Select Committee on Defence Minutes of Evidence


Examination of Witness (Questions 112-119)

SIR PETER SPENCER KCB

10 OCTOBER 2006

  Q112 Chairman: Sir Peter, good morning and welcome. Thank you very much for coming to give evidence about procurement to the Committee.

  Sir Peter Spencer: Thank you for inviting me.

  Q113  Chairman: Not at all. There are four main areas that we want to cover, but I think on two of them we will be asking questions in writing to you, and those are the performance targets and the DPA's performance against your targets, and also the smaller projects that we took evidence on earlier in the year. We think that those could probably best be covered in writing rather than by cross-examination of you.[1] So the ones that we want to concentrate on mostly today are the merger between the DLO and the DPA and various major projects, including the Astute submarine, the carriers and others. So if I may begin, Sir Peter, with a question about the merger of the DLO and the DPA. We were told that the way the organisation was going to be run and the performance and management system would be set up by September. Has that happened?

  Sir Peter Spencer: The organisation has been set up and announced, and in broad outline we have described the purpose, the aims and the objectives, and we have named the key players that we can who will be in board level positions. There are a number of other work strands which are at varying degrees of completion which are going to focus in on the detail of how the performance metrics will be set, both for the organisation and for the Ministry of Defence as a whole. Central to this is the principle at the heart of the Defence Industrial Strategy which is that we should measure performance in terms of delivering through-life capability.

  Q114 Chairman: Okay. Have you worked out precisely how that is to be achieved within the new organisation?

  Sir Peter Spencer: Without wishing to be pedantic, if I could just stand back from this and say that there are four phases to the project. Phase one was to define what the organisation would look like and set out in broad principles how it will operate.

  Q115  Chairman: That was to finish by September?

  Sir Peter Spencer: The end of September and that was completed on time.

  Q116  Chairman: That was completed on time.

  Sir Peter Spencer: Phase two has now begun with giving a set of instructions to each of the two star board members to define in outline what it is we want them to do, to tell them what their job is, define in outline what it is we wish them to deliver, and for them to do the more detailed work as to how in each of their areas they might need to make some degree of change to deliver the targets which they have been set and to live within the resources which have been provisionally earmarked for them, which we will achieve at the end of December.

  Q117  Chairman: Sorry, when will you achieve phase two?

  Sir Peter Spencer: Phase two is planned to be achieved at the end of December, which then initiates phase three, which is the next level of detailed work of engaging with the workforce in a much more detailed way to explain what it means for them. However, we will have deep chilled the design by that stage so we will know we have got something which is adequate for the purpose as a new organisation which vests on 2 April (because the 1st is a Sunday). That is important because there will be a lot of communication with all of the people involved, and by communication of course I mean not just telling them how it is going to be but listening to the particular points that they have got. There will still then be in the very fine detail the same sort of opportunities as are happening now to consult because although the leaders with the two stars are already consulting with the people that work with them. All of this draws upon what we did when we did the DPA Forward project inside my own agency. It recognises that the people who are really very familiar with the patterns, in the main, will go a very long way towards implementing change, so long as it is change which has been explained to them properly, and you have given them boundaries within which you want them to operate. But you do not try to dictate explicit, cookery book instructions to them because it does not work.

  Q118  Chairman: Okay, that is phase three. Phase three will be completed by when?

  Sir Peter Spencer: It will be completed by 1 April so from 2 April phase four is the first year of operation of the new organisation and during that year there will then be the first of the post-project evaluations to take a look to see to what extent the organisation is going to be delivering what is needed and then to be prepared to make any further adjustments at the end of that first year. During that first year the intention is to measure the performance publicly by the existing PSA targets for delivery of projects and by the same targets that are in place for the current Defence Logistics Organisation, but to shadow trade in a new set of targets which will be optimised to measure the organisation's ability to deliver year-on-year improvements in through-life capability management and some other performance metrics as well, including agility in terms of responding more rapidly than we do at the moment to the needs of the Armed Forces.

  Q119  Mr Jones: Yourself and the Civil Service do not actually believe in this merger, do you?

  Sir Peter Spencer: Yes I do, and that is a passionate belief.


1   See Ev 49 Back


 
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