Examination of Witnesses (Questions 140-159)
GENERAL SIR
KEVIN O'DONOGHUE
KCB CBE, DR ANDREW
TYLER AND
REAR ADMIRAL
PAUL LAMBERT
CB
25 NOVEMBER 2008
Q140 Mr Jenkins: I understand that,
but surely there is no guiding rule or unwritten law within the
Department that a piece of equipment that is going to last for
20 years should take 20 years to procure, is there?
General Sir Kevin O'Donoghue:
No, and it is a very fair criticism. It used to. Setting aside
one or two of those projects which have been going on for many
years already, I would be very disappointed if anything that we
were setting off on procuring now—out of a requirement from
the requirement and capability area, through Dr Tyler's organisation,
and through mine—if you could accuse us of the same problems
in a year or two.
Dr Tyler: We must be clear about
the difference in the scale of the endeavour of most of the UORs;
which might be some new sites, or might be some new piece of communications
equipment, by comparison with, let us say, a new nuclear submarine.
Just the size of the endeavour, the amount of public money that
is being committed, the rigour that needs to go in to ensuring
you are getting the requirements right (because the cost of changing
those requirements as you know only too well is so enormous later),
the amount of rigour that has got to go into that whole process
is of a completely different scale from what it is when we are
talking about a UOR—the investment for which might be a
small number of millions, maybe tens of millions at the most.
Q141 Mr Jenkin: General, do you think
you could take this opportunity to dispose of something that we
in the defence world are often accused of which is being in the
pockets of certain leading manufacturers and not being open-minded
enough about buying off the shelf. The example always thrown to
us is about helicopters. Why are we buying expensive bespoke helicopters?
Why do we have the future Lynx programme? Why do we not just buy
Sea Hawk or Black Hawk off the shelf much cheaper? Can you use
this opportunity to explain why we do things in the way we do
them?
General Sir Kevin O'Donoghue:
I do not actually agree with you that we could buy a helicopter
which you could fly off the back of a ship and fly in the battlefield
and have a common helicopter. I do not agree that we could buy
that cheaper. Yes, you could buy a cheap one no doubt to fly in
a land battle space. I do not think you could find an aircraft
that could fly off the back of a ship much cheaper. Then you are
back into something the Chairman was talking about earlier, which
is a lot of very small fleets, and you do not have coherence across
the fleet. I would actually challenge your original premise, if
I may, which is that we do go through the value for money argument
in quite considerable detail. The Defence Commercial Director,
my own DG Commercial and the Treasury, when our projects go to
them, and the equipment capability customer, who is the guardian
of our budget, are very careful that what we are buying is value
for money.
Dr Tyler: I would add the fact
that we have got some of the best defence equipment manufacturers
in the world in the UK. As we have some of the best defence equipment
in the world it is not unlikely that we will be turning to our
industry to source quite a lot of our defence equipment. The other
thing I think is worth adding to that is the fact that, in order
for us to have an operationally sovereign capability in the UK,
particularly when you are in the in-service phases of equipment,
that ability to be able to make decisions at a time of your own
choosing does require us to sustain an industrial base within
the UK; and you cannot sustain an industrial base unless they
have a continuing supply of work to do so. Our challenge is getting
the balance between the sustainment of that capability inside
the UK in order so that we can be a sovereign nation, along with
the value for money to ensure that at any point in time that industry
is not oversized for the activity that we wish it to sustain.
Q142 Mr Jenkin: I agree with all
that, but I think the difficulty arises as we tailor these programmes
and take so much time over them we add risk and cost to those
programmes, which rather undermines the argument. How are we going
to explain to these off-the-shelfers that the extra risk in costs
is still worthwhile?
General Sir Kevin O'Donoghue:
Off the shelf is very often the only answer for a UOR. Off the
shelf means you are buying almost probably the last of the last
generation of equipment. If you want it to last 30 or 40 years
you are pushed. What you need is something which has that stretch
potential; has open architecture; has the ability to be upgraded
throughout the rest of its life (for example if we are talking
about aircraft) either as civil aviation requirements change,
as the threat changes, as the weapons systems change. Yes, you
can buy something off the shelf for today as we do with UORs but
you probably then would need to buy something else off the shelf
in five years' time.
Q143 Mr Holloway: An Admiral recently
said to me that he felt the best was often the enemy of the good.
Do you agree?
General Sir Kevin O'Donoghue:
Yes, I do.
Q144 Mr Holloway: That is straightforward!
But in this context?
General Sir Kevin O'Donoghue:
Yes, I do. I was saying earlier, we need to be clear: do we want
something which is 100% of what we thought we wanted five years
ago, and will get it in five years' time, maybe—but then
the requirement is changed because the threat changes and the
security architecture changes; or do we want something which is
80% fit for purpose and we can get it in six months or a year's
time? Going back to Dr Tyler's point, you just have to temper
what I have said with the size and the complexity of the project.
You cannot buy an 80% solution to a nuclear submarine in six months'
time. You really do have to think that through. With some of the
less complex equipments, I would agree with you entirely. I think
we do sometimes over-specify, and that is where I think you are
coming from.
Dr Tyler: One of the things your
Admiral would recognise is the fact that we have very much been
applying the best is the enemy of the good principle on the major
future naval platforms. Carrier went through an extremely rigorous
capability trading process to ensure that we were buying what
was absolutely necessary, and reducing the technical risk in the
project. The MARS Fleet Tankers have been through exactly the
same process, and led by an Admiral. We are right in the thick
of it, Admiral Lambert and I, with the future surface combatant
requirements—applying exactly that principle.
Rear Admiral Lambert: I think
we are far better at trading than we were in the past. I think
in the past we did put down a requirement which was perhaps the
100% requirement, and it is one of the things probably we have
learnt from the UORs, that we do trade across performance, cost
and time, so that we get the capability we require within the
timescale and within the cost, rather than going for the 100%
solution.
Dr Tyler: Something else that
is really helping us as well and it should be said is the way
that technology has evolved over the last decade or so. The whole
way that particular electronic and software technology has evolved
is much more towards these open system architectures—the
sort of things we enjoy even in our home environment with our
pc computers, the so-called "plug and play". In the
past that was not the case. The technology was much, much more
rigid which meant your ability to buy something that was the 80%
solution initially and upgrade it over a number of years or possibly
decades to ultimately be your 100% solution, that was a much,
much more difficult thing to do 10 or 15 years ago. Not only have
we culturally changed our view on this, but also the technology
has become an enabler to allow us to do it.
Q145 Mr Holloway: On the same theme
though, say you go for the best value kit; none of us are naive,
there is also the political element in terms of sourcing things
like ships in the UK. Do you ever feel that as military officers
you could get greater equipment capability for your money if you
sourced some of these major projects abroad? You might get more
aircraft carriers, for example?
General Sir Kevin O'Donoghue:
I am sure we could, but would we then retain the ability to upgrade
them throughout their life and maintain them? Not so much the
metal-bashing, but the complex mission systems and the weapon
systems. If you just buy everything off the shelf from overseas
you have got to go back overseas for some of these complex mission
systems, and that is not what the defence industrial strategy
and the policy is.
Q146 Mr Holloway: And the jobs question?
General Sir Kevin O'Donoghue:
If you look at the defence industrial strategy, the principles,
it basically said: what industrial capability do we need out there
somewhere—not necessarily in the UK—in 15, 20 or 25
years' time to produce military capability? Then it said: and
which of those industrial capabilities could be anywhere, which
you could buy off the shelf? Which need to be in a country of
our choosing? Which have to be based onshore in the UK? That is
what the defence industrial strategy said. That is what we are
working to, and that is Government policy. That is the issue we
are working to at the moment. You are aware the Secretary of State
reasserted those principles with this Committee, or certainly
in Parliament, quite recently.
Q147 Chairman: May I ask in open
session something which is quite important: who, below ministerial
rank, is in charge of the defence industrial strategy?
General Sir Kevin O'Donoghue:
Who writes it? Who is leading it?
Q148 Chairman: Who is in charge of
it?
General Sir Kevin O'Donoghue:
The Defence Commercial Director is leading the revision—DIS2,
as we know it.
Q149 Chairman: No, that was not what
I asked. Who is in charge of the Defence Industrial Strategy?
General Sir Kevin O'Donoghue:
I am not sure I understand the question. Minister DE&S is
the lead Minister for it, on behalf of the Secretary of State;
but the Department within MoD that is responsible for writing
it, if you are talking about the new one, is the Defence Commercial
Director. The departments responsible for delivering DIS, which
is current policy, is Equipment Capability, ourselves and the
S&T community.
Q150 Chairman: Last week Mike Turner,
speaking on behalf of the National Defence Industries Council,
started an answer by saying, "If we had a defence industrial
strategy ... ", which implied that he, at any rate, and possibly
industry in general no longer thought that we did.
General Sir Kevin O'Donoghue:
I am absolutely clear that we do and it is on the stocks and that
is the one we are operating to.
Q151 Chairman: You would not be the
lead person then below ministerial rank who is in charge of the
Defence Industrial Strategy?
General Sir Kevin O'Donoghue:
Correct.
Q152 Chairman: Is there anyone who,
within the Ministry of Defence below ministerial rank, is in charge
of the Defence Industrial Strategy?
General Sir Kevin O'Donoghue:
The Defence Commercial Director.
Q153 Chairman: You are not talking
there about the Defence Industrial Strategy 2?
General Sir Kevin O'Donoghue:
Yes.
Q154 Chairman: Well I was not. I
was talking about the Defence Industrial Strategy. Is there anyone
below ministerial rank who is in charge of the Defence Industrial
Strategy 1?
General Sir Kevin O'Donoghue:
I am not really sure I understand what you mean by "in charge".
If you mean "delivering to it" because it is now policy,
yes, I am; we all are.
Q155 Chairman: What I mean is driving
it forward and ensuring that it is actually effective and carried
into position?
General Sir Kevin O'Donoghue:
Driving forward the current extant policy is the business of the
Department and a lot of that falls on my shoulders.
Q156 Chairman: But there is no one
overall person in charge, apart from ministers?
General Sir Kevin O'Donoghue:
No. If you are looking at the S&T area then the Chief Scientific
Adviser or Paul Stein. We have a policy there; we then all implement
it. There is an acquisition policy board which will lead that,
I suppose.
Dr Tyler: If your question is
about how we are taking it forward, the Defence Industrial Strategy
really has its tentacles into every aspect of the Department's
business. If you take a part of it, if you take one of the sector
chapters, for example, in the DIS 1 and ask, how is that being
taken forward?; the answer is that in most cases it is being taken
forward by a sector strategy board. Those sector strategy boards
I think in virtually all cases have myself as chairman or co-chairman
of that board; the Defence Commercial Director is intimately involved
in that; so also is the Chief of Materiel; and sitting around
that table would be members of the S&T community; members
of the frontline command; members of the EC; and indeed Admiral
Lambert has been sitting on the maritime one for the Maritime
Change Programme. Those strategies are being taken forward and
actually implemented. I could give you examples across the whole
swathe of defence activity.
Q157 Chairman: Does it bother you
or surprise you that defence industry seems to think that the
Defence Industrial Strategy is now somewhere on a shelf mouldering
away and gathering cobwebs?
Dr Tyler: I would love some of
the managing directors, for example, in the maritime sector, the
armoured fighting vehicle sector, the helicopter sector, or the
fixed-wing sector to sit here and say that; because the evidence
and their engagement in it has been very great over the last two
years since the Defence Industrial Strategy was progressed. Indeed,
there is lots of evidence that has come in front of this Committee
of exactly the outputs from the implementation of the Defence
Industrial Strategy: the partnering agreement with AugustaWestland;
the formation of BVT in the maritime sector and the surface ship
support project; in the armoured fighting vehicle sector—the
work we are doing at the moment in maturing that sector strategy.
There is evidence right across the piece, all of which has involved
industry to a great degree.
Q158 Mr Jenkin: Is industry expecting
too much from it?
General Sir Kevin O'Donoghue:
I sit on the NDIC, and industry quite openly and publicly at the
NDIC were clear that they did not want DIS 2 published until it
could be published in its totality; and that cannot be done until
PR09 is complete. At some point we will be able to publish DIS
2. Industry, I think, would have liked it a year ago, or two years
ago; but until we have got our mind round the sector strategies
and exactly the sort of funding that might be available for the
various strategies, industry would rather stick with DIS 1.
Q159 Chairman: We were here last
year and we were told last year that the Defence Industrial Strategy
2, although it was expected I think in November last year, could
not be published because of the Planning Round 08. We are now
in the position where it cannot be published because of the Planning
Round 09. Is there ever to be an end to this process?
General Sir Kevin O'Donoghue:
I am absolutely clear, the Permanent Under-Secretary has been
clear that we will publish DIS 2 as soon as we are able to. Chairman,
I really cannot go beyond that.
| 
