Defence Equipment 2010 - Defence Committee Contents

Examination of Witnesses (Question Numbers 320-339)



  Q320  Mr Hancock: Do you think it is acceptable to sell that idea of starting with an 80% capability to the wider public, to the media, who would say, "Here you are. Industry is saying do not go for the 100% solution: take 80%. It gets into the field quicker, it offers most of what you want, but it is still 20% down on it." Is it a saleable thing? It would appear that officers in the MoD are up for it, industry is up for it; but politicians have to be up for it because, at the end of the day, they carry the can if it goes wrong. So how do you sell it?

  Sir Brian Burridge: Well, do not use the term 80%. The label is wrong.

  Q321  Mr Hancock: Or whatever. Less than full capability.

  Sir Brian Burridge: The reason I say do not use the 80% label: what is the 80% solution on body armour? There are some things in some places that do not lend themselves, but if you have to use your newly introduced equipment very rapidly on operations, then you have to go the UOR route, you have to accept that you will invest in a small number, and most front-line commanders hate the idea of fleets within fleets, but that is exactly the way it would have to go. I think the general public have become almost immune to the annual slaughter of the equipment programme by the National Audit Office—this number of months late since last year, this amount of money extra—and the numbers are so large, but I think that it would be widely acceptable and Ministers ought to be able to say, "Look, this is us managing risk properly."

  Linda Gilroy: I am trying to relate what you are saying to a couple of circumstances. You have talked quite a lot about airframes, but I am thinking about FRES and, with the wisdom of hindsight, I am also thinking about what I saw when I went out with the Armed Forces Parliamentary Scheme to Camp Bastion last year in the way of new vehicles: quite a big range of vehicles being produced for the convoys and also, of course, the Jackal as an Urgent Operational Requirement and, I believe, a forthcoming replacement for the Snatch Land Rover similarly being procured and something which, I think, our Armed Service personnel would have welcomed some time ago. What I am thinking is, what are the lessons of what Gray is putting forward and what we are talking about in terms of procuring, perhaps, for a basic building block capability into which you can update and put in spiral insertion? The other programme that I am thinking of is, with the wisdom of hindsight and realising some of the things that Gray is now saying, what would the lessons have also been for not just the procurement of the carriers and the Type-45s but looking forward as well to what has been known as the Future Surface Combatant, now the Future Frigate, I think, is what we are calling it, and can we get that one in the right place? I am sorry that is a fairly complicated set of scenarios, but if somebody could take the vehicles one first and then maybe the lessons learned on procuring naval equipment.

  Q322  Chairman: Dr Wilson, do you want to talk about FRES?

  Dr Wilson: Yes, surely. I think if FRES had been procured earlier with either the specification that existed or some lesser specification, then it would have been perfectly possible to get into service a protected manoeuvre vehicle that would have given the Army all of the capability that it currently needs in Afghanistan, plus additional capability for contingent operations. The sticking plaster of a solution which was adopted is to procure what are called protected mobility vehicles rather than protected manoeuvre vehicles, which have limited off-road capability, and that then gives you problems in your tactics as to where you can go to avoid some of the threats, such as IEDs, that you are constantly going to find embedded at the sides of tracks and roads and places that these vehicles can go. I am here specifically thinking of the Utility Vehicle, which was a large eight-wheeled armoured vehicle with all the usual characteristics of V-shaped hulls and lots of armour and lots of blast protection and the like. If that had been procured, whether it was procured as part of the FRES UV programme or had been procured in some other way, whether it was what finally was selected for UV, which was PIRANHA 5, or whether it was a Stryker or some other vehicle, that capability could have been introduced earlier and it would then have been, upgraded, because those platforms have a history of being upgraded. To quote one simple example, PIRANHA would have started at 18 tonnes, often sits at 23 tonnes. PIRANHA 5 sat at about 28 and currently PIRANHA 5 sits at 30 tonnes. So the ability of these platforms to grow over time is well documented, and that does not take into account all of the growth that could have come in the mission fit that could have added additional capability. So I think it is perfectly feasible to have procured something and that would have stopped other procurements, that would have saved money; it would have allowed the incremental procurement to go ahead.

  Mr Godden: Can I just add one thing which we have not mentioned, which is the export market, because it has an impact. It has had and would have had a big impact on the exportability of many of the pieces of equipment that we have produced over time, and so there is an extra economic incentive which feeds back on itself with the potential for spiralling to become an economic benefit. As well as the reduction in the early stage it also feeds off itself and creates the economies for the upgrades that might be required. So the thing feeds well in that sense as well.

  Chairman: Do you want to answer the rest of the points?

  Q323  Linda Gilroy: Can I just say in relation to what you have seen with the Type-45 and the increase in the cost for the Type-45, when I went to the defence exhibition earlier this year—the major one—what I saw there as a Future Frigate seemed to be replicating, again, going for (never mind the 100%) 110%, 120%, rather than looking at the basic hull that could be designed to cross all two or three types of Future Frigate and then to build from that.

  Mr King: It still is called the Future Surface Combatant.

  Q324  Linda Gilroy: Is it? That is a shame!

  Mr King: One of the key issues on this programme is that they have to build in flexibility and modularity of the design so that it can be exported, because there is no doubt that unless you have a less complex ship, you are not going to export it a" la Type-45, and that is a key part of the "Initial Gate" proposal that is in at the moment, which is to start the thinking and ensure from day one that the programme is structured in that way and we do not get too late and too long in the process before it becomes an over-complex set of capabilities. So those lessons are being learnt and it is a key part of the terms of the business agreement that we have signed up with Surface Fleet in terms of the 15-year partnering agreement which looks at the types of skills, in terms of protection of design skills, making sure it is modular and it is flexible both for export markets and home markets.

  Q325  Linda Gilroy: So the commentators who say that what is being attempted is a substitute for not getting enough of the Type-45s and that these are a Type-45 variant rather than a different support vessel are wrong, are they?

  Mr King: Yes. The Type-45 is completely different. This is about the replacement of the Type-23 capability and that type of frigate capability rather than the Type-45, which replaces the Type-42s.

  Linda Gilroy: So the commentators are wrong when they say that?

  Q326  Chairman: I think you said, "Yes."

  Mr King: Yes, I think I would say "Yes" in terms of the structure of the programme.

  Q327  Mr Borrow: I am trying to come back to basics in a way, because I sense that there is something about defence procurement where you come up with an idea of what you need, which is way different from what you have already got, and then you try to specify it, de-risk it, usually unsuccessfully, and then you are surprised when it takes longer than you expected to build it and it costs more than you anticipated. I am not sure whether that is peculiar to defence. Certainly I can think of two major civil aviation projects where they have come up with something very different from what is already flying and then been somewhat surprised when it has taken rather longer.

  Mr King: It is nearly destroying their companies at the moment.

  Q328  Mr Borrow: I think outside defence it does not happen very often that you have a product that is costing a huge amount of money to design and launch and when you do it tends to take longer and be more expensive.

  Sir Brian Burridge: The level of complexity in defence systems across the world is an order of magnitude different than that in most civil systems, so there is bound to be more technological risk. The factor on cost is that the production runs are necessarily shorter. Marrying those two things together, the non-recurring expenditure on a programme which is at the top end of technology on short production runs means that its unit cost is going to be high, and certainly in the civil aviation industry Boeing and Airbus, of course, look for hugely long production runs in order to sweat that cost over a large number of aircraft.

  Mr King: I would not want you to believe that there are other engineering sectors which have not gone through the same types of issues that defence has gone through. There are a number of examples, particularly in oil and gas, where they have changed the nature of the contracting structures on major platforms because they nearly destroyed the supply chain in trying to pass fixed-price risk for something that was going through a very highly engineered phase and they have gone to more partnering type structures to manage those things. But, I think, if you implemented incremental acquisition properly so that you do get an initial operating capability, because the definition of what operationally they want will change over time and probably at a speed which is much more rapid than previously, then you can upgrade those platforms and those systems over time rather than trying to define the 25-year picture at day one that will push risk into the programme. It will push complex contracting structures and costs into the programme; and those are the things that we cannot face, either as an industry or the MoD, going forward.

  Q329  Mr Borrow: But the MoD therefore needs also to have some recognition of the capabilities of industry?

  Mr King: Absolutely.

  Q330  Mr Borrow: The classic example is nuclear-powered submarines.

  Mr King: Absolutely right.

  Q331  Mr Borrow: You cannot simply decide, "In 10 years' time we will have a load of these submarines", if you have not allowed industry to keep the capability to produce them.

  Mr King: Yes. If you look at the Astute Class submarine, this is the first time for 15 years that we have commissioned a new first of Class nuclear submarine in the UK. If we think those commissioning skills that existed previously have to be sustained for the future, it has to be against a balanced programme and budgets.

  Sir Brian Burridge: That speaks to my point about consulting industry early. If I may make a very quick related point, the ability to do spiral development does depend on the nation's ability to maintain the skill base in its engineering industry. In other words, just doing support availability contracts on a support basis does not necessarily preserve the highly skilled aspects of systems engineering, of design engineering and of development engineering. These are very important aspects in being able to do spiral development.

  Q332  Chairman: Can I come on to a different issue, namely, the possibility of having this whole process dealt with by a Government Owned-Contractor Operated process? Bernard Gray says that "it is the contention of the review team that any change needs to be system-wide and significant because trialling or small-scale experimentation risks being strangled by the significant forces working to maintain the status quo". That rings true, does it not?

  Mr Godden: The statement I made earlier about this being a reform rather than a change I think is very important. It is in the context of saying that if we are going through another change programme without radical change of skill base, etc, then you would say you are looking for a mechanism to get that electric shock through the system.

  Q333  Chairman: An electric shock?

  Mr Godden: But it is not industry's view, although there are different opinions, I guess, that a Go-Co is the right answer, because I think it is a view that says that that is a great conceptual example of getting the shock tactic but it is not very practical. For practical reasons I think industry feels that this is a very complex area, as Sir Brian Burridge mentioned. Therefore, it is not that easy, it is not that simple, to just talk in simplistic terms.

  Q334  Chairman: Do you think this electric shock might kill the patient?

  Mr King: Yes.

  Mr Godden: Yes is the answer. I think that is the consensus.

  Mr King: In simple terms, yes.

  Q335  Chairman: Bernard Jenkin asks who is the patient. I think we all are. Mr King, why is that industry's view?

  Mr King: There is distinct domain knowledge and I think the debate has taken us in quite a number of aspects around the specific domain knowledge of this. There are a couple of examples where this has been tried in the early days of FRES, in the early days of the carrier, of putting somebody between the MoD and the rest of industry, and both of those constructs were taken apart because they do not really work. If we are talking about some Go-Co, so you are talking about this fantastic organisation that has got all these commercial, these programme management, these finance skills as specialist to the area, all of which we debated earlier and which are in short supply, where is this going to come from? What benefit are we going to have from putting somebody between industry and the MoD when, if you look at the real things which are showing progress, the real things which are showing value, these availability contracts, these partnering structures, if we think of how the munitions programme is now structured, the terms of business around naval, that is the way forward rather than putting some artificial interface in the way.

  Q336  Mr Jenkin: This is all a bit grim, really.

  Mr King: It is the life we live.

  Q337  Mr Jenkin: I was struck by the electric shock comment because I think you are the patient that has suffered the electric shock and you are suffering the prospect of the axe falling on various programmes as reality dawns on the public sector generally. I just wonder what you can say at this Committee meeting that is really going to be much use to us generally because we are in this sort of limbo land now waiting for the Defence Review, waiting to see what changes to the procurement process are made.

  Sir Brian Burridge: What is our light at the end of the tunnel?

  Q338  Mr Jenkin: It is all a bit paralysing, is it not?

  Sir Brian Burridge: It would be to our advantage and to the advantage of the nation if we were to emerge from this tunnel with a sustainable, affordable force structure where in each sector it was known and understood where technology was going to take us in terms of capability and where the Government wanted to set its limits. I think that as a statement underpins the difference with where we are now with a programme and resources so hopelessly out of balance that they are just constraining both parties' ability to act rationally.

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