Select Committee on Defence Minutes of Evidence

Examination of witnesses (Questions 180 - 206)



  180. Okay. I accept that. Does industry accept that?
  (Baroness Symons of Vernham Dean) We have to winnow out the definition. Industry has to comment on the definition that we will have to reach with them and that is work still in progress.

  181. Are we talking about contracts here?
  (Baroness Symons of Vernham Dean) We are talking about the definition of what we mean by defence manufacturing. Sir John was trying to give you the definition which he is in a position to give you and I am not. All I am concerned about is that we do have proper understandings with industry about the terminology that we are using.

  182. BAE Systems, for example, Boeing or whatever.
  (Baroness Symons of Vernham Dean) As I say, we have to do proper consultation with them. That is still part of work in progress on this issue.

  Mr Cann: It is elastic at the moment.

Mr Gapes

  183. Have you yet decided what New DERA assets are of strategic importance and thereby will fall under the protection offered by the golden share?
  (Baroness Symons of Vernham Dean) Do you want to deal with that?
  (Mr Jagger) There is an exercise going forward at the moment run by a individual in the Defence Procurement Agency. The short answer to your question is no, but work is well advanced at identifying both the strategic assets and the relationships which will support them.
  (Baroness Symons of Vernham Dean) We hope it will be ready within a matter of weeks.

  184. Will it be announced in the sale prospectus?
  (Mr Jagger) It will absolutely have to be identified within transaction documents, yes.

  185. If it is not ready then it has to be delayed.
  (Baroness Symons of Vernham Dean) It will be ready.

  186. My next question, DSTL, as I understand it, is not going to have more than 3,000 staff. How many of those are going to be involved in knowledge integration to give you this backbone of intelligent customer function? Are you confident that there will be enough people within DSTL to keep track of developments and evaluated technological developments going on in New DERA and in foreign research organisations and in industry?
  (Mr Clifford) You are quite right, we are running about 3,000, in fact it is 2,835 at the last count yesterday morning. It is very difficult to define who will be involved in knowledge integration and who will not be, quite honestly. In the same way that systems integration, systems engineering and manufacturing is becoming less easy to define because of new technologies, that is true of knowledge integration. The people we extracted from DERA specifically to do that task numbers around 800 to 900 but, for example, I would expect many of the members of the Centre for Defence Analysis, one of the so-called strategic extract sectors, would themselves also be involved in systems integration in the analysis they are doing, similarly for people in Porton Down. To give you my personal estimate I would say about 1,200 to 1,300 across the organisation as opposed to people working on pure technology in as much as that can be defined.

  187. Have you worked out a career structure for your scientists that is going to keep them in touch with current developments in the outside world and how will they be able to stay up to speed without being involved in hands on laboratory work?
  (Mr Clifford) We have not yet finished the work. I personally became involved in this in May last year and we have been talking to our colleagues in the Ministry of Defence, other Government Departments, universities around the UK. We have been talking on this subject with people in the Pentagon and we are bringing together a career development and mid term refresh process specifically to address that issue. As you know the Ministry of Defence will be competing research so we must expect to work with a broader base of technology suppliers over the next decade. That is a key issue for us. As I say, the work began in May, it is not quite finished but it is well advanced. I am confident that it will give us the sort of staff capability we need.

  188. Will you in that context be sending people on secondment to New DERA?
  (Mr Clifford) We have a wish for our staff to become involved with teams around the world, as you said yourself, where technology is created. New DERA, as Sir John has said, and as Lady Symons has said, will be a major supplier to MoD, therefore that must be one of the options for us. I suspect secondment will not be the word. New DERA will be as any other industry will be in that respect. The answer is yes.

  189. Do you not see a potential problem given all that we have said about Chinese walls and everything else? Have there been any concerns expressed either by defence industry outside generally and the US authorities about the potential of such a relationship?
  (Mr Clifford) Not at all. I tried to make the point in my previous answer that that relationship will not be special other than in the sense that New DERA will be a major supplier. It is actually quite common in the United States for people to be seconded from Government to industry and vice versa.
  (Baroness Symons of Vernham Dean) And in this country.
  (Mr Clifford) And in this country, indeed. One simply puts in place appropriate processes to make sure information stays where it is. Very much part of our life is dealing with highly classified information which we have to maintain in compartments so we have the processes which are well tried to do that.

  190. You do not see this as being a kind of cosy relationship with a privatised organisation which does not apply in general elsewhere?
  (Mr Clifford) Most certainly not. We need to have an intellectually stimulating relationship with anybody who provides technology, advice, research, capability to the Ministry of defence. One of those organisations will be for a very long time new DERA. It will be quite wrong for DSTL to put up the shutters in that respect against New DERA. It will be equally wrong for us to treat New DERA specially other than as a major supplier.

  191. You do not seem to have any concern but would not some foreign governments or companies in industry regard this as being not a level playing field because of the history?
  (Mr Clifford) I have travelled to the USA and, indeed, I was also in Australia a couple of weeks ago. I have not heard that concern at all.


  192. One of the concerns we have and I know the Defence Science Advisory Council has expressed its concerns about the structure of scientific research in the MoD. Traditionally the MoD has contracted some of the very best scientists and now with the split I am not sure whether Sir John will be so keen as to allow the fluidity of movement of very, very good scientists from his section back into the MoD or the circulation of scientists that currently exists who have entered the service of the Ministry of Defence. I hope that Professor O'Nions is going to look at this as well as the structure and ethos of scientific research in retained DERA. Are you going to be generous by letting your very best scientists move around back into the MoD, Sir John, or are you going to keep them?
  (Sir John Chisholm) As a manager of a large scientific organisation, I know well the value, exactly as Bill has been expressing, of maintaining good contacts with all other players in the field, you have to. It is not a business which you can succeed in by thinking you invented world science all on your own. Maintaining fluidity, as you put it, in our resource base is just as much a challenge and objective for New DERA as it is for DSTL.

  Chairman: Thank you. We have one last lot of questions. Harry Cohen.

Mr Cohen

  193. Yes, on the Defence Diversification Agency which was a manifesto commitment of the Government. Indeed, I was the chair of the Labour backbench Defence Committee which worked through to this, and although it is a small agency it is an important one. It does seem to me that it is being treated as an afterthought as part of these changes and I am concerned about that. It is going to be divided up under your consultation document, headquarters at the MoD. Most of the technology diversification managers will stay in current locations but being with New DERA and some being with the retained DERA. Surely this division is unsatisfactory. What will the relationship be between the Defence Diversification Agency HQ and the front line managers within the New DERA, for example?
  (Baroness Symons of Vernham Dean) Can I say, first of all, that we actually do regard the Defence Diversification Agency as a little jewel, but it is a jewel.

  194. It is.
  (Baroness Symons of Vernham Dean) It has had a very successful start in delivering our objective since its establishment since 1999 and the DDA has helped more than 300 small and medium sized businesses solve their problems since it got underway. If you have taken from the consultation document an idea that it is a sort of tail end Charlie in all this, I am very sorry because that is certainly not how it is viewed. As you rightly say, it was part of our manifesto commitments last time and we are rather pleased and proud with what the Defence Diversification Agency has been able to do. The fact is that life is moving on with the public/private partnership proposals and we have honestly tried to set out what we think is the best course of action for it in this consultation document. This is a period of genuine consultation, Mr Cohen, and I hope you will accept that for what it is, a genuine assurance on that point. I am looking for input. I know that particularly many of my own party are very concerned with what will happen with this and this is a genuine exercise that we are trying to progress. I would be very sorry and disappointed indeed if it was felt that somehow this was all being put on one side because from our point of view it absolutely is not, from the Secretary of State's point of view it absolutely is not. We have had discussions about this and I know that he is very keen to ensure that it goes on doing valuable work.

  195. I appreciate that comment about it being in the consultation. I think it is quite important that it be kept unified as much as possible and I hope that there will be improvements on the consultation document.
  (Baroness Symons of Vernham Dean) Any particular comments that you have I will be very happy to take into account over the way forward.

  196. Can we explore some of this detail then on the technology diversification managers. Who will direct their work: the MoD or New DERA? Who will pay for them? Whose interest will they serve: the MoD or New DERA?
  (Mr Jagger) Perhaps I can start as it involves both organisations. I think the real critical point about how we try to arrange this is that the job these people do depends on being close to where the technology is generated. Obviously some of our technology is generated in what will be New DERA, some in DSTL. To take everyone in the DDA and put them in one organisation or the other or in the MoD would actually be to take a lot of people away from, if you like, the front line of technology which would not enable them to do their jobs well. The thinking behind the current plan is to leave, if you like, the front line people where they are best able to keep in touch with technological developments, whether that is at Porton Down or at Fort Halstead or Farnborough or wherever, under the general direction of the MoD. The Chief Executive of the DDA, Damian McDonnell who has been in front of this Committee before, will report to the MoD, he will be a member of MoD staff. He will be responsible for directing them and paying them and saying what the strategy should be. The key thing is to keep them close to the technology that John's and Bill's organisations are developing.

  197. Let me push on quickly. On your main activities which you summarise in your consultation documents, which again I think are successes, "to encourage as wide as possible exploitation in the civil sector of defence technology . . . to provide information on defence equipment for the defence industry's own diversification planning and to facilitate civil spin in the defence programmes". All very important but will this not all be being done through a filter of New DERA, it will not be industry-wide? How will it go industry-wide other than through this filter of New DERA?
  (Baroness Symons of Vernham Dean) If it were to be solely in New DERA I think there would be some validity in your fears and criticism but as Mr Jagger has said the fact that we have got people working closely with people in New DERA on the one hand but with overall control from the MoD does I hope give you some confidence that it is not through a filter. It is nonetheless, obviously, drawing on New DERA experience and expertise and that, of course, we hope, as I was indicating a little while ago will be both in the opening up of DERA expertise but also in DERA being open to what is going on in the private sector as well. I have some difficulty with your idea that this is somehow closing it down, working through a filter when actually I believe it is rather the reverse.

  198. We have not got much time to explore this but they are going to be based at their current locations. Many of them are going to be working directly with New DERA.
  (Baroness Symons of Vernham Dean) Yes.

  199. And are going to be involved in their directions through New DERA in some form or another. New DERA is going to be a competitor with other sectors in the defence industry. Getting this information, which is industry-wide, out to all the defence industry is limited by New DERA's interests, or potentially limited.
  (Sir John Chisholm) That is not exactly how it works at the moment, to be honest. The way it works is that there is a networking process whereby particularly SMEs can articulate the issues that they need a solution to and the technology transfer managers can access the technology which is going to solve that problem. That is the way it works at the moment. Therefore, if you cut them off from those laboratories then actually you might very significantly reduce their effectiveness. That is why, as Terence Jagger has said, keeping that contact going is really rather important. I do not recognise at all the context of competition with other defence suppliers, that is not really the context in which this is happening. What is happening is SMEs who are typically not involved in defence are accessing some defence technology in order to solve their problems. Actually being able to access that technology is what the key thing is.

  200. For all the defence industry?
  (Sir John Chisholm) Yes. Anybody can use the DDA.

  201. All right.
  (Baroness Symons of Vernham Dean) Chairman, might I suggest, would it help any Members of the Committee who felt that they would benefit to have a meeting with the Chief Executive of the DDA?

  Mr Cohen: That is helpful.

Laura Moffatt

  202. Very interesting.
  (Baroness Symons of Vernham Dean) It might help deal with some of these problems that Mr Cohen is expressing which are obviously ones which are concerning him and other Members of the Committee. I am very happy to facilitate that.

Mr Cohen

  203. I appreciate that. One last question, one of the options not considered in the consultation document is to move the whole of the DDA to the Department of Trade and Industry. Why was that rejected as even an option worthy of considering?
  (Mr Jagger) I think it is this question of access again. For a DTI organisation to have this role, these people would be even further, if you like, from the front line than they would be if we put them in DSTL or MoD. It is the same rationalisation, I think, that we are just trying to explore about leaving them where the technology is.

  Mr Cohen: All right. Thank you for the offer of the meeting. I still have a number of questions but I will take them up with him.


  204. I think Sir John will be with the new Defence Diversification Agency and any good ideas from the MoD will be quickly whipped around his organisation so we will have no anxiety whatsoever, Mr Cohen. Thank you very much. I am sorry we could not beat your earlier record of 25 minutes past one o'clock but I am afraid you snookered us by offering Mr Cohen a visit.
  (Baroness Symons of Vernham Dean) I am very grateful to be allowed to go and answer the questions in the House of Lords, Chairman.

  205. Nobody was incandescent with rage, we have tried our very best. I think you have convinced about as many people this time as you did last time which is very few. However, it occurred to me that whilst we have disposed as a Select Committee in the short term with this issue, I do note the Leader of the House said that there is going to be a Committee set up on the Defence Science & Technology Laboratory Trading Fund Order so we might all move en masse to that Committee. Tell Lewis Moonie that maybe we will see him there to be allowed to participate.
  (Baroness Symons of Vernham Dean) I am sure Dr Moonie will be delighted.

  206. However, I suspect the Whips will round up the usual suspects of loyalists which will exclude anybody serving on this Committee.
  (Baroness Symons of Vernham Dean) I am sure that is not true, Chairman, I am sure you are all jolly loyal. I will certainly let Dr Moonie know.

  Chairman: Thank you all very much indeed.

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