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DE 10
Memorandum from the Ministry of Defence
The Equipment Programme / Equipment Plan
(1) When is the "short examination of the equipment programme" expected to be completed by? If already completed, when will the results of the review be announced?
As Sir Bill
Jeffrey told the Committee on 4 November, we hope to resolve the remaining
issues arising out of our examination of the equipment programme over the next
few weeks. We expect its results to provide
an important input to our 2009 planning round, which will be completed in
Spring 2009, but
(2) RUSI Acquisition Focus reported in RUSI Defence Systems Spring 2007 that "The equipment plan has been estimated as underfunded by some £15Bn or more over its ten-year period". What is MoD's estimate of the extent to which the Equipment Plan is underfunded?
The MOD is conducting Planning Round 09 which will help in ensuring that the equipment plan is realistic, affordable and matched with our priorities for the coming years.
Defence Equipment Capabilities / Equipment Programmes and Equipment Projects
(3) A list of the Defence Equipment Capabilities. The list to set out the key current and future equipment programmes which currently deliver / are planned to deliver these capabilities.
A list of the Defence Equipment Capabilities, setting out the key current and future equipment programmes is at Annex A to this Memorandum.
(4) The definition of an equipment programme and an equipment project. Details of the number of equipment programmes and equipment projects which DE&S are responsible for delivering. What assessment has the MoD made of whether the current number of equipment programmes being acquired is (a) affordable and (b) can be managed effectively by DE&S? Is the MoD examining options to rationalise the number of equipment programmes?
Following the Capability Review of the MOD published in March 2007 and the subsequent planning to Streamline the Head Office, a review of how the Department delivers capability was carried out in the first half of 2008. The review was led by the Equipment Capability Customer and included DE&S, the User, the MOD's Science, Innovation and Technology branch and the MOD Centre; the overall grouping being known as the MOD Unified Customer. During the review, the Department consulted the guidance[2] produced by professional bodies such as the Office of Government Commerce (OGC) and Association of Project Management (APM). Based on this consultation, the following definitions will now be adopted:
Projects are unique, transient
endeavours undertaken to achieve a
Programmes. What constitutes a programme will vary across industries and business sectors but there are core programme management processes. Programme management is the co-ordinated management of related projects, which may include related business-as-usual activities that together achieve a beneficial change of a strategic nature for an organisation.
In the Defence context, programmes are characterised by the following:
a. Focused on the delivery of outcomes, and therefore the coordinated delivery of all Defence Lines of Development (training, equipment, people, infrastructure, etc), necessary to achieve the required capability.
b. Usually comprised of several related projects which need to be coordinated in order to manage the dependencies and achieve the required overall outcomes.
c. Structured such that the capability outcome can be clearly and simply defined and accepted, and the group of key stakeholders is manageable, but not so granular that the adoption of programme management adds no value to the management of the component projects.
d. Normally be aligned to "Capability Integration Groups" (groupings in the Front Line Commands) to optimise the integration of capability into operational service and the through life management of the capability after acceptance.
DE&S is currently managing some 350 projects at various stages of the acquisition cycle. In addition, there are currently some 300 Urgent Operational Requirements in which DE&S is involved.
As stated in serial 2 above, the question of affordability of the Equipment Plan is being addressed in Planning Round 09. In addition, availability of suitable resources within DE&S to manage the delivery of a project is a key consideration when investment decisions are made. The current portfolio of projects is considered to be manageable, although work to support current operations through the delivery of Urgent Operational Requirements has inevitably required the re-prioritisation of some tasks; this has been done in conjunction with the customer. The effective management and deployment of resources, particularly those with specialist skills, is a key challenge for effective project management. To improve its ability to better manage the deployment of people to meet business priorities, DE&S is introducing Flexible Resourcing. This will improve the visibility of the skills people have, where they are deployed and the tasks on which they are engaged, allowing a more agile approach to the deployment of resources to aid the efficiency of project delivery.
As part of the review of how capability is delivered referred to above, it was recommended that the overall number of programmes should be rationalised to ensure that the benefits of a fewer number of broader programmes could be delivered. In line with this we are seeking to rationalise the number of programmes to approximately 40 - 50 across the whole of the Equipment Plan. The implementation of this approach is scheduled to commence in early November 2008 with the first tranche of programmes acting as 'pilots' for the remainder.
Updates on Equipment Programmes
(5) A short progress report on the following equipment programmes:
· Astute submarine
· Future Carrier
· Joint Strike Fighter (JSF)
· Type 45 Destroyer
· Future Rapid Effect System (FRES)
· Military Afloat Reach and Sustainability (MARS)
· A400M
· Nimrod MRA4
· Future Lynx
For the above programmes which have passed Main Gate, the progress report to include:
· The Current Forecast Cost (against Approved Cost at Main Gate) · The Current Forecast In-Service Date (against Approved In-Service Date at Main Gate)
For each of the above programmes, the progress report to include:
· A summary of the key events / decisions since the Committee last examined the programme[3] and the key events / decisions expected in the near future (next six months).
Future
Carrier
- the progress report should set out the current position regarding French
involvement in the programme, including any potential savings for the
FRES - the progress report should set out the key developments following the announcement on 8 May 2008 that Piranha 5 had been selected as the preferred design to be taken forward to the next stage of the Utility Vehicle programme and set out when the package of work on risk reduction is expected to be completed.
A400M - reports in the press have suggested that the A400M programme has experienced further delays. The progress report should set out the options which the MoD is considering for bridging the capability gap caused by these delays.
Astute
* Approval only given at 50% confidence level
Progress Report
Over the last 12 months, several technical issues have affected HMS ASTUTE's programme. These included damage sustained to Turbo Generator bearings during testing, replacement of a main coolant pump that was not performing to the required standard and quality issues on some components.
In July 2008, a detailed programme taking HMS ASTUTE through to her In-Service Date (ISD) was worked up between MOD and BAE Systems, encompassing lessons learnt from the test and commissioning programme to date, and incorporating expert advice from across the submarine build and support enterprise, including expertise from Babcock Marine (Devonport) and the US (NAVSEA and Electric Boat). This has shown that the Astute Boats 1-3 schedule will require re-approval by the Investment Approvals Board (IAB), work on which is already underway - a detailed Review Note is planned for early 2009.
As part of the re-approval process, programme reviews are being conducted on Astute Boats 2 & 3 (AMBUSH & ARTFUL) to determine if there are any consequential schedule and cost implications arising from HMS ASTUTE's delay.
Construction on Astute Boat 4, AUDACIOUS, started in May 2007 under a contractual limit of liability. The intention is to extend this contract in Spring 2009 to cover delivery of AUDACIOUS into service under a target cost incentive fee arrangement. By that time the required £160M of savings will sufficiently mature to be contained within the contractual price.
Contract for procurement of long lead items for Boat 5 were placed in January 2008. A Review Note is on its way to the IAB in October 2008 seeking permission to procure Boat 5 and long lead elements of Boat 6.
Key Events/Decisions since March 2008
· ASTUTE Core Load completed in July 2008 · ASTUTE undocked on 16 Oct 2008 · AMBUSH - Pressure hull and bridge completed
Key Events/Decisions expected in the next 6 months (to April 2009)
· Continuing ASTUTE's test and commissioning programme · IAB, · IAB, · AMBUSH - Starting first phase of testing preparations · ARTFUL - Main Propulsion Machinery Package assembly complete · Agree Target Cost Incentive Fee contract for AUDACIOUS · Start of construction on Boat 5
Future Carrier
Key Events/Decisions since HCDC Report on CVF in January 2008
3 July 2008 - It was announced in Parliament that contracts valued at around £3Bn had been placed with the newly-formed Joint Venture company (BVT) and the Aircraft Carrier Alliance for the construction of two 65,000 tonne aircraft carriers for the Royal Navy.
Sub-contracts (valued at approximately £400M) have been placed for the following:
· (placed before contract signature) The modification of Rosyth dockyard, 80,000 Tonnes of Steel, Blown Fibre Optic Cable Plant, Reverse Osmosis Equipment, Aviation Fuel Systems Equipment, Manufacture of Aircraft Lifts. (see bullet points below for further details)
· (placed after contract signature) Highly Mechanised Weapons Handling System, Uptakes and Downtakes Systems, Air Traffic Control Software, Wholeship Pump Integration, Emergency Diesel Generators, Power and Propulsion Systems. (see bullet points below for further details)
February 2008 - Sub-contract placed for the modification of Rosyth dockyard £35M, (widening entrance etc) in preparation for the assembly of the aircraft carriers.
March 2008 - Sub-contracts placed for:- Supply of over 80,000 tonnes of steel for manufacture of the two ships (placed with Corus Construction & Industrial / Dent Steel Services Ltd) £65M, Blown Fibre Optic Cable Plant (BFOCP) (placed with Brand-Rex Ltd) £3M, Reverse Osmosis Equipment (placed with Salt Separation Services) £1M, Aviation fuel systems equipment (placed with Fluid Transfer International) £4M.
April 2008 - Sub-contract placed for the manufacture of Aircraft lifts for the two new aircraft carriers (placed with MacTaggart Scott) £13M.
August 2008 - Sub-contracts placed for:- Highly Mechanised Weapons Handling System (placed with Alstec Ltd) £34M, Uptakes and Downtakes Systems (placed with Darchem) £8M, Air Traffic Control Software (placed with Cobham plc) £5M, Wholeship Pump Integration (placed with DESMI Ltd) £3M, Emergency Diesel Generators (placed with Wartsila Lips Defence) £1M.
October
2008 - Sub-contracts placed for Power & Propulsion Systems (£240M)
including gas turbines, shaft lines, propellers, platform management system,
power generation and transmission equipment.
Thales
UK/FR
Carrier Co-operation - As part of a wide ranging Defence Review,
Key Events / Decisions expected in the next 6 months
Order for Goliath crane (which will be installed at Rosyth) to be placed shortly (£15M).
Central Upper Blocks - Bids have been received, decision due at end of October 2008 (worth £300M).
Late
2008 - Lower Block 01, Pre-fabrication work begins at Babcock's Appledore yard,
First Cutting of Steel for HMS Queen Elizabeth (CVF01) is expected to commence in early 2009 (mid 2010 for HMS Prince of Wales (CVF02)), this corresponds with the start of production in the main shipyards. Joint Strike Fighter
Key Events/Decisions since 2007
· First flight of the first development STOVL JSF in June 08.
· JSF programme is progressing to plan with both the CTOL and STOVL variants completing in excess of 60 sorties to date.
Key Events/Decisions expected in next 6 months
· January 2009 - DE&S will seek approval to purchase three JSF to allow the UK to participate in the Operational Test and Evaluation of JSF in the USA.
Progress on Production, Sustainment and Follow-On (PSFD) Arrangements
The
Type 45 Destroyer
Key Events / Decisions since the Committee last examined Type 45
· April 2008 - First of Class DARING successfully completed second set of sea trials, proving propulsion systems.
· June 2008 - First test firing of Principal Anti-Air Missile System (Sampson) (PAAMS(S)) from the Longbow test barge off of the French coast successfully completed.
· September 2008 - DARING successfully completed third and final set of sea trials prior to Acceptance Off Contract. These trials focused on the Combat System, marking a shift to delivery of the all important fighting capability of the warship.
· September 2008 - The Main Gate Business Case for Phase 1 of the Type 45/PAAMS(S) Full Support Solution approved by DE&S Investment Board.
Key Events / Decisions expected in the next six months
· The Main Gate Business Case
for Phase 1 of the Type 45/PAAMS(S) Full Support Solution is currently planned
to be presented to the Investment Approvals Board before the end of 2008.
· The second ship, DAUNTLESS, will begin her first set of sea trials in November 2008.
· The fourth ship, DRAGON, will be launched on the Clyde in November 2008.
· DARING to be Accepted Off Contract in December 2008, and custody of the ship passed from BVT Surface Fleet Limited to the MOD. DARING will then transit to her base port (Portsmouth) and begin 12 months of MOD led trials prior to entering service (expected to be late 2009).
· Second PAAMS test firing from Longbow planned for December 2008.
· Third (and final) PAAMS test firing from Longbow planned for May 2009. Future Rapid Effect System (FRES)
Utility Vehicle
On
8 May 2008, the Ministry of Defence (MoD) announced selection of PIRANHA V
offered by General Dynamics (UK) Ltd as the preferred design for the FRES
(Future Rapid Effect System) Utility Vehicle. Acknowledging that there
were significant issues to be resolved during negotiations, the MoD took the
step of making General Dynamics (UK) Ltd's preferred bidder status
provisional. Their conversion to full preferred bidder status was
dependent upon the agreement of acceptable commercial terms followed by the
successful completion of a package of work on risk reduction.
Specialist Vehicles
The Specialist Vehicle element of the FRES programme continues to make good progress.
In June 2008, Departmental approval was given for the Specialist Vehicle Assessment Phase. The aim of this phase is to refine the requirement, develop programme options for delivering the FRES Specialist Vehicle capability and to understand and mitigate technical risk. The Assessment Phase includes the placement of a range study of contracts with industry. We are also currently developing the Acquisition Strategy for future stages of the Specialist Vehicle programme.
Military Afloat Reach and Sustainability (MARS)
Key Events / Decisions since Initial Gate approval (July 2005)
· July 2005 - entry into
Assessment Phase announced via Written
· May
2007 -
· December 2007 - Following
approval of open competition by
· May 2008 -
Key Events / Decisions expected in the next 6 months
· 2009 - The main investment decision for the MARS FT programme is currently expected to be made during 2009. A contract for the FT procurement will be placed with industry after that decision has been taken.
A400M
Progress Report A400M
remains a key element of the Development delays announced by Airbus Military (AMSL) in 2007 led to a 9 month slip in the ISD to December 2011. AMSL have recently announced further delays to first flight of the A400M prototype. We are pressing industry for further information so we can make a detailed assessment of the impact on production deliveries and also understand the scope of possible recovery actions. The Design and Production
Phase (DPP) contract for delivery of 180 A400M aircraft (including the
Key Events/Decisions since March 2008
· Roll out of the first A400M Prototype in June 2008 in Seville. · Draft issue to Airbus of our In-Service Support Request for Proposal.
Key Events/Decisions expected in the next 6 months (to April 2009)
· First Flight of the Engine Flying Test Bed. · Initial In-Service Support Proposal from Airbus Military.
The A400M will replace the Hercules C-130K, the out of service date for which remains 2012. We are naturally concerned by delays to the A400M programme and will be monitoring the situation closely in the coming months. The Department regularly reviews its transport airlift requirements and is considering various contingency plans to mitigate any potential capability gaps. These include:
· Reallocating assets, dependent on changing operational requirements (e.g. Herrick drawdown) · Extending the out-of-service dates of C130K. The potential costs and limitations of this option are recognised and critical investment decision points have been identified. We will remain adaptive to emerging information on the A400M programme. · Leasing or procuring additional assets (C-17/C130) Nimrod MRA4
Key Events/Decisions since March 2008
· One of the trials aircraft (PA03) completed its contribution to the flight test programme in March 2008 and has since been utilised for Reliability, Maintainability and Testability work in aid of the Future Support programme.
· The first polar navigation by a Nimrod MRA4 was successfully completed by a trials aircraft (PA02) in June 2008. This involved a flight of more than 12 hours and 4,000 nautical miles.
· Trials aircraft deployed to Istres in Southern France in August 2008 to utilise the long runway and reliable weather conditions.
· Aircraft production remains on programme to meet an In Service Date of 2010.
Key Events/Decisions expected in the next 6 months
· A Main Gate submission proposing the strategy for the support of MRA4 is planned for Spring 2009.
A
decision on the number of trials aircraft that can be converted to a full
production standard is expected to be taken in Spring 2009.
* This is the ISD for the British Army's Battlefield Reconnaissance Helicopter and is defined as 4 force elements at readiness to deploy on a small scale focussed intervention operation.
.Key events decisions since approval The programme is proceeding within current approvals. · June 2006 - FLynx Contract awarded to AgustaWestland, along with the signing of the Strategic Partnering Agreement and the Business Transformation Incentivisation Arrangement. · October 07 - First metal cut for the FLynx Trials Installation aircraft · Jan - Mar 08 - First appearance in Major Projects Report
· May 08 - Air vehicle Critical Design Review held. · June 08 - Verification of the tail rotor concept complete. · July 08 - Mission System Preliminary Design Review held · September 08 - Successful Production Readiness Review Held
(Note: There has been recent speculation about the MoD's commitment to the Future Lynx programme. As a significant MoD project, Future Lynx is being reviewed as part of a wider examination of the Department's financial planning process. No decisions have been taken.)
Forthcoming key events/decisions · November 2008 - delivery of 1st Aircraft Structure from GKN Structures to Agusta Westland Build line · August 2009 - Air Vehicle and Mission System Critical Design Review · November 2009 - More Effective Contracting Gate Review 1 · December 2009 - First Flight of trials installation aircraft
Helicopters
(6) A note setting out:
· The current UK military helicopter fleets (broken down by type / mark e.g. Sea King Mk 5), the number of helicopters currently in each fleet, and the forecast out-of-service date for each helicopter fleet;
· The UK military helicopter fleets (broken down by type / mark) expected to be operating in 2020 and the number of helicopters expected to be operating in each fleet.
The table below provides a
breakdown of the 594 aircraft currently in the military helicopter fleet (as at
01 Oct 2008), excluding helicopters that the 71 of the 594 helicopters are categorised as non-effective. These aircraft are still on the Military Register but they are redundant, declared as surplus, awaiting disposal and consequently are not expected to be flown. Without life extension work, the service life of the majority of the helicopters in our current fleets will cease before 2020. Where a life extension programme is planned to extend the out of service date of a helicopter, the resulting extended OSD is set out in brackets. We also expect to complete a number of helicopter procurement programmes in advance of 2020. The capabilities currently provided by the Lynx fleet will be provided by the Future Lynx from the middle of the next decade, the Sea King Mark 3, 3A and 5s will be replaced under a PFI arrangement for Search and Rescue and the first tranche of our Future Medium Helicopter capability should have been introduced. In addition the 8 Chinook helicopters reverted from Mark 3 standard to the 2/2A standard are also not included in the table but will have been introduced into service. Broadly, we expect to sustain the levels of medium and heavy lift capability. We do expect to reduce the number of platforms used in lighter roles, such as currently provided by the Gazelle and Lynx. In the battlefield environment, the light helicopter fleet is in transition as a result of the introduction of the Apache which has reduced our reliance on Lynx in the attack role and improvements in communications and ISTAR coverage by other assets has reduced the numbers of Rotary Wing aircraft needed for battlefield reconnaissance. For such reasons we have already decided that we would not anticipate deploying Gazelle on operations overseas before it goes out of service. As with all Defence
programmes, it is not until Main Gate approval has been obtained that decisions
such as the final aircraft numbers, the timescales for the upgra
DE&S Performance / Personnel
(7) The MoD Annual Performance Report for 2007-2008 states that "procurement performance declined, failing to meet our in-year Public Service Agreement sub-targets for cost and time, and only partly meeting the overall target". What were the key factors behind the decline in procurement performance in 2007-08? How did the need to support current operations affect DE&S's procurement performance in 2007-08?
The key factors for cost and time variation in Financial Year 2007-08 can broadly be grouped into three categories:
a. decisions taken by the Department in the broader context of the defence needs (this would largely include elements of changed requirement; changed budgetary priorities; procurement strategy);
b. factors outside the Department's direct control (this would largely include international contracting process and procurement strategy issues, accounting adjustments and re-definitions; inflation and exchange rates); and
c. factors reflecting the realisation of unplanned or low level/high impact risk for the Department and/or Industry (technical factors).
On this basis much of the in-year cost variation falls to factors either outside the Department's direct control, with international factors being the single most significant element, or the realisation of unplanned low level/high impact risk. We have sought to mitigate the impact of these risks by taking decisions that can be managed within the broader context of defence.
The impact of international collaboration on performance, cost and time is something that it is currently hidden amongst the factors normally ascribed to change. UK Defence benefits enormously from international collaboration. Not only does collaboration increase military inter-operability for coalition operations but provides a means of sharing development expenditure and production economies of scale. Indeed, capabilities such as Typhoon, Joint Combat Aircraft, A400M and the Guided Multiple Launch Rocket System would probably be unaffordable on a UK-only basis. However, within international collaboration, we are only one customer amongst several and our influence is inevitably diluted; we are subject to the influence of the intricacies of programming decisions in each of the member nation's defence programmes; and we are often obliged to pursue more traditional means of procurement compared with our generally more innovative and progressive approaches.
Five projects - Naval EHF/SHF Satellite Communication Terminals (19 months), Soothsayer (16 months) and Terrier (27 months) Replacement General Service Respirator (22 months) and Precision Guided Bomb (18 months) - account for a high proportion of the total in year slippage. Taking the broader approach to reasons for variation outlined above, nearly all of the change appears to result from factors ascribed to international programmes with the remainder relating to the realisation of unplanned risks. This latter factor still obscures the fact that, where such risks emerge, the Department does have a choice over a lower standard of capability or performance, to cancel the project, or to trade time to ensure delivery of capability. Because of the demonstrable need for the capability the latter option is likely to offer the lowest risk solution.
The extent to which the Department
makes deliberate tra
Supporting operations, not least through the procurement of equipment to meet Urgent Operational Requirements, has been the Department's highest priority. Resources within DE&S have been prioritised accordingly. It is not, however, possible to assess to what extent, if any, this effort has impacted on our performance against the procurement targets.
(8) How is DE&S performing in 2008-09 against the three sub-objectives under "PI 3.1 Procuring and Supporting military equipment capability through life"?
The current DE&S position has highlighted a number of risks to Time and Cost, and options to recover these are being investigated.
(9) How many DE&S personnel were in post at 30 September 2008 and how many are expected to be in post at the end of March 2009? Is it still the target to reduce the number of DE&S personnel to around 20,000 by 2012? Has this target been re-examined to take account of the need to continue to support current operations?
On 30 September 2008, there were approx 23,400 personnel of full time equivalent (FTE) employed within DE&S (17,800 civilian and 5,600 military). It is anticipated that the FTE strength at 31 March 2009 will be approx 23,300 FTEs (17,700 civilian and 5,600 military).
DE&S is currently reviewing its manpower requirements as part of the PR09 process. Based on current PACE (Performance, Agility, Confidence, Efficiency) manpower requirements, it is planned to reduce to a figure of around 20,000 by 31 March 2012 with resources re-prioritised where necessary to enable the effective delivery of our outputs.
(10) What progress has DE&S made to upskill its staff? How did DE&S perform against its target of staff completing a minimum of six training days in 2007-08 and against the "further target of four days for Continuing Professional Development in the key acquisition disciplines of Commercial, Finance, Programme and Project Management, Engineering and Logistics"[4]?
DE&S must continue to
develop and acquire skills needed for the future. The funded Upskilling programme has been
expanded to embrace the wider functional community as well as broader
acquisition, leadership, management and core competence skills. In year some £10M has been allocated to fund
a range of skills interventions. The Skills Directors appointed for each discipline
have drawn up skills plans to improve the skills capability in each of the
functions and are on track to meet Professional Posts targets to ensure
key
Over 70% of the DE&S workforce met the 6+4 training days target last year (2007/08). The current levels of achievement against the 6+4 target are twice as high this year than for the same period last year.
Achievements in the programme include:
Project and Programme Management Project Management Level 3 Licence development commenced with a pilot of the Certificated Project Manager (CPM) qualification; 25 Professional Post holders are undertaking the pilot which will complete in March 2009. A total of 484 Project Management Licences (which are linked to the Association of Project Management) have been issued, including 80 at Level 2.
Finance Over 55% of staff in DE&S finance professional posts are qualified accountants. To improve the future position, the Training Accountant Development Scheme (TADS) has been increased and 22 new graduates commenced the development programme in September 2008. Existing TADS achieved 100% pass rate in the May 2008 CIMA exams, with two TADS achieving a mark that brought them into the "top 10 worldwide". A further 39 have been accepted for Association of Accounting Technician training.
Commercial Over 70% of DE&S commercial professional posts are filled by individuals with the relevant Chartered Institute of Purchasing and Supply (CIPS) qualification. The target of 100% of Commercial Directors with MCIPS or on the Professional Development Programme is currently at 75%. The target of 100% is expected to be reached by 31 March 2009. The B2 conversion 2007/08 intake graduated in September 2008.
Logistics
Engineering Twenty one DESG Graduates commenced the development programme and a further 51 have been given an offer of contract. Delivery of places achieved on Land Systems Post Graduate Certificate. Delivery of modular Aerospace Engineering Technology & Systems Engineering awareness courses. Increase to apprentice recruitment, September 2008 intake expected to be in excess of 40.
(11) What progress has DE&S made in "producing a Workforce Strategy during 2008.... and introducing Workforce Plans in support of Business Plans to identify opportunities for recruitment, interchange and partnering with industry in order to develop a strong and sustainable skills capability"[5]?
DE&S has been engaged with other MOD Top Level Budget areas on the development of a pan-Departmental approach to Workforce Planning during 2007/08. This resulted in the adoption by the MOD's Director General Civilian Personnel (DGCP) of the MOD Guide to Workforce Planning. The DE&S Workforce Plan seeks to identify critical skills that will be required to deliver DE&S outputs over 2, 4 and 10 year horizons and the risks associated with recruiting and retaining those resources. Since January 2008, DE&S DG Human Resources has been engaged with the DE&S 2-star Clusters through their HR Business Partners to undertake Workforce Planning within business areas. The Workforce Planning process was trialled with DG Information Systems and Services, and DG Safety and Engineering from February - June 2008 to test the methodology. The lessons learned from these trials were incorporated into the roll out of Workforce Planning across DE&S during June 2008. The Workforce Plan is focussing on the identification of critical roles and skills to the business, whether these will grow, shrink or remain constant and the gaps or surpluses that will arise in these role/skill areas. The DE&S Workforce Plan will seek to aggregate together role/skill issues from across the TLB. Once TLB critical roles/skills have been identified, the Workforce Strategy will be produced to identify interventions to meet the critical shortfalls. In some business areas (eg Naval Bases), measures enabling staff to work alongside partners to develop knowledge and skills are in hand. Work is currently in train to identify "near-term" recruitment requirements to meet critical resource shortfalls within the business over the next 6 -18 months. It is planned that co-ordinated recruitment activity to meet identified resource requirements will be launched in November 2008.
Additionally, DE&S has been engaged, through DGCP, in the Defence Sector strategic workforce and skills planning programme. The aim of this is to enable the Defence Sector to identify common "skills demand signals", exert more influence on the national training and education system and establish joint methods of reducing common skill gaps.
Defence Industrial Strategy
(12) In December 2006, the MoD provided the Committee with a "Summary Progress Report on significant DIS Milestones" which was published in the Committee's Report "The Defence Industrial Strategy: update" (Sixth Report of Session 2006-07, HC 177). The Committee would be grateful for an updated version of the Summary Progress Report.
An updated Summary Progress Report on significant DIS Milestones is at Annex B to this Memorandum.
(13) Where does responsibility for promulgating and implementing the DIS fall within the MoD?
The Defence Commercial Director (DCD) is the Senior Responsible Owner for the DIS, charged with overseeing its implementation and execution, and for seeing that it is refreshed, current and relevant to the business needs of MOD and industry. The Defence Acquisition Change Programme (DACP) is responsible for implementing the majority of internal change programmes that resulted from the DIS. It is the responsibility of DE&S, and its sector clusters, to implement the sector strategies of the DIS.
Updated Version of the Defence Industrial Strategy
(14) What is the latest position regarding the publication of the updated version of the Defence Industrial Strategy? What assessment has the MoD made of how the delay in publishing the updated version has affected industry?
The Department remains firmly committed to the Defence Industrial Strategy and has engaged closely with industry to develop it further. Work continues on developing the policy framework and examining the medium and long term equipment programme issues that will inform the industrial sector strategies. We are discussing the revision of the Strategy with the National Defence Industries Council; and through bilateral meetings with individual companies at all levels.
We do not believe that the lack of an updated version is having a significant impact on the achievement of the original DIS objectives, where we continue to make good progress. The principles set out in the original DIS still underpin all MOD's acquisition activity and are driving transformation that will deliver equipment to the front line at value for money for the taxpayer.
UK/US Defence Trade Cooperation Treaty
(15) What progress has been made with the UK/US Defence Trade Cooperation treaty and when does the MoD expect the Treaty to be ratified?
HMG has been working closely with the US Administration to achieve ratification of the Defence Trade Cooperation Treaty. Unfortunately, the US Senate Foreign Relations Committee was unable to consider the Treaty during the closing sessions of the 110th Congress due to a number of other high priority issues also being dealt with by the Senate staff. The Committee chair, Senator Biden, has made it clear that the Treaty will be dealt with as a priority in the early part of the 111th Congress, due to start in late January 2009. While this is clearly disappointing news, we understand that the SFRC continues to fully support the aims of the Treaty and that they are content with the way it will be implemented and enforced. The MOD will continue to work with the US Government to ensure the Treaty remains a priority issue and can be brought into force as quickly as possible upon ratification.
Dispute Resolution
(16) How does the MoD usually seek to resolve disputes with defence equipment contractors? What assessment has the MoD made of other approaches to dispute resolution, such as the sorts of approach offered by bodies such as the Winchester Group?
The MOD seeks, where possible, to resolve disputes by negotiation as early as possible. It is our preferred approach as it is the most efficient in terms of time management, costs, and control of process. Where negotiation fails to produce a settlement that is acceptable to the parties, the MOD will seek the agreement of the contractor to use alternative methods to settle the dispute. These alternative methods might include a contract pause period coupled with Alternative Dispute Resolution (ADR) which comprises, amongst other techniques, mediation, neutral evaluation and expert determination. Should these fail the parties are then able to resort to arbitration, or litigation. Where ADR is used, an ADR organisation will be selected under whose auspices the dispute resolution will be conducted. A wide range of these alternative methods is now available and the MOD considers along with the contractor in dispute which is most suitable for each dispute as it arises and when it is most suitable to deploy the chosen method. A number of different approaches have been used to solve real life disputes with contractors such as Early Neutral Evaluation. For example, on the Survey Vessels project, at the MOD's suggestion, the Winchester Group were engaged to assist in resolving a dispute between the MOD's contractor and one of its sub-contractors which was preventing one of the vessels from being delivered. Annex A
DEFENCE EQUIPMENT CAPABILITIES (Serial 3)
There are 12 Director of Equipment Capability (DEC) areas. Each DEC has responsibility for specific Capability Management Groups.
The key current and future equipment projects which deliver or are planned to deliver these capabilities are listed in the table below. "Current" can be difficult to be precise about, but has generally been taken as those projects underway which are close to reaching the In Service Date. The term "key equipment projects" has generally been interpreted as the Category A projects i.e. those with an expected total procurement cost in excess of £400M (or which are subject to the same level of scrutiny due to risk, complexity, precedence or similar reasons), with the exception being DEC Chemical, Biological, Radiological and Nuclear whose largest project is Category B.
Annex B
SUMMARY PROGRESS REPORT ON SIGNIFICANT DIS MILESTONES (Serial 12)
14 November 2008 [1] MOD memorandum of 20 October responding to HCDC advance questions on the Annual Report and Accounts 2007-08 (question 14). [2] APM Body Of Knowledge Definitions and OGC's Managing Successful Programmes [3] The Committee last examined the Astute submarine, Future Carrier, JSF, Type 45 Destroyer, FRES, A400M and Nimrod MRA4 programmes in its Report Defence Equipment 2008 (Tenth Report of Session 2007-08, HC 295) published on 27 March 2008. [4] Government Response to the Defence Committee's Report Defence Equipment 2008 (Tenth Report of Session 2007-08) [5] Government Response to the Defence Committee's Report Defence Equipment 2008 (Tenth Report of Session 2007-08)
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