Examination of Witnesses (Question Numbers
320-339)
SIR BRIAN
BURRIDGE, MR
IAN GODDEN,
MR IAN
KING AND
DR SANDY
WILSON
8 DECEMBER 2009
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.
| 
