Examination of witnesses (Questions 1
WEDNESDAY 14 FEBRUARY 2001
1. Mr Hill, gentlemen, welcome.
(Mr Hill) Thank you, good morning.
2. I must tell you that I am imposing a £50
fine for the first person who confuses DERA and DARA because we
are returning to DERA shortly. Thank you for coming. It was a
very helpful meeting that we had with you in St Athan. The genesis
of this inquiry, I suppose, was two-fold. One, was the invitation
by John Spellar to look at DARA and, secondly, we have an obligation,
a self-imposed obligation, to examine the Agencies attached to
the Ministry of Defence and your organisation came out of the
hat, or a pin alighted on your name, most fortuitously because
of your proposed change in status. So our inquiry today, which
will be followed by a report, will be looking at moving to a new
status. We will be reporting to the House and we will take the
opportunity of commenting generally on what we saw and what we
have read. We wrote to you, Mr Hill, seeking a number of documents,
some of which have arrived. I wonder whether you could tell us
if in the second bundle it includes the DLO conducted survey of
DARA/St Athan personnel? Do you know if that is coming from the
(Mr Hill) We are certainly going to be delivering
that to the Committee. I think that is available now.
(Mr Oughton) Perhaps I could answer that point. We
have completed the survey and the results have been made publicly
available to our staff so, yes, indeed that information will come
3. And DARA's Customer Service Agreements?
(Mr Hill) Yes, we released that yesterday.
(Mr Hill) Into the MoD's hands anyway.
5. So we may see it eventually. You sent us
DARA's Terms of Business Agreement, have we got that or is that
with the MoD? We have got that. Any interim report of the assessment
of options for St Athan's future, including the assessment of
the possibility of moving to Cardiff Airport?
(Mr Hill) There is no report because the study is
still ongoing but I am very happy to give you an overview as to
where we are now.
6. There is no interim document?
(Mr Hill) No, there is no interim document.
7. We have the report of the conclusions of
the Engines Study Group, thank you very much. The other one is
the MoD report: Project for endorsement by the Equipment Approvals
Committee (Eurofighter Support 14 May 1999) which deals in part
with plans for the aircraft's in-service maintenance.
(Mr Hill) That is not a document that we own in the
DARA, that is owned by the Integrated Project Team in the DPA.
We have spoken with them and I believe there are reservations
about releasing that document.
(Mr Oughton) Again, Chairman, the position is that
the document is with the Minister and he will have to take a view
8. As I said when we visited St Athan, one copy
in the safe, access to the Clerk and maybe, if you permit it,
the Chairman on the normal basis of holding classified information.
That would be helpful. Then we did say that the Committee would
also like a memoranda on (i) Project Whirlwind and (ii) DARA's
assessment of the future size of the markets for repair (for engines,
airframes, avionics, transmissions etc) and the likely competitors
of DARA in those markets.
(Mr Hill) As far as Whirlwind is concerned,
that paper is with the Minister. He is considering a public announcement
on that but is not ready yet to clear that, so that very much
lies with him. As far as the markets are concerned, we have released
our assessments of the markets. Clearly that is quite sensitive
9. Of course it is.
(Mr Hill) We are happy for the Committee to see that
as long as it is protected.
10. You are happy for the Clerk to see it.
(Mr Hill) As far as our competitors are concerned,
we have provided a list of our main competitors. Again, I have
a list here which I can take you through if you wish.
11. Thank you very much, that is really helpful.
I have to apologise, half way through the session this morning
I have to depart and my colleague, Jimmy Hood, who came down with
us, will be taking the Chair. As a result of my other engagement,
which I can assure you is unmissable as far as I am concerned,
the sequence that we would have unfolded in a fairly logical way
will be somewhat disrupted, so we will be moving in a strange
way, Mr Hill, if you do not mind. I would like to ask some questions
on the rationalisation of your organisation. Can you outline the
main features of the rationalisation programme that you have under
consideration? What is the sort of time frame involved for any
(Mr Hill) Yes, Chairman, I would be delighted
to. When we formed the DARA on 1 April 1999 we welded together
two completely separate Agencies into one. Invariably there was
duplication and under-utilisation of facilities in both. Our aim,
with our rationalisation programme, is to eliminate unnecessary
duplication, to reduce our overheads, and then if we do that we
will make the DARA much more competitive in what is becoming increasingly
an aggressive marketplace. Our plan is to create centres of excellence
and so far we have successfully migrated all avionics work to
our Sealand site, so that now is the single site for all avionics
repair and overhaul. A few weeks ago we gained ministerial endorsement
to co-location of our engine repair and overhaul at Fleetlands.
That will take between 18 months and two years to implement. We
now have two current studies that are under way that are being
carried out jointly by management and trade unions and they are
looking into mechanical component repair and overhaul and machine
shops and also looking at the future of the Aircraft Business
Unit at St Athan. The problem that we are faced with at St Athan
is a very large site, 1,000 acres, over 900 buildings, most of
them are 1938/1940 vintage, and for various reasons over the years
they have become in quite a dilapidated state and there is a huge
cost associated with refurbishment. We are carrying out a study
that is going to use as a benchmark doing absolutely nothing.
We are going to look at an option to refurbish a smaller number
of buildings at St Athan and then, alternatively, to look at a
greenfield site at Cardiff Airport. That study is ongoing but
it will be several weeks before we get a first cut investment
12. The impression I had, and it could be absolutely
erroneous, was that the option that might be favourable is clearing
out of the site altogether. Could you say if this is an objective
either of the Ministry of Defence or the Royal Air Force or your
(Mr Hill) The Minister has given us clear direction
that in our study we have to engage all stakeholders that are
affected at St Athan. The site is currently owned by the Royal
Air Force Personnel and Training Command and we are the largest
lodger unit. We are leasing facilities from them and that is the
way we plan to go into trading fund on 1 April. There are other
major users on the site. There is 4 School of Technical Training,
there are parts of the Technical Director (Air) of the DLO, the
Repair and Salvage Squadron, Aircraft Recovery and Transportation
Flights. Currently we have the Hawk detachment from Valley that
does bombing practice on the Pembrey Range and we also have the
University of Wales' Air Squadron. There are a number of people
who have interests in St Athan. Our study has to take into account
all their particular interests and that is why the study is probably
taking longer than we had expected, because we do have to consult
widely with the stakeholders.
13. If you decide to leave then this will make
the position of those remaining almost untenable I would have
(Mr Hill) It could do but, to counter that, we have
had discussions with the Chief Executive of our Defence Estates,
Ian Andrews, and he has nominated a project officer to work with
us and to look at possibilities of alternative defence interests
if a decision was made to vacate St Athan by the DARA.
14. The consultation process involved representatives
from the trade unions and the professional associations.
(Mr Hill) Yes, indeed.
15. Is there any representation from the trade
unions on the various sites or would you assume that the national
spokesperson has had consultations with the local workforce whose
views may not be entirely congruent with those of the national
(Mr Hill) As you are probably aware, we have got trade
union representatives at the national level on our main management
board for the Agency. In addition, the local trade union representatives
at St Athan represent all interests, not just the DARA, they represent
the support unit interests, so they are looking after everybody's
interests on the particular site.
16. So you would say, Mr Hill, that very certainly
the local views are going to be very strongly taken into account?
(Mr Hill) Yes, indeed.
17. Because no-one likes change.
(Mr Hill) No, but we have to manage change and it
is very important for us to bite the bullet on these difficult
issues for DARA as a trading fund if we are going to shape it
up to make it successful in the future.
18. You are going to leg it to Bristol, I understand?
(Mr Hill) Not necessarily. Siting the head office
at DARA St Athan was always an interim arrangement and we will
be looking at alternative options for the future when we become
a trading fund. The problem we are facing at the moment is we
just do not have the staff effort available to look at this particular
issue, but we do have particular problems at DARA St Athan recruiting
specialists, in particular qualified accountants and also IT experts.
We have carried out a number of competitions for those people
and we just cannot get the quality that we require. That is why
we may have to consider siting the head office in a larger conurbation
so that we can trawl in the wider area.
19. When I looked at some of the earlier literature
and press reports about the new organisation and moving the headquarters,
I cannot recall seeing any indication early on that the headquarters
was a temporary move, that seemed to come in much later. Was it
always intended to be temporary?
(Mr Hill) Yes indeed, that is on the record in the
minutes of the DARA Implementation Team Steering Committee going
back to before the Agency was formed and it was always agreed
that it would be an interim solution. Another problem that we
are faced with
1 p.20 Back
The Chairman had been summoned by HM the Queen to be sworn as
a Member of the Privy Council. Back