Examination of Witnesses (Questions 80-99)
GENERAL SIR
KEVIN O'DONOGHUE
KCB CBE, DAVID GOULD
CB AND LIEUTENANT
GENERAL DICK
APPLEGATE OBE
29 JANUARY 2008
Q80 Robert Key: I recall that that
happened also with the Hercules upgrade?
Mr Gould: That was much more difficult.
Lockheed had a number of very significant problems on that programme.
Q81 Chairman: Therefore, no contingency
has been built in for this happening?
Mr Gould: A contingency is always
built into a project, but if we did that for every single risk
that we identified in terms of time and money you would criticise
me for coming in under budget on all of the projects and wasting
resources which could have been used for something else.
Q82 Chairman: When did we last criticise
you for coming in under budget?
Mr Gould: You never have.
Q83 Chairman: Because you have never
done it?
Mr Gould: On the original Trident
programme, yes, I did. We had a very large contingency in there,
but if you fund a very large contingency it takes money away from
other projects that you are doing.
Q84 Chairman: Surely, what a large
contingency does is create a realistic defence procurement programme?
Mr Gould: I would say you should
put into the contingency a sum that budgets and funds in time
and money for the risks that you believe are the most likely outcome
in the project. That is really the definition of what we call
the P50. If you put in every single risk, including those that
you think are unlikely to emerge, you will over-egg the contingency.
Q85 Chairman: This one being not
usual; it had happened before?
Mr Gould: It happened before on
the MRA2 but not during the wind tunnel trials on the MRA4. How
much collective memory is there? How long a gap was there between
the MRA2 conversion programme and the MRA4? It was something in
the region of 20 years. It would not be surprising if some of
that experience was lost.
Q86 Mr Jenkin: Do you think that
the Airbus consortium is in possession of this wisdom? It is producing
what will be a production aircraft ab initio; there will
be no trials before it starts to produce it.
Mr Gould: Are you referring to
the A400?
Q87 Mr Jenkin: I refer to the A400M.
Mr Gould: There will certainly
be flight trials.
Q88 Mr Jenkin: I appreciate that
it will do flight trials but it will be with a production aircraft.
Do you think we should build in a bit of extra contingency for
see-sawing, yawing and pitching?
Mr Gould: I think we should take
a very cautious view of the time it will take to complete flight
trials on A400. It is an extremely challenging programme. The
one most like it in my view is the American C17 programme which
is now extremely successful and we are doing very well with it
but, my goodness, it went through problems to bring it to where
it is today.
Q89 Robert Key: Which other major
projects are sharing cost growth in this financial year?
Mr Gould: Cost growth is Nimrod.
Q90 Robert Key: Where are you making
the largest contingencies for major projects this year?
Mr Gould: In terms of time?
Q91 Robert Key: In terms of money.
Mr Gould: There is one other major
project about which I have some concern in money terms and that
is the BVRAAM Meteor air-to-air missile. The risks there are not
so much technical—because the missile programme itself is
going quite well—as production costs. We are signed up for
production but the other nations are not. At the moment they do
or do not sign up for production that will have a major effect
on the production costs of the missile. The uncertainty about
that is a concern. Again, as to the integration cost of Typhoon,
whether or not the Italians come into that programme will have
an effect on that budget.
Q92 Robert Key: It is quite difficult
to get a handle on some of these things. For example, the current
cost forecasts for Typhoon are restricted. Why is that so?
General Sir Kevin O'Donoghue:
I shall be very happy to offer the Committee a closed brief on
Typhoon, but for commercial reasons it would be quite difficult
to talk about it in open session.
Q93 Chairman: We would be happy to
have a closed brief, but are you not able to answer the question
put by Robert Key?
General Sir Kevin O'Donoghue:
Not about the cost, no.
Q94 Robert Key: In principle, why
is the cost restricted?
General Sir Kevin O'Donoghue:
Because we are in the middle of commercial negotiations.
Q95 Robert Key: With whom?
General Sir Kevin O'Donoghue:
With Eurofighter.
Q96 Robert Key: In that case I may
be able to help. There has been a report this week in the German
press of a letter from Eurofighter GmbH to the German Defence
Ministry saying that the bill for the Eurofighter will increase
by about €10 billion more than expected, of which Britain's
share of additional spending will be €5.8 billion because
of certain systems and other modernisation programmes put into
the procurement process. Is that right?
General Sir Kevin O'Donoghue:
I am not happy to say any more. I am happy to say it privately.
Robert Key: Is it not extraordinary that
we can get this information from Germany but our own Ministry
of Defence cannot provide it? That is why I seek clarification.
Chairman: You have offered us a private
briefing and we will take you up on it. This is obviously a matter
of key concern to this Committee no doubt as well as to you.
Q97 Mr Holloway: I am fairly ignorant
about the whole Nimrod programme, but are we not constantly reinforcing
failure? Is there an argument even at this stage for thinking
about a completely different platform?
Mr Gould: We went through this
in very great detail in about 2003 when there was a major crisis
in the Nimrod programme. There was an open question at that point
as to whether we should continue with it or just stop it and it
should not go anywhere. One of the questions we asked was: if
we did not go with the Nimrod what aircraft would we go with?
We could not find a substitute at that time. It is quite a specialised
design because it is not just a flying platform that sucks up
information and you take a civil aircraft and put some kit in
it like a Boeing AWACS or something like that. It is an aircraft
with a bomb bay and it does tactical flying to be able to deliver
its torpedoes and ordnance in the right place at the right time.
To take a civil aircraft design and turn it into a tactical military
aeroplane is a pretty hard call. At that time we looked at it
very carefully and could not find an alternative way to go and
eventually we made the decision across government to continue
with the Nimrod programme. At this stage we do not have the pitch
problem but we have to make a modification to ensure it does not
recur on the production aircraft. The production, flight trial
and mission system programmes are going very well.
Q98 Chairman: But other countries
struggle by without Nimrods?
Mr Gould: They certainly have
struggled. Most other countries that have this use something called
the P3 which is a Lockheed Orion aircraft. That was a contender,
but it does not have the endurance of Nimrod. Indeed, the Americans
are moving to the multi-role maritime aircraft and have been struggling
for about 15 years to try to find a way to move from the P3 design
to something more capable.
Q99 Mr Holloway: It just seems bizarre
to be doing this to a rotting old 1950s aircraft?
Mr Gould: Most of it is new.
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