Ministry of Defence: Chinook Mk 3 - Public Accounts Committee Contents

2  The Department's decision making

8. The Department's approach following the original procurement of the Chinook Mk3 helicopters was one of caution and a desire to prevent further mistakes. However, this resulted in protracted negotiations and decision-making over the Fix to Field project. The period from the delivery of the helicopters in 2001 to the final cancellation of the Fix to Field project in March 2007 was 63 months, which the Department accepted was too long.[13] The Fix to Field project was supported by a robust business case and a review by the Office of Government Commerce, which concluded that it would succeed in delivering the required capability.[14]

9. The Department acknowledged that the decision to cancel the Fix to Field project was initially taken in haste.[15] The numbers of troops deployed to Afghanistan had increased significantly, and as a consequence, the demand for helicopters to support operations increased. The Department said that they had been looking at a range of options, from the purchase of Danish Merlin helicopters to the upgrading of the Sea King helicopter with state-of-the-art rotor blades.[16] However, the Department had not fully eliminated the shortfall in helicopters and felt strongly that it was necessary to correct this shortfall. The Reversion programme, which would convert the Chinook Mk3 to a Chinook Mk2 standard, would provide more helicopter capability earlier than the Fix to Field project. While this was far from the ideal solution, the Department felt it was the most appropriate choice given the operational circumstances.[17]

10. In August 2007, the then Chairman of the Investment Approvals Board, the senior approving authority for procurement decisions in the Department, expressed disappointment at the level of evidence provided to the board in assessing the Reversion project, in particular, with regard to the operational imperative. The Department acknowledged that, while there were deficiencies in the evidence supporting the Reversion project, they believed that they had made the correct decision at the time.[18] The Department said that it was conceivable, but unlikely, that the Reversion project would not have been approved by the Investment Approvals Board, regardless of the level of evidence presented. This was because the operational requirement was so great.[19]

11. The Defence Industrial Strategy outlines how the Department manages its relationship with key defence suppliers. The key elements of this document are that the relationships should be managed in the sprit of partnership, joint decisions taken and, where possible, information should be freely available to both sides. Boeing, being the sole supplier of the Chinook helicopter, was the prime contractor for the Fix to Field project. The Department, however, failed to consult with them over the decision to cancel Fix to Field, or to confirm the costs of the Reversion project. The Department acknowledged that the initial estimates of cost were flawed. The estimate used to make the decision to cancel Fix to Field was 70% lower than the final contract cost.[20]

13   Q 39 Back

14   C&AG's Report, para 2.8 Back

15   Q 40 Back

16   Q 2 Back

17   Q 38 Back

18   Q 93 Back

19   Q 135 Back

20   Q 83 Back

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Prepared 5 March 2009