Memorandum from the Ministry of Defence
1. Please provide an outline of the organisation
and work programme for the implementation of the Gray report recommendations
and the preparation of the Strategy for Acquisition Reform which
is due to be published in the New Year.
1.1 Following the Review of Acquisition by Bernard
Gray, a Defence Acquisition Reform Project team has been established.
This is led at Director level, and reports to a senior Steering
Group chaired by Lord Drayson, and including Bernard Gray. The
team is developing a Strategy for Acquisition Reform which will
build on the eight-point approach set out in the Defence Secretary's
statement to the House on 15 October,
together with existing business improvement initiatives in the
1.2 The intention is to publish this Strategy
in the New Year. Implementation of some central aspects of the
Strategy, notably the creation of a Defence Board sub-committee
on Equipment, has already begun.
2. How is the implementation of Through Life
Capability Management (TLCM) being monitored and what progress
has been made over the last 12 months? Is implementation proceeding
to the MoD's satisfaction? Please provide some examples of benefits
identified through adopting a TLCM approach.
2.1 A number of mechanisms exist to monitor
and guide the implementation of TLCM. The principal one is the
TLCM Governance Board. As part of this governance structure, the
Deputy Chief of Defence Staff (Capability) and senior 2* and 3*
representatives from across Defence meet monthly to review progress
and ensure that the strategic risks to implementation are being
managed effectively. Industry is represented on the TLCM Governance
Board and through joint strategy and working groups as part of
the National Defence Industry Council (NDIC) structure.
2.2 The Department remains committed to the
continuously improving the provision of capability to our Armed
Forces. Over the past 12 months, we have improved the capability
planning structures introduced as part of TLCM, including more
effective engagement with the Front Line "User". We
have also made progress in our engagement with industry and have
established new mechanisms for involving industry earlier in our
planning processes. This will lead to greater realism and improve
our understanding of the options available to meet the future
needs of our Armed Forces. We have also made good progress in
implementing the programme approach to the delivery of capability,
further details are set out in the answer to Question 3.
2.3 Specific examples of benefits arising from
the programme approach include the rebalancing of resources across
the Maritime Platforms Programme by cancelling planned enhancements
to the Type 42 Destroyer and reinvesting the freed-up resource
in the Type 45 Destroyer. For the same Programme, the coherence
and greater visibility delivered by a broader programme view across
all major maritime platforms, both current and future, has given
much earlier visibility, by some four to five years, of the overall
manpower implications for the Royal Navy, thereby allowing better
informed and proactive manpower planning. The programme approach
has also been beneficial in how the Department responds to the
delay in the A400M project. Faced with a potential gap in our
tactical air lift capability, the Programme Board has been the
primary means to examine opportunities to enhance the delivery
of capability from existing fleets by improving the flexibility
of personnel, the quality of support infrastructure, the capacity
of logistic support organisations and whether doctrinal changesthe
way we operate the aircraftwill reduce the maintenance
burden on the existing fleets. The recommended mitigation action
is a combination of these measures and demonstrates the greater
benefits of a broader programme approach, along with a the more
rigorous examination across all of the Defence Lines of Development
as advocated by Through Life Capability Management.
3. What progress has been made with regard to
the implementation of programme arrangements for acquisition activities?
The Government Response to the Committee's Defence Equipment 2009
Report stated that the programme approach would be "embedded
across the MoD acquisition community" by March 2010: will
this be achieved? What metrics are in place to ensure that individual
projects do not under-perform in a "programme managed"
3.1 Implementation of a Programme Approach to
Capability Delivery, and the establishment of Capability Programme
Boards began in November 2008 and implementation is focussed on
achievement of four staged outcomes:
Programme Stand-Up (April 2009Achieved):
The MoD has formed Programme Boards to take a consistent approach
to the delivery of capability through grouped projects across
Defence Lines of Development (DLoDs).
Programme Coordination (September 2009Partially
Achieved): The MoD consistently coordinates the delivery of capability
through grouped projects and DLoDs, and has tested how we can
use the programme approach to improve coherence in the Planning
Programme Balance (target March 2010):
The MoD consistently achieves balance in the through-life delivery
of capability across projects and DLoDs including managing risk
Programme Optimization (target March
2012): The MoD Acquisition system delivers a stable, affordable
capability programme, balanced with defence policy and with the
agility to adapt to changes in the operational environment, by
optimising the management of risk across delivery programmes.
3.2 These outcomes are embodied in the Programme
Approach Maturity Model which is used to monitor progress on a
six-weekly basis. The latest Maturity Assessment (as at the end
of September 2009) showed that overall programmes are making good
progress in areas where they have control, with 97% of programmes
assessed as Good or Satisfactory against Programme Stand-Up.
3.3 Against the Programme Coordination maturity
measures, 53% of programmes are assessed as Good or Satisfactory.
This represents a 25% increase since August 2009 due to improved
availability and maturity of pan-DLoD information and increased
ability of Programmes to consider programme issues and decisions.
Over 75% of Programmes are forecast to reach a satisfactory level
of Coordination maturity by the end of 2009, although we do not
expect full achievement of this milestone due to the shortened
timescales for Planning Round 2010 which limited Programme Board
3.4 The majority of programmes achieved the
September Programme Coordination milestone and remain on track
for the March 2010 balance maturity level. It should be recognised
that Programmes Boards are at different levels of maturity which
will be reflected in the proportion achieving the Balance milestone.
3.5 Under the programme approach, the role of
the Head of Capability is to sponsor the delivery of a set of
related projects and associated Lines of Development that form
a programme. The Head of Capability acts as the programme sponsor,
ensuring coherence across all Lines of Development and that the
programme requirement output is met. Responsibility for individual
project and Lines of Development performance remains with the
MoD Top Level Budgets (TLB) and delegated officers delivering
the projects. Existing metrics at project level, for example Performance,
Time and Cost, are set and monitored by each TLB and remain in
force to ensure project delivery in accordance with the agreed
4. Please provide a progress report for the staff
restructuring programme in DE&S, explaining what efficiency
savings have been made. What have been the effects on service
delivery of the efficiency savings and what safeguards are in
place to ensure that these savings do not have an adverse impact
on the equipment programme? What scope remains for further efficiency
4.1 Defence Equipment & Support continues
to reduce its numbers under the PACE (Performance, Agility, Confidence,
Efficiency) programme. Currently DE&S comprises some 22,500
military and civilian personnel, a reduction from around 27,000
at the formation of DE&S in April 2007, and HM Treasury efficiency
reporting cited the efficiencies from PACE to June 2009 as over
£190 million. The drawdown in staff has happened more quickly
than envisaged at the beginning of PACE, but DE&S maintains
support to operations as its highest priority, exemplified by
the fact that it has around 800 people diverted from established
funded-roles to the activity of delivering essential new Urgent
Operational Requirements. Many DE&S staffaround 11,700are
engaged in directly supporting the front line, in areas such as
the Joint Support Chain and HM Naval Bases. DE&S regularly
reviews the best use of available manpower resource to deliver
capability priorities but, with substantial efficiencies already
in hand, the scope for further such savings is becoming restricted.
5. The MoD 2008-09 Annual Report (page 95)
states that "a review of research programmes has resulted
in funds being reprioritised into activities better aligned to
Defence's strategic needs". What research activities have
been stopped or cut back as a result of this review and which
are expanding? Please provide an updated version of the research
spending table shown on p58 of the Committee's Defence Equipment
2009 Report, expressing spending in real terms, and adding data
for 2007-08 and 2008-09. What were the reasons for the sharp changes
in research spending between 1996-97 to 1997-98 and 2003-04 to
5.1 Research in the following areas has had
some specific activities reduced or stopped as a result of strategic
reprioritisation: Maritime, Land and Air domains, Weapons, C4ISTAR,
ballistic missile defence and climate research. The main area
of activity which has been expanded is Counter Terrorism and Support
5.2 The table below provides an update on the
MoD research expenditure estimates expressed in current and constant
2008-09 prices. Estimated outturns for 2008-09 will not be available
until the end of January 2010.
ESTIMATED MoD NET RESEARCH EXPENDITURE (CURRENT
AND REAL TERMS)
Inclusive of non-recoverable VAT (£million)
||Constant 2008-09 prices|
|1. Conversion to constant 2008-09 prices uses the latest available forecast GDP deflator series produced by HM Treasury dated 29 September 2009.
|2. Full details of the methodology (including any changes or breaks in series) used by DASA to compile the MoD Research figures are published in DASA Defence Statistics Bulletins Nos 2, 6 and 9.
5.3 The change in research spending between 1996-97 and 1997-98
reflected reductions in the Research Building Block (RBB) outturn
between those years following a decision to reprioritise funding
across the Department to match strategic priorities.
5.4 The increase in expenditure between 2003-04 and 2004-05
largely reflected the movement into the RBB of a specific Met
Office programme and an increase in expenditure related to nuclear
research between 2003-04 to 2004-05.
6. What have been the most significant consequences of the
short examination of the equipment programme? Was the examination
a successful exercise? What benefits have resulted from it? How
is the MoD ensuring that an appropriate balance continues to be
maintained between supporting current operations and the longer
term equipment programme?
6.1 The main success of the Equipment Examination was in
going a considerable way towards bringing the equipment plan more
into balance. This has enabled us to focus more of our expenditure
on those capabilities of highest immediate urgency, such as those
needed for current operations, while also continuing to invest
in capabilities needed to respond to future threats. However,
we recognise that there is further to go. Ensuring the equipment
plan is affordable and has the right balance between supporting
current operations and longer term capability requirements will
continue to be addressed through our planning process and in the
forthcoming defence review. The measures we are putting in place
in response to the recommendations of the Bernard Gray report
will also help us to maintain the appropriate balance in our programme
7. What is the MoD's estimate of the extent to which the equipment
plan is under-funded? To what extent have current economic circumstances
affected the affordability of the equipment plan?
7.1 The Department is currently conducting Planning Round
10 (PR10) which will look at the overall departmental programme
against the likely future resources for Defence. The Government's
spending plans for Defence beyond 2010-11 have not yet been set.
It is not possible to give a meaningful assessment of the extent
to which the equipment plan is under-funded in advance of the
completion of PR10 (currently planned for December/January) when
the cost of the programme and available resources should be clearer.
7.2 Defence, like any other large organisation in the UK
at the moment, faces particular pressures including weak sterling,
pay increase, increased pension costs, rising costs of utilities
and reduced estates disposal receipts. As a result, although the
Department's budget has increased in real terms (in line with
the Comprehensive Spending Review) our programme pressures have
been greater. We have mechanisms in place to deal with these pressures,
but we accept that we need to do better at controlling them, as
we acknowledged in our response to the Bernard Gray Report, not
least because of the severe pressures on public spending generally.
8. Please provide a progress report for the working group which
is producing a measure of defence inflation. Is the work on producing
this measure still scheduled to be completed by April 2010? Is
the work of the group being revised in view of the comments on
defence inflation in the Gray report?
8.1 The programme of work being undertaken to produce a measure
of defence inflation is progressing to plan. Details about the
measure and estimates for inflation in total MoD expenditure for
financial years 2006-07, 2007-08 and 2008-09 are scheduled to
be published in April 2010 in a Defence Statistics Bulletin. Estimates
for 2009-10 will be produced in October 2010, when the necessary
contributing data and price indices become available.
The status of this work is as follows:
Estimates for fixed price contracts and high value
firm price contracts have been produced and are currently undergoing
quality assurance. These estimates account for around £12
billion of annual expenditure through MoD contracts.
Work on producing estimates for military and civilian
pay and labour cost inflation is on schedule to be completed by
end of December 2009. These estimates account for around £12
billion of MoD expenditure.
The remaining work-strands are: estimating effect
of currency fluctuations; low-value contracts; high-value miscellaneous
contracts; and fuel purchases. These work-strands are planned
for completion by March 2010.
8.2 The Bernard Gray report identifies a number of reasons
why equipment costs grow. These include: over optimism in initial
estimates; real cost growth with successive generations of equipment
due to higher specifications; and drift in project completion
date. Gray attributes these to behaviours in the defence procurement
8.3 The measure of defence inflation adopted captures the
increase in pay and prices for all goods and services while holding
quality and quantity constant. It is aligned to the measures of
inflation produced by the Office for National Statistics and is
wholly consistent with the Review of Acquisition by Bernard Gray.
There is therefore no need for the MoD to revise the definition
or scope of this work.
9. Please provide a short progress report on the following
Joint Strike Fighter (JSF);
Future Rapid Effect System (FRES);
Military Afloat Reach and Sustainability (MARS);
Future Lynx and Puma refurbishment.
For the above programmes which have passed Main Gate, the
progress report to include:
The Current Forecast Cost (against Approved Cost at Main Gate);
The Current Forecast In-Service Date (against Approved In-Service
Date at Main Gate).
For each of the above programmes, the progress report to
A summary of the key events/decisions over the last 12 months
and the key events/decisions expected in the near future (next
Future carrierWas the MoD aware that the procurement
budget was tight when it ordered the aircraft carriers? Why was
the decision made in December 2008 to reschedule the in-service
date for the carriers, given that the award of the contracts had
been announced only six months previously? What is the cost penalty
of rescheduling the aircraft carriers?
JSFWhen will the decision be made regarding
how many JSFs are to be purchased? Have all of the technology
transfer issues with the USA been resolved? Will UK personnel
or UK industry be able to carry out repairs, or will this have
to be done by US personnel?
FRESWhat has been the impact of the UOR programme
on FRES? What assessment has been made of the ongoing costs of
vehicles procured under UORs? What type and numbers of vehicles
are still needed, given the extensive procurement of vehicles
via the UOR process? What now is the objective of the FRES programme
and what capability gap is it intended to address?
A400MWhat options are being considered as a
contingency to mitigate any potential capability gaps that may
arise from A400M delays? What is the timetable for making decisions?
Do you agree with the assessment in Jane's Weekly on 5
October 2009 that "the RAF is faced with a potential gap
in capability in sustaining an air bridge to Afghanistan, which
is already described as fragile".
MARSIs it still the intention of the MoD to
compete MARS outside of the UK shipyards or is MARS seen as a
requirement to maintain UK maritime shipbuilding skills? Why is
MARS not already underway when the restrictions on single hulled
ships come into force in 2010?
HelicoptersPlease provide an updated version
of the table "Current Platform Numbers and Out of Service
Dates"' which was provided by the MoD to the Committee in
April 2009 for its inquiry into Helicopter Capability.
|Astute Class Boats 1 to 3||Original MG|
| Cost (£m)||2,578*
|ISD||June 2005||March 2010
|* Approval only given at 50% confidence level
There are four Astute Class submarines under construction
at BAES Submarines Solution Shipyard (BAES SS), Barrow-in-Furness;
ASTUTE (First of Class), AMBUSH, ARTFUL and AUDACIOUS. Long Lead
items have been ordered for Boat five, and the reactor core has
been ordered for Boat six.
Over the last 12 months ASTUTE's programme has been further
delayed by six months due to a range of technical and programme
issues. BAES SS have had to re-establish the UK's strategic capability
to design, build, test and commission nuclear powered submarines,
due to the inexperience of the BAES SS workforce following the
10 year gap between Vanguard and Astute Classes.
ASTUTE has just completed her final stage of testing and
commissioning of the reactor, propulsion and ships systems, which
is the penultimate major milestone before she is cleared to sail
from Barrow to start a comprehensive sea trials programme.
Following delays, the Astute programme is being rebaselined.
The full impact of any programme changes can only be confirmed
once this work has been completed. Once the detailed cost and
schedule implications have been confirmed, IAB, Ministerial and
Treasury re-approval will be sought; an announcement will be made
in due course.
Key Events/Decisions since February 2009
ASTUTE (Boat one) completion of reactor and propulsion
AMBUSH (Boat two) initial fill of the primary circuit
with reactor quality water and testing of the main coolant pumps.
Valiant Jetty arrived in Faslane in May 2009.
AMBUSH final hull weld completed.
ARTFUL (Boat three) main propulsion machinery tested.
AUDACIOUS (Boat four) keel laying ceremony March 2009.
Key Events/Decisions expected in the next six months
ASTUTE to complete the first phase of sea trails.
IAB, Ministerial and Treasury re-approval of Boat
one to four.
IAB, Ministerial and Treasury Approval for Boat five
construction and Boat six Long Lead Items.
AMBUSHCompletion of the first phase of the
primary and propulsion system tested.
ARTFULdelivery of the Command Deck Module (CDM)
to the BAE SS Devonshire Dock Hall (DDH) at Barrow.
AUDACIOUSsecond hull unit to DDH.
Start of construction on Boat five.
Order Long Lead Items for Boat six.
Approval July 2007
|Difference from 2007|
| Cost (£m)||4,3591 (70%)
|May 20162||+7 months5
|1 50% confidence figure of £4,085 million (includes CDEL and iRDEL).
|2 Current Forecast at 50% confidence level.
|3 The differential between Main Gate 50% figure and the current 50% forecast is £1,070 milion (with adjustments)as reported in the 2008-09 ARAC.
|4 50% confidence date of July 2015.
|5 19 months when set against announcements at Main Gate which assumed July 2007 Contract Award. In the event contract award was July 2008.
Key events/decisions over the last 12 months
As part of the 2008 Equipment Examination it was decided
to delay the carriers by one to two years, recognising this would
The Departmental Annual Report and Accounts 2008-09,
published earlier this year and the MPR 2009 show a cost growth
of £1,070 million against the Main Gate most likely cost
(50%), which equates to £774 million against the approved
(70%) not to exceed cost.
Updated cost and time estimates are currently going
through the Department's approval process, and, as is normal,
this information will only be set and announced once the formal
re-approval process has completed.
The Aircraft Carrier Alliance announced a revision
of the QE Class Build Strategy on 2 March 2009.
Construction of the ships commenced with pre-fabrication
of steel at Appledore Shipyard, North Devon in late 2008 and a
major milestone was achieved with the first cutting of steel at
Govan, Glasgow in July 2009.
The first sponson unit was delivered from Appledore
to Rosyth in August 2009, and work is now under way in four UK
shipyardsBabcock Marine at Appledore and Rosyth, BVT at
Govan and A&P Tyne.
Significant progress has been made on infrastructure
preparations at Rosyth, including completion of No 1 dock in September
2009, where the ships will be assembled.
The Aircraft Carrier Alliance has, to date, placed
sub-contracts for some £1.1 billion for materials and equipment
required to build both ships.
Key Events/Decisions expected in the next six months
A&P Tyne contract Signature for manufacture of
the Centre Blocks (November 2009).
Prince of Wales dock naming ceremony at Rosyth (March
IAB submission (Apr 2010) to set Final Target Cost
by June 2010.
Goliath crane delivered to Rosyth (May 2010).
Delivery of Steering Gear and Rudders (May 2010).
Was the MoD aware that the procurement budget was tight when
it ordered the aircraft carriers?
The QE Class project was considered broadly affordable when
approval was given to order the two carriers in 2007. The Alliance
commercial model was expected to drive out cost over time on a
stable programme. Although costs have increased on the programme
as a result of the Equipment Examination decision and other economic
factors, these additional costs will be managed by the Department.
In conjunction with the ACA, we continue to work hard to drive
down costs in order to agree the Final Target Cost for the Carriers
in mid 2010.
Why was the decision made in December 2008 to reschedule the
in-service date for the carriers, given that the award of the
contracts had been announced only six months previously?
In order to best manage resources and address affordability
issues across the Department, the Equipment Examination reprioritised
investment to deliver the most important and urgently needed capabilities,
while continuing to invest in capabilities needed to respond to
future threats. The decision to reprofile the QE Class programme
allowed resources to be diverted to more urgent projects. The
carriers will deliver wider benefits as part of the Defence Industrial
Strategy and we have worked closely with the Aircraft Carrier
Alliance to find workable solutions.
What is the cost penalty of rescheduling the aircraft carriers?
The direct impact of the Equipment Examination re-profiling
measure to reprioritise cost in the first four years and to delay
each ship by one and two years respectively, was in the order
of £700 million. Although costs have increased on the programme
as a result of the Equipment Examination and other economic factors,
the Department is working with the Aircraft Carrier Alliance to
find ways of reducing them.
|Original MG Approval
|ISD||No formal ISD will be set until the programme|
is sufficiently mature.
Key events/decisions since 2008
March 2009Secretary of State announced the
approval to purchase three JSF to allow the UK to participate
in the Operational Test and Evaluation of JSF in the USA.
June 2009Contract negotiations completed for
the UK 2 Short Take Off and Vertical Landing (STOVL) jets for
Operational Test and Evaluation.
September 2009Production of first UK STOVL
aircraft commences at Rolls Royce in Indianapolis.
Key Events/Decisions expected in next six months
December 2009First transition to full STOVL
February 2010Initial Gate for the UK Main Operating
Base at RAF Lossiemouth.
March 2010First flight of the Carrier variant
(CF-1) of JSF.
March 2010Conclude contract negotiations for
the 3rd UK STOVL jet.
JSF programme is progressing to plan with both the CTOL and
STOVL variants completing in excess of 100 sorties to date with
better than expected predicted results.
When will the decision be made regarding how many JSFs are
to be purchased?
JSF numbers are driven by a range of factors including training
needs and pilot numbers, the anticipated airframe life, attrition
considerations and, of course, the number of JSF we might anticipate
deploying in a range of operational scenarios.
The JSF programme gives us considerable flexibility in the
timing and numbers of aircraft to be purchased and we do not intend
to make final decisions until the programme has matured further
and we have completed successful operational evaluation of the
Air System. This will not be before 2015.
Have all of the technology transfer issues with the USA been
The UK has all the information it requires at this stage
of the programme however the UK continues to work closely with
the US to secure the commitments it requires with regards to operational
sovereigntythat is to say the ability to operate, repair
and maintain UK assets at a time of its choosing and through life.
Progress is being made in this area by the UK's inclusion in the
JSF Operational Test and Evaluation (OT&E) development planning,
continued presence and increased access of UK SME's within the
JSF programme in the USA and proposals to increase the level of
access to JSF information for UK Industry
Will UK personnel or UK industry be able to carry out repairs,
or will this have to be done by US personnel?
The most cost effective solution for maintaining our JSF
fleet will be under a common support solution that is being designed
to meet the needs of all nine nations engaged in JSF who are collectively
planning to buy 3,173 aircraft. It is our stated intention to
maintain sovereign capabilities to train our pilots and maintain
and repair our aircraft at our Main Operating Base at RAF Lossiemouth.
These facilities will be operated primarily by UK personnel in
a Government/Industry partnership using the lessons learned from
current fast jet fleets.
JSF is a US led productwhat does UK Industry get from
Under a "best athlete" procurement strategy, UK
industry has won a significant role in the development, demonstration,
production and sustainment of the JSF, with more than 100 UK companies
delivering approximately 15% by value of the aircraft. UK industry
orders for the system development and demonstration phase are
over USD 4 billion, with production orders expected to generate
over USD 40 billion for UK industry based on the 3,173 aircraft
that JSF partners expect to purchase. Key UK suppliers include
BAE Systems, Rolls Royce, Martin Baker, GE Aviation, Goodrich
and QinetiQ with many contributing cutting edge skills and technology
and benefiting from involvement on a highly advanced fighter programme.
TYPE 45 DESTROYER
|Original MG Approval
| Cost (£m)||5,475
|ISD||November 2007||July 2010
Key Events/Decisions since the Committee last examined Type
November 2008DRAGON (Ship 4) was successfully
launched on the Clyde.
December 2008DARING (Ship 1) was accepted off
contract from the Prime Contractor, BVT Surface Fleet Ltd. She
sailed into Portsmouth, her base port for the first time on 28
December 2008DAUNTLESS (Ship 2) completed her
first set of Sea Trials. These confirmed the performance of the
power and propulsion system. Initial Combat System testing was
also successfully completed.
February 2009Sea Viper (PAAMS) successfully
test fired from the Longbow trials barge for a second time.
July 2009DARING commissioned into the Royal
July 2009DAUNTLESS completed her second set
of Sea Trials, which focussed on testing the ship's Combat system.
The entire radio and satellite communication suite was also tested
using RN shore communication stations, aircraft and other RN vessels;
all trials were successful and confirmed system flexibility and
September 2009BVT Surface Fleet Ltd were awarded
the contract to provide in-service support to the Type 45 Destroyers
for a period of up to seven years, commencing from 1 January 2010.
October 2009DIAMOND (Ship 3) Sea Trials commence
(due to conclude 4 November). DEFENDER (Ship 5) was launched on
Key Events/Decisions expected in the next six months
A further test firing of the Sea Viper system is due
to take place in early November.
In late November DAUNTLESS will leave the Clyde and
sail to Portsmouth. She will be Accepted off Contract soon after
arrival (planned for 3 December).
The In-service Date for DARING is being targeted for
February 2010, some five months ahead of the forecasted in-service
The first set of Sea Trials for DRAGON are planned
to begin in July 2010.
The Specialist Vehicle element of the FRES programme is in
the Assessment Phase and continues to make good progress, with
the competition process proceeding at pace. The programme's Invitation
To Tender was issued in July 2009 following Departmental approval
of the Specialist Vehicle programme's Acquisition Strategy. Tenders
are due to be returned at the end of the year. We are now working
to an aggressive schedule for a Main Gate decision and entry into
a Demonstration Phase with the down selected bidder next year.
In May 2008, General Dynamics (GD) (UK) were awarded the
provisional preferred bidder status for the Utility Vehicle Design
competition based on their Piranha V design. This status was provisional
because it was recognised that more work was needed. Following
earlier discussions with GD (UK), the MoD had good reason to believe
a mutually satisfactory solution could be found. Unfortunately,
this was not possible and GD (UK)'s provisional preferred bidder
status was withdrawn in December 2008 after a period of intensive
negotiations that failed to reach agreement on the commercial
conditions required to enable further progress. Separately, the
Department's examination of the Equipment Programme concluded
that, in the context of current operations and the recent investment
in protected mobility, the highest priority should now be accorded
to delivering the Warrior Capability Sustainment Programme and
the FRES Scout vehicle as quickly as possible. FRES Scout is part
of the FRES Specialist Vehicle family. Against this background
we decided to restructure the FRES programme, giving priority
to FRES Scout over the FRES Utility Vehicle. Although this will
mean a delay to the FRES Utility Vehicle, we recognise the importance
of this programme and are now looking at the best way to take
this procurement forward.
What now is the objective of the FRES programme and what capability
gap is it intended to address?
The objective of the FRES programme is to deliver a medium-weight
armoured vehicle fleet with higher levels of deployability and
protection than the current in-service fleet, and the potential
to accommodate new advances in technology. FRES will replace a
number of vehicles that have reached or are reaching the end of
their service lives, such as CVR (T) Scimitar and FV430, in addition
to introducing new vehicle roles.
What has been the impact of the UOR programme on FRES?
The MoD's approval of over £1.2 billion for new vehicles
under the Urgent Operational Requirement process shows the Department's
commitment to supporting our Armed Forces on operations, but FRES
has not been made redundant as a result. Unlike the Protected
Patrol Vehicles procured as UORs, FRES is not designed for one
specific theatre, such as Afghanistan. FRES will operate across
the whole spectrum of operations, including rapid intervention,
peace keeping/peace enforcement and support to high intensity
war fighting. Ultimately, FRES will provide a superior capability
with greater longevity than UOR vehicles.
What assessment has been made of the ongoing costs of vehicles
procured under UORs?
For procurements made under the UOR procedures, the speed
of delivery of life-saving equipment is the absolute priority
and the capability may be so specific to the threat that we would
not expect to retain it beyond the operation. In these cases,
while support costs are considered, predicted whole life costs
are generally not calculated as a pre-cursor to the procurement.
An initial twelve month support solution is approved before the
UOR vehicles are procured, giving the Department time to negotiate
a more comprehensive solution without impacting detrimentally
on the time taken to deliver the capability to the operational
theatre. While the equipment is deployed on operations in Afghanistan
the support costs are met by the Treasury Reserve.
What type and numbers of vehicles are still needed, given the
extensive procurement of vehicles via the UOR process?
Our success in delivering UOR vehicles has not changed our
need for the numbers and types of vehicles the FRES programme
will deliver. Our success in delivering UOR PPVs for current operations
was taken into consideration during the Department's examination
of the equipment programme and led to a restructuring of the FRES
programme, giving priority to FRES Scout over the FRES utility
Key Events/Decisions since Initial Gate approval (July 2005)
July 2005Entry into Assessment Phase announced
via Written Ministerial Statement. The Procurement Strategy at
the time was the formation of an Alliance, comprising the MoD,
an Integrator, a Design, Outfit and Build Alliance Partner and
a Through Life Support Partner.
May 2007The Minister for Defence Equipment
and Support (DE&S) approved a decision to review the Procurement
Strategy to take account of changing market conditions and the
opportunities generated by the delivery of the Defence Industrial
December 2007Following approval of open competition
by the Minister (DES), advertisement placed in the Official Journal
of the European Union (OJEU) seeking expressions of interest from
companies who wish to compete for the design and build elements
of the MARS Fleet Tanker (FT) programme.
May 2008The Minister (DE&S) approval to
down select to four bidders (Fincantieri, Navantia, Hyundai and
a consortium of BVT/BMT/DSME) to enter into Competitive Dialogue
over the MARS FT programme.
December 2008Equipment Examination announcement
concluded that there was scope for considering alternative approaches
to the procurement of elements of the MARS Programme. The Fleet
Tanker competition was `paused'.
March 2009The Minister (DE&S) decided that
the Fleet Tanker competition should be cancelled. A review of
the procurement strategy and requirement continued.
October 2009The Minister (DE&S) approved
revised Procurement Strategy to consider a range of possible solutions
which takes account of market conditions and is more likely to
secure best value for money.
October 2009Advertisement placed in the OJEU
and the Defence Contracts Bulletin seeking expressions of interest
from companies who wish to compete to deliver solutions for the
MARS Tanker programme. Interested companies will be asked to submit
a Pre-Qualification Questionnaire (PQQ).
Key Events / Decisions expected in the next six months
2010Following evaluation of PQQ responses,
approval for a short list of companies will be sought in early
Is it still the intention of the MoD to compete MARS outside
of the UK shipyards or is MARS still seen as a requirement to
maintain UK maritime shipbuilding skills?
The Defence Industrial Strategy is clear that projects within
the maritime programme that exceed core workload requirement may
be competed more widely, and potentially undertaken offshore if
to do so would not prejudice key capabilities. The UK shipbuilding
industry is benefiting from a sustained period of MoD investment
of some £14 billion over the next 10 to 15 years in both
new and far more capable ships, such as the future aircraft carriers,
the Type 45 destroyers and the Future Surface Combatant. In view
of this, a competition for the MARS Tanker requirement was originally
competed internationally in late 2007. Following the examination
into the Department's equipment programme that was carried out
in 2008, which concluded that there was scope for considering
alternative approaches to the procurement of elements of the MARS
Programme, the competition was cancelled in March 2009. Since
then work to review the procurement strategy has continued and
has concluded that a more open procurement strategy considering
a range of possible solutions, including commercial solutions,
and which takes account of current market conditions, is more
likely to secure best value for money for the Department. A new
open and international competition to deliver the MARS Tankers
has, therefore, recently been approved and, in accordance with
EU and MoD commercial policy, expressions of interest from industry
are currently being sought through advertisements in the Official
Journal of the European Union and the Defence Contracts Bulletin.
The closing date for these is 4 December 2009. The later ship
classes, Fleet Solid Support and Amphibious Combat Support, remain
uncommitted at this stage. The extent to which they will contribute
to the sustainment of key UK design and build skills will continue
to be evaluated in the MARS Programme's Assessment Phase.
Why is MARS not already underway when the restrictions on single
hulled ships comes into force in 2010?
The International Maritime Organisation and EU legislation
bans the operation of non-exempt single hulled tankers of any
age from 2010 onwards. The UK has agreed to implement legislation
to meet the requirements of the Maritime Pollution (MARPOL) Convention.
Vessels to which this convention does not currently apply include
naval auxiliary ships operated and manned by the Royal Fleet Auxiliary.
These ships are maintained in accordance with Lloyd's Register
and the Maritime Coastguard Agency as the UK's classification
and statutory certification organisations. The Department is working
closely with these bodies to ensure that operation of our single
hulled tankers is not impaired whilst working towards achieving
full compliance as soon as is practicable.
The age of the current in-service tankers does not significantly
affect their ongoing operability, or the current levels of sustainment
that they provide. The risk of continuing to operate single hulled
tankers is mitigated by careful programming, operating outside
sensitive geographical areas and additional training for the crews.
Additionally the tankers are subject to a detailed structural
inspection every two and a half years.
|Original MG Approval
| Cost (£m)||2,744
|ISD||December 2009||December 2015
A400M remains a key element of the UK's future defence capability,
providing both tactical (intra-theatre) and strategic (inter-theatre)
Airbus Military, responsible for the design and manufacture
of A400M, announced delays to the programme in late 2008. Challenges
have included development of the engine, leading to delays to
first flight, and also a reappraisal of overall programme risk
for the transition from development into the production phase.
Airbus informed the Partner Nations that first flight would be
delayed (from January 2008) until the end of 2009 or early 2010.
Airbus also announced that aircraft deliveries would be significantly
delayed, with UK deliveries not expected to commence until 2013
at the earliest.
The Partner Nations subsequently agreed to enter a "Standstill
Agreement" (which ran from April 2009 until the end of July
2009) with Airbus Military, which protected the rights of all
parties under the existing contract, in order to facilitate exploratory
discussions. At a Ministerial meeting on 24 July 2009, the Minister
(DE&S) agreed that the UK would join Partner Nations in a
negotiation phase with Airbus Military to determine a way ahead
for the A400M programme.
Key Events/Decisions since March 2009
Ministerial agreement to enter into negotiation phase
with Airbus Military in July 2009 in Le Castellet.
Successful completion of the Flight Test Programme
for the A400M Engine Flying Test Bed in October 2009, conducted
at Marshalls Aerospace in Cambridge, UK.
Key Events/Decisions expected in the next six months
First Flight of the A400M prototype MSN001.
Ministerial agreement on way ahead for the programme
in December 2009, with a view to a revised contract being in place
by March 2010.
What options are being considered as a contingency to mitigate
any potential capability gaps that may arise from A400M delays?
The delay to the delivery of A400M causes strategic and tactical
capability gaps for future operations; there is no effect on current
operations. The tactical airlift capability gap due to the A400M
programme delay will be met, where possible, by the existing fleet
of 24 C-130J aircraft. We are thoroughly assessing our ability
to sustain current operations and exploring options to enhance
Do you agree with the assessment in Jane's Weekly on 5 October
2009 that "the RAF is faced with a potential gap in capability
in sustaining an air bridge to Afghanistan, which is already described
The airbridge is absolutely critical for the success of current
operations. We have invested significant effort and resources
into maintaining and improving the current airbridge. Given the
operational context, which does not apply to commercial airlines,
we believe the airbridge is performing to a high standard. However
we are not complacent and the performance of the airbridge is
kept under constant review. In 2008 we received an additional
two C17s; in 2008 we also signed the contract for the Future Strategic
Tanker Aircraft, which in due course will deliver Air Transport
capability. Beyond that, we are looking at what further measures
we might need to take to sustain the current airbridge. Options
being considered include buying one or two more C17 aircraft.
|Original MG Approval
| Cost (£m)||2,813
|ISD||April 2003||December 2010
Key Events/Decisions since March 2009
Design and Development flight trials programme has
made good progress and is expected to complete at the end of December
The first production aircraft (PA04) completed its
first flight from BAES Woodford on 10 September 2009 and is expected
to be delivered to MoD in November 2009.
Aircraft production remains on programme to meet an
In Service Date of 2010.
Measures have been identified to reduce the additional
cost growth (+£46 million) that will be reported in the MoD's
Major Projects Report 2009 (as shown in the table above).
Key Events/Decisions expected in the next six months
A Main Gate submission proposing the strategy for
the support of MRA4 is planned for early 2010.
|Original MG Approval|
|ISD (Army)||August 2014
|ISD (Navy)||August 2015
The UK commitment to the Wildcat programme was re-confirmed
in December 2008.
The programme remains on target to deliver a new Light Helicopter
for the Army and Royal Navy from 2014 and 2015 respectively.
We have worked closely with AgustaWestland to identify significant
savings to Wildcat equipment and support programme and have reduced
the number of aircraft we are planning to acquire from 70 to 62.
The reduction in aircraft numbers is the result of a review
of our Light Helicopter requirement and of our work with AW to
establish increased commonality between the Army and Royal Navy
variants of Wildcat and their training and support arrangements,
which will give the fleet as a whole greater versatility and flexibility.
The Army Wildcat will perform a range of tasks on the battlefield
including reconnaissance, command and control, the transportation
of troops and materiel, and the provision of force protection.
The Royal Navy variant will be an important element of ship defence
against surface threats as well as acting as a light utility helicopter.
Key Events/Decisions since the Committee last examined Lynx
9 September 2009Delivery of TI#3 Airframe.
31 August 2009Receipt of Technical Proposal
for Training and Support Solution.
Key Events/Decisions expected in the next six months
October 2009Flight Trials Readiness Review.
November 2009Wildcat TI#1 First Flight.
March 2010Achievement of block 1 Trials Flying.
| Cost (£m)||339
|ISD||October 2013||March 2014
Puma LEP will deliver a series of modifications to extend
the life of 28 or more RAF Pumas from the current Out of Service
Date of 2012 to at least 2022. The resulting aircraft will be
known as Puma Mk2. The LEP will address obsolescence, legislative
and safety issues and enhance capability. Upgrades will include
a digital cockpit, more powerful Makila engines and an up-rated
The engine upgrade will provide a significant enhancement
in performance terms and would allow Puma to operate effectively
all year round in Afghanistan.
The contract was awarded to Eurocopter (UK) on 18 September
2009. The programme remains within the approved performance, time
and cost envelope.
Key Events/Decisions in the last six months
August 2009Main Gate approval.
September 2009Demonstration and Manufacture
October 2009First aircraft delivered to Eurocopter
Key Events/Decisions expected in the next six months.
December 2009Preliminary Design Review for
Defensive Aid Suite.
February 2010Aircraft Comprehensive Design
CURRENT HELICOPTER PLATFORM NUMBERS AND OUT OF SERVICE
|Aircraft type/mark||MoD Departmental Fleet
||Effective Fleet||Non-Effective Fleet
||Current Planned OSDs||Comments
||Nil||2030||MoD expects to have to invest further in this aircraft (eg to address obsolescence and meet emerging requirements) during the next decade, in order to sustain its service life up to 2030.
|Chinook Mk 2|
Chinook Mk 2a
|Two Mk 2 ac lost in current conflict reducing Mk2/2A fleet to 38. MoD expects to have to invest further in the remaining aircraft to address obsolescence, to meet emerging requirements and to ensure they can achieve the planned OSD of 2040 during the next decade, although no investment decisions have yet been made. It is expected that 8 Mk3 a/c will be operational by the end of 2010.
|Dauphin (N3)AH Mk 1||4||4
||NIl||2029||With effect from July 2009. Replaces Agusta 109.
||47 (see Note 1)||2018||Where there is an enduring requirement for the capability currently provided by Gazelle, MoD is exploring arrangements based on leased aircraft.
Lynx Mk 8
|It is expected that these aircraft will be replaced by the maritime variant of Future Lynx from 2015. (see Note 6)
|Lynx Mk 7|
Lynx Mk 9
|It is expected that these aircraft will be replaced by the battlefield variant of Future Lynx from 2014. (see Notes 5 and 6)
|Merlin Mk 1||42||42 (see Note 2)
||Nil||2029||MoD is currently preparing to upgrade 30 (see Note 3) of these aircraft through the Merlin Mk1 Capability Sustainment Programme.
|Merlin Mk 3|
Merline Mk 3a
|MoD expects to have to invest further in this aircraft (eg to address obsolescence and meet emerging requirements) during the next decade, in order to sustain its service life up to 2030.
||9 (see Note 4)||2025||MoD has now invested in upgrading the Puma aircraft and extending the service life to 2025.
|Sea King Mk|
||It is expected that the capability provided by these aircraft will be replaced by a joint PFI service with the Maritime and Coastguard Agency.
|Sea King Mk 4||38 (see|
|37||1 (see Note 7)||2012
||MoD is assessing the future of SK MK4 and how the roles that this aircraft type perform might be best undertaken in the future.
|Sea King Mk 6c||5||5
|Sea King Mk 5||15 (See|
|15||Nil (see Note 8)||2017
||It is expected that the capability provided by some of these aircraft will be replaced by a joint PFI service with the Maritime and Coastguard Agency.
|Sea King Mk 7||13||13
||Nil||2018||MoD is assessing the future of SK Mk7 and how the roles this aircraft type performs might best be undertaken in the future.
1. The Non-effective fleet currently includes 42 aircraft for
disposal and five ground training aircraft.
2. Three of these aircraft are in storage and have been cannibalised
heavily; one has been extensively modified as part of a joint
MoD/Industry technology demonstrator programme. Recovery to a
fully serviceable condition would take significant time and investment.
These aircraft are, under today's definitions, classified as effective
until such time that a decision is taken to dispose of them.
3. The Department reviewed its investment plans across a number
of capability areas during 2008; this review was known as the
Examination. As a result, the MoD determined that, given current
defence priorities, it would not take up an option to modify an
additional eight Merlin Mk1 aircraft and that its contractual
commitment would remain at 30 aircraft. The Department is currently
exploring whether it has further use for those aircraft not being
modified under the Merlin Capability Sustainment Programme, they
will otherwise be disposed of in the most cost effective way (including
consideration of sales opportunities).
4. The Non-effective fleet include five "Category 5"
plus four "Category 4" damaged helicopters not expected
to fly again as Puma Mk 1 aircraft.
5. The Lynx Mk 9 Fleet is currently undergoing a Communications
and Engine Upgrade programme that will change the overall capability
of the MK 9 aircraft.
6. There is currently a scheduled fleet run down and donor strip
programme that is feeding the Wildcat project with high -value
serviceable assets for inclusion in the new aircraft.
7. An additional aircraft was returned from QinetiQ to MoD ownershipplus
1 aircraft CAT 4 at HMS Sultan.
8. There is and additional flying Mk5 not included in the total
above which is a project team owned asset and is on loan to Qinetiq
at Boscombe Down to use for testing. In addition there is also
a CAT 5 aircraft at HMS Sultan which not expected to fly again.
10. Following the Naval Base Review, which concluded that we
should retain all three Naval Bases, could you outline the program
of work that each will do over the next 10 years. What is the
program for the three dockyards and what is the future utility
for Rosyth after the completion of the Carrier programme?
10.1 The Maritime Change Programme (MCP) was established
in October 2007 and incorporates the post Naval Base Review (NBR)
work. It provides a strategic framework for the cohesive, coherent
and sequenced delivery of a number of change initiatives across
the maritime domain flowing from the 2005 Defence Industrial Strategy
(DIS) and the outcome of the NBR. On the 6 May 2009, the then
Minister for the Armed Forces announced the way forward on a number
of MCP key areas that will critically shape the maritime industrial
and operational landscape well into the next decade. All three
Naval Bases (at Devonport, Portsmouth and on the Clyde) have a
strong future and will continue to play a vital role in supporting
the Royal Navy.
10.2 The announcement confirmed that HM Naval Base Portsmouth
will be the home port for the new Type 45 Destroyers and the Queen
Elizabeth Class Aircraft Carriers. Subject to main investment
decisions, to be made early in the next decade, the most complex
war fighting variant of the next generation of Royal Naval frigatesthe
Future Surface Combatantwill be base ported in Portsmouth
to maximise the benefits of the common systems and equipment also
fitted to the Type 45s and Queen Elizabeth Class Carriers. This
paves the way for Portsmouth to become, in the longer term, the
main operating base for our most complex warships. In addition
to providing Fleet Time Engineering Support for these vessels,
six Type 23 Frigates and the eight Hunt Class Mine Counter Measure
Vessels, Portsmouth will undertake sufficient Deep Maintenance
activity on an occasional basis to sustain the capability of key
10.3 HM Naval Base Devonport will be the main operating base
for Amphibious Shipping, Survey and Hydrographic vessels, for
the Type 22 Frigates and for at least the next five years, for
seven of the Type 23 Frigates. Devonport will also continue to
provide world class sea training through Flag Officer Sea Training
and will undertake Fleet Time Engineering support for base ported
ships and for visiting sea training vessels. Devonport will also
retain and, subject to commercial negotiations, enhance its position
as the centre of excellence for Surface Ship and Submarine Deep
maintenance activity. Finally, subject to ongoing approvals, Devonport
will be developed as the centre of specialisation for Amphibious
Operations by moving No 1 Assault Group Royal Marines, including
the Landing Craft of 10 Training Squadron and 539 Assault Squadron
currently at Poole and Turnchapel to Devonport.
10.4 HM Naval Base Clyde will become the main operating base
for all classes of submarines, including the future classes of
submarines, such as the replacement for the Vanguard Class, and
eight Sandown Class Mine Counter Measure Vessels. Fleet Time Engineering
support for these vessels will also be undertaken at Clyde. To
reduce duplication of facilities and to provide future stability
for submarine personnel we intend to accelerate the move towards
a single submarine operating base some six years earlier than
originally planned, although there will be no base porting changes
for around five years. This decision will see three of the Trafalgar
Class submarines transfer from their base port at Devonport to
Clyde upon completion of their respective mid-commission major
maintenance periods. This is currently expected to be by 2017,
while four will remain at Devonport until their planned decommissioning
dates (currently 2010 to 2017). We will ensure that the necessary
infrastructure to support this move will be put in place.
10.5 Rosyth dockyard, which is privately owned and operated
by Babcock, currently has a strong order book of MoD work: it
is currently a key location for surface ship upkeep work through
the Surface Ship Support Programme and is at the heart of the
build programme for the two new Queen Elizabeth Class aircraft
10.6 As work on the new aircraft carrier programme at Rosyth
increases, it is envisaged that deep maintenance surface ship
work will be predominately undertaken at Devonport dockyard (which
is also owned by Babcock). This is to ensure best use of industry
wide resources. Beyond this, the future programme of MoD work
with Babcock is still being considered; in particular, the location
of future surface warship upkeep packages will be discussed and
managed by members of the Surface Ship Support Alliance (MoD,
Babcock and BVT Surface Fleet Ltd).
11. The MoD reported in a Defence News article on 7 October
2009 that Apache was playing a crucial and effective role in operations
in Afghanistan and that Integrated Operation Support contracts,
such as that used for Apache, were achieving a better distribution
of risks between the MoD and its suppliers. What lessons have
been learned from the Apache programme? What were the key challenges
and how were they overcome?
11.1 The Defence News article on 7 October 2009 was describing
the announcement of award of an IOS contract for the Apache IOS
to AgustaWestland. The contract was signed on 29 September 2009
with a full service provision date of 1 April 2010. The anticipated
benefit of the Apache IOS contract from full service provision
is improved aircraft availability both within the UK and on operations
at reduced support cost, through incentivising industry to be
fully responsible for delivering the outputs specified in the
11.2 The key challenge in getting to Apache IOS contract
award was to achieve an output-based proposal from Industry at
better value for money to defence than the current (previous)
input-based contract. The challenge was overcome by demonstrating
a robust and implementable internal benchmark support solution,
which also clearly demonstrated value-for-money in its own right
that Industry had to better in terms of value-for-money and effectiveness
in order to be awarded the contract.
11.3 The key lesson learned from this was that Industry had
to find innovative ways to deliver a better value-for-money solution
as a result of the MoD demonstrating that it had developed an
alternative feasible/credible support solution against which the
Industry solution could be benchmarked.
6 November 2009
Official Report Column 34WS. Back