Examination of Witness (Questions 140-159)|
10 OCTOBER 2006
Q140 Chairman: Yes.
Sir Peter Spencer: Of course.
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
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
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
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
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
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 becauseand
again it is not me saying thisthere 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
Sir Peter Spencer: is to
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 piecesand I am not going to go into too much detail
for obvious reasonsis 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
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 importantlyand I should have said
it earlierat 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 outlinedand 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.
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
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.
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