Examination of Witnesses (Questions 40-59)
GENERAL SIR
KEVIN O'DONOGHUE
KCB CBE, DAVID GOULD
CB AND LIEUTENANT
GENERAL DICK
APPLEGATE OBE
29 JANUARY 2008
Q40 Richard Younger-Ross: You seem
very pleased with its progress. Is there anything that delays
it or holds up any part of it?
General Sir Kevin O'Donoghue:
One of the strands was to produce an affordable and balanced budget
and that will be a challenge, as I think the permanent under-secretary
said.
Q41 Richard Younger-Ross: One of
the targets for performance management is the creation of a set
of metrics. Have those been set?
General Sir Kevin O'Donoghue:
We are setting them.
Q42 Richard Younger-Ross: By when
do you expect that to be done?
General Sir Kevin O'Donoghue:
We need something in place by the start of next year. The challenge
was to move from input to output metrics. How do we measure through
life capability? How do we persuade this Committee and others
that we are delivering through life capability in the way we say
we are? It is those sorts of metrics that we are now putting in
place. We shall trial them between now and 1 April and see whether
we can develop something that is meaningful in the way of a through
life capability measure.
Q43 Richard Younger-Ross: Not only
are you being asked for through life capability but the change
programme is meant to deliver capability more quickly?
General Sir Kevin O'Donoghue:
Yes. The challenge placed on me by Lord Drayson—it was placed
on the department because there are more players than just DE&S—was
to reduce acquisition time, particularly the demonstration and
manufacture bit of it, by 50%. The CADMID cycle is that the concept
phase is the concept phase. As to the assessment phase, I have
always resisted an arbitrary cut in time because I think that
for some very complex and highly technical projects you need a
longer assessment phase; you need to de-risk before you move to
demonstration and manufacture. But we are looking at ways to reduce
the demonstration and manufacturing phase by 50%. Part of it is
much quicker decision-making within MoD.
Q44 Richard Younger-Ross: You used
the words "looking at". Are there any examples you can
give to assure us that this is happening?
General Sir Kevin O'Donoghue:
FRES is quite a good example of reduced timescales.
Mr Gould: To give a specific example
emerging from FRES, what we have done with the demonstration trials—the
so-called trials of truth—is that rather than seek to develop
an entirely new vehicle from scratch we are taking existing designs
and finding out how much further development needs to be done,
so the amount of work that needs to be done at the D&M phase
is the minimum necessary to get to the initial upgrading capability,
not the complete redevelopment of an entirely new design. That
is one way of cutting into the time taken up.
Q45 Robert Key: Before we get any
deeper into detail I want to ask you about the philosophy of where
you think you are going. What do you believe the Ministry of Defence
wants? Does it want fewer people in your organisation or to spend
less money on that organisation?
General Sir Kevin O'Donoghue:
It is very clear that the government-wide target is a reduction
in the cost of overheads and that is the administrative cost regime
laid upon all departments.
Q46 Robert Key: If any organisation
is told to reduce the cost of people it can do it in two ways:
it can lose a large number of people who are not paid very much
or a small number of people at the top who are paid more. Which
are you doing?
General Sir Kevin O'Donoghue:
It will be both. This is not a downward pressure on numbers. How
many people do you need to deliver your outputs?
Q47 Robert Key: Are you relying upon
being able to buy in consultants for the expensive jobs and losing
more of the people who would be there if you did not have to engage
those consultants?
General Sir Kevin O'Donoghue:
A lot of the jobs will go because as we move to contracting for
availability a lot of the transactional work that we currently
do in-house will move to industry. As we form these partnering
arrangements quite a lot of the work done will move across to
industry which is better placed to do it. I think we shall finish
up with a higher skilled and paid workforce but a smaller one.
Q48 Mr Hancock: One of the criticisms
we have often had from industry is that the customer can choose
the changes and expectation of the particular equipment it has
sought to obtain. What will you do to overcome the issue of the
goal posts being continually moved by the customer who demands
changes and costs go up mainly, as manufacturers tell us, because
the process is not clear from day one?
General Sir Kevin O'Donoghue:
Perhaps I may separate that into two. You are absolutely right
that there is requirement creep, as it is called, and customers,
in this instance front line commands, will often change their
minds. That is something about which we need to be fairly rigorous,
unless it arises because the threat or security aspect has changed.
A very good example perhaps is electronic counter-measures where
the threat continually changes and the reaction by industry working
through the project teams has been outstanding. ECM equipment
is continually being altered to meet changing threats. We need
to become much more agile.
Q49 Mr Hancock: But in some instances
it has prevented much needed equipment coming into service, has
it not?
General Sir Kevin O'Donoghue:
You may be right, but there is always a balance. Do you want something
that is 80% right now—this is my view—with an open
architecture that you can build on incrementally as changes occur?
Q50 Mr Hancock: I would settle for
that, but we have not done it in the past?
General Sir Kevin O'Donoghue:
We have not always done so, but the line we are driving forward
now is to have an open architecture with incremental upgrading
and innovation to be added as required either by the threat or
as research and technology develop something much better.
Lieutenant General Applegate:
In addition to guaranteeing operational focus within the organisation
I work in the other direction to make sure that they are part
of the team and understand the consequences of some of the decisions
and the requirements they set. We want to make sure they are involved
in the trading process and understand the cost of some of the
things they would like to have. I am there to make sure they are
realistic and pragmatic. In a way, it is a matter of weighing
up the various competing demands of those in the front line, particularly
those on operations, those in the equipment customer community
in London who set the requirement and those in DE&S. One of
the roles of the Chief of Materiel is to span all of those to
try to make sure that we do not have an "us and them"
approach. We shall come back to FRES later, but part of the role
we have been playing is to make sure there is absolute realism,
that hard decisions are faced and that adequate briefing is given
so there is a greater understanding of the technological background
and proper cost implications, not keeping them at arm's length
and saying, "Well, that is our specialist business. You just
tell us what you want." Fundamentally, that is one of the
roles that we as Chief of Materiel have in dealing with each of
the front line services.
Mr Gould: A fundamental of good
project management is good change of control. What you need to
do is use the assessment phase to do the trading process to which
General Applegate referred and ensure there is a common understanding
between ourselves, suppliers and customers about the level of
capability following the assessment phase investigations which
will be pursued in the initial development and production standard.
I think you will find that our clients in the Armed Forces, the
users, are prepared to do that kind of bargaining provided they
can see in a long-term project that there is a growth path to
insert capability changes as you go through life in the future.
The key to the whole thing is good change control. The kind of
thing to which Mr Hancock refers happens when you do not exercise
good change control inside the project and that is where both
we and industry suffer the uncontrolled change to which reference
has been made. It is a fundamental of good project discipline
that that is carried out, working with the customer and supplier
to make sure it is done properly.
Q51 Chairman: There was a time when
smart acquisition was the Holy Grail. Do you say that defence
acquisition change has taken its place?
Mr Gould: I do not believe in
holy grails for project management; other people may do so. If
I were to write a book on the subject it would be called No
Golden Bullets or something like that.
Q52 Mr Hancock: Is it a change for
you, Mr Gould?
Mr Gould: No, it is not, but I
have learnt a lot over the years, believe me. It comes down to
the discipline of good project management. The change programme
can provide you with the right atmosphere, surroundings and conditions,
but fundamentally it is good project and good programme management
that gets you the right result. There is no magic formula. There
are some really good disciplines. I have here a 10-point card
which I am very happy to share with the Committee.
Q53 Chairman: What is the top point
on that 10-point card?
Mr Gould: The top point is that
we lay down the foundations of success early. Hindsight is a wonderful
thing, but for most projects that get into difficulties you can
look back and say that that was all foreseeable if only more attention
had been paid to it right at the start and people had not given
in to the temptation to compromise, ignore a difficulty and pretend
something could be done quickly when it could not be. I think
the most difficult thing is to retain that sense of objectivity
and realism in the programme but at the same time not lose the
ambition.
Q54 Richard Younger-Ross: My background
is architecture which is a form of project management. The one
bit I learnt as the defining point is that if you did not get
the brief right everything else would fall apart. A very good
example is defence procurement where the brief keeps changing.
Mr Gould: Fundamentally, one talks
about good change control, but that starts with having a really
good common understanding on both sides as to the project outcome
that is expected, the brief if you like.
Q55 Chairman: May we please have
copies of your card?
Mr Gould: You may indeed.[2]
Q56 Chairman: Who else has it?
Mr Gould: It is available on the
acquisition operating framework, so anybody who has access to
the defence intranet can obtain it.
Q57 Mr Jenkin: Did you give it to
the new minister?
Mr Gould: I am not sure that I
have yet, but I will make sure that is done.
Q58 Chairman: I am sure she will
look forward to it.
Mr Gould: I have certainly discussed
it with her, but I shall make sure she has one.
Q59 Mr Jenkins: I had the opportunity
to see Lord Drayson a couple of weeks ago. He took time off from
racing his biofuel cars round circuits in America and so on. He
said that one of the big differences between what he is doing
now and the defence side is that if in the afternoon a Formula
1 car suffered a broken strut when going round a track it would
be photographed, downloaded to the manufacturer, the alterations
would be discussed, the part would be made, flown out to the circuit,
fitted on the car and the car would be on the track next morning.
He does not expect the defence industry to achieve that pace in
the near future but there is a marked difference in terms of how
long it takes for it to get to that dealer and produce an enhanced
strut, or even get round to seeing the one that is broken. As
to Through Life Capability Management, would you like to explain
to the Committee what benefits you expect from this approach?
General Sir Kevin O'Donoghue:
Perhaps I may first comment on your initial statement. The way
we achieve what Lord Drayson describes is through contracting
for availability. When the cost of not repairing something falls
on the contractor he repairs it very fast. A good example may
be Rolls-Royce at Filton near Bristol. They have a military engine
operations room across the end of which is a big sign for the
Rolls-Royce workforce to see—we contract for availability
of engines—which says "Remember! Spares are now a cost,
not a profit". Harrier is another very good example. Under
the old way of doing business if something was wrong with a Harrier
photographs were taken, reports were written and it was sent back
to BAE Systems and perhaps some time later a view would be taken.
Now there is a BAE Systems engineer on site and he has to be available
within two hours. He may still say that it is not airworthy, but
at least a decision is made very quickly. That is because we are
pushing back onto the manufacture the risk of unreliable equipment.
Risks arise in a number of ways. Financial risk seems to migrate
back to the biggest player, which is ourselves; operational risk
will always stay with us, but I do believe that the risk of unreliable
equipment is one we must push back onto the manufacturer.
2 See Ev 40. Back
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