Sustainment and Follow-on Development MOU. We are unable to go into specifics about our contingency plans. The Minister for Defence Procurement has previously made clear that such plans as are needed to maintain a fallback "Plan B" are in place.

1 November 2006

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