Select Committee on Defence First Special Report


APPENDIX 17

Memorandum from BAE Systems concerning Royal Ordnance Defence propellant procurement strategy (21 July 2000)

  Further to your letter of 30 June, I now attach for the Committee's consideration, a paper from BAE SYSTEMS RO Defence setting out its propellant procurement strategy and commenting on the document submitted by Mr Jack Dromey on behalf of the Bishopton Trades Union.[6]

  If the Committee would like further amplification of points in the submission, please let me know.

  This paper has been prepared in response to the letter dated 30 June 2000 from Simon Flander, Audit Adviser to the Committee.

  RO Defence are able to give assurance to the HCDC that we are totally committed to ensuring that the British Armed Forces are supplied only with products and materials which conform to the highest standard and which fully comply with the stringent safety requirements demanded by the Ministry of Defence. The Company is equally committed to ensuring that products and materials are supplied in a timely manner to support the introduction of new products into service and to provide on-going and continued security of supply for as long as the items are required by the British forces.

  We also wish to confirm that we have carried out a professional, logical and auditable supplier selection process to ensure that the requirements and demands of the Ministry of Defence are fully satisfied. We have used the selection process which was described to the HCDC in the spring of 1999, and this is summarised below.

GUN PROPELLANTS

  1.  Conducted a full market survey of propellant suppliers.

  2.  On the basis of a paper study of products and capability, short-listed to five companies.

  3.  Carried out a detailed review of those companies by visiting them, interviewing personnel, examining technical, manufacturing and commercial capabilities and prices for a basket of propellants. The assessment criteria were as follows: Engineering resource, skills and knowledge; Intellectual Property, Investment; Security of Supply; Capacity; Commercial Responsiveness; Logistics and Flexibility.

  4.  Carried out a further down-select to three companies who were asked to provide best and final offers for specific items.

  5.  This group down-selected to two companies, who were invited to detailed commercial discussions on their willingness to enter into a long-term supply agreement and to commit to the principles of the Partnering Agreement between RO Defence and the Ministry of Defence. In addition, we have had detailed discussions to ensure the influence which RO Defence would have in the future strategy of that company and to guarantee access to future propellants technology.

  6.  Currently in the final stages of negotiation with our preferred supplier, which is a long-established, competent manufacturer of Gun Propellants.

  7.  Initial samples of material had been obtained prior to completion of the down-selection process, but these had been manufactured without the technical assistance of RO Defence. Since down-selection, RO Defence has provided direct technical support to the chosen supplier to ensure that all requirements, whether included in technical specifications or not, are clearly communicated and understood.

ROCKET PROPELLANTS

  1.  Identified potential suppliers and assessed equipment and capabilities.

  2.  Down-selected to two companies on the basis of those which had the equipment or capabilities to meet RO Defence requirements.

  3.  Companies supplied representative sample charges.

  4.  Structured qualification programme will involve motor charges from both those suppliers.

QUALIFICATION METHODOLOGY AND SAFETY

  The processes employed by RO Defence in qualifying and certifying the materials are consistent with Company policy and the principles of the Ordnance Safety Group specialist advisers regarding Safety and Suitability in Service to the Ministry of Defence. These processes require an iterative approach to characterise fully the materials, an understanding of the risks involved and a plan to manage those risks. An integral part of this methodology is the design of a development programme which takes account of the iterative nature of the trials required when new materials or technologies are included, a full and accurate record of the conduct of all trials and trials results as well as the creation and maintenance of a risk register, which ranks those characteristics in the programme which could threaten success and details the actions necessary to manage the associated risk. This methodology enables us to demonstrate unequivocally the thoroughness of the programme and the robustness of our conclusions.


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