Select Committee on Defence Appendices to the Minutes of Evidence


Supplementary memorandum from the Ministry of Defence following evidence session with Minister for Defence Procurement (30 May 2002)

The Committee would like to have a note on what is involved in "reliability centred maintenance" and "underwater engineering" techniques, and some examples of the sorts of saving in refit frequency or duration these make possible [Q65]


  1.1  Reliability Centred Maintenance (RCM) is based upon a thorough analysis of the design, function and operational criticality of warship systems and equipments, which identifies more precisely the required maintenance. It also defines more accurately the frequency of maintenance. This process involves full recognition of all safety requirements and operational usage.

  1.2  RCM is expected to be a marked improvement over earlier maintenance management systems that use set intervals and general overhaul instructions, irrespective of the in-service function of the equipment. It is particularly appropriate to ship-borne equipment, where similar components can be used in either a primary or auxiliary role. Throughout the life of a warship, RCM has the potential both to improve flexibility in the timing of when maintenance is undertaken and to provide a reduction of about 10 per cent in the overall volume of the maintenance required.


  1.3  Underwater Engineering (UWE) allows a wide range of maintenance activities to be undertaken afloat that previously have only been possible with a vessel dry-docked.

  1.4  For example, with a vessel afloat, using UWE techniques it is possible to survey and repair the underwater hull structure and its paintwork system and to examine and repair external equipment fitted below the water-line. Typically this includes items such as propellers, rudders, stabilisers, the sonar fairing, and hull valves.

  1.5  With planned dry-dock maintenance activity now programmed at intervals of about 4 to 5 years, a prime benefit from using well-developed underwater engineering techniques, is to avoid the high cost and operational disruption caused by having to undertake an unplanned docking in order to rectify an unexpected defect.

  1.6  Each year on average, across the Fleet, there is a need to conduct repairs that would require about 20 unplanned dockings. However, using these valuable UWE techniques annual savings on dock charges of up to £1.5 million can be achieved.

The Committee would like to have a note setting out the process followed by MoD in developing the Warship Support Modernisation Initiative partnering arrangement, the basis for the in-house benchmark used to evaluate it, how the new prospective contracts compare against the benchmark, and the conclusions and recommendations of reviews undertaken by the NAO and any other external advisers [Q97-98]. The Committee would like to see a copy of the NAO's report, or if the MoD were to decline to provide it a detailed summary of its conclusions and recommendations.


  2.1  The Warship Support Modernisation Initiative process, in which both Industry and the Trades Unions were involved from the outset, had three main stages.

  2.2  The first of these, the scoping stage, from June 2000 to January 2001, examined the potential for savings in the Dockyard warship repair programme and Naval Base operating costs. Scoping proposals were received from the three companies (BRDL at the Clyde, Devonport Management Limited at Devonport and Fleet Support Limited at Portsmouth) and the MoD Trades Unions, which identified the possibility of achieving considerable savings. Subsequently, Memoranda of Understanding were signed with each company to develop their proposals to a level of maturity against which contracts could be let. The Trades Unions were also invited to develop their own proposals further.

  2.3  During the second stage, output specifications describing the services provided by the Naval Bases were developed, together with a `Benchmark' as a means of measuring value for money and to support the negotiations. Initial proposals were received from the companies and the Trades Unions in April-May 2001 for comparison with the Benchmark. At this point only a summary of the financial savings offered by the Naval Bases' component of the Benchmark at each location were released to the relevant company, however, the full details of the Naval Bases' component were released to the Trades Unions. The output specifications and draft contract terms and conditions were issued, in the form of a `Request for Proposals', in early July 2001 and the companies were given the descriptions of the efficiency measures in the Benchmark, but not their individual values.

  2.4  In the third stage, in response to the Request for Proposals, the Companies and Trades Unions submitted their final proposals in September 2001. These were compared to the Benchmark in a full investment appraisal in accordance with Departmental and Treasury guidelines. A post tender clarification process was conducted on both the Company's and TU's proposals. A final release of the detail of the Benchmark was provided to the companies at this stage to inform the final negotiations and achieve best value for money. The Trades Unions had used the Benchmark as the main source of their costed efficiency proposals. The companies adopted proposals from the Benchmark that they were prepared to commit to delivering.


  2.5  The Benchmark incorporated in-house savings proposals offered by the Naval Base Commanders assuming that the operation of the Naval Base would continue to be managed by the Department, and the savings from the changes to the dockyard programme that could be achieved without partnering.


  2.6  The company proposals offered additional value for money over the first five years significantly in excess of the Benchmark and the Trades Unions proposals. Release of the companies' figures at this stage could prejudice the Department's negotiations.


  2.7  The Warship Support Modernisation process was subjected to both internal and external audit. As part of this, in his role of chairman of the agency audit board, the Non Executive Director of the Warship Support Agency commissioned the National Audit Office to carry out an assurance audit of the process in a constancy role. This should not be confused with a value for money audit carried out by the NAO on behalf of Parliament. As such this assurance report constitutes internal advice to the MoD and is not for publication. However, a short summary report of the WSM process has been agreed with the NAO and a copy of this is at Annex A.

When, for each of the three dockyards, in turn, had the allocated surface ship refit programme been due to end, and when (again for each dockyard) will they now end under the terms of the WSM arrangements? What are the MoD's estimates for the percentage of surface ship refits exposed to competition: currently; at the time the allocated surface refit programme comes to an end under the terms of the WSM initiative and (also at that date) if WSM were not to proceed [Q99, 101]


  3.1  The dates for the programmes at the three locations are as follows:


  3.2  Prior to WSM the allocated surface ship upkeep programme was planned to end in 2001-02. Additionally, the Docking Periods (DP) of all surface ships based at Devonport were allocated. Under the terms of the WSM agreement the last allocated surface ship upkeep completes in 2002-03. After this all the docking periods for surface ships based at Devonport will also be competed in the unallocated programme.


  3.3  Prior to WSM the allocated major warship and escort upkeep programme was planned to complete in 2004-05. Allocated minor warship Repair Periods were also allocated at Rosyth until the completion of the last vessel in 2007-08. Post implementation of WSM, the Rosyth allocated ship-work programme ends during 2004-05.


  3.4  Prior to the WSM initiative all Docking Periods at Portsmouth in the 15-year programme were allocated. Post WSM, the allocated ship-work programme at Portsmouth ends in 2004-05. No surface ship Repair Periods were included in the allocated programme at Portsmouth prior to WSM nor will they be afterwards.


  3.5  The estimated percentage of refit work exposed to competition is as follows:

Assuming WSM proceeds
53 per cent
51 per cent
69 per cent
93 per cent
Assuming WSM does not proceed
52 per cent
44 per cent
41 per cent
61 per cent

How does the £327 million anticipated saving from the WSM initiative break down between:

(a)  Devonport, Portsmouth and Rosyth/Faslane/Coulport?

(b)  Naval base and dockyard work at each location [Q131, 136-7]

Against the same benchmark used to calculate the £327 million, what is the MoD's estimate of the savings that the trade unions' proposals would have produced? What constraints were there in adopting the trades unions' proposal?


  4.1  The analysis estimated that the overall savings offered by the Warship Support Modernisation Initiative relative to the baseline are £327 million over the first 5 years and some £48 million per year thereafter. The savings in the first 5 years are roughly evenly divided between the dockyard programme and the Naval Bases. The split between the Naval Bases cannot be disclosed at this stage as it could prejudice the Department's negotiations. The Dockyard savings are not all location dependent and therefore cannot be separated as requested. The continuing savings are entirely attributed to the Naval Bases, since the programme of work allocated in support of the privatisation would have, in any case, terminated at the end of the 5 year period.


  4.2  The Trades Unions proposals offered a marginal additional value for money related to the Benchmark. The Trades Unions have asked that their detailed proposals should not be released.


  4.3  The Trades Unions proposal was considered as a full option in its own right and treated in the same way as the companies' proposals with no particular constraints on adopting them if they proved to be the best value for money. Overall, the companies' proposals were assessed to offer better value for money than the TU proposals over the first five years and beyond.

The Committee would like a note on the Professor Pascale's background, the remit of his review, and the emerging conclusions and recommendations of his study [Q157].

  5.1  Richard Tanner Pascale, an American citizen, is an associate fellow of Templeton College, Oxford University and is a business consultant and author. He has worked with many corporations. Those listed on his curriculum vitae include AT&T, General Electric, the New York Times, Marriot, BP, and Intel. As an author, Richard Pascale has written books on business change and related management issues. The most recent was "Surfing the Edge of Chaos: The laws of nature and the new laws of business" which was published in 2000.

  5.2  Richard Pascale was engaged by the Department in February 2002 to conduct an `audit' of the MoD's Equipment Capability Customer (ECC) organisation to establish what had been accomplished (against the background of the ECC's initial charter) and what is left to be done. The audit, will inter alia, assess how successful the ECC's change to a capability management based organisation has been, taking account of the views of key MoD stakeholders.

  5.3  The audit is not due to complete until mid June 2002. It is therefore still too soon to comment on what findings and recommendations are likely to emerge from Richard Pascale's work.

What modifications and other improvements are to be made to the Type 42 destroyers to improve their anti-air warfare capability, which ships will be involved and when will the improvements be carried out [Q192, 205]?

  6.1  A number of programmes are in progress that will improve the Type 42 destroyers' anti-air warfare (AAW) capability. The improvements can be grouped into three categories; situational awareness, hardkill capability, and softkill measures.


  6.2  Improving a ship's situational awareness means providing a more accurate and reliable recognised maritime picture. With an accurate and up-to-date picture the commander will be able to direct his or her assets more efficiently, and engage the enemy more effectively. In the AAW environment, improved situational awareness is provided by upgrading the ship's command system, introducing Identification Friend or Foe (IFF) tracking, introduction of the Command Support System (CSS), and improvements to the ship's radars.

  6.3  The Type 42 command system upgrade, ADAWS20, will be completed this year, having been incorporated into eight batch two and three ships. It will improve situational awareness through greater capacity, added redundancy and improved data link functionality (including provision for Link 16).

  6.4  IFF tracking will again be fitted to the eight batch two and three ships and will facilitate fully automatic tracking of contacts, based on their IFF codes, out to around 250-300nm. It will also provide the ability to interrogate all modes of civilian and military IFF concurrently. With an In Service Date (ISD) of September 2004 this will allow the commander to build an accurate "air picture" giving early indication of potentially hostile targets.

  6.5  The CSS, which has recently been introduced to all Type 42s, delivers networked AAW planning. It displays around the Operations Room the Wide Area Picture, fusing together inputs from a variety of sources, including intelligence, thereby enabling better cueing of hardkill and softkill systems against potential attack.

  6.6  Improvements to Radar Type 996 will provide more accurate and robust Target Information to Sea Dart, along with improved spatial awareness by replacement of some existing components with software based technology. This in turn will improve radar performance in a number of areas, including the littoral; hot climates; against supersonic sea skimming and supersonic high diving targets. And, through greater range and bearing accuracy it will facilitate improved discrimination for detection of smaller targets. The approved In Service Date for this Automatic Software Adaptive Radar (ASAR) enhancement is 2005, and it will be fitted to the eight batch two and three ships mentioned above. Finally, improvements to the Type 42's long range radar (Radar type 1022) will increase performance in both the littoral and hot climates, as well as ameliorating some of the effects of anomalous propagation (where atmospheric conditions affect radar performance). This Solid State Receiver enhancement package has a planned ISD of 2005, and will be fitted to the same eight batch two and three ships.

  6.7  With the number of situational awareness enhancements proposed the commander will have a significantly enhanced AAW picture, and will be able to utilise his or her AAW hardkill assets more effectively.


  6.8  In the AAW environment, hardkill is defined as the ability to engage a target through physical interception, resulting in target's destruction (or inability to complete the mission). This is achieved through the use of missiles and gun systems. The Type 42's primary AAW missile system is the Sea Dart system. The most recent improvement of the Sea Dart system, which is currently in service with all ships, is the Automatic Target Indication (ATI) modification. This allows the combat system to prioritise the threat posed by incoming targets, automatically assign a fire control radar, load and allocate the launcher, and conduct an engagement based on that order. Functionality ranges from fully automatic to fully manual, and this has the ability to considerably shorten ships' reaction times. Improvements to the Sea Dart missile are also being made by upgrading the missile's fuse to an Infra Red version. This modification replaces the current fuse type in the missile with one that is triggered by the heat source from a threat platform, whether that is a missile or aircraft. This in turn increases the probability of a kill against modern sea skimming threats, whilst retaining the original capability against higher altitude targets.


  6.9  Should a threat missile penetrate the ships' hardkill systems, softkill or decoy systems are used to distract or seduce the incoming missile away from the ship. A new softkill system, the Offboard Active Decoy (DLH), is due in service by December 2003. It is a rocket propelled round that is automatically programmed, and fired, by the ship's combat system when an incoming missile seeker head is detected. When fired, it travels to a predetermined height and distance from the ship before activating, with the result that the threat missile is seduced away from the target ship. It will provide a significant improvement in platform self defence capability. DLH will be fitted to all Type 42s.

  6.10  Softkill efficiency has also recently been increased with the introduction of Electronic Warfare outfit UCB into all eight batch two and three ships. This equipment provides better situational awareness to the Electronic Warfare Director, enabling him to prioritise and cue softkill defence systems.

What would be the main technical risks involved in upgrading the Sea Harrier for continued carrier operations [Q221]?

  7.1  The current engine of the Sea Harrier does not provide adequate thrust to enable operations to be conducted year around in hot climates, such as those encountered in the Gulf. There would be a very high level of technical risk in fitting new engines, since the Sea Harrier was not designed to take the more powerful engine which is being fitted to some of the Harrier GR9s. (The Sea Harrier is an early generation Harrier I—similar to the RAF's previous Harrier GR3s—whilst the only Harriers operating world-wide with the upgraded engines are the extensively modified Harrier IIs, such as Harrier GR7-9s). Specifically, the main technical risks are associated with the extensive airframe modifications that would be required and the adverse effects on the engine due to different intakes.

Q7  (a)  What constraints (technical, cost and timelines) would there be on fitting the Blue Vixen radar and AMRAAM missile onto the GR Harriers [Q395]?

  7.2  While it would be technically possible to adapt the Harrier GR to have a greater air defence capability, the primary capability requirement is for offensive air power.

  7.3  Fitting the Blue Vixen radar and AMRAAM missiles to the Harrier GR would have to be preceded by a lengthy period of design and development work. Only once this work was completed would it be possible to initiate any installation programme. It is likely that the integration programme would involve significant modifications to the forward fuselage structure in order that existing capability (such as the Forward Looking Infra Red, Angle Rate Bombing System, and ZEUS electronic warfare equipment) could be relocated. Additionally, the electrical and avionic cooling systems, and cockpit displays of the Harrier GR would need to be enhanced. A trials period would then follow to develop and test the new capability, before it could be employed operationally. This work would be in addition to the existing and extensive Harrier GR7 to GR9 upgrade programme. In addition, there are insufficient Blue Vixen radars to fit the full Harrier GR9/9a fleet.

  7.4  Since it would be inefficient and expensive to conduct a comprehensive upgrade (GR7 to GR9) only to dismantle the aircraft again soon after, (to install the Blue Vixen radar and AMRAAM missiles), it is likely that the GR9 upgrade programme would have to be postponed considerably until a joint GR9 and Blue Vixen/AMRAAM programme could be developed. However, this would leave important Harrier obsolescence issues unaddressed in the meantime. In addition, any delay to the GR9 programme would not only delay the introduction of smart weapons to the frontline aircraft of Joint Force Harrier, but would also call into question the overall cost effectiveness and practicality of any form of significant upgrade, given the Harrier's OSD of 2015. In terms of timescale, a GR9 Blue Vixen/AMRAAM programme would be at least as complex as the Sea Harrier Blue Vixen/AMRAAM update in the mid-90s. This took five to six years to embody after completion of the design and development phase.

Q7  (b)  What are the factors that would limit the useful employment of the Sea Harrier after 2006?

  7.5  Sea Harrier is optimised to provide air defence of the fleet. It has a limited capacity for carrying ground attack weapons and no forward looking infra red sensor for identifying ground targets. Ground attack is now envisaged as the main purpose of the Royal Navy's carrier force.

What arrangements are being put into the FSTA PFI contract, and other PFIs more generally, to allow the mix of sponsored reserve and contractor staff to be adjusted during the life of the PFI contracts [Q292]?

  8.1  There is no "mix" of sponsored reserve and contractor staff, as all sponsored reserves will be drawn from the contractor's workforce. The FSTA contract, which has not yet been finalised, will include a mechanism to adjust that proportion of the contractor's workforce that we require to hold a Sponsored Reserve commitment. The contract is expected to include a requirement for the MoD and the contractor to review all manning and personnel issues. The contract will contain provisions to ensure that any agreed changes are implemented in accordance with a timetable agreed by both parties.

  8.2  All PFI contracts, whether they involve Sponsored Reserves or not, contain a change mechanism which allow elements of the contract to be varied in agreement between the parties.

In regard to the Airfield Support Services Project, what is the MoD's latest thinking on the possible use of sponsored reserves and/or "contractors on deployed operations" arrangements for when airfield fire services would be required at overseas bases? [Q319]

  9.1  Contractors on Deployed Operations (CONDO) and Sponsored Reserves (SRs) are two separate concepts. CONDO personnel are civilian contractors and are not reservists. SRs, while acting as normal contractors' personnel in normal circumstances can be called-up as reservists to undertake their duties close to the front line in times of crisis. CONDO describes arrangements under which civilian contract staff could deploy into safer environments such as long-standing deployments in friendly countries. The two concepts are not alternatives, but separate instruments suited to different circumstances.

  9.2  Regarding the Airfield Support Services Project (ASSP), three consortia were invited to submit bids by 30 April 2002. Each of the three submitted their bid by the due date and the bid evaluation process is now in its early stages. The Invitations to Negotiate (ITN) sought proposals for the employment and use of SRs, in order to assess if SRs could improve value for money without placing operational capability at risk. As the cost effectiveness of SRs for ASSP has yet to be established, bidders were asked to price options with varying numbers of SRs, from a bare minimum to 25 per cent. Proposals utilising more than 25 per cent could be submitted if the bidders assessed this to be worthwhile. Under the SR options, some of the contractor's personnel would have a reservist commitment and during times of crisis would effectively become Service personnel, able to deploy on ASSP tasks in military areas when required. This does not, however, include fire fighting, which, for deployed operations, would normally be covered by RAF firefighters[2]. Service Personnel would still form the core of support to overseas operations.

  9.3  Although not specifically addressed in the ITN, the bidding Consortia could make innovative proposals for the use of CONDO to augment the SRs concept.

  Q9  (a)  The Committee would like also to have a note on the key features of the Contractors on Deployed Operations arrangements more generally, including the pros and cons relative to the use of sponsored reserves.

  9.4  General CONDO support ranges from ad hoc contracting for limited deployed support to broad, enabling commercial support contracts having theatre or global application. CONDO does not replace core military manpower but augments it when circumstances permit to reduce the pressure on the deployable logistic support of the Armed Forces. CONDO personnel would normally only be deployed to benign environments (although our arrangements provide for CONDO to be deployed outside benign areas in circumstances where no military capability exists or where a previously benign area becomes non-benign as an operation develops). Decisions would depend on the operational situation and the availability of military capability.

  9.5  All contractors deployed on operations would be responsible to the Theatre Commander for the successful execution of the contract. A joint MoD/industry Code of Conduct sets out the obligations and rights of CONDO personnel and MoD's authority over those deployed and the protection their CONDO status would bring them. Before deployment, CONDO personnel may be required to undertake a brief package of training and medical and dental checks. MoD may provide deployed contractors' personnel with emergency health treatment and primary health care as well as other welfare facilities. As a recognised element of the deployed force, CONDO personnel would have Prisoner of War status under the Geneva Convention III, Article 4.a(4) provided they were correctly identified and badged by the MoD. CONDO employees are subject to some provisions of Military Law when deployed. The local military commander may discipline an employee, or if more appropriate, require the contractor to take administrative action.

  9.6  SRs are different from CONDO personnel in a number of important ways. The key characteristics of SRs are as follows:

    —  they are members of the Reserve Forces with liabilities under Part V of the Reserve Forces Act 1996 (RFA96) to serve as reservists, to be called out into permanent military service and to train for that service in peacetime;

    —  they are, when called out, uniformed members of the Armed Forces fully subject to Service Discipline Acts and integrated into the chain of military command;

    —  their peacetime training has equipped them to deliver a service, as an integral part of an armed force, in a potentially hostile operational environment; and,

    —  as a member of the Armed Forces, they may undertake weapon training in peacetime, bear arms on operations and undertake duties deemed to be combatant under International Law.

  9.7  SRs may provide support services in environments and under circumstances where it would be inappropriate or unlawful to employ civilians under CONDO arrangements. Any one of the following is likely to rule out the use of CONDO:

    —  the operational environment is non-benign (subject to the criteria in 9.4 above);

    —  the required support could be judged as being combatant in nature;

    —  there is a need for personnel to bear arms for either their own protection or the protection of others and/or equipment;

    —  personnel in theatre should be fully subject to the Service Discipline Acts and, for their own protection or otherwise, fully integrated into the chain of command; and

    —  it is necessary for personnel providing support to undertake additional military duties as well as those duties directly associated with the primary support for which they are in theatre.

  9.8  An additional important factor in judging the relative merits of contracting for CONDO or SR support is the degree to which delivery of the required capability must be guaranteed. SRs are, under RFA96, subject to legally binding liabilities to serve and be called out for service irrespective of the dangers such service might put in the individual's way. In the face of potential danger, CONDO personnel may legitimately decline to deploy.

  9.9  If these factors do not rule out the use of CONDO, the following commercial considerations must be taken into account:

    —  the requirement for employees to undertake training in peacetime will come at a price which, in the case of SR military training, may be higher than that required to be given to CONDO personnel;

    —  SR personnel will need to be materially equipped to be service personnel;

    —  SR civilian employers will generally have to pay SR employees more, as an incentive to maintain sufficient numbers of SRs in their workforce;

    —  recruiting and employing SRs may incur higher administrative and overhead costs than CONDO, for example personnel insurance, for the contractor.

  9.10  In general the training, investment and planning required make the use of SRs economic only for long term contracted support associated with particular equipments or services.

  9.11  Whilst SR and CONDO are different that does not prevent SR personnel being deployed in a purely civilian capacity under CONDO arrangements should it be safe to do so and the operational situation permits it. There may therefore be advantages in some CONDO arrangements if some contractor personnel are engaged as SRs. These personnel could be called out and deploy early as service personnel to prepare the ground for follow-on purely CONDO support when the situation in theatre can be judged as sufficiently benign. Conversely, if support is deployed under CONDO arrangements and some of the CONDO employees are also SRs, then should the situation deteriorate, those employees could be called into military service to remain in theatre to facilitate a change to the alternative military provision of support.

What guidance have Ministers given to MOD officials about what areas of defence activity they would regard as jeopardising operational effectiveness or should otherwise be regarded as "inappropriate" for PFIs? What criteria are used to assess the value for money of prospective PFIs [Q354]?

  10.1  The use of PFI is considered on a case-by-case basis. Ministerial guidance is that PFI should be used only where it is appropriate, workable and economic. Detailed criteria have been developed in order to assess these objectives, one of which is operational effectiveness. In respect of operational effectiveness, issues such as operational flexibility and loss of core skills will be taken into account. This work is done in the feasibility stage and can even result in projects that "do not move" being rejected for PFI because of the unacceptable operational impact if that project were to be PFI.

  10.2  The scrutiny and approvals process also tests the value for money of each project. A key element of this is to compare commercial bids against the most cost effective conventional means of delivering the service (the public sector comparator (PSC)). The PSC, however, is not the sole means of determining value for money. Other factors, particularly the quality of services, are also taken into account as part of the assessment and appraisal processes.

What is the current annual aggregate service charge for the MoD's current PFIs? And what does the MoD expect the total figure to be if all the PFIs currently in the pipeline were to be implemented [Q362]?

  11.1  MoD, like all other Departments, makes a biannual report to Parliament, one of which informs the Financial Statement and Budget Report exercise, showing future payment commitments for signed PFI deals and those that are at or due to move to preferred bidder status. In the MoD these categories currently relate to 50 projects. The last report, in Spring this year, showed that annual commitments peak in 2007-08 at £835 million, or around 3.5 per cent of the Defence budget. We are looking at more than 40 further potential PFI projects, including some very large ones, for example the Future Strategic Tanker Aircraft, Airfield Support Services and Project Aquatrine. Should all of the projects currently under consideration materialise as PFI deals, the total annual commitment could double. But some projects are at an early stage and the requirements have yet to be fully developed and as a result the potential annual costs have yet to be fully identified. Some of the projects now being considered may not lead to a PFI deal. It would therefore be wrong to give a precise figure on our forecast future commitment. We do of course keep the potential future PFI commitment, and its implications for future financial planning, under review.

What improvements are involved in the £26 million modification programme for the GR series Harriers [Q377]?

  12.1  The GR9/T12 programme will provide avionics and weapons upgrades to give the aircraft a much improved capability, in particular the ability to deliver the new generation of smart weapons that are about to enter service. These will include the Brimstone anti-armour weapon and a Precision Guided Bomb.

  12.2  The overall cost of the GR9 and T12 (trainer variant) programme is approximately £330 million, of which 75 per cent is related to routine maintenance and modification work being undertaken concurrently with a capability upgrade programme to minimise costs. The remaining 25 per cent comes from reallocation of funding from discontinued Harrier programmes, together with the quoted £26 million, generated as a result of the Joint Force Harrier Balance of Investment work.

On Nimrod MRA4, what additional costs will be incurred by the MoD as a result of the delays with the project, including any cost consequences of the delays arising (and in prospect) since the contract was renegotiated in May 1999?

  13.1  Full cost of ownership data is not yet available for the MRA4. But the DPA judges that the cost of running on MR2 aircraft pending the delayed introduction into service of the MRA4 is broadly similar to the running costs of the latter. Additional costs will therefore be minimal, as indicated in MPR 2001.

Q13  (a)  If BAE Systems were able to sell its Nimrod MRA4 solution to satisfy the DoD's Multi-mission Aircraft requirement, what share would the MoD receive of any revenues achieved?

  13.2  The Nimrod MRA4 contract contains a standard MoD Commercial Exploitation agreement. In respect of a sale of significant value this provides for MoD to receive a share of the profit generated. The agreement contains provisions for abatement of the share for those items where MoD has not funded the design (eg of a proprietary nature) and other factors. The MoD share to be negotiated cannot therefore be expressed as a simple percentage nor calculated precisely without full detail of the product design which may finally be offered to the DoD.

Q14.  What is the result of the MoD's review of its ammunition war stock holding requirements [Q436]?

  14.1  The stockpile planning review looked at the total requirement for munitions calculated to ensure the successful outcome of the most demanding scenario for each environment. These revised Stockpile Liabilities are effective from 2005 which will enable shortfalls and surpluses to be addressed in the interim period. Where a shortfall between the current stockpile and the 2005 liability has been identified, funding is being sought, and in some instances has already been secured, to improve the position and detailed procurement studies have commenced. For those munitions where there is now an identified surplus, phased disposals have been planned and are being executed.

  14.2  This work has included a fundamental review of MoD planning methodology in respect of munitions. Previously each operational environment historically relied on single-Service documents to define operational munitions scales. These scales were not related to specific scenarios and were set so as to be sufficient to provide for a wide range of contingencies. This resulted in an adequate capability across the Defence environment but did not provide for a wide range of contingencies. This resulted in an adequate capability across the Defence environment but did not provide best value for money.

  14.3  The Strategic Defence Review (SDR) introduced the concept of graduated readiness to provide forces for military operations at an appropriate Scale of Effort. The various planning assumptions associated with these concepts are incorporated in the Defence Strategic Plan (DSP), which is subject to periodic review. This has enabled the Department to ensure that best use is made of limited resources and that stocks of munitions are based upon a suitable balance of capability, risk and cost to provide a coherent and balanced solution to the operational need.

  14.4  Stockpile planning work is continuing. It will ensure that munitions liabilities remain in step with strategic planning assumptions and operational priorities.

Q14. (cont)  In which areas (if any) does the MoD not hold ammunitions in the quantities set by its war stocking requirements?

  14.5  In general terms, the UK armed forces do have the munitions available to support current and future operational requirements. Some specific areas, which remain high priority for further action or investigation, are set out below.

2   There are 650 RAF firefighters, forming their own trade group, based predominantly at RAF stations. They form the pool from which firefighting teams for deployed operations will be drawn. Back

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