Select Committee on Defence Minutes of Evidence

Examination of Witness (Questions 140-159)


10 OCTOBER 2006

  Q140  Chairman: Yes.

  Sir Peter Spencer: Of course.[3]

  Mr Hancock: I am glad Kevan has come back into the room because I would just like to reassure members of the Committee who had not seen Sir Peter before that I have witnessed him on at least two occasions when he has been extremely passionate about what he believes in, both in his capacity as Second Sea Lord and also in his new role. That is not to flatter him but I think the record does need to be put right to a certain extent about that. Kevan is obviously disappointed by that remark but nevertheless—

  Mr Jones: I am trying to think what you are after, Mike!

  Q141  Mr Hancock: To protect Portsmouth's interests! The commercial is over and I am sure Sir Peter will take both comments in the spirit in which they were intended. In Preview in July it was suggested that there were a lot of changes in your organisation, the DPA and the DLO and they have been through quite a lot since the creation of it in the 1990s. The staff have had to deal with major initiatives, Stocktake, Smart Acquisition, the DPA Forward programme, etc, and now in the July edition of Preview the suggestion is that you are going to lose something like 450 jobs, nearly 10% of your staff, over the next two years or so. That is a big cut in an organisation which has not really found its feet properly but is on the way to getting there. How are the staff going to cope with what they are expected to do, with the training you want them to have and the loss of 10% of the workforce at a critical time both for your organisation and for the men and women on the front-line?

  Sir Peter Spencer: Part of the reduction was brought about by the forward look at the number of new projects which we will be managing, and I think that has been made clear in the Defence Industrial Strategy. However, we have just been through a period of buying quite a lot of new big and complicated platforms and we have still got a few more to buy, and we will come on to that later. But in the main the focus now is going to be much more on technology insertion on existing platforms and much of that work is done inside the DLO anyway by project teams, albeit that they are accountable to me currently for the outcomes. Secondly, we had to accept our part of the Gershon efficiency savings, and I think it is no bad thing to ensure that projects are properly sized. I think the onus, as you would expect, lies on the leadership to ensure that we are using those individuals to best effect, and all I would say is that there are inconsistencies between the way in which projects of similar sizes have been populated in the past which are more to do with the way it has always been as opposed to having a really thorough look at how a project needs to be set up. One of the problems which we have grappled with is when you have got a limited number of people with real expertise, the way in which we have empowered project leaders previously has effectively allowed them to own people who we might use to better effect by being a bit more flexible.

  Q142  Mr Hancock: How selective are you going to be and are we going to find ourselves in a position where we let people go and then we re-hire them in a different guise as consultants?

  Sir Peter Spencer: I hope not. I cannot stop people leaving. What I would say is that my strong preference is for the work to be done inside the project by properly experienced people, and so it will take time as we get the up-skilling arrangements in place. Meanwhile the most important thing as we form up the new project groupings with the DLO, who in generality tend to have projects with larger numbers of people in them, I think there is going to be much more scope for the individual two star board members who are going to be entrusted with managing groups of projects to take a much more thorough look and decide how they might redistribute within the cluster of projects they have got.

  Q143  Mr Hancock: Do you have the facility to be able to slow down the process of loss of staff, to be able to cope, or have you got this target which has to be met?

  Sir Peter Spencer: The Gershon targets have been set for the agency. In terms of loss, the loss from the agency over and above planned retirements is extraordinarily low.

  Mr Hancock: That is fine.

  Q144  Mr Jones: You mentioned the issue around IPT leaders which is very important in terms of making sure that projects go forward. What are you doing to ensure that you actually get the right people doing that job rather than what has been seen in the past possibly as a nice pre-retirement job for somebody before they leave the Armed Forces, for example? Have you any mechanisms in this organisation to ensure that you are going to get the very best people to do this?

  Sir Peter Spencer: We have had that mechanism in place for several years now. I have removed a number of team leaders from their posts who have not been capable of doing the work, and so the sort of message I get from people when they leave now is, "It used to be quite fun being a team leader until you rolled up, now there is a rather sharper edge to it." That is where we need to be.

  Q145  Mr Jones: What is your role, Sir Peter, in terms of ensuring that you get the right people in the first place?

  Sir Peter Spencer: The way the process works is that most team leader posts are competed and that competition is sometimes an open competition, sometimes it is within the Ministry of Defence and the Armed Forces. I take a look at the proposed shortlist so that anybody who is then subsequently interviewed I have confirmed before their interview that I would be content for them to be appointed. In other words, I take a long, hard look at their ability and their expertise to ensure that it is a reasonable thing to ask them to be doing. This has bought me into some discussion, as you might imagine, with other parts of the Ministry.

  Q146  Mr Jones: Can you be overruled by, for example, the MoD who want to palm somebody off on you before they go off on retirement?

  Sir Peter Spencer: It has happened the other way round. Where the conflict has been, and it is a friendly conflict, has been my insistence that if I am going to be held accountable for results (and I wish to be) the most important decisions I make are the people who are going to deliver it, which is why I went open competition for an operations director and for a commercial director and for two non-executive directors because there is no room for sentiment here. This is business, and we need to get people who are of the right ability and background in order to do it. The challenge we tend to find when we go to open competition is that there is a national shortage in quite a lot of the skills areas we are looking for and some of the very best have got good jobs somewhere else, thank you very much, and then we have to compete either on salary, or on the quality of the work and the interest, or a combination of both.

  Chairman: There is a series of questions about key targets that we propose to write to you about because they are rather technical and detailed and are not really the subject of good oral evidence, so we would like to move on to Urgent Operational Requirements and Kevan Jones.

  Q147  Mr Jones: Sir Peter, the NAO Report said the DPA performed well in terms of Urgent Operational Requirements and the Committee have seen some of those first-hand both in Afghanistan and Iraq. Are there any lessons that can be learned from those UORs in terms of major procurement issues?

  Sir Peter Spencer: There are some very powerful lessons. I think the three most powerful principles are go for something which is off-the-shelf or as close to off-the-shelf as you can get; secondly, make sure right from the outset that the front-line end user is involved in defining the requirement.

  Q148  Mr Jones: Can I just stop you on that. When you say the front-line user, do you mean the squaddie who is actually using the equipment at the front end or the commanding officer, because I have found there is a big difference between what a commanding officer is saying and what the man or women we are asking to use the equipment on the front line is saying?

  Sir Peter Spencer: That is a good point. I think probably not often enough do we get the actual user. When it is Special Forces we do. A key lesson from that is when somebody rolls up as front-line user, it is a good idea to make sure that it is a real front-line user. Without boring the Committee now, I have a very similar experience from years ago of getting involved with officers trying to say that something was needed which the sailors who were using it really did not need and there being quite a confusion. The third point is to ensure that we go incremental. I think a lot of procurement problems ultimately, when you are measuring performance, go back to people get carried away with their own enthusiasm and extending the financial liability beyond the envelope of their understanding of the uncertainties. So build a bit, test a bit, build a bit, test a bit, as long as you do it rapidly and you have not got long periods of time where you are waiting for decisions to be made and you have a rolling concurrent programme is a way of doing that. Then once you have got the project on contract you need to keep the end users properly engaged. I think that we are probably better at getting the right end user engaged at that time because, in the main, if you are looking at something which is fit for purpose and reliable, you need troops to test it, and we have done that, for example, with the Functionally Integrated Soldier technology system, where we had a number of soldiers who came and wore the equipment and used it in exercises and we could then measure not only the performance but find out where the weaknesses were. Often it is just not being made rugged enough and reliable enough for the sort of terrain in which it is to be used.

  Q149  Mr Jones: This is becoming a highly political situation at the moment because people are homing in, for example, on the vehicles in Iraq and Afghanistan, so there is a spotlight being put on to it. How confident are you that you can as an agency react quickly to some of these issues because—and again it is not me saying this—there is a school of thought saying you civil servants are down there in Bristol labouring over all these long projects while our men and women are being exposed in Iraq and Afghanistan. This is going to be an increasing problem for us as we do more operations and is going to lead to the situation we have got in both Iraq and Afghanistan. How can you give assurance to those people that you are reacting rapidly to those issues?

  Sir Peter Spencer: I think the performance on UOR speaks for itself and certainly when we have questioned people over the last three or four years, they thought the UOR that was delivered gave them what they needed. It was a 98% success rate. So in terms of when we go UOR, we know we can do it and I think you will always be judged on your performance as opposed to your propaganda. So far as trying to speed up the more conventional processes, speeding up the Vector vehicle is one example of that and the speed with which we have moved with Mastiff is another example. Where we are going to have to be very careful is the speed at which you have to make those decisions means you run a higher risk of not understanding what the full requirement is, and therefore you just need to be very careful as you start to deliver that somebody does not say, "By the way, it also needs to do A, B and C." That is manageable so long as you keep in mind the point I made about incrementality. So long as you say okay, we are going to get you precisely what you ask for and it is going to have some stretch potential, and that is phase one. Then when as operations evolve you realise there is something else you want, you then say that is phase two and you approve it as a separate project. Then so far as public accountability is concerned you have got two successful projects. If you are not careful, the idle way of doing it is to say, "By the way, the requirement is now this and I would like to resubmit." You then make two successes look like one single failure. It sounds trivial but we have been completely bedeviled by this sort of slackness in managing.

  Q150  Mr Jones: I do sympathise with you. Sometimes the MoD is not clear in what they actually want but if you are a man or woman in Afghanistan or Iraq, the important thing—

  Sir Peter Spencer: —is to act quickly.

  Mr Jones:— is to act quickly but also in terms of vehicles it should protect those individuals. Trying to explain that to their families as well is the key point.

  Chairman: Can I bring in Mark Lancaster.

  Q151  Mr Lancaster: I am intrigued by you saying the important thing is to act quickly because it is, but I fear that sometimes the need to feel that you have to act quickly is not necessarily working in our soldiers' interests. Can I give you one example, and I do not expect you to comment on this example, but there is a UOR just gone in for Afghanistan for a route clearance package, which is a combination of vehicles, American vehicles, Buffalo and Huskies, and they go and clear IEDs off the road. It has come in because the threat is changing in Afghanistan, but when you actually go and talk to the American soldiers using this equipment you discover that one piece of equipment (because this package was designed for Iraq for the nice Tarmaced roads there) is completely unsuitable for Afghanistan and one of the pieces—and I am not going to go into too much detail for obvious reasons—is simply not being used in Afghanistan and so this notion of we have to react quickly is potentially resulting in us buying the wrong piece of equipment. I have some concerns that we can go too far. How do you address that? Clearly nobody had spoken to the first sergeant who is using this equipment in Kandahar.

  Sir Peter Spencer: I think the clue that was given by Kevan in ensuring that you have got the right end user is pretty fundamental. I do share the concerns but there is a balance to be struck between proper propriety to say let us make sure we have understood this requirement, we are asking for the right thing, we understand the costs and this is not the thin end of a wedge which is going to cause us to spend huge amounts more money putting right the wrong appliance. But by the same token what we cannot do is then apply very slowly the full assurance and scrutiny process which bedevils the rate at which we have laboured in the past. To be positive about it, that was why it was so important that in setting the metrics of performance for the new organisation, agility and speed of response in delivering the right thing to the front-line is going to be encapsulated and more importantly—and I should have said it earlier—at my insistence, those targets are going to be written by the military. The work strand is led by the Vice Chief, Tim Granville-Chapman, who is in consultation with the three Services because one of the problems that you have if you set up a target set without properly involving the end users is that you could end up meeting your targets and they do not feel good about it at all, and what you have done is to satisfy an internal agency requirement which has not been aligned with the real needs. That is the trick of all this is; to put the intellectual effort in and involve the right people so that when you meet the targets there is a wow factor out there.

  Q152  Mr Jones: You have just said involving the right people. I think the example that Mark has just outlined—and it is perhaps not your fault but you are perhaps talking to senior people in the MoD, even military people, and are not talking to the squaddie or the person who needs to use the kit. I think that is one of the fundamental changes that needs to happen.

  Sir Peter Spencer: I will look at the detail because occasionally there is nothing available in the market place that will do something and it may be that was the only thing they could get, which may not be as good in one theatre as in another clearly.[4]

  Q153 Mr Hancock: Chairman, why would you buy a piece of kit with that on it if you are getting good advice that it is a pointless bit of kit to buy on a vehicle? I can understand the need but I think there are some judgments to be made. I am annoyed when I hear Prime Ministers say time and time again that commanders only have to ask and we will deliver and yet you hear then of soldiers dying because their vehicles are not properly armoured. Yet there are adequately armoured vehicles that are available, as you said, off-the-shelf, from other countries which could deliver the basic commodity which they need, which is a safe journey from their base to where they are expected to be in operations.

  Sir Peter Spencer: With respect, I think we have to break that down a bit into its component parts. I did not say that there were vehicles that would guarantee the safety of British Armed Forces.

  Q154  Mr Hancock: Give them better protection than they currently have in some of the vehicles they are driving around.

  Sir Peter Spencer: And that is the whole purpose of the current procurement activity.

  Q155  Mr Hancock: How long does that process take if you are buying it off-the-shelf and it is only a vehicle that is delivering personnel from one location to another and is not expected to do anything other than that role?

  Sir Peter Spencer: It rather depends as to how many there happen to be with the supplier because although they might be able to provide one very rapidly, in order to get a realistic number, generally speaking these days, people operate lean supply chain manufacture do not have large numbers of complex and expensive bits of equipment stacked up in a warehouse. In the case of Mastiff we managed to place that contract within a very short space of time.

  Q156  Mr Hancock: From start to finish give us an example then. You let the contract: how long did it take you to get to the stage of letting the contract and how long will it be for the vehicles to be fully operational?

  Sir Peter Spencer: We let the contract in under a month from being asked to do it and that was in July and the first vehicles are planned for delivery on 17 November. So you can do it within a few months, depending upon the article and depending upon the availability from the manufacturer. Occasionally of course you can intervene and see if another nation is willing to allow something to be diverted.

  Q157  John Smith: I just wondered, Chairman, following on from the earlier point about training, were there any plans to introduce new training programmes to try and improve this agility of response? Because we are not going to the NCOs on the front-line, I wonder whether there is a training requirement there? You said we were using the Defence Academy for training not just civil servants but the military for improving our delivery of defence procurement. How far are we going to take it? Are there going to be any plans for NCO training in the proposed new Academy because I know there is going to be a whole department on logistics and logistical support.

  Sir Peter Spencer: They have already achieved training within the DLO training organisation, all of which will be owned by the Defence Academy from 1 April which will, I think, give much more coherent, cost-effective training across defence. We do need to train people to be more agile in their procurement processes, and that is people involved across the spectrum, from those who state the requirements through to those who are negotiating contracts.

  Chairman: We will have more questions to ask about vehicles in later inquiries. Robert Key?

  Q158  Robert Key: I want to say, Sir Peter, all power to your elbow for recognising that you can do things quickly, although I would point out that there was an Urgent Operational Requirement for a Mastiff-type vehicle in 2001 which somehow got lost in the system, but that is history. Could I turn to the question of Chinook Mk 3s. We were all delighted to hear the Prime Minister say what he did about the Forces having the requirements that they needed to do the job. I thought particularly then of the eight Chinook Mk 3 helicopters in my constituency that have been sitting in hangars since 2001. I do not want to go back over why that happened. The Public Accounts Committee and the NAO have already told us roughly what happened. What I would like to hear from you, please, is what is now happening to those eight Chinook Mk 3s which are urgently required in Afghanistan and Iraq? Estimates were made that Boeing and the MoD are working to fix this problem, but the cost appears to have doubled from £4 million per helicopter to £8 million. The date for in-service operations seems to have slipped from 2007 to 2010 or 2011. Could you please explain what is happening with those eight helicopters, which cannot be flown except in the most benign conditions because they cannot be certified?

  Sir Peter Spencer: The position today is that a Boeing team has arrived in Bristol to go through what I hope will be convergence on the final negotiations for a contract which is both affordable and satisfactory in terms of where the financial risk lies. This has been a much more difficult problem to unravel than had been anticipated. I have pressed the team very hard because I could not understand the timelines. When I looked into it, I discovered the extent to which we just had not completed the original design for the cockpit, so we have got to finish off the cockpit and we have also got to sort out the safety issues and we have also got to sort out the certification and airworthiness issues. We then have to sort out the priority for delivering the work because clearly there are options as to how fast you can push that through, and that will need to be judged against priorities elsewhere in the programme by the equipment capability community.

  Q159  Robert Key: Have you got any date in mind as to when they might be operational?

  Sir Peter Spencer: It is so delicate at the moment that I can only risk your irritation by saying early in the next decade remains the current publicly stated forecast. Ministers are taking a very close interest in this. When the answer does emerge I am sure the Minister would want to tell the House first. It would not really be for me to pre-empt that. I can assure you that I am on the case and he is on case. I talk about it regularly with the CEO in Boeing, Jim Albaugh. I saw him in London two weeks ago and I have another telephone call arranged with him for either Thursday or Friday of this week, so we are doing everything possible to drive it through and get on with it.

3   See Ev 54 Back

4   See Ev 55 Back

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