Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 40 - 59)

WEDNESDAY 3 MARCH 1999

SIR ROBERT WALMSLEY, KCB and MR PAUL HATT

  40.  This is rather unnerving. Somebody knows where they are and it will be known in a proper fashion in due course where all these trucks are, so at the moment, given the situation as of today, how can the cost of operating them be managed? Or is it being managed?
  (Sir Robert Walmsley)  The trucks are issued to units or they are held in store at Ashchurch, as we have discussed in this room before. Most of them will be in issue. The units do not just get given these things, they record the fact they have received them so they are held accountable for looking after them, and they are expected to make sure they are kept in a fit condition. If they cannot be used because they are beyond the ability of the unit to repair, then they make appropriate arrangements through headquarters with Army Equipment Support, and the truck is returned for full refurbishment or written off depending on the severity of the damage.

  41.  So an individual unit knows what has happened to the trucks which it has been issued with?
  (Sir Robert Walmsley)  Absolutely, they rely on it.

  42.  But there is not anyone who knows what has happened to them all?
  (Sir Robert Walmsley)  I did say that somebody knows what is happening to each one.

  43.  Who is it?
  (Sir Robert Walmsley)  Different people. Every unit will know where their trucks are.

  44.  I was visualising a person sat somewhere who is the person who has that knowledge and you could ring them up and ask.
  (Sir Robert Walmsley)  When they have got DRUMM they will be able to answer the question satisfactorily.

  45.  Moving on to the Air Force, paragraph 3.7, the Logistics Information Technology System has been referred to. That is to be introduced, is it?
  (Sir Robert Walmsley)  Yes.

  46.  How long will it take? The system is partly manual now, is that right?
  (Sir Robert Walmsley)  Very much so.

  47.  So for how much longer will it continue to be manual with all the potential for human error that there is there?
  (Sir Robert Walmsley)  LITS is already being introduced in some areas now. I hope it does not sound a nit-pick if I say that it still requires people to put into it the equipment serial numbers and to describe the event that has occurred, and if they put the wrong number in then there will still be errors although it is a computer. This is the point I was trying to make earlier about how the computer provides the technical means but it still requires operators at the point of inserting the data to tap in the right number which, even on quite a simple article, can be ten digits long. So it is not just a question of providing computers and instructions to people, I am absolutely clear that there has to be a change in the working methods across actually the whole of the MoD as we move to these much more advanced computer information systems or we will not get the benefits from them, and we are making very substantial investments in them. We are pleased with the way LITS is going now, after a slightly hesitant start, but it is now focused absolutely on delivering benefits to the efficiency of the Air Force rather than just some theoretical computer system which whirrs away doing its best without any real connection to the outputs.

  48.  How much involvement should there be by the industry who manufacture these items in all this?
  (Sir Robert Walmsley)  There certainly should be involvement by industry. I did try to explain that industry are generally the Design Authority, that is nearly always true for aircraft, much less frequently for ships for reasons we can go into. The Design Authority are the people who know what the configuration of the equipment should be so when it comes to seeking to modify it, to upgrade its capability, it is quite natural that one turns to the Design Authority and asks them for a price estimate. It is quite unsatisfactory in a way that nearly always for modifications this has to be non-competitive because the only person who understands the design well enough is the person who is the Design Authority. Equally, they can be given a task, if we so contract, to manage obsolescence which in electronic component terms is becoming more and more of a serious issue. So industry is greatly involved both in upgrades in capability, because they have the competence to do that and also in keeping an overview of the equipment to cater for the obsolescence of electronic components, et cetera.

  49.  Looking at Figure 12 on page 35, it seems from that representation it is not easy to have an overview of what the workload is for the process of modification. What is going to happen to make sure that it becomes easier to understand what the workload is and what is in process?
  (Sir Robert Walmsley)  It is partly organisational, and that is the Integrated Project Team, which contains representatives from industry, as you have suggested; from the Support Authority, the people who have responsibility for managing the equipment in service; very importantly from the operational requirements community, the people who are wanting the equipment to be modified to do something newer and more difficult; and from any other stakeholders who have a part to play in the modification process. So the organisation of an Integrated Project Team which brings all the people together with the budgetary and the management responsibility should do a great deal to improve it because they are incentivised to do so, but without the computer systems which we were speaking of a moment ago, it will not be a practical possibility, which is why the two go hand in hand.

  50.  That leads me on to my last question which is looking at paragraph 3.12. The organisations which embody the modifications do not seem to be included in planning that workload and timetable, is that the reason why? Because the systems are not in place to allow them to do that, or is there another reason?
  (Sir Robert Walmsley)  It is this organisational issue, that sometimes the modifications are planned in one part of the Ministry of Defence and responsibility for undertaking them is in another part. It is that cross-organisational process which has provided us with these inefficiencies, which is why these integrated teams will be established. I would say that although I acknowledge every word in the Report, the position has hugely improved as people over the last ten or more years have come to understand that the embodiment work is often more costly and more difficult to manage than the actual design, development work and production work of the modification kits, so I think it is improving systematically.

  51.  So the integrated project teams, when they exist and when they are functioning properly, will address all this, but they are not there yet?
  (Sir Robert Walmsley)  They are there now in ten equipment cases. Three of those are for equipments which are in service and, therefore, they are dealing with these issues now. They are called the "pilot integrated teams" and they have only been in existence a few months, but they are tackling the issues now and we will have the rest in place within about 14 months from now.

  52.  Comprehensively?
  (Sir Robert Walmsley)  Comprehensively.

Mr Wardle

  53.  Sir Robert, good afternoon. Can I start by going back to an answer you gave to Mr Steinberg which surprised me. He was asking you about fuselage fires on the Tornado and I think I heard you say that the RAF are not storing fuel in the fin now, that the RAF has done that and perhaps the Germans did it all along. To what extent is there an exchange of knowledge on this sort of technical development? The layman, sitting here, thought to himself with the answer you gave to Mr Steinberg that the Germans would have compared notes.
  (Sir Robert Walmsley)  I simply was reflecting my own state of knowledge. I am absolutely clear in my own mind that there is a colossal interchange, including pilot interchange, between all the air forces. I have no doubt about that. Similarly, there is the international office in Munich and it is just me that does not know.

  54.  Thank you. That makes absolute sense. Just reading this fascinating Report and listening to your answers so far, it seems to me that it is easy to be dazzled by the equipment that we are all talking about, and Tornados and tanks and Trident submarines are pretty impressive stuff, but I imagine more or less, perhaps more complexity here, the management systems which should be used to approach this problem are the same if you are talking about a supermarket or a sophisticated healthcare system or anything else. Is that the case?
  (Sir Robert Walmsley)  I think that is a fair point.

  55.  Well, if that is the case, how did this complex matrix of responsibilities at each stage of the modification or the upgrade process to enhance or sustain, how did that develop? Has it been a process of evolution as the equipment has got more complex? How has it grown in the MoD?
  (Sir Robert Walmsley)  Well, we start with the fact that we have traditionally, and still have, three armed services who have each up until now been entirely responsible for the budget for the support costs of their equipment. That effectively comes to an end very soon now with the formation of the Defence Logistics Organisation with a single budget, but it is still dedicated to support.

  56.  Fine, and I was looking earlier at figure 3 and trying to understand how that had evolved. What you have just said slightly worries me. It is perfectly understandable it should have been developed that way, but does that not mean that there are some counter-productive competitive tensions in all of this, not simply between the armed services, but confusion and delay between the different people bidding entirely conscientiously to have their voice heard?
  (Sir Robert Walmsley)  Again I think that is a fair point. This is a huge process, as the Report makes clear, £1 billion in expenditure. As you absolutely rightly point out, this is spread not just across the glamour equipments, but across everything.

  57.  Can I just stick on the £1 billion which is the first or second sentence of the Report, 12 per cent of the defence equipment spend. Is that typical annually? Is that figure average, do you suppose, year in, year out?
  (Sir Robert Walmsley)  The Report acknowledges that the figure goes up and down.

  58.  But that is about right, is it?
  (Sir Robert Walmsley)  I have no better information than the Report.

  59.  Are you able, sitting behind your very important desk, to say whether it should be higher or lower? In other words, can you get more leverage by spending more money on upgrade and enhancement and all the rest of it or is it about right?
  (Sir Robert Walmsley)  It is a question I have asked myself and I have looked to commercial analogues, as you have just implied I might do. I looked at a civil airliner which has been in service since 1967 and they have things called "service bulletins" which is their equivalent of a modification and they have raised 3,534, which is 110 per annum. The Tornado raises 130 per annum across the two very different versions of Tornado, so I draw some comfort from that. I then looked at the other end of the market, the perhaps simpler end of the market, and looked at Army Land Rovers, the TUL/TUM, of which we have spoken here before. In our 1998 production run of TUL/TUMs, we had 30 modifications to the production standard as compared with 1997. The civilian vehicle from which it derives had 177. Just picking those two, they may not be representative, but they seem to me to span quite an area of technology and I deduce that we are not over-enthusiastic on modifications.


 
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