Examination of Witnesses (Questions 80-92)
MR PAUL
O'HARA, DR
BEATRICE NICHOLAS
AND MR
DECLAN O'SHEA
19 MAY 2009
Q80 Chairman: That was an experiment
in a sense that worked. There have been lots that have not, have
there not?
Mr O'Hara: I would not say from
a Rolls-Royce perspective; I am not aware of any integration programmes
that have not worked and I would not necessarily describe the
RTM 322 going on to the Apache as an experiment; I think it was
a calculated risk, people knew that there was a risk. Certainly
from an industry perspective we thought that the risk was manageable
and therefore we were very well engaged with the programme and
keen to take it on.
Q81 Chairman: As the person who took
the decision I suppose I should not really describe it as an experiment
myself.
Mr O'Hara: I am not at liberty
to comment, sir!
Q82 Robert Key: Can I ask you about
changing operational priorities? Dr Nicholas, you gave us a very
good brief, if I may say so, and one of the things that really
struck me was your experience of UORs and you said that Urgent
Operational Requirements are generally a disrupter to coherency,
and you gave the example of the Chinook integrated project team
being the only team that took up the challenge that you gave them
in trying to get around this problem. And you said, "In addition,
future capability insertion will be more onerous," if the
Ministry of Defence insists on this rather piecemeal fleet within
a fleet approach. Would you like to tell us how you think this
is looking over the next few years? Is the MoD going to go on
insisting on the insertion of UORs that are disruptive?
Dr Nicholas: Firstly I would like
to say that in the company we absolutely support the need to get
equipment out to the forces as rapidly as possible, so clearly
for any urgent operational requirement by definition it is urgent
and so it needs to take the most time effective route. However,
we believe that the requirement is often interpreted extremely
narrowly and for instance on the Chinook what we did was to introduce
what we term a DAS controller, which basically means that it will
be much simpler in the future to integrate additional capability
into the defensive aid system on the helicopter to improve protection
against new threats as they emerge. If we had taken the very narrow
approach just to add the new sensors and effectors that future
proofing would not have been there, whereas on the Chinook it
is present.
Q83 Robert Key: Do you see any end
to this particular way of doing business?
Dr Nicholas: No, and I do not
think we would necessarily want to. I guess we would like to see
an end to the conflict, of course; but what we would like to see
is more engagement about how the procurement process actually
is used so that we can get the most cost effective and most future
proof procurements in place in the circumstances in which we find
ourselves at the moment.
Q84 Robert Key: Is this because there
is such inertia at Abbey Wood, for example, that they are not
anticipating the need to insert new programmes?
Dr Nicholas: No. I think the engagement
we have had with Abbey Wood has always been very constructive.
I think it is about the rules within which they operate and that
sometimes they need to be modified as circumstances change.
Q85 Robert Key: In what way could
they be modified?
Dr Nicholas: I think to allow
more discretion would be useful.
Q86 Robert Key: Discretion in how
they set the contract or discretion in engineering terms at your
end?
Dr Nicholas: I think both.
Robert Key: That is helpful, thank you.
Q87 Mrs Moon: I would like to go
back to the Defence Industrial Strategy. Is it an adequate basis
for a relationship with you and does it place sufficient emphasis
on competition?
Mr O'Shea: Maybe I could start
on that, Mrs Moon. We bought the DARA companies and Fleetlands
and Almondbank last year with effect from 1 April 2008. We could
not have done that; we could not have made a business case if
we had had very short term contracts on the platforms that were
there. So given that the decision was made to privatise those
sites the fact that we had a long-term relationship, albeit as
a sub-contractor to the prime, meant that we could make that investment.
We could not have made that investment if it was a much shorter
term that we had to recoup that investment over—it could
not have been done. So it allows us to plan; it allowed us to
take on the 1200 people that we did; it allows us to do other
things on the site. But we would like a restatement of that to
ensure that it is there for us in the future.
Dr Nicholas: From our point of
view the partnership model that was introduced in the Defence
Industrial Strategy has been very helpful because it has helped
us to build long-term relationships, both with the helicopter
manufacturers but also with other equipment suppliers. I think
the accompanying Defence Technology Strategy has been very, very
important in recognising the need to maintain a sovereign capability
in the UK in some key technologies, which are fundamental to the
defence industry and to the defence of the country.
Mr O'Hara: From a Rolls-Royce
perspective we welcome the transparency, the clarity and the certainty
that the DIS actually brought with regards to the relationship
between industry and the UK MoD. We would welcome a DIS 2; we
understand obviously that there are other priorities at the moment
which are keeping us from moving forward generally on that, but
overall we think it is a very positive way of describing the relationship
and actually moving it forwards.
Q88 Mr Crausby: How big an issue
is technological sovereignty? I read in the Defence Industrial
Strategy that we will continue to invest in research and support
of the development of key helicopter related technologies. Then
it goes on to say that the investment averages approximately £13
million per year. Is that adequate? It does not sound very much
to me for such an important field. What do we really need to do
and how much money do we really need to put in, in order to maintain
sovereignty over this level of technology?
Mr O'Hara: From a Rolls-Royce
perspective we are heavily investing in our products on an annual
basis. The DIS did not particularly mention propulsion systems
with regards to R&T. There was an R&T project which was
on fixed wing but it was not on the rotary wing side. So what
we would welcome is the opportunity to discuss in DIS2 how we
could work and move forwards in terms of R&T investment in
rotorcraft products. We are investing in our products; we are
bringing growth products back to the market—and I have mentioned
one before in terms of the RTM 322. T800 was heavily invested
from Rolls-Royce and its partners as well. So there are products
out there; there are things that we could be doing in the future—things
like the FIRST infrared suppression technologies. There are things
that we should be looking at to invest in in the future and we
would welcome that to be incorporated into DIS2.
Mr O'Shea: From the Vector perspective
we provide skilled labour on these platforms. I think there was
a nervousness when the MoD sold it to a private industry as to
what would we do with it? But since then we have taken on all
of the technical people that were there; we have taken on all
of the apprentices that came out. We currently have 51 apprentices
going to 70 apprentices and we have taken on MAOS accreditation
for the whole site. So for our part we will continue to invest
in the people that will deliver these platforms ultimately.
Dr Nicholas: In the field of electronic
warfare clearly we have a dependence on technology right the way
from the base technologies of things like Gallium Arsendide semiconductor
technologies right the way up through signal processing, materials
technology. So we have a very, very high dependence on science
and technology in the science and technology base of the UK. That
is something that we take very seriously and continue to invest
in that. We believe that it is key that the UK retains sovereign
capability in electronic warfare really because there is a dependence
on intelligence data to get the best performance out of the equipment
and we believe that that is better handled within the UK industry.
Q89 Mr Crausby: But are we doing
enough to maintain that sort of technological sovereignty that
we really feel we should have?
Dr Nicholas: I guess we could
always do more but I think that we have a very sound technological
base in the UK and that needs to be maintained, so it is a matter
of protecting that for the future. There is a sound base there.
However, if it gets stretched any more then we could see cracks
appearing in the technology base.
Q90 Mrs Moon: How do you feel the
system of Integrated Operational Support is working? Is it effective?
Dr Nicholas: I cannot really comment
on that because none of the contracts that I have fall within
the Integrated Operational Support scheme.
Mr O'Hara: It is the same for
Rolls-Royce. We direct contract in terms of whether it is traditional
or the preferred availability type contract. Our services contracts
are not under the prime contractor and are direct with the UK
MoD. What it gives is direct visibility to both partners; it gives
value for money; it gives benefits on both sides. So therefore
we are not operating under an IOS scheme per se.
Mr O'Shea: We operate in two IOS
schemes; there is the TLCS through Boeing and the other is the
IOS with Sea King through AgustaWestland. Then we operate directly
with the MoD, with the IPT Lynx. I think to look at Chinook—and
my colleague David Pitchforth referred to it earlier on today—when
we took over the contract they were flying 12,000 hours—that
is what the contract was for—and they had never flown more
than that. At this point we are heading past 16,000 hours on some
of the platforms. Our contract was to deliver 27 to forward and
we are currently at 30 today.
Q91 Chairman: I thought he said 29.
Mr O'Shea: The Boeing number may
be 29. Ours not in maintenance in Fleetlands would be 30. That
is today and we will continue to do that. However, with the Lynx
aircraft we are direct with the IPT but what we have done there
is we have set up a logistical cell at Fleetlands where we have
AgustaWestland and we have the project team itself and we have
Vector Aerospace involved in it and that gets over the planning
issues, the logistic issues and the supply chain issues as well.
Q92 Mrs Moon: Do you think that industry
could take on a further expanded role in relation to preparation
for aircraft for deployment and while in deployment? Is that something,
for example, in terms of Rolls-Royce, in taking the maintenance
of engines and the maintenance of defence equipment? Do you think
that there is an opportunity for industry to expand into that
in the field? Also, in terms of the question David Crausby asked
about the protection of staff in the Armed Forces, do you think
you could get your staff to take on those roles in theatre and
are they equipped and prepared to do that?
Mr O'Hara: We are already involved
in what is called CONDO, which is Contractors On Deployed Operations.
So although it is relatively small numbers what we have done is
that we have assessed the risks, we have looked at the DEF STANS,
we have looked at the depth DEF CONS that are applicable to it
and found a way forwards for people who are not military—they
may be reservists but primarily they are Rolls-Royce plc staff
who have actually gone forward. I went out to the Balkans in the
early 1990s as a field service engineer in a previous role, supporting
operations. We know there are benefits for that; we have people
there today on fixed wing and what we believe is that that would
bring advantages to the role that the services have to do. At
the end of the day it is about getting the skills sets; it is
about getting the knowledge where it is necessary. As I have said
before, if you have an ability to keep an aircraft flying then
that has a significant impact on its operational capability. If
you then stop an engine being removed as an item you stop it having
to go through a large logistical chain to come all the way back
for somebody to fix something that could have taken quite a short
time to repair whilst on operations. So there are huge benefits
to doing CONDO operations. We have looked at ways of doing that
and we are prepared to do that; we do have people who would volunteer
to do that.
Dr Nicholas: In the fixed wing
arena rather than the helicopter arena we certainly had staff
deployed in country during the first Gulf War and we are certainly
prepared to do that in current operations. We certainly see a
tremendous benefit in understanding how the equipment truly performs
in theatre. If you can get very rapid feedback from the crew who
are using it you can then optimise the performance much more rapidly.
Also, we find that it is very motivating for our staff to get
that close contact and understand how the equipment is really
being used.
Mr O'Shea: We have people in Afghanistan
as we speak. In December we were requested to assist through the
project team and Boeing with people in Afghanistan and in early
March we deployed eight people to there. We did the proper due
diligence, the duty of care and we asked for volunteers and got
many people who volunteered and we rotate those every four months
for as long as we are required there. Certainly it is a motivational
issue for our staff; they feel that they are part of the system
that is being deployed. They see the aircraft in action as well
as in the hangars and we are delighted to be involved in it.
Chairman: Thank you very much indeed.
I think that we have no further questions for you and we would
like to thank you enormously for coming along to help us with
our inquiry; it is much appreciated.
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