Examination of Witnesses (Questions 60-79)
MINISTRY OF
DEFENCE
17 MARCH 2008
Q60 Mr Mitchell: Or changes.
Lieutenant General Andrew Figgures:
Or changes. Generally, it becomes more testing in that anybody
sees what capability we deploy and they look to produce counters
for it. So we have to make a judgment of how many platforms we
have and how capable those platforms are. The Type 45 is a very
good example of the radar, which we have developed, which is hugely
capable, has got great potential in it; and by linking it with
a co-operative engagement capability, we get better capability
out of those platforms than we would have done if they were not
linked together. There is a balance between the obvious hardware
and all the inter connectivity of the sensors, the communications
and our means of fighting.
Q61 Mr Mitchell: I accept that, but
the likes of me would rather have more platforms—
Lieutenant General Andrew Figgures:
Not if the platforms are not any good!
Q62 Mr Bacon: I would like to ask
you about figure 4, which says in relation to Barrow: "Psychologists
are working with the existing teams to improve communication and
management styles. Further improvement in relationships between
the workforce and management should lead to productivity gains.
Although more expensive in the short term, these initiatives are
expected to have long-term benefits on costs ..." Are we
really reading here that relationships between management and
the workforce were so bad that you have had to ship in a job lot
of psychologists?
Sir Bill Jeffrey: I would say—and
Sir Kevin may want to add to this—that—
Q63 Mr Bacon: Sir Kevin Tebbit retired—I
am afraid you are the one—
Sir Bill Jeffrey: The renegotiation
of the Astute contract a year or so ago has certainly led to better
working relationships with us and BAE Systems and the supply chain.
Q64 Mr Bacon: What about the psychologists?
Sir Bill Jeffrey: The psychologists
I think are employed by BAE Systems.
Q65 Mr Bacon: How many of them are
there?
Sir Bill Jeffrey: I do not know.[4]
General Sir Kevin O'Donoghue:
I can ask BAE Systems. All I can say is that the workforce and
the working environment at Barrow is very impressive. I said it
earlier. The new shipyard management has—
Q66 Mr Bacon: It looks as though
they have literally turned things upside down.
General Sir Kevin O'Donoghue:
They have indeed.
Q67 Mr Bacon: Why did they not do
that earlier? What is it about turning a boat on its end that
makes it easier to construct it?
General Sir Kevin O'Donoghue:
It is so that instead of trying to fit pipework up there, you
can fit it there; it is much quicker.
Q68 Mr Bacon: Has no-one thought
of this before?
General Sir Kevin O'Donoghue:
The Americans thought of it about six months before and started
six to 12 months before and we shifted that way of doing business
over into BAE Systems.
Q69 Mr Bacon: I would like to come
on to the question of thinking about things before, and this question
of reallocating the budget. You did it in the last financial year
where there was a transfer of £609 million, and the preceding
one, which we looked at last year, when there was a transfer of
£448 million. Did you do it in prior years?
Sir Bill Jeffrey: I am not aware
of shifts of that sort in prior years, although we had better
check because it is—
Q70 Mr Bacon: The NAO tells me you
did not and I do not remember this coming up at the Major Projects
Report hearings before now. If it is such a good idea, why has
it only dawned on you now that you should be transferring these
costs in order to: "better measure how individual teams are
performing and to distinguish costs of maintaining critical industrial
capability"? Why have you only thought about it now?
Sir Bill Jeffrey: I think it probably
reflects something you touched on in this Committee a number of
times in the past, which is more emphasis on thinking hard about
the structure of the accounts and how best to allocate money in
order to get a good overall picture of what it is actually being
spent on.
Q71 Mr Bacon: Never before now, in
all the years the NAO has been doing this, has someone come up
with the idea that perhaps you should be transferring very significant
sums of money from one budget heading to another and out of—coincidentally—out
of Major Projects Report: it has never been brought up before!
Sir Bill Jeffrey: To my knowledge,
no.
Q72 Mr Bacon: Can you tell me if
there are any occasions when money has been transferred into the
ambit of the Major Projects Report? (I do not know why the guy
behind is smiling but it is probably because the reason is not
an edifying one!)
Sir Bill Jeffrey: Not to my knowledge.
We can check.[5]
Q73 Mr Bacon: The fact is that they have
been transferred across now because you have a very urgent focus
on keeping within project costs given come what may through classification.
That is the real reason, is it not?
Sir Bill Jeffrey: It really is
not. As I said in response to Mr Touhig's questions, it is a pretty
transparent device that we were using—
Q74 Mr Bacon: It is transparent masking—it
is a new one on me!
Sir Bill Jeffrey: I do not think
that has been part of our thinking at all. What it does highlight
though is the partial coverage of the Major Projects Review approach.
In the interests of providing a fuller account for the Committee—
Q75 Mr Bacon: A proper whole life
account.
Sir Bill Jeffrey: We have proposed
the arrangements we have.
Q76 Mr Bacon: One of the Generals
talked about the support vehicle and the warranty costs—that
is you, Sir Kevin. The support vehicle, which I prefer to call
"the lorry" has support warranty costs of £64 million.
Are there any other examples of warranty costs that are still
inside the Major Projects ambit at all?
General Sir Kevin O'Donoghue:
I do not know.
Q77 Mr Bacon: None at all?
General Sir Kevin O'Donoghue:
No, the answer is that I do not know.
Q78 Mr Bacon: You do not know! If
there were any at all, then the question would arise: why have
they also not been—
General Sir Kevin O'Donoghue:
I suspect they have gone across. It would in the past have gone
across to the DLO at the right time.
Q79 Mr Bacon: I would like to ask
about the measuring. It says, apart from distinguishing the support
of the industrial capability or the military capability—the
main reason given in paragraph 1.2 is: "to better measure
how individual teams are performing". Presumably, you have
metrics that enable you to better measure how individual teams
are performing?
General Sir Kevin O'Donoghue:
Absolutely correct.
4 Note by witness: For the past two years,
BAES (Submarine Solutions) have been employing, on an occasional
consultancy basis, six psychologists to provide business support
to wider team working and leadership development activities. Back
5
Note by witness: There is one example in Major Projects
Report 2007 where costs have been transferred into the ambit of
the report. This is a transfer of £344 million from Advanced
Jet Trainer to United Kingdom Military Flying Training System
(Holistic) in the pre-Main Gate population. Back
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