Examination of Witnesses (Questions 120-126)
MINISTRY OF
DEFENCE
17 MARCH 2008
Q120 Mr Bacon: Yes, on the Landing
Ship, thank you, Chairman. In Appendix Two on page 15 of this
particular mini-book, there is reference to not only actions that
led to the problems, but also "How things are done now".
Can you, going through each of those "How things are done
now", identify specific quantified benefits from the fact
that things are done in a different way now?
Sir Bill Jeffrey: Not in the sense
that I could answer this question here and now with a figure,
but if you look at "How things are done now", it covers
the whole agenda that we three and others in the Department are
trying to pursue, to build up skills with things like licensing
of project managers; to require independent review of cost estimates,
which would have prevented the LSD(A) case, I suspect; to require
something called historical trend analysis, what do these sorts
of projects normally cost, what does history suggest they should
cost, as a mandatory requirement; and within the DE&S to have
an investment board which approves these projects before they
even come to the centre of the MoD. It is hard to say all of this
effort produces a specific figure at the end, but we are confident
that we are on the right track, and that we are making it significantly
less likely than LSD(A) type cases will occur in future.
Q121 Mr Bacon: One more question
quickly: one of the actions that led to the problems is defined
as project management: at the outset, the Department and industry
did not adequately control the project. That reminds me of the
Bowman project, where there was no senior responsible owner at
all. Can you tell us whether all the top 20 projects now have
their own SRO?
General Sir Kevin O'Donoghue:
Yes.
Q122 Mr Bacon: Is he or she dedicated
solely in each case to the task of being the SRO for that project?
General Sir Kevin O'Donoghue:
Not necessarily. On the very big ones, like carrier strike, the
answer is yes.
Q123 Mr Bacon: If possible you could
send us a note and specify where it is full-time, where it is
part-time, and what they are doing with the rest of their time
or what the percentage split in their time is.
General Sir Kevin O'Donoghue:
Of course.[10]
Sir Bill Jeffrey: We will provide
that sort of note. The thing I would ask the Committee to remember
is that an important element in selecting the SRO, who is often
someone in Andrew Figgures' area, is to find someone who is best
placed to bring the whole thing together across the Department,
and articulate the customer requirement, and indeed relate to
the project team as well, and that may well be somebody, if it
is somebody sufficiently senior, who has other responsibilities
as well.
Mr Bacon: Thank you.
Q124 Chairman: Well, General O'Donoghue,
it says that on 2 April 2007, you became the first Chief of Defence
Materiel, combining the Defence Logistics Organisation with the
Defence Procurements Agency. You are responsible for a staggering
responsibility. It includes responsibility for MoD assets worth
£76 billion and an annual operating budget of £16 billion,
and your hobby, apparently, is tending a vegetable patch. I am
sure there is a philosophical point to see which is more enjoyable,
but seriously, do you want to say a word before we end about how
things are shaping up in your new job?
General Sir Kevin O'Donoghue:
It is shaping up extremely well. It is one part of the defence
acquisition change programme, it is a very key part of it, but
there are other changes as well. Really, what underlies it is
that Peter Spencer and I, as CDL before I became CDM, were coming
together as closely as we could, but we got to the point where
Through Life Capability Management, Through Life Equipment Management
was difficult, and we now have the ability where we have the procurement
cost and the Through Life cost in one budget, in one organisation.
We now have the ability for the first time really to spend more
on something perhaps upfront because it is going to be much cheaper
throughout its life. There are some examples where we have done
that already. That really is the first occasion where we can really
get into Through Life Equipment Management. What General Figgures
does is then take that and add it to his Through Life Capability
Management by adding all the other defence lines of development,
trade, people, infrastructure and so on. So it is a golden opportunity;
if we can seize this, this will make a huge difference.
Q125 Chairman: It is going to make
a difference to the sort of questions that Keith Hill was asking
you.
General Sir Kevin O'Donoghue:
Oh yes, a huge difference.
Sir Bill Jeffrey: We are not going
to abolish cost overruns and slippage, but we must reduce it them
further very significantly, and I think we are capable of doing
so.
Q126 Chairman: So next year, when
we return to this, we will not just have another £1 billion
juggled in the balance sheets, we are going to see some real improvement,
are we? Right, well, you are not answering, that is probably a
good point to end.
Sir Bill Jeffrey: I hope you will
see a real improvement. I do not accept the premise of the first
part of the question.
Chairman: Thank you very much, that concludes
our hearing.
10 Note by witness: All of the 20 MPR projects
have a formally appointed SRO or a designated person who fulfils
the equivalent role as Programme or Project Sponsor or Owner.
As the Permanent Secretary said in response to Question 123, in
common with practice elsewhere in Government (and consistent with
OGC guidance), the person appointed is normally a sufficiently
senior figure well placed by virtue of their position in the organisation
to oversee the programme or project in all its aspects, and it
is generally not a full-time role. The only full-time SRO covers
the Carrier Strike programme, including the Joint Combat Aircraft
and Future Aircraft Carrier. Back
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