Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80. But even where it is a recognisably national project which can be put into, for example, a British yard and a British yard is a prime contractor, if you have a project such as, for example, an aircraft carrier, the British yard may well be the prime contractor but the reality is that bits of that could be built elsewhere or the equipment could be coming from elsewhere.
  (Mr Tebbit) Almost certainly.

  81. What I am getting at is to what extent are these projects taking on a life of their own and becoming collaborative projects even though they might appear to be national projects?
  (Sir Robert Walmsley) Could I just try something on shipbuilding? The Government's policy is, and has been for a very long time, to have warships procured and built in the United Kingdom. There is no prospect that that is going to change for the carrier or for anything else. It does not mean it will not. It means that there is no prospect whatsoever of that changing. The distinction on RO-ROs is not because it is PFI but because they are not warships so they will not be flying the White Ensign.

  82. The point about something like the carrier is that even though they can and will be put into British yards, nevertheless there will be a collaborative and a trans-national element to it.
  (Mr Tebbit) It may well be that bits that go on to these things, albeit built in British yards, will come from a foreign country because the industry at the moment is trans-national.

  83. The consortium that gets the project may well be and in fact is likely to be trans-national.
  (Mr Tebbit) To that extent it is possible, which is why the Letter of Intent is so important, because the Letter of Intent ensures that we have security of supply if sub-components, bits and pieces, may be coming from abroad, not least because even British companies these days operate on a global basis. That does not change the point that Sir Robert Walmsley made that warships will always be built as warships in United Kingdom yards. The nature of the industry these days is global, which is why we have to make sure that we have things like the Letter of Intent in place, so that it is absolutely clear, even on a national project, that where we need help from overseas that is forthcoming and guaranteed.

Mr Griffiths

  84. In the modern era when did collaborative projects begin? How far do they go back?
  (Mr Tebbit) I will ask Sir Robert Walmsley to answer that. I have said too much already and he is very expert on this.
  (Sir Robert Walmsley) I noticed in the report, and it was news to me, that collaboration on the Harrier started in the 1950s, so my guess is that, following an awful lot of collaboration on various weapons programmes beginning in the Second World War, it really took off after that. As the R&D costs accumulated people wanted to find ways of sharing.

  85. How much are delays and cost overruns dictated by the country with the most cumbersome bureaucratic procedures?
  (Sir Robert Walmsley) That is a very difficult question to answer because sometimes there is a real surprise. Countries that have apparently cumbersome procedures have on occasion said, "We agree", and they can circumvent them. Part of the cumbersomeness of their procedures is that they do not adhere to them always. It is quite surprising to me how quickly agreements can suddenly crystallise from countries which are apparently quite obstructive.

  86. It is surprising to me because your answer to Mr Steinberg was that it could be five weeks before one of the experts of one of the countries can move from one country to another.
  (Sir Robert Walmsley) That is a feature of the formality of security clearances. I know that nobody in this Committee (or anywhere else) would want us to hazard our security of very important technical secrets.

  87. You were the one who was critical of the five weeks.
  (Sir Robert Walmsley) It is the administration of it that needs to be speeded up.

  88. What about requiring export licences for parts that are sent here from Italy or Germany for assembly as part of collaborative projects?
  (Sir Robert Walmsley) Exactly. Collaborative projects in general can have an umbrella licence just as we have started to negotiate with the United States, which means that you do not have to seek a new licence for every piece.

  89. If we have got this history going back 40 years why did we not sort this out before? We have got 64 projects running now and this does not operate on any of them.
  (Sir Robert Walmsley) Those projects, which are subject to international collaborative remits, do not have to seek export licences for every single piece that crosses a border. The purpose of the Letter of Intent of course is associated more with national projects where a component is coming from abroad, not under a collaborative agreement, and provides a new framework agreement so to speak for the component to be exported without having to go through very cumbersome procedures.

  90. We have now got Declarations of Principles being agreed. My question is, why did not we agree them ten or 15 or 30 years ago?
  (Sir Robert Walmsley) It is never too late to do the right thing, and equally it is always very difficult to predict why you did not do the right thing sooner.

  91. It is easy to predict why we did not do the right thing.
  (Mr Tebbit) I think with the Declaration of Principles it would not have been possible to have got those agreements with the United States Government earlier. We have had a much more helpful and forthcoming United States Government over the past few years.

  92. What has been the cost of these delays?
  (Sir Robert Walmsley) I do not have an estimate. In general the delays occur during the decision making period. We have talked about stages of an international collaborative programme before and the delays occur through getting everybody's decision processes to the point where we can all say yes, so we are not spending money during that period. I agree, however, that there is a hidden cost, because the taxi meters are running in the industries of all the countries. It is not a cost that is obviously visible to us. It is merely reflected back in overhead rates etc.

  93. Which collaborative projects have been the poorest value for money?
  (Sir Robert Walmsley) I could not possibly answer that except possibly by hazarding that they are those which we have pulled out of. We have pulled out of long range TRIGAT.

  94. How much did that cost us?
  (Sir Robert Walmsley) It is in the report. I am not going to try to remember a number that is in the report.

  95. Two hundred and something million?
  (Sir Robert Walmsley) I think that is right, and medium range TRIGAT we pulled out of and that is a hundred and something million. Those are the worst.

  96. But if you look at that what retrospective analysis have you done to work out whether it might have been better to allow our Army to have an anti-tank missile like TOLE(?) available a decade or so ago?
  (Sir Robert Walmsley) It is the lost operational capability. If you are extremely fortunate, as we generally were during the Cold War period, the Army is not required to undertake active operations and therefore there was as a matter of fact no operational serious consequence, but there could have been and the risk we ran of course was very substantial.

  97. In terms of the analysis that you make on the success of collaborative projects, tell me some of the procedures you go through.
  (Sir Robert Walmsley) All the standard ones for a national programme. We first of all want to be absolutely clear that we are not attempting the technologically impossible, and so when we get a proposal from a company we are able to pass that proposal through to the Defence Evaluation Research Agency experts. They scrutinise it, as they did in spades on the METEOR proposals and on the ERAAM+ proposal for that. They then crank it through a computer in models and predict the performance.

  98. Have you cranked through TRIGAT versus TOLE?
  (Sir Robert Walmsley) No. In a sense, having made the TRIGAT decision, we were then stuck with it. It was the decision of the Government to participate in the TRIGAT programme. We then came out of it and we are now running a new competition, not with TOW but with two separate systems.

  99. Have you analysed the relative merits of efficiency of it all in terms of the MRC Tornado GR1 versus the F111?
  (Sir Robert Walmsley) The US F111 competition was run and announced in around September 1962, almost simultaneously with the Cuban missile crisis. I have to say that it would be very difficult now to go back and look at what would have happened if we had participated in that programme. It is just too long ago.
  (Mr Tebbit) I think it is fair to say that we would not expect the TRIGAT problem to arise now that we have OCCAR which is a much more efficient management system for delivering these sorts of projects. That is one of the reasons we have OCCAR, to prevent the sort of thing we had with TRIGAT or indeed with the Type 45 Frigate from recurring. You cannot guarantee it will not but you can put in place systems which minimise the risk that this will happen again.

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