Defence Equipment 2010 - Defence Committee Contents


Examination of Witnesses (Question Numbers 120-139)

GENERAL SIR KEVIN O'DONOGHUE, DR ANDREW TYLER AND MR GUY LESTER

1 DECEMBER 2009

  Q120  Mr Crausby: To what extent has the UOR programme really affected all of this? To what extent will it continue to affect this?

  Dr Tyler: The UOR programme is obviously very specifically focussed at Afghanistan, and therefore everything we are buying under the UOR programme is for fighting the war that we happen to be fighting at the moment in Afghanistan and is optimised for the conditions in Afghanistan. What the SV programme, the FRES Scout programme is all about is about investing in the future. That is not to say that those vehicles once provided—if at that point we are still in Afghanistan—would not have utility in Afghanistan; they might very well do; but what this is about is building the Army's contingent capability for the future and giving them a vehicle that is adaptable, versatile and agile for them to use in the future for whatever conflict.

  Q121  Mr Crausby: Am I right in saying that the FRES programme has not stopped then?

  Dr Tyler: No, it has not stopped.

  General Sir Kevin O'Donoghue: The FRES UV programme was stopped, but the overall FRES programme is continuing.

  Dr Tyler: The FRES name was used, if you like, as a sort of overall name describing a whole family of different types of vehicles. The reason why they were held under this banner of FRES is because it was important, and remains important, that those vehicles were able to operate very well with each other, communicate with each other and be compatible with each other in all sorts of different ways. As originally conceived, and that concept has not gone away, what we wanted the Army to have was a whole family of assets which were able to work together on the battlefield. When we look back in the rear view mirror now and think about why was it that FRES was not successful in getting to where it needed to be in the time, is because we were overemphasising the nature of this sort of system, of trying to bring all these vehicles together. What we have done subsequently is said, "We must not lose sight of that but we must also recognise that what we are trying to do is to deliver individual families of vehicles to meet particular needs of the Army". So we said, "Right, we'll go back to first principles again. We will say to the Army, `What is your top priority?'" They made it very, very clear to us that the Scout vehicle, which was part of the FRES family, was their top priority, closely followed by the UV vehicle; so we said, "Right, we'll concentrate our main effort on the Scout vehicle", which is what we have done. We worked very hard with the Army to get the requirement very quickly tied down, and made sure that areas of significant technical risk and so on, or areas that would prevent us from looking in the open market for vehicles that already existed, were excluded. We nailed down the requirement, and since that time we have been driving at very, very high speed to get the project to the state where we will have a competition. We have got the bids back in; we are deep in the assessment of the bids now; and we will hopefully have it on contract early in the new year.

  Q122  Mr Crausby: Has Quentin Davies changed his mind then?

  Dr Tyler: No.

  Q123  Mr Crausby: He sounded pretty clear to me. He says, "It turned out to be a perfect disaster. I will not dwell on a sad story. I have now stopped the FRES programme".

  Dr Tyler: I can say, he was referring to the FRES programme as we previously conceived it; and you yourselves have described I think only last year the FRES programme as "a fiasco". What we have done is said, "Let's look at the individual constituents of the FRES programme".

  Q124  Mr Crausby: The MoD's response was that it was not a disaster and we intend to continue.

  Dr Tyler: I was only describing what you described it as last year. The Minister has clearly made statements recently as you have just quoted to us saying that it was not the best piece of procurement that he had ever seen. I have to say, I would agree with that. I think there are a lot of reasons why the FRES programme, as originally conceived, was unsuccessful. All I am saying now is, concentrating on the positive, we spent the whole of the last year reassembling, realigning that programme to get it on the straight and narrow and concentrate on delivering vehicles that the Army require, and we are within reach of victory now in getting some vehicles on contract early in the next calendar year.

  Q125  Mr Crausby: He says, "I will not dwell on a sad story". I think he needs to dwell on a sad story. We need to know because it gives me the firm impression in what he says that, "I have now stopped the FRES programme". That needs to be clarified as to exactly where our manufacturing base stands?

  Dr Tyler: We have stopped the FRES programme as it was previously conceived. We have restructured, we have recast it now into a set of individual vehicle projects, the first one of which is the Scout project; and it is still bearing the tag "FRES" because that is its provenance in terms of its requirement; and we are still sustaining this crucial factor that the vehicles need to be able to operate with each other and indeed operate with the other legacy vehicles, and indeed operate with dismounted soldiers. That system (the "S" of FRES) remains a very important thing. We need all of our assets on the battlefield to be able to talk to each other and work together. In that sense the system part of FRES lives on. The name, frankly, I cannot get excited about. What is important is that we are now focussed on delivery. We have got a project that is very, very close to getting on contract with industry; and we will soon, hopefully, have some Army vehicles on our hands under the programme previously known as FRES.

  Q126  Chairman: It is still looking like a fiasco, is it not?

  Dr Tyler: No, far from it. Absolutely not.

  General Sir Kevin O'Donoghue: Absolutely not.

  Q127  Chairman: Jolly good, because last year we said it was a fiasco. You said, "No, no, it is not." This year the Minister says it is a fiasco. I say it is a fiasco now. Do you not agree?

  Dr Tyler: No.

  General Sir Kevin O'Donoghue: Absolutely not. We have turned the corner, as we have in a number of projects.

  Q128  Chairman: We are trying to get to the bottom of whether the FRES programme still exists.

  Dr Tyler: We are assessing two bids at the moment from industry against a detailed specification, bids the paper work for which is inches high, and I have got teams working literally seven days a week assessing those bids in order to get us into a position to be able to award a contract early in the New Year. That sounds like progress to me.

  Q129  Chairman: Early in the New Year. Does that run the risk of falling into the General Election?

  Dr Tyler: There is always a risk, but we are working to a programme which would deliver us a contract award before we got into the General Election period, and I do not know what the timing of the General Election is specifically going to be.

  Q130  Mr Crausby: It is one thing to keep buying vehicles—I think we all accept that—it is another thing to have a Future Rapid Effects programme that was supposed to be planned and integrated over a period of years. It seems to me that all of that has completely collapsed.

  Dr Tyler: I think it is very important that we deliver some vehicles, and the criticism that I think has been levelled at FRES by yourselves and others in the past has been that FRES was not delivering anything. Now it is on the verge of delivering something and I have said several times that what is really important is that we do not lose the "S" of FRES, the system piece of it, and that we have put instructions within our organisation to make absolutely certain that when we buy, first of all, the first of the Specialist Vehicles, the Scout vehicle, and then, subsequently, the other variants of the specialist vehicles, when we buy the Utility Vehicle, that we are buying vehicles that can operate together, communicate with each other and work together on the battlefield along with the legacy vehicles and also with a dismounted soldier and ISTAR assets and all the other things that we have to link together in the battlefield. We have not lost the essence of FRES, which was to have an overall systems view of it—that has not been lost.

  Q131  Chairman: But, according to the Ministry of Defence, for the last 20 years this programme has been on the verge of delivering something and some of the people who have borne the consequences of no delivery have been defence industry. Is there any thought of the Ministry of Defence compensating defence industry for the money that they have had to spend themselves on what the Minister now describes as a perfect disaster?

  Dr Tyler: I think you will find that the key industries who have been involved in this over an extended period of time are involved in the current bidding for the Scout project and, therefore, they have got a potentially very large prize there, in industrial terms, if they are the successful winners of the competition.

  Q132  Chairman: So they do not learn from experience.

  Dr Tyler: I do not understand that question.

  Q133  Chairman: They have been trying to get some contract out of this for the last 20 years. Not a lot has happened.

  General Sir Kevin O'Donoghue: One of them will get a contract in the first months of next year, subject, as you say, to the General Election.

  Q134  Chairman: But there is no thought, then, of compensating defence industry for what the Minister himself has described as a perfect disaster.

  General Sir Kevin O'Donoghue: No.

  Dr Tyler: I think that, of a number of different parties, industry also has been one of the contributing architects to the problems that we have had with FRES in the past, along with the MoD, along with the acquisition part of the MoD, along with the centre, along with the Army.

  Q135  Chairman: Is the Ministry of Defence paying for the costs of bidding into this new contract?

  Dr Tyler: No, we never do.

  Q136  Mrs Moon: Can I get it clear in my head. How much does this perfect disaster actually cost?

  Dr Tyler: I do not think that is a question that you can put a number on in that way. We can say what we have spent. If I take an example as being the Utility Vehicle programme (and I do not have the precise number here but we can let you have it), we have spent tens of millions of pounds on the activity that led up to the abortive Utility Vehicle competition this time last year, which was one of the reasons, I think, that prompted your description of the programme as a fiasco last year. However, that is absolutely not wasted money. There might be some aspect of it that one can point to and say that might have been nugatory spend, but actually the vast majority of it went in looking at the overall system approach that we were taking to FRES, and we are using all of that, as we speak now, in the competition. It has also given us a very firm basis of the requirement for a Utility Vehicle, so that when priorities permit in the planning round we will be able to very rapidly get a Utility Vehicle specified and get the bidding underway for it. So an awful lot of the money that we spent previously has provided value, which we are using today and will continue to be using in the future.

  Q137  Mrs Moon: How many tens of millions has this learning curve cost: 10, 20, 30, 50, 80 million? What are we talking about? Give me some global figures here.

  Dr Tyler: I could not give you a precise number now, but we are at the upper range of your estimate.

  Q138  Chairman: The suggestion last year was £150 million.

  Dr Tyler: For the UV programme, I think. I was going to say 140, but it is of that order.

  Q139  Mrs Moon: It would have been £140 million for the UV vehicle out of which we have learnt, what, 10 million worth of lessons?

  Dr Tyler: I think the vast majority of the money that we have spent on the UV vehicle—and bear in mind that that was in the context of the overall FRES programme (and back to the point about the system, the "S" of FRES being very important)—has been spent in understanding a system of systems, that will be all of the vehicles that will sit within the FRES programme going forward. I would say the vast majority of that has not been nugatory spend.


 
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