Examination of Witnesses (Questions 220-229)
GENERAL SIR
KEVIN O'DONOGHUE
KCB CBE, DAVID GOULD
CB AND LIEUTENANT
GENERAL DICK
APPLEGATE OBE
29 JANUARY 2008
Q220 John Smith: Will that continue
as a Trading Fund?
Mr Gould: Yes.
Q221 John Smith: The IPTs or the
department will be its main customer for the newly-formed Trading
Fund?
Mr Gould: It will not be its only
customer but it will be the main one. That is the main reason
for having it. One of the reasons for keeping ABRO as a Trading
Fund is the fact that because it is a government-owned company
it is quite easy to deploy people overseas and into operations
and so forth. With a private company it is much more difficult
to do it.
Q222 John Smith: You referred to
consideration of the sale of the rotary wing/helicopter deep repair
and maintenance business. Given the pressure we are under on the
front line in Afghanistan in terms of maintaining helicopters
in theatre, to which this Committee has referred, do you think
it is a wise move to consider the sale of the entire deep repair
and maintenance of three principal platforms which have been delivered
to date to the front line without any major difficulty? We have
placed enormous pressure on aircraft service and the component
supplier. Do you think that to sell it to a relatively small Canadian
company called Vector which does not have a track record in this
field at this particular time is an unnecessary risk to the support
of these aircraft?
Mr Gould: I do not want to speculate
on the final decision to sell or to whom it might be sold. Vector
has shown interest in it.
Q223 John Smith: That is the only
company to show an interest in it?
Mr Gould: Others have but I do
not want to get into it because I am not right on top of the sale
process; I am not the person who is conducting it. Is it a sensible
thing to do in general? I think the answer is yes. We are already
heavily dependent on commercial suppliers, Boeing, AgustaWestland
and others, for deep support for aircraft. We do not deploy the
deep maintenance and repair people forward into theatre. That
is done by the REME basically or the RAF. Therefore, for maintaining
aircraft in theatre RAF and Army technicians are the key. To make
sure we get availability of aircraft so we can deploy them in
theatre we are moving to availability contracts based on a partnering
arrangement with AgustaWestland or with Boeing for Chinook. Our
degree of industrial dependency is increasing and we find that
availability contracting is a better way to get the right number
of aircraft ready to deploy into theatre than the mixed arrangements
we currently have. Therefore, in principle I think it is a perfectly
sensible thing to do, but I stress that a final decision has not
yet been made.
Q224 John Smith: Is it not the case
that these are larger principally British or British-based companies
which have a track record in servicing our front line aircraft?
If Vector, a Canadian-based company, purchases the rotary wing
and component business from DARA it will double in size as a company.
I just flag it up. I think there are implications in terms of
maintaining front line availability.
Mr Gould: Any final decision to
sell will have to take all those things into account, and certainly
one of them will be: do not move any of these things without our
agreement.
Q225 Mr Holloway: Why can we not
support more Apaches in theatre? There is no shortage of Apaches.
Is there a shortage of support?
Lieutenant General Applegate:
At the moment the hours for Apaches are pushing up really well
at the moment. Remember that the Apache was brought into service
several years early and we had a problem over the support package.
Currently, the stress is in people in terms of sufficient maintainers
and the trading of the parts, not the aircraft or the spare parts.
Q226 Chairman: Mr Gould, this is
probably your last appearance here which will be a sadness for
the Committee and probably a joy for you. As you sail off into
the sunset what would be your greatest triumph in recent years
in your job? What would be your greatest regret? What is currently
your greatest hope?
Mr Gould: Wow! I shall not point
to a particular project as the greatest triumph. If in 2012, say,
we have managed to launch an aircraft carrier and it is floating
somewhere on the Firth of Forth, albeit not in service, or we
have a company's worth of FRES utility vehicles operating in Afghanistan,
or we have completed a set of negotiations on the Typhoon tranche
III, or we have made a lot of progress on the future capability
of Typhoon and it fully exploits its potential in its air-to-ground
as well as the air-to-air role, I will say that I have put in
place a lot of the matters that made those things happen. Therefore,
if they finally succeed I shall be happy. What I can tick off
now is that when I started this job a minister had fairly recently
said something along the lines, "We do not have an industrial
policy for defence and we are proud of it."
Q227 Chairman: It was not me, was
it?
Mr Gould: No, and I would not
have reminded you if it was. Since then we have an industrial
policy, which I wrote. We have an industrial strategy, most of
which I wrote. Most of the ideas were mine but with a lot of encouragement
from Lord Drayson without whom it would not have happened. That
has had an enormous effect on the ownership of the industry. If
you look at the amount of inward investment in the UK defence
industry in the past 10 years it is phenomenal and that can be
only to our benefit because in this country we have created a
market that has been attractive for inward investors. I hope that
will continue. It has also enabled us to move on. I know well,
like and admire Peter Levene, for whom I worked, and he did a
great deal of good. We had a winning formula but took it too far.
I talked earlier about the Type 45 contract and others like it
where we said there should be competition that could be used to
fix everything. You then find that you have not done a first of
class; you have set parameters without knowing what you are doing.
You have pushed people into a situation where they almost buy
contracts and bet the firm and it ends in tears. I believe that
to move to a point where you use competition but only in a way
that satisfies and meets market conditions, and it make sense
so to do—the industrial strategy does that—is a great
step. The biggest regret—I hope I have dealt with it—is
that I did not spot earlier, not that the DPA had forgotten how
to do project management—a lot of people did know how to
do it and were still doing it—but that they had not made
it a fundamental and total core skill to train people through
life. You can teach people the techniques of project management;
you can send them off on courses—the first course I did
in the MoD a long time ago was on project management, and I have
probably forgotten most of it—but the fully-fledged manager
comes only with a lot of domain experience and scars. If you want
to apply good project management to a submarine build programme
you also need people who have familiarity with and main knowledge
of the submarine world and so on. Therefore, probably my biggest
regret is that I did not pay more attention to it earlier, did
not pick it up inside the DPA—it is being done now—and
insist on it more vociferously, and perhaps I would then have
had even more arguments with the MoD personnel director than I
have had.
Q228 Mr Holloway: What do you plan
to do next?
Mr Gould: I am not allowed to
accept any offers at the moment because I am still under contract
to the MoD. I do not plan to retire to retire. I believe I have
some skills and knowledge that are useful to other people and
hope to be able to use them.
Q229 Chairman: This has been an absolutely
fascinating session. While you are under severe constraints because
of the process you are going through you have done your utmost
to try to get round them and be as open as possible, and for that
we are most grateful.
General Sir Kevin O'Donoghue:
I apologise if we ducked the issue on occasions. As you say, we
are in the middle of a planning round and the programme will be
made affordable. That is the purpose of planning rounds, but where
we are at the moment is quite difficult.
Chairman: Thank you.
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