Select Committee on Defence Appendices to the Minutes of Evidence



  ISD is defined as acceptance of the certificate of design and the performance statement, with the subsequent delivery of 60 missiles that are fit for purpose.
ISD approved at Main Gate: December 1998
Current ISD:December 2000 (50%), April 2001 (90%).

These are to be revised (see paragraphs 8 and 9 of the main text).
Variation:+24 months



Changed Requirement
6 To align production deliveries with candidate aircraft availability
Technical Factors18 Missile hardware and software technical difficulties


  There are no additional costs as a result of the existing ISD slippage.

ApprovalDate Explanation
First approval1981Pre-feasibility
Main Gate equivalent1992 Development and Production
Latest approval1999 Revised ISD

Current estimate823
Approved Cost at Main Gate828

£m, outturn prices, as at 31 March 2000.




4 Difference in price uplift between specific indices and the GDP deflator
Changed requirement45 9Requirement to carry out Service Evaluation Trials (+£30m). The purchase of buffer connectors providing an interface between the missile and aircraft electronics (+£1m). An Environmental Round to measure the on-board environment of ASRAAM on various aircraft (+£2m). Various studies required to clarify the project requirement (+£1m). The decision to convert operational missiles to telemetered missiles during production (+£2m). An increase in DERA support to the development and production package. (+£9m). Reduction in cost of the rocket motor following selection of a conventional rocket motor (¸£9m).
Contracting Process3 38Reduction in prices as a result of contractual negotiations (¸£38m). Renegotiation of the contract to convert from fixed to firm price, introduction of a Smart gainshare incentivisation and integration of a new processor (+£3m).
Receipts19 Liquidated Damages and Consideration Payments due to late delivery of missiles.
Accounting Adjustments and Redefinitions 17Derivation of the approved cost on a resource basis.

Total balance-5

Expenditure to 31 March 2000: £72 (Feasibility) + £479m (Development and Production)
Years of peak expenditure:2001-02 and 2002-03
Unit Production Cost;£0.2m
Further expenditure in clear prospect: Nil
Quantities required:* * *


  During the conflict in Kosovo it became apparent that gaps existed in certain key capabilities because the equipment operated by our Armed Forces was not optimised for the particular operational circumstances that they encountered there. On 24 July 2000 the Secretary of State for Defence announced that the three most important of these gaps would be filled as quickly as possible. These are an all-weather interim precision guided bombing capability pending the introduction of Staff Target(Air) 1248 around late 2006, Maverick air-launched anti-tank missiles, and secure communications equipment for key aircraft. Since the announcement in July significant progress has been made in these three areas, including the introduction into service of Maverick on 15 February 2001. The cost of this equipment was met from the additional £200 million allocated to the MoD by the Treasury Reserve in July 2000. This memorandum updates the Committee on the background to, and progress made, in bringing these three key projects into service.


Operational Requirement

  1.  The Kosovo campaign demonstrated the importance of being able to bomb accurately in weather conditions that preclude the use of laser-guided weapons. With the exception of Tomahawk Land Attack Missiles, which were used successfully during the conflict, the Department recognised in its post-conflict report that more needed to be done by both the UK and its Allies to develop a better capability to strike targets in poor weather conditions. This was consistent with the results of the Strategic Defence Review (SDR), which recognised the importance of precision guided weapons and the need to be able to strike whilst minimising collateral damage. The Department has an extant requirement (ST(A) 1248) for an all-weather precision guided bombing capability to enter service around 2006. However, given the importance of this capability, confirmed during the Kosovo campaign, a requirement was raised to bring an interim system, capable of being operated by Tornado GR4s, into service at an earlier stage.

Military Capability

  2.  The Interim Precision Guided Bomb (IPGB) will be deployed on Tornado GR4 aircraft in all phases of war and operations other than war as an integral part of the whole strike inventory. This includes Tomahawk missiles, Laser Guided Bombs (LGBs), Maverick missiles, and from 2002, Stormshadow and Brimstone. Each of these systems represents a different precision attack capability and the most appropriate weapons for the circumstances will be deployed.


  3.  Given the importance of the capability, the procurement of the IPGB has been "fast tracked" under the Department's Urgent Operational Requirement (UOR) procedures. Two off-the-shelf weapons were considered: the Enhanced Paveway series offered by Raytheon and the Joint Direct Attack Munition (JDAM) offered by The Boeing Company.

  4.  Paveway 2 and 3 Laser Guided Bombs (LGBs) are already in service with the RAF. The enhancement proposed by Raytheon consists of an additional Global Positioning System (GPS) guidance kit and inertial measurement unit fitted to the standard Paveway LGB. This addition allows the weapon to switch between laser guidance and GPS guidance depending on the circumstances and this can be done even after the weapon has been launched. JDAM is based on the US Mark 80 series of bombs (not currently in service with the RAF) and consists of GPS guidance only.

  5.  Whilst both weapon systems met the accuracy criteria, some additional risk was attached to the JDAM solution. The Mk 80 bomb series is not in service with the RAF and additional safety trials would have been required to confirm that the system is compatible with Tornado. Additionally the RAF's Multi-Function Bomb Fuze (MFBF) is not compatible with JDAM and a US fuze would have been required. As well as representing an additional logistics support requirement, the US fuze would have required further trials to prove that the system met UK-specific standards. In comparison, Paveway LGBs are currently operated from Tornado aircraft and the Paveway series is compatible with the MFBF. Whilst trials are still required to confirm GPS data transfer, significantly less risk is associated with this solution than with JDAM.

  6.  As a result, the MoD decided to purchase *** Enhanced Paveway 2 (EP2) bombs (based on a 1,000 lb weapon) and up to a *** EP3 bombs (based on a 2,000 lb weapon). A contract has been let with Raytheon. The current planned In Service Date is October 2001. This is defined as the delivery of at least *** IPGBs, the modification of *** Tornado GR4s, sufficient trained air-and-ground-crew, all necessary support equipment, and cleared operational Flight Programme (the weapons and systems management software).

  7.  Prior to contract signature in December 2000, a number of risk reduction trials were completed. Further trials, including live firing, are planned for the near future. The EP2 weapons, and an initial batch of EP3 weapons, are currently being manufactured.

Milestones and Costs

  8.  Key milestones are:

ITT issued
July 2000

Bids received
August 2000

August/September 2000

Contract let
December 2000

October 2001

  9.  The project has a budget of £75 million. The Department is currently forecasting an outturn of £72.5 million, although the exact cost will not be confirmed until the receipt of BAe Systems' firm price offer for integration and support. Although the Department is not currently forecasting the need to do so, the additional capability given by the EP3 bombs may be traded against cost in order to keep costs within budget.

Industrial Factors

  10.  Although Raytheon are based in the US, BAe Systems are responsible for integration work and software upgrades to the Tornado GR4's mission computer. A close working relationship has been fostered between the RAF, BAe Systems, and Raytheon to ensure that the weapon enters into service on time.

In-Service Support

  11.  The EP2 and EP3 bombs are based on the Paveway Laser Guided Bombs, already in service with the RAF, and will use the in-service MFBF. Only the GPS guidance kit will be new and additional support costs, therefore, will be minimal. Raytheon have been contracted for one year to provide training in the use and maintenance of the system. The on-aircraft GPS signal feed is provided by new hardware introduced onto Tornado; the system is relatively cheap and inexpensive. BAe Systems will be contracted to provide initial training.

In-Service Life

  12.  The IPGB is being procured to meet a short term requirement, pending the introduction of the wider PGB capability around the end of 2006. However, there may be utility in retaining any remaining stock at this point and a decision will be taken nearer the time based on the size of the residual stock pile.

Development Potential

  13.  The development potential for this project is largely dependent on the outcome of the competition for ST(A) 1248. There would be little utility in significantly developing the interim capability unless Enhanced Paveway bombs are selected as the solution for ST(A) 1248. This will not become apparent until ST(A) 1248, which is being managed as a conventional competition, reaches its Main Gate approval towards the end of 2002. The Department does not intend to mandate the EP series of bombs as the solution to ST(A) 1248 as technology will mature over the coming years and an alternative system may offer a greater capability and utility.


Operational Requirement

  14.  During the Kosovo campaign, the RAF identified an Urgent Operational Requirement (UOR) to integrate Maverick onto the Harrier aircraft. With the cessation of hostilities during the integration phase, this was put into abeyance. However, as part of the Kosovo Lessons Learned process, the perceived lack of capability to attack mobile, hard armoured targets without incurring collateral damage was further considered. This led to the initiation of a UOR in January 2000 to trial fully the integration of the Infra Red (IR) guided AGM-65G2 Maverick missile on the Harrier GR7. At the time, this was assessed to be the weapon best able to fill the majority of our overall requirements, which were:

    (a)  availability for immediate introduction into service;

    (b)  ability to destroy mobile, hard armoured, high value tactical targets;

    (c)  ability to be used as part of an early entry, theatre air campaign;

    (d)  delivery from medium level;

    (e)  for use by day and by night in a European theatre;

    (f)  low risk of collateral damage;

    (g)  resistant to known countermeasures.

Military Capability

  15.  Maverick will be used from land and carrier bases primarily for the Air Interdiction (AI) and Close Air Support attack of mobile hard armoured and high value tactical targets, during an air or air/land campaign. Due to its large blast fragmentation warhead, Maverick also has utility as a pre-planned AI weapon against static targets if marginal weather conditions prevent the use of laser guided bombs. The Harrier GR7's integral optical system and the Maverick IR sensor will be used for the recognition and identification of detected targets before lock on and weapon release. Maverick will reduce the risk of collateral damage as the missile is locked onto the target by the pilot before launch.

  16.  In certain conditions, Maverick could be used instead of Cluster Bombs. During Kosovo, for example, we used cluster bombs when they were assessed to be the appropriate weapon for the target. If we had had Maverick it is likely that we would have been able to attack more armoured targets, in more difficult circumstances, and more often. We always retain the right to use the most appropriate weapon in our inventory in any given circumstance in order to ensure the swift conclusion of conflict and to safeguard the lives of UK and allied Service personnel.

Acquisition Approach

  17.  Due to the urgency, the requirement has been satisfied by a single source purchase from the sole manufacturer, Raytheon. It was originally planned that Maverick would enter service in December 2000 but export procedures in the USA took longer than expected and this delayed the transport of the missiles to the UK and the necessary aircrew training. The delay had no significant operational impact.

  18.  An assessment was made of other existing and potential candidate systems for the precision attack of mobile tactical targets from the air. These included:

    (a)  RBL 755 medium level cluster bomb;

    (b)  CRV7 free flight rocket;

    (c)  Laser Guided Bomb (Paveway);

    (d)  Brimstone anti armour missile.

  19.  An off-the-shelf procurement of Maverick G2 missiles was identified as the most appropriate solution that was immediately available for procurement and rapid integration onto existing aircraft. A contract was placed with Raytheon for *** missiles and these have now all been delivered.

  20.  Prior to the decision to purchase Maverick, integration trials were undertaken to ensure that the missile could be successfully integrated onto the Harrier GR7. The trials concentrated on the integration of the necessary software. Successful trials were undertaken between April and September 2000 and included the live firing of two missiles in the USA.

Milestones and Costs

  21.  ***.

Other Related Equipment

  22.  Brimstone is being procured separately and is due into service with the RAF in October 2002. Brimstone and Maverick are complementary systems. Brimstone was chosen to counter mass armoured targets, and consists of an autonomous missile that seeks out targets within a designated area. This means that it is not necessarily suited to conflicts with tight Rules of Engagement, but it enhances aircraft survivability by allowing the aircraft to stand-off from the target. In addition, it is a smaller missile than Maverick so more can be carried on each aircraft sortie. Maverick is being procured to destroy single, identified targets, static or mobile, in areas with a high risk of collateral damage.

Industrial Factors

  23.  Whilst Maverick is made by a US company, BAe Systems were responsible for integration work and software upgrades to the Harrier's mission computer.

In-Service Support

  24.  An innovative package has been negotiated with Raytheon which provides a warranty for the duration of the capability requirement detailed in the UOR. The contractor logistic support arrangements that have been established require the purchase of minimal in-service spares for maintenance activities carried out at RAF units and there is no requirement for purchase of depot test equipment. The contract includes stringent performance indicators on Raytheon with an agreed target of greater than 95 per cent of missiles serviceable during the contract life. The warranty covers in-service support activities such as Design Authority responsibilities, fault investigations, modifications, technical publications, repairs, the provision of spares, and transportation costs. The warranty also covers initial aircrew and groundcrew training. In addition, a Foreign Military Sales case is being negotiated through the UK Defence Procurement Office with the US Department of Defense to obtain technical information in support of operational and engineering activities.

In-Service Life

  25.  ***. Current guidance from the Design Authority indicates that, subject to Defence Ordnance Safety Group advice, a Service Life in excess of 25 years could be achieved.


Operational Requirement

  26.  The Kosovo air campaign highlighted the need for secure communication between aircraft in joint and coalition operations. ***.

Military Capability

  27.  Secure air-to-air communications will provide RAF aircrews with the ability to contribute to the application of air power in any future coalition operations. ***.

Acquisition Approach

  28.  ***.

  29.  A number of different ways of engineering the requirement were identified, as there was no common solution for all the aircraft types involved. The UHF radio and cryptographic equipment used will be a common element. Equipment has been procured via single source arrangements in order to minimise technical, timescale, and cost risks. Existing service assets have been used where appropriate, and, so far as possible, were modified only so far as to provide the required secure facility. Where new equipment was acquired, this was because either no suitable surplus in-service items existed or because it was not possible to modify or adapt such equipment for the task in hand.

  30.  Major equipment suppliers were chosen because of their ability to meet the extremely tight lead times. Rockwell Collins (USA) supplied ARC 210 radios. BAe Systems supplied Wide Band Secure Speech equipment. RACAL Avionics (now THALES) supplied JTIDS (Tactical Datalink) Control Units, since there were insufficient items available in service stocks. DARA Sealand and DERA Boscombe Down designed and built various interface units, since no commercial product existed. Raychem (USA) supplied specialist double screen, twin core cable for the installations. There was no UK manufacturer able to meet the required timescales.

  31.  ***.

Milestones and Costs

  32.  The cost of the enhancement contract is expected to be £33 million. The total cost including 15 years through-life support is £40 million VAT inclusive.

In-Service Support

  33.  Support for the equipment will initially be covered by warranty. Spares will need to be procured in order to support the deployed aircraft and will be dependent upon basing policy and operational requirements. It may be necessary to procure further turn-round spares in order to ensure that the required equipment availability is met. To retain value for money the equipment will be supported for a 15 year period.

In-Service Life

  34.  The secure air-to-air communications equipment is planned to have an in-service life of 15 years.

Further Work

  35.  In addition to the immediate response work, steps have been taken within the resource planning framework to introduce a wider programme to fit equipment to support larger scale deployments. Details of this programme are being developed.

April 2001


  The Strategic Defence Review identified a need for four additional Roll-on- Roll-off vessels, making a total of six, to support the deployment of the Joint Rapid Reaction Forces (JRRF). After Initial Gate in March 1999, an Invitation to Negotiate (ITN) was issued to four consortia. Assessment of the bids received in July 1999 indicated that a Private Finance Initiative (PFI) solution was likely to provide value for money. After optimization of the bids to reflect commercial and capability trade-offs, final bids were received on 14 January 2000. However, as MoD could not be certain that it was receiving the best value for money, the bids were revised and confirmed by the bidders in July 2000. The competition confirmed that each potential service provider would intend to build new, or convert existing, ships to meet the operational requirement. The selection of AWSR Shipping Ltd (AWSR) as the preferred bidder was announced on 26 October 2000.

  Following a period of negotiation, MoD entered into a preliminary agreement with AWSR in December 2000. This cleared the way for shipbuilding contracts to be let by AWSR with the German Flensburger yard (for four ships) and Harland and Wolff (H&W) (for two) in time to benefit from Shipbuilding Intervention Fund support.

  ***. Through ordering ships from two shipyards, AWSR has been able to offer early delivery of the capability, which is of benefit to Defence by reducing the period in which availability of sufficient strategic sealift to support the JRRF could not be assured. However, difficulties in the detailed commercial arrangements for the two H&W ships were threatening the timely completion of the PFI negotiations and early delivery of the service. In March, MoD therefore took over the commercial shipbuilding contract with H&W as part of the PFI arrangements. (AWSR's shipbuilding contract with Flensburger is unaffected). The H&W contract will be managed on MoD's behalf by AWSR. On delivery of the ships to them, AWSR will provide the full six ship service on PFI terms. It is expected to complete negotiations leading to award of the full PFI contract this summer.

  Until the full service can be available a provisional service is being managed by MoD which provides an enhanced level of sealift compared to that previously available.


  1.  The requirement is for guaranteed, world-wide delivery of JRRF early entry equipment, including containerised ammunition, at sustained speeds of at least 18 knots. The vessels will be of commercial design. They will not be provided with warlike features such as a self-defence capability or military communications, although the selection of appropriate commercially available equipment will maximise their operational use. Ship size is a balance between optimum load carrying capacity and the need to operate into small ports with draught restrictions and no specialist Ro-Ro facilities; manoeuvrability is built into the design to assist with berthing in the absence of tug support.


  2.  Trade-off between operational risk and value for money has been tested in negotiations.


  3.  The long-term requirement is for a capability of six vessels in total.


  4.  Operational analysis in the SDR subsumed earlier studies of strategic lift to identify the number of RoRo vessels, and aircraft, required.


  5.  The RoRo service can be used across a full range of missions and military tasks that require deployment of UK forces into theatre through a seaport of disembarkation. It is not the intention to use the service in "battle conditions" but the ships may need to transit warlike zones and may be under escort as part of a task force.


  6.  Following the expiry of the contracts for the bareboat charter of RFAs SEA CRUSADER and SEA CENTURION in January and April 2001, these two vessels have been rechartered, along with Merchant Vessel Dart 10, to provide an enhanced level of sealift (the "provisional service") pending the introduction of the PFI service; a fourth vessel will be chartered on an ad hoc basis as required. The target date for the full PFI service to be available to provide the increased capability identified by the SDR is 2005, but, under the preliminary agreement signed last December, it will be available by 2003.


  7.  Under the PFI arrangements, the service provider will be responsible for the design, finance, manning, operation and maintenance of the service. PFI is inherently "Smart" in that it looks at whole life costs, harnesses commercial skills and opportunities, and seeks to place risk in the hands of the parties best placed to manage it. The opportunity for commercial trading of capacity under-used by MoD will reduce the cost of the service to the MoD.


  8.  The PFI service provider must provide a guaranteed service, which includes the possibility of transiting warlike zones as well as limiting the possibility of interference from other nations. Furthermore, there is also a clear operational requirement to man these vessels with British seamen, as a minimum, for security considerations. AWSR have bid, and will be contracted to provide, British seafarers eligible to be called out as sponsored reserves for all vessels when working for the MoD.


  9.  An Investment Appraisal has considered a wide range of options including: do nothing for 20 years, short and long term charter options, and conventional design and construction. None of these matched the value for money offered by the PFI approach.


  10.  The issue of export potential does not arise directly in the circumstances of this project.


  11.  Both the interim and long term requirements have been addressed through competition. It was recognised before the competition that the long-term requirement might involve a new build by the selected PFI contractor. As the requirement was for a service to be provided using commercial, non-warlike vessels, the competition could not be restricted to UK shipyards. The selected PFI solution involves the build of four ships by the German Flensburger shipyard and two by H&W.


  12.  The programme is being managed using a Smart Acquisition approach.


  13.  Key milestones as currently planned:

Notes Date

Initial Gate
Approving issue of Invitation to Negotiate assuming PFI. March 1999
Assessment of bids (including the "revise and confirm" round) Late 1999—July 2000
Main GateTo approve selection of preferred bidder for PFI solution October 2000
Announcement of preferred bidder October 2000
Preliminary agreements in relation to shipbuilding subcontracts December 2000
MoD take over commercial shipbuilding contract with H&W March 2001
Provisional Service

PFI Contract
March 2001

Summer 2001
Full ServiceBy 2005

  14.  The capital cost of the asset element of the PFI service will be around £175 million. The annual service cost to the MoD is related to usage but might amount to £40 million per annum (fuel excluded).


  15.  Under a PFI arrangement the service provider is responsible for the operation and maintenance of the service and is paid against performance.


  16.  The intention is that all six ships, under a PFI arrangement, with optimum risk transfer, should be at the graduated readiness required for JRRF operations.


  17.  The services supports the NATO Defence Capabilities Initiative in a number of areas but full commitment is limited by contractual limitations appropriate to a PFI contract.


  18.  As the PFI vessels become available, the charters for the ships providing the "provisional service" will expire.


  19.  The contract will be 20 years from the introduction of the full service and the contractor will be responsible for the disposal of the assets at the end of the contract. The 20-year period is related to value for money, financing and ship life.


  20.  A change procedure will allow, for example, technical upgrades offering value for money to be introduced by agreement.

April 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 14 May 2001