1 Strategic decision making on military
capability
1. The Carrier Strike programme includes two new
aircraft carriers, the aircraft that will operate from them, and
a new helicopter-based early warning radar system (known as 'Crowsnest').
In 2007, the Ministry of Defence, (the Department) decided to
procure the Short Take-Off and Vertical Landing (STOVL) variant
of the Joint Strike Fighter as the aircraft to operate from the
carrier. In October 2010, as part of the Strategic Defence and
Security Review, the National Security Council which is chaired
by the Prime Minister, decided to switch to the carrier variant
of the Joint Strike Fighter arguing this was a better value option,
saving money and enhancing capability including 'cross-decking'
(the ability to land on another countries' aircraft carriers).[1]
This required the installation of additional equipment, supplied
from the USA, on the carrier to launch and land the aircraft (by
catapults or 'cats' and landing recovery equipment or 'traps').
We reported on our considerable concerns in November 2011.[2]
2. In May 2012, the Department concluded that the
expected benefits from switching the type of aircraft for the
carriers would not be achieved as the costs involved would be
significantly higher than projected and switching would delay
the operation of the carriers. Within an 18 month period, the
Department changed its mind again and announced that it had decided
to revert to the original STOVL variant of the aircraft. On the
basis of a Report by the Comptroller & Auditor General, we
took evidence on this decision from the Department.[3]
3. The Department conceded that the decision taken
in 2010 had been based on deeply flawed and immature information.[4]
It attributed the basic mistakes that had been made to time pressures,
secrecy in the way decisions were taken and a failure to prepare
for all the options considered under the 2010 Strategic Defence
and Security Review. The Department told us the National Security
Council had not discussed the option of switching to the carrier
variant of the Joint Strike Fighter until the end of the 2010
Strategic Defence and Security Review. As a result, the Department
had had to generate cost estimates quickly. The Department acknowledged
that it should have advised the National Security Council, at
the time, that it had not had sufficient information to provide
an accurate estimate of the costs of switching to the carrier
variant. Instead, it had provided a rushed estimate that the cost
of converting the aircraft carrier by installing 'cats and traps'
would be between £500-£800 million. The Department recognised
that this had not been based on a proper analysis and accepted
that it had been clearly wrong.[5]
4. By February 2012, the Department's forecast of
the costs of converting the aircraft carrier had risen by 150%
to £2 billion. Every element of the conversion cost had increased
significantly. These cost increases cannot be blamed solely on
the result of a lack of information and unknown, unpredictable
costs. Over half were the result of omitting predictable costs,
such as the costs of planning the conversion, and basic errors
which included omitting VAT and inflation from the costs of converting
the carriers.[6] The Department
agreed that it should have taken inflation into account at the
start and believed that it missed inflation off the original estimate
due to the pressure it felt rushing to give a cost estimate to
the National Security Council.[7]
The Department's original estimate assumed VAT on conversion items
would not apply, although it did not confirm this with the suppliers
in the USA. In December 2011, the Department discovered that the
USA required the use of a 'Foreign Military Sale' route on conversion
items. This route attracted VAT and increased costs by over £130
million.[8]
5. The original planned operating date for Carrier
Strike was 2018.[9] The
Department initially estimated that the conversion work for the
carrier variant could be completed to allow a delivery date of
2020. The Department conceded this had been over-optimistic. It
told us the delivery date slipped to 2023 once it had undertaken
work to determine how long fitting the conversion equipment would
take. Part of the reasoning the Department offered for its decision
in 2012 to revert to the original aircraft type was its belief
it would be undesirable to delay Carrier Strike beyond 2020.[10]
6. We are concerned that the Department appears to
have changed its definition of 'interoperability' to suit what
can be delivered. The Department admitted that while interoperability
with the French and the Americans remains a priority, the ability
to land the carrier variant aircraft on other nation's aircraft
carriers had proven to be more technically difficult than previously
thought. The emphasis now was on whether the UK could deliver
its Carrier Strike capability to work alongside our allies, which
does not include the ability to land aircraft on each other's
carriers.[11]
7. The Department has estimated that £74 million
incurred in switching to the carrier variant option will be written-off
by switching back to the original aircraft type. But the Department
will not be able to confirm this estimate until 2014. The Department
believes that, despite writing-off this sum, reverting to the
original decision will avoid £600 million across the 30 year
life-cycle of the Carrier Strike programme.[12]
However, the Department agreed that its cost information is still
not mature.[13]
8. We were concerned that the Department has delayed
investment in Crowsnest, the helicopter-based early warning radar
system required to protect the carrier and its crew, which is
not expected to be fully operational until late 2022. The Department
confirmed that when the aircraft carrier comes into service in
2020 it will not be protected by Crowsnest and conceded that this
might constrain where the carrier could operate. However, the
Department noted that there would be other options for protecting
the carrier including land-based airborne early warning and relying
on our allies for this capability.[14]
9. Operating Carrier Strike effectively and safely
will require a wide range of other enabling capabilities including
frigates, destroyers, aircraft, helicopters, submarines, hydrographic
vessels, mine clearance assets and amphibious units.[15]
The Carrier Strike programme's capability may be limited if the
Department does not upgrade or replace a range of other capabilities,
including support shipping where some vessels will be over 30
years old when Carrier Strike comes into operation. The Department
told us that it had not agreed funding to replace this shipping
and considered that this should be a decision for the next Strategic
Defence and Security Review in 2015. The Department acknowledged
it could not guarantee the other support programmes would not
be touched in the 2015 Strategic Defence and Security Review,
or that it could completely protect the Carrier Strike capability
in its decisions on funding. It recognised these are all complex
and expensive programmes, which would take a long time to deliver.[16]
10. Realising value for money from the 2012 decision
to revert to the STOVL variant of the aircraft will also depend
on bringing the second aircraft carrier into operation. The Department
told us that this change in aircraft variant provides the option
to operate Carrier Strike from both carriers, as it will not have
to install 'cats and traps' on the second carrier. However, it
was still planning to put the second carrier into storage and
would not reconsider this policy until the 2015 Strategic Defence
and Security Review.[17]
1 Q11 Back
2
'Providing the UK's Carrier Strike capability',
Committee of Public Accounts, HC 1427, 56th report,
2010-12, 29 November 2011 Back
3
'Carrier Strike: The 2012 reversion decision', National
Audit Office, HC 63, Session 2013-14, 10 May 2013 http://www.nao.org.uk/wp-content/uploads/2013/05/10149-001-Carrier.full-report.pdf Back
4
Qq 3-5 Back
5
Qq7-9 Back
6
C&AG's report, para 1.9, Figures 1 & 3 Back
7
Q8 Back
8
Qq 8 & 108 Back
9
C&AG's report, para 1.13 Back
10
Qq 13-15, 108 Back
11
Qq 11-13 Back
12
C&AG's report, para 1.12 and 2.9 Back
13
Q 10 Back
14
Qq 45 - 72; C&AG's report, para 3.5 Back
15
C&AG's report, Figure 12 Back
16
Qq 81 - 94 C&AG's report, para 2.13 Back
17
Qq 81, 108; C&AG's report, para 3.7 Back
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