Defence Equipment 2010: Further Government Response to the Committee's Sixth Report of Session 2009-10 - Defence Committee Contents



Lessons (to date) from the A400M experience

Acknowledgements

A considerable number of uniformed officers and civil servants gave freely of their time, knowledge and experience to support this short investigation. The author is grateful to all of them. He hopes to have captured all the implications of their thought and to have done justice to their ideas. In order to encourage people to speak freely, their identities are not revealed. Thanks are also due to Cranfield's Lt Col (retd) Philip Poole who managed this project on behalf of the university, provided timely support and more than the occasional useful comment on the drafts. The shortcomings of the report are the responsibility of the author, but its qualities owe most to those who provided inputs to the study.

EXECUTIVE SUMMARY

Background

This report was written in response to a request from the House of Commons Defence Committee that the Ministry of Defence should undertake an exercise on the lessons to be learned from experience with the A400M project.

'The MoD should provide us by the end of September 2010 a written evaluation of the lessons learned from the A400M experience which will establish the most effective basis for future collaborative projects'.[3]

The report was drafted by Professor Trevor Taylor of Cranfield University at the Defence Academy, Shrivenham, with his draft then being reviewed by senior staff at the Defence Equipment and Support (DE&S) organisation at Abbey Wood, including the current A400M Team Leader, Director Air Support and the Chief of Defence Materiel.

The generation of lessons from experience is an inherently subjective activity involving judgement: different individuals and organisations can derive very different lessons from the same experience. Particular care needs to be taken in deriving lessons from 'projects' which by definition have significant elements that make them unique. Here, the lead author sought to articulate lessons that could be derived from the views of UK participants in the A400M project and endorsed by senior MoD staff. The particular context of the A400M included its symbolic nature in terms of European cooperation, its limited political support within the UK defence sector, its large number of partners, its potential to sell in wider markets, its importance for the civil aerospace sector in the UK, and Airbus' success record with commercial aircraft.

The A400M was a very different prospect at the end of 2010 from what it had been 15 months earlier. After a first flight in December 2009, good progress was achieved including more than 800 hours of flight testing. The DE&S Sentinel project health tool showed the A400M in good shape with more than 75% of the indicators involved showing 'green'.

LESSONS

L.1 Appreciate the range of motives behind participation in a collaborative project and, if necessary, manage that range as a risk.

L.2 & 3 Select, prepare, maintain in post staff with the right attributes and skills.

L.4 Ideally collaborative projects should target a significant 'gaps in the market'

L.5 and 6 Governments should fully resource the early stages of a collaborative project so that its risks can be fully assessed, and customers and suppliers should build and maintain an agreed risk register.

L.7 The procurement approach should reflect risk appetites, with a fixed price development and production contract being recognised as risky for both customers and suppliers.

L.8 Payment arrangements should be against demonstrated progress, and a significant final payment should be dependent on project success. However Earned Value Management systems (EVM) cannot be expected to operate without some flexibility.

L.9 European governments often engaged in collaborative projects might usefully explore the idea of a shared acquisition cycle and requirements engineering process for such projects

L.10 Governments may need to educate a commercial contractor new to defence as to the full implications of a military requirement and a fixed price development contract.

L.11 The scenarios against which a proposed system is judged are central to the evaluation of that system and so must be selected rigorously.

L.12 Incorporating a number of national requirements into a single system brings risk but can also generate the flexible and adaptable systems needed for the 21st century.

L.13 In assessing the risks in programmes, account should be taken of the experiences of other government and companies developing similar systems.

L14 A fixed price development and development contract does not negate the need for a continuous frank dialogue between supplier(s) and contractor(s), and consideration should be given to the generation of a code of conduct between customer and supplier(s) to direct their behaviour towards each other.

L.15 A fixed price development and production contract does not negate the need for the MoD to make contingency provisions, especially for large projects including significant technological and managerial risk. This constitutes a further argument for the establishment of a central MoD contingency fund as proposed by Tom McKane in his Enabling Acquisition Change report of 2006.[4]

L.16 Decision-making on collaborative projects is easiest with two partners. For projects where two states could not provide a viable market, the MoD should seek to establish an early close relationship with another major contributor in order to be able to play a leadership and control role.

L.17, 18 and 19 Contracts should be placed with a well-resourced prime contractor, not a single-project, special purpose company, and account needs to be taken of all the commitments and resources of the supplier. Governments should work to communicate with the particular staff who will deliver a project.

L.20 The MoD and OCCAR management structures coped well with the crisis that began in 2009 with the Airbus request for additional resources, but thought could be given to the development of crisis management provision for major international projects.

L.21 Greater transparency between Airbus and OCCAR after contract signature would not have prevented the technical problems associate with the A400M, but would have meant that such problems could have been dealt with in a non-crisis context.

L.22 Rigorous commercial and military logic, alongside expertise in areas such as logistics, programme management and technology, matched with political acumen, may be needed to rescue a struggling project, and crisis management needs to be able to draw on such skill sets.

L.23 When a major defence project encounters technical and managerial challenges, having a collaborative basis should not be entirely bad news, since it has access to a broad range of expertise and several parties are available to share any extra cost burden.

L.24 The A400M demonstrates that Europeans can move away from strict application of the juste retour principle. The sub-contracting process for the A400M was clearly preferable to that for Tornado or Typhoon, demonstrating that Europeans can learn to improve collaborative performance.

L.25 It is difficult to find the right amount of empowerment for the international governmental team managing collaborative projects.

L.26 The UK can gain influence from being a second-ranked but significant partner when it enjoys a reputation for impartiality and expertise. The UK 2* and 3* representatives have been chosen to chair both the Programme Committee and Programme Board.

L.27 'Be careful what you wish for' is a useful adage: both customers and suppliers got what they wanted in the original contract, and both suffered as a consequence.

CONCLUSION

In conclusion, there is a clear message for the UK that collaborative projects will be necessary if any aspiration for 'operational autonomy' is to be maintained. The A400M project emerges as a risky but eventually positive experience, and the most important lesson may be to work to run collaborative projects better and not to expect to be able to avoid them.


3   House of Commons Defence Committee, Defence Equipment 2010, Sixth Report of the Session 2009-10, London, the Stationery Office, 4 March 2010, p.23, http://www.publications.parliament.uk/pa/cm200910/cmselect/cmdfence/99/99.pdf, accessed 25 October 2010. Back

4   Enabling Acquisition Change: an examination of the Ministry of Defence's ability to undertake Through Life Capability management, A Report by the Enabling Acquisition Change Team leader, London, MoD, June 2006, paras 1.9 and 6.30  Back


 
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