Examination of Witnesses (Questions 20-39)
DR FRANCES
SAUNDERS, MR
PETER STARKEY
AND MR
MARK HONE
28 NOVEMBER 2006
Q20 Mr Hancock: How does that compare
with our European neighbours or other countries? Where are we
in the hierarchy of having a government agency specifically remaining
in government because of the sensitive nature of the type of work
you are doing? How does your share compare with your counterparts
elsewhere?
Mr Starkey: We cannot give you
an authoritative answer to that, we can follow that up.[1]
Q21 Mr Hancock: But you talk to them?
Dr Saunders: We do talk to them,
yes.
Q22 Mr Hancock: Do they say: "You're
doing a lot for a little and a lot of our government share of
the action is coming our way"?
Dr Saunders: No, I think we would
have to give you some actual figures in order to be able to illuminate
that, but we will look at doing that.
Q23 Chairman: Would it be more appropriate
to ask Mr Woolley to do that, for example?
Dr Saunders: It may well be that
between us we probably have that information because we, obviously,
do talk on a laboratory-to-laboratory basis and he would have
the figures on the overall spend.
Q24 Mr Hancock: We were told earlier
this year by the Chairman of QinetiQ that he believed that it
would be necessary for a 25% increase in research on defence expenditure,
and that he believed that QinetiQ ought to be getting the lion's
share of that. What is your view on that?
Dr Saunders: I do not think I
can really comment on what the Chairman of QinetiQ's views are.
Q25 Mr Hancock: You are the Chief
Executive of your organisation. I am asking you to tell us what
you think you ought to be getting out of that.
Dr Saunders: I would go back to
what Peter was saying, in that we are here to do the things that
need to be done in government. So it is not about a share, it
is about being very clear with our customers in government what
it is they expect of us, at a detailed level. When do they need
to use us and when could they use others? We do not have any targets
that say we need to grow by a certain amount, or whatever. That
is not the kind of business we are; that is what makes us a bit
different, I would suggest, from QinetiQ.
Mr Hancock: When this Committee
did the DERA break up it was very controversial for this Committee,
and Chisholm and his colleagues had a hard time from the Committee.
We were very concerned about the split and the constraints that
were going to be placed on you by QinetiQ wanting to not just
corner but to occupy the overwhelming majority of the research
and development ground; that you would be, eventually, squeezed
and your remit so tight that you did not have any scope for both
securing your own future and holding on to the very people you
were talking about keeping at that level of expertise and competence.
What are you doing to ensure that you can—
Chairman: Keeping the people is something
we want to come on to later.
Q26 Mr Hancock: Not that; I am more
concerned about the squeeze.
Dr Saunders: Actually, I think
we have done pretty well over the last five years. If you look
at it we have not been squeezed. The reason that has been the
case is because we have focused on doing things that are really
important to our customers and MoD. So we are not doing things
in the margins; we are doing things at the heart of the defence
agenda, and we have been doing work in support of some of the
major equipment programmes where we are doing something distinctively
different from the QinetiQs and the others. We have carved out
a niche for ourselves which I think is a very valuable part of
the contribution that science and technology can make to defence.
We are very happy with that niche, actually. It is clarified for
us; we do not straddle a boundary between private sector and the
government; we are now very clearly on the Government's side and
doing those things that really make a difference. The kind of
accolades and feedback I get from senior people in the Ministry
of Defence now are much more heartfelt in terms of the thanks
they say for the things we do than perhaps we had when we were
DERA. So I think we have carved out a very clear niche for ourselves.
Q27 Mr Holloway: Can you help us
to visualise the sort of things you are doing? What are these
things that need to be done in government?
Dr Saunders: To give you some
examples, in terms of some of the work we did in support of operations—I
am sure Peter will join in with that—we deploy scientists
out into theatre on a rolling basis; every three months we put
a scientist out into Iraq—
Q28 Mr Holloway: How can we visualise
the sort of things you are doing that industry is not?
Dr Saunders: Industry does not
do that.
Q29 Mr Holloway: Sure, but the basis
of my question is what sort of projects are they, and in what
sort of areas? Can you take us through some?
Dr Saunders: Do you want to take
us through what we are doing on FRES?
Q30 Mr Holloway: So FRES is one.
What other stuff?
Dr Saunders: FRES is one. Joint
combat aircraft—
Mr Starkey: Essentially, we have
a role in all acquisition decision making, in that we are providing
an in-house, evidence-based—
Q31 Mr Holloway: We have heard that,
but what sort of things? FRES, future combat aircraft.
Mr Starkey: Future combat aircraft,
carrier strike, NEC, right through to things which are, perhaps,
less obviously tangible, like the future defence supply chain
initiative, which is about how we better organise the logistic
supply chain in the UK and in Germany. That is being provided
by industry but actually the work that we did was to look at what
is it that is there at the moment, to model the way that logistics
flowed through the system and, actually, to come up with both
confidence that there were improvements that could be made and
then metrics—
Q32 Mr Holloway: But none of the
things you have said so far, certainly in the way you have explained
them, suggest that they need to be done in government. Commercial
organisations do that. What is it particularly about what you
are doing?
Dr Saunders: To give you another
example that is clearly within government, the work we do in support
of detecting and defeating improvised explosive devices. Clearly,
there are a lot of sensitive security issues and intelligence
issues that we do not want to widely communicate out into industry.
So you need to blend that with the technical expertise we have
to be able to design countermeasures that actually work. Similarly,
support we have been doing on helicopter survivability where we
have been able to work with the warfare centres to develop tactics.
So we are not just talking about developing pieces of equipment
and science, we are talking about how those things are deployed
and the tactics that they use. We are helping the warfare centres
train the pilots of helicopters to make them more survivable when
they go out and fly in Iraq. Those are very different sorts of
thing, not things I would suggest industry would be doing.
Q33 Chairman: How, in respect of
improvised explosive devices, for example, do you divide up what
you as Dstl do and what is done in Abbey Wood? We visited some
of the things they do there.
Dr Saunders: Abbey Wood are, primarily,
the procurers and we work very closely with the IPTs that are
procuring the equipment to be used in theatre for operational
requirements. We actually do some of the design work and we come
up with the ideas for what we are going to do next. So we are
actually coming up with the solutions ourselves.
Q34 Mr Borrow: Moving on to competition
for this research spending by the Ministry, to what extent is
that likely to affect your organisation?
Dr Saunders: As we have said,
our framework document says we do not compete, so the proportion
of the research budget that is being opened up to competition
is actually not open to us anyway. So, that does not affect us
in that regard. We have clearly been working in support of our
colleagues in the Research Acquisition Organisation to help them
run some of those competitions and to do some of the peer review
alongside academics as to the proposals that are coming in under
competition.
Q35 Mr Borrow: Does all your work
have to be done within government for national security reasons?
Dr Saunders: It is not all for
national security reasons; some of it is for national security
reasons. Some of the other reasons we do things in government—and
this is really what Peter was saying about some of our support
to major procurements—are where we have access to sensitive
commercial information from a number of the different suppliers
and we have to act with integrity and make sure that information
does not pass from one area to another. So it is sometimes handling
sensitive commercial information.
Q36 Mr Borrow: On this competition
issue, if as an organisation you cannot compete and the Government
increases the proportion of research spending that is open to
competition, that, presumably, will have a knock-on effect in
terms of the proportion that you are likely to be getting.
Dr Saunders: At the moment, as
we have said previously, we currently get 37% of the budget and
the rest of it is what is being opened up to competition. There
has been no indication that anybody is going to change that percentage
at the moment. Obviously, if there was a change in the volume
of research then maybe there would be a re-look at that policy,
but that is one of the targets at the moment the research budget
has to meet with, which is to give us this 37%.
Q37 Chairman: Do you accept the premise
of what David Borrow was just asking: as an organisation you cannot
compete?
Dr Saunders: Yes.
Q38 Chairman: Why are you a trading
fund exactly?
Dr Saunders: There are two reasons
why we are a trading fund. As you will know, we have been reviewed
in 2004 and 2005 just to check whether or not the trading fund
is still the right business model for Dstl. That concluded that
there were a couple of quite big advantages of being a trading
fund. For me the most important one is the customer/supplier relationship
and the real focus on the customers. So I think it helps customers
to understand the cost of what they are buying, and then they
can make decisions about whether they want to purchase that from
us and whether they are getting good value for money. So this
whole customer/supplier relationship; having the discipline of
customers saying what they want and then us proposing a solution
to that and having a debate about does that seem like a fair price
for what you are going to be getting. I think it is quite a healthy
debate and it stops Dstl being any kind of self-licking lollipop,
because we clearly have to be focused on doing the things that
our customers are looking for. The other benefit is just in terms
of being in charge of one's financial future. Part of being a
trading fund has allowed us to retain profits in order to be able
to afford to do our rationalisation programme, and if we were
not a trading fund we would not have been able to do that. I think,
therefore, it makes, if you like, the chief executive of the organisation
more accountable for making sure that they maintain the infrastructure
and maintain the skills than if this was just an on-vote organisation.
Chairman: You are giving us very
helpful, crisp answers which are directly addressing the questions
that we are asking. Would that everybody did that. So thank you
very much indeed.
Q39 Mr Jenkins: There are rapid changes
you are making at the moment, particularly this laboratory you
are building. How much did that cost and where is the money coming
from?
Dr Saunders: I have got the figures
here. It is £94.7 million, which is the maximum price. We
have gone for a project that is a mixture of building a new build
at Porton Down and refurbishing our site at Portsdown West. We
have gone for a maximum price of £94.7 million and a target
price of £92 million.
1 See Ev 36 Back
| 
