DE 06

 

Further supplementary memorandum from the Ministry of Defence

 

The Department's responses for information following the Committee's session with the Chief of Defence Materiel on 1 December 2009 are set out below:

 

(1) A description of the four main areas of skill shortages which CDM started to list in his oral evidence.[Q8]

 

DE&S in seeking to continuously improve its skills and is focused on doing so in the following four areas:

 

1. Cost Assurance, including:

 

(a) Cost Forecasting (develop cost models and forecasts to support decision making around capability options);

 

(b) Cost Engineering (providing cost estimates and contract pricing in the absence of competition to support value for money considerations); and

 

(c) Cost Certification (including negotiating and agreeing rates and verifying contractor payments during and post contract).

 

2. Technical Assurance (Technological and Engineering advice and support to project teams)

 

3. Financial skills (in particular Management Accounting skills); and 

 

4. Complex Programme Management (Managing projects in their widest context).

 

(2) How many MoD people are involved in buying helicopters? [Q20]

 

As at 30 November 2009 the DE&S Helicopters Operating Centre had 858 crown servants (military and civilian) in post. Of these approximately 420 directly manage work on Apache, Lynx, Merlin, Sea King and Wildcat helicopters for which AgustaWestland is the main contractor, addressing "buying" issues such as: commercial, engineering, finance, in-service support, core and UOR project management, requirements and safety.  The remaining 438 manage similar work with other Companies, such as Boeing, Eurocopter and Lockheed Martin, plus Operating Centre business management.

 

(3) Comments on the data on staff rotation provided in the graph on p184 of the Gray report, including the MoD's own data for staff rotation on project teams. [Q 57-68]

 

Data on staff tenure in project team leader appointments is not held in a form that would permit meaningful analysis or comparison with the graph on page 184 of the Bernard Gray report. Work will be undertaken to produce an analysis and the results will be provided to the Committee in the New Year.

 

 

(4) A description of the methodology used to calculate the estimates of £21 billion and £6 billion for the extent of over-programming. [Q77]

 

The Defence Budget until 2010/11 reflects the 2007 Comprehensive Spending Review settlement (CSR07). The projected Defence Budget thereafter assumes a level budget in real terms, based on an annual 2.7% increase from 2010/11, adjusted to exclude an element of ring-fenced expenditure which was provided as part of the CSR 07 settlement.

 

The future Defence Programme is costed using generic Corporate Planning Assumptions for inflation. Inflation indices for specific industrial sectors are used where it is appropriate to do so. It is assumed that, consistent with the 2006 White Paper, the future strategic deterrent will be funded beyond 2010/11 in such a way that would not be at the expense of the conventional capabilities our Armed Forces need.

 

Costs for projects in the forward Equipment Programme are based on analytically generated estimates. Each project is costed at a 50% confidence level. Statistically, those projects exceeding their estimated cost should be balanced by those undershooting.

 

At the start of Planning Round 09 the cost of the future Defence Programme exceeded the projected Defence Budget by £21 billion over the ten year planning horizon. After changes resulting from the Equipment Examination and Planning Round 09, an excess of £6 billion remained between the costed programme and assumed budget at the end of Planning Round 09. This is being addressed in the current planning round and the forthcoming defence review.

 

(5) Spend to date on the FRES programme. [Q143]

 

The total spend on the FRES programme to 30 October 2009 was £189M (inclusive of non-recoverable VAT). None of this money has been wasted. The knowledge gained has refined our understanding of the requirement; reduced technical risk; and up-skilled the project team with specialist management and integration skills. This all continues to have a direct or indirect benefit to the FRES programme as it moves forward. The table below gives the breakdown of this spend for the Utility Vehicle and Specialist Vehicle programmes, and the benefits derived. The table does not include the £6M spent on the Concept Phase, which established the baseline for all subsequent work in the FRES programme.

 

Category	Utility Vehicle (£M inc non-recoverable VAT)	Specialist Vehicle (£M inc non-recoverable VAT)	Benefits
Assessment Phase Activities	54	44	The primary outputs of the Assessment Phase so far include: the development of the detailed requirement; technology management; and systems and engineering integration studies. The outputs of this work will enable the Utility Vehicle programme to progress rapidly to Demonstration once the programme restarts. Much of the Utility Vehicle Assessment Phase work was of direct benefit to the Specialist Vehicle programme. These figures also include engineering and technical support to the MoD project team in managing the above activities. These skills were successfully transferred to MoD personnel in the project team and are of significant benefit to the management of the programme as it moves forward.
Systems of Systems Integrator (SOSI)	9	1	The SOSI formed part of the project team and aided the management of the complex multi-platform and wider battle-space integration issues. SOSI personnel were engaged to provide Systems Integration, Engineering Integration and Through Life Capability & Technology Management expertise. Again, these skills were successfully transferred to MoD personnel in the project team and are of significant benefit to the management of the programme as it moves forward.
Technology Demonstrator Programmes (TDPs)	68	5	TDPs are studies into technology that could be used through life on FRES vehicles. These included Electronic Architecture, Protection, Chassis and drive concepts. The output of these studies provides vital technology risk reduction work and technical information of significant value for all the FRES vehicle families.
UV Trials of Truth	2	N/A	These were the assessment of the three contending vehicles for the Utility Vehicle Design role. The results of these trials provided a detailed understanding of capabilities of the vehicles involved, a good insight into the capabilities of industry, and physical evidence of the further work needed to mature the vehicles. This will be of significant value to the Utility Vehicle programme when it restarts.
TOTAL	133	50

 

 

(6)  The rationale originally for having 12 Type 45s in the equipment programme [Q218]

 

The requirement for 12 Type 45 Destroyers was first set out in the 1998 Strategic Defence Review.  The SDR confirmed the need to maintain plans to modernise the destroyer and frigate force, but reduced its size from 35 to 32.  The need to meet a broad range of operational demands required a balanced fleet of Destroyers and Frigates, and it was judged that 12 Destroyers would be sufficient to meet this requirement with acceptable military risk against the planning assumptions and policy baseline at that time.

 

(7)  When will the Type 45s be fitted with close range weapons systems [Q220] 

 

The Phalanx Close in Weapon System (CIWS) will be fitted to HMS DARING prior to her first operational deployment.  On current plans, this is scheduled to take place during her first maintenance period in the summer 2010.

  

(8)  What examination has been given to the lack of accommodation in the Portsmouth area prior to the base port changes to accommodate additional vessels and also to the security considerations of having most of the fleet in one location? [Q231]

 

Work continues to greater understand the implications of any potential future change to warship base porting arrangements at Portsmouth and Devonport.  A number of key stakeholders, including representatives from Portsmouth and Plymouth City Councils as well as Naval Base staff, are involved in this work and have been invited to join a Working Group to support Warwick University in developing a socio-economic model on behalf of MOD.  On current plans, the aim is to have the model ready in early 2010 which will then be used to inform debate and the decision making process.  Separately, but coherent with this modelling work, the likely impact that base porting changes might have on accommodation and infrastructure at the two Naval Bases is also being assessed.

 

Security measures are constantly reviewed to take into account the prevailing threat conditions and number of assets to be protected and, as such, appropriate security measures will be implemented accordingly.

 

(9) When will the full capability of the Nimrod MRA4 programme be available? [Q236]

 

On current plans, the ninth aircraft is due to be delivered by the end of 2012.  As the Secretary of State announced in the House on 15 December, however, we are planning to slow the rate of introduction of the MRA4 force by reducing flying activity in the early years following delivery of the aircraft.  We will be discussing with industry how this can best be managed, and until this work has been completed we cannot give a definitive assessment of when Full Operating Capability will be achieved.

 

 

(10) Are any UK subcontractors working on the Puma LEP? [Q242]

 

There is a total of 8 UK sub-contractors working on the PUMA Life Extension Programme. They are: Qinetiq, Thales Avionics Ltd, Selex Sensors and Airborne Systems Ltd, Thales UK Ltd, Chelton Ltd, GE Aviation Systems Ltd, Rockwell Collins UK Ltd and HR Smith (Technical Developments) Ltd.

 

 

16 December 2009

Ministry of Defence