Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 320 - 339)

WEDNESDAY 8 MAY 2002

LORD BACH, SIR ROBERT WALMSLEY KCB, AIR MARSHAL SIR JOCK STIRRUP, KCB, AFC AND MR JOHN COLES

  320. It would be possible theoretically?
  (Air Marshal Sir Jock Stirrup) It would be possible theoretically to look at a contractor on deployed operations or a sponsored reserves arrangement under a PFI for all kinds of services.

Chairman

  321. It would be helpful, Minister, if you could send us more considered brief on this matter. As you can tell from the questions and from people expressing their views outside, it is a very emotive issue. Has there been any attempt to try to squeeze more efficiency out of existing fire service arrangements prior to considering a PFI? There are other examples—we shall talk about those later—where the trade unions felt that they had not been given the opportunity to provide for greater efficiency. Is that something that you are considering.
  (Lord Bach) Many years ago there was an intention to make the fire service more efficient as applied to the three services. Alas, that does not seem to have been carried out in full then. As part of the consultation and examination that we are carrying out now on this potential PFI, we shall consider whether we can make the present system more efficient and more efficient than any PFI would be.

Rachel Squire

  322. Minister, either now or perhaps in a written response, can you clarify whether under existing arrangements any private airfield fire support services are engaged for airports and landing fields where we have aircraft that carry weapons? Under the existing arrangements, are private firms used where there are aircraft landing and taking off carrying weapons?
  (Lord Bach) As you anticipated in your question, I do not know the answer. It is a good question and I shall make sure that there is a response.
  (Air Marshal Sir Jock Stirrup) I think we should come back to you on the details. Certainly at Valley, for example—one of the airports that the Minister mentioned earlier—aircraft land with training weapons and there are practice camps that have live weapons. We shall return with the detail.

  Jim Knight

  323. At Kabul airport the airport support appeared to be a multi-national arrangement, but the fire support was British and had fantastic kit. I am interested in that kind of operation. If we start to go down the PFI route and find that sending contractors out to somewhere like Kabul is too difficult, shall we start to go down a specialisation road where we end up using other countries' services, where they have retained airport support services and we cannot do it because we have privatised it?
  (Lord Bach) Mr Roy, with respect to Mr Knight, touched on that as well. The question around that comment is an important one and one to which we need to have a clear answer. I have not had the advantage, as you have, Mr Knight, of going to Kabul yet. That is not a bad example at all. I think it is relevant to the question to say that we often use foreign airfields, not necessarily in the circumstances of Kabul at present, and we often rely on a host nation's fire service. We always rely on host nation fire services to ensure that our aircraft are protected. That seems to work pretty well. On your actual point, we shall come back to you.

  Chairman: It is a sensitive area.

Mr Hancock

  324. If I could have got in, I would have asked one question on that subject. We have spent 20 minutes on it but you did not give one good reason why you should do it. I was rather surprised at that. Perhaps I can move you back to the PFI situation. In an earlier answer you spoke about some of the PFIs and I want to return to my first question about the tankers. I would be interested to know whether you know of any civilian tankers that are currently flying. I do not think that there are any. Presumably tankers will have service crews flying them and frequently they have to fly through hostile anti-aircraft flak and missiles, so the crew would be in harm's way. I was interested to see the way in which you dismissed that issue fairly quickly.
  (Lord Bach) If you had asked the question that you were not able to ask, I would have answered that the reason for what we are looking at in terms of the fire service is that we are looking for best value as always. We want best value for our forces. That is how I would have answered that point. On FSTA and the point you made about the dangers involved, that is one of the reasons why we are using sponsored reserves as well as aircrew. Sponsored reserves are what we have said they are. They are people who, when in uniform, are under military discipline and have some experience. It may be that a number of them will turn out to be those who in the past were full-time servicemen. That is why we would use them under a PFI system, rather than a mere employee of a contractor who had no service experience.

  325. How do you know that they are available?
  (Lord Bach) As I understand it, it is part of the agreement reached with the contracting company that there will be sponsored reserves available at all times if and when the RAF need the planes.

  326. They are prepared to fly tankers through hostile terrain?
  (Lord Bach) Yes.

Mr Howarth

  327. What happens if some of the civilian crews say, "Sorry, from what I have read about this and seen on television, I do not want to be involved"? The contractor will not be in the position of a commanding officer who can say, "You will be deployed".
  (Lord Bach) I think any sponsored reserve who said that would have a question or two to answer. Of course, I have already stressed that there will also be service aircrews as well to begin with, making up three-quarters of any crew.
  (Air Marshal Sir Jock Stirrup) That questions the whole essence of sponsored reserves. That is the reason why they are sponsored reserves. If they are needed on military operations, they will be called up. They will be military personnel, subject to military discipline and military law. That is the point about having sponsored reserves.

Mr Hancock

  328. Who will call them up? Will it be the company or the RAF?
  (Air Marshal Sir Jock Stirrup) We will; the Government will. On the point about availability of crews, I do not know of any civilian tanker crews flying around, but I know quite a lot of civilian crews flying around who used to be tank crews. I think there are quite a lot of people out there who have the skills. Training would be an issue for the contractor as well. With regard to flying into hostile territory, it is absolutely right that that would be necessary at times. We have a tanker captain who, not long ago, was awarded the Distinguished Flying Cross. As the Minister says, that is precisely the reason why we need sponsored reserves as part of this overall contract.

  329. I was also surprised by the suggestion that you made about being in harm's way and that normally these operations would not take people into harm's way. I thought that that was rich coming 20 years after the sinking of the Atlantic Conveyer. Presumably, that crew did not believe, when they sailed from the UK, that they would be in the firing line and sunk. There is a question about relying on PFI to supply your Armed Forces when they are undoubtedly on occasions going to be seriously in harm's way and there is the question of whether you can guarantee that they will perform.
  (Lord Bach) I go back to the answer that has just been given. That is why in certain PFIs we are insisting on sponsored reserves, in the same way that the Americans do. They use many reservists themselves. That is why in those PFIs where we are occasionally close to danger we shall use sponsored reserves; for example, people who are reservists and have some experience and knowledge of how the Armed Forces work.

  330. Going back to what you said about the combat support vehicles, I accept the reasons why you abandoned that. Why did it take you three years to make that decision if it was such an easy one to make?
  (Lord Bach) I would rather make the right decision, even if it takes longer, than make the wrong decision so that I do not have to face a question like that. We are trying to get it right.

  331. What were you doing for three years? If the contractors were telling you that there was too much of a third market opportunity, what were you doing for three years? Why did it take that long to come to the conclusion? I would imagine that the service personnel were telling you that from day one.
  (Sir Robert Walmsley) I never think there is a good answer to why we did not do the right thing sooner. I can assure you that the team were working very hard to try to bring the PFI to a conclusion. As you do that, you work with the companies and discuss matters with them, and quite often you are told in PFIs that something will not work but that could be someone just positioning themselves in the competition. So you do not take everything at face value. A number of issues slowly became clearer as we engaged with the companies, particularly on specifying the military features of the vehicles which actually started to look more specialised the longer we ran the procurement. It is never easy to decide that you have not been pursuing a course that will lead to the right result. We decided that and some of the companies were rather surprised and others were absolutely sure that we had done the right thing. So we faced a range of opinions. I personally wrote to the chief executive of all the bidders and some wrote back and said, "Thank goodness you have done the right thing", and others wrote back and said, "We are rather disappointed; we thought that that could have worked". There was a range of opinion.

  332. How many were you talking to?
  (Sir Robert Walmsley) I honestly cannot remember. I think it was three or four prime contractor consortia, each employing lots of companies. Another interesting feature that we may all remember clearly, was in regard to the wheeled tankers, of which I think we needed about 500. They look like petrol tankers, except that on a detailed inspection they do not. We also thought that there would be a good market in the civilian, commercial world for those vehicles. September 2000 taught us all a lot about the elasticity of the petroleum products supply arrangements in this country. It quite quickly became clear that the commercial market does not want tankers some of the time, but it wants absolute access to commercial tanking transport fleets, 24 hours a day, seven days a week. The idea that one could defray that by turning up sometimes with a notice of withdrawal began to look more fanciful than it had when we had been at the whirling eyeball, PFI stage, 12 months early.

  333. Was the crisis that we faced here when fuel prices escalated and there was trouble at the various terminals partly responsible for that shift? I think the timing was about the same.
  (Sir Robert Walmsley) Yes, the timing was about the same. That is why I can remember it so clearly. It was in September 2000 that we went through this. It was not the price of fuel; it was simply that vehicles were more specialist than we had understood.

  334. Was it the fact that the Government would have wanted 500 specialist fuel vehicles available for their use and not having to rely on civilian tankers if there was an ongoing protest at fuel terminals? They wanted the nation to have a supply of tankers available to deliver fuel if the need arose.
  (Sir Robert Walmsley) I am sorry, I misunderstood the question. I can absolutely emphatically state that at no stage in my consideration—I was the first chief executive in line—was such a point put to me.

  335. That decision was solely made on the commercial viability of the product and the constructors ability to continue with the PFI, and had nothing to do with any Government interference at all?
  (Sir Robert Walmsley) Absolutely.

  336. Fine. What other ones are you thinking about pulling away from PFI? What other projects are you currently reviewing or looking at with a mind to changing any plans for PFIs?
  (Lord Bach) I think to answer your question directly would be foolish in the extreme. We are looking at all the projects that we possibly have in mind for PFI over a period of time. Some are nearing decisions, others are further away and to pick out individual ones now I do not honestly think would help this Committee very much in its deliberations and it certainly would not help us in what we are trying to do.

  337. When you read the various reports on procurement issues which have been done by the NAO, one of their criticisms is the length of time it takes within the MoD to make a decision when there is a move afoot. I do not know how much it cost the MoD in the three years it took you to make a decision on the Combat Support Vehicles, how much money was spent in that process which was non-recoverable. I am interested to know whether the full process on PFIs is going to be speeded up, so you start with the idea, "We are going to do this", you realise it is not going to work and you are out and you are back to the old style of tendering process. I want to know whether or not lessons have been learnt and you have speeded that process up, consequently saving yourselves a lot of time and money.
  (Lord Bach) Well, we are always trying to get it better and faster too. Of course we are trying to do that, but I think to pick out individual items as to what you were doing in individual projects is not at all helpful.

  338. Would it be possible for you to do us a note on the ones where you have done it as opposed to the ones you are considering?
  (Sir Robert Walmsley) I can tell you now that the two we gave up were these cargo vehicles, something like 9,000 vehicles, and, as I have prostrated myself in front of this Committee I think perhaps on a day you were not here, survey vessels for the Royal Navy. Those are two I can recall very clearly and the formal position of course with all the others is until they pass their main-gate decision point, it would be something for Ministers to approve and for people like me to try to bring them to the point of decision. Until they have passed that, they are not past it, so to speak. They are not approved until they are approved. All the ones we have got in play at the moment represent, in our judgment today, viable PFI propositions, but the proof will be in the eating.

Mr Jones

  339. Could I just continue the question in terms of PFI and its links with the front line. You actually said that the aim was to take PFI as close to the front line as possible, and then you just used the words "best value" and you used the words, "which offer better value for money" and "which are appropriate". What do you mean by "are appropriate"? What would be inappropriate?
  (Lord Bach) What—in terms of deciding what we should use for PFI or not?


 
previous page contents next page

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

© Parliamentary copyright 2002
Prepared 10 July 2002