Examination of witnesses (Questions 180
WEDNESDAY 28 FEBRUARY 2001
CLIFFORD and MR
180. Okay. I accept that. Does industry accept
(Baroness Symons of Vernham Dean) We have to winnow
out the definition. Industry has to comment on the definition
that we will have to reach with them and that is work still in
181. Are we talking about contracts here?
(Baroness Symons of Vernham Dean) We are talking about
the definition of what we mean by defence manufacturing. Sir John
was trying to give you the definition which he is in a position
to give you and I am not. All I am concerned about is that we
do have proper understandings with industry about the terminology
that we are using.
182. BAE Systems, for example, Boeing or whatever.
(Baroness Symons of Vernham Dean) As I say, we have
to do proper consultation with them. That is still part of work
in progress on this issue.
Mr Cann: It is elastic at the moment.
183. Have you yet decided what New DERA assets
are of strategic importance and thereby will fall under the protection
offered by the golden share?
(Baroness Symons of Vernham Dean) Do you want to deal
(Mr Jagger) There is an exercise going forward at
the moment run by a individual in the Defence Procurement Agency.
The short answer to your question is no, but work is well advanced
at identifying both the strategic assets and the relationships
which will support them.
(Baroness Symons of Vernham Dean) We hope it will
be ready within a matter of weeks.
184. Will it be announced in the sale prospectus?
(Mr Jagger) It will absolutely have to be identified
within transaction documents, yes.
185. If it is not ready then it has to be delayed.
(Baroness Symons of Vernham Dean) It will be ready.
186. My next question, DSTL, as I understand
it, is not going to have more than 3,000 staff. How many of those
are going to be involved in knowledge integration to give you
this backbone of intelligent customer function? Are you confident
that there will be enough people within DSTL to keep track of
developments and evaluated technological developments going on
in New DERA and in foreign research organisations and in industry?
(Mr Clifford) You are quite right, we are running
about 3,000, in fact it is 2,835 at the last count yesterday morning.
It is very difficult to define who will be involved in knowledge
integration and who will not be, quite honestly. In the same way
that systems integration, systems engineering and manufacturing
is becoming less easy to define because of new technologies, that
is true of knowledge integration. The people we extracted from
DERA specifically to do that task numbers around 800 to 900 but,
for example, I would expect many of the members of the Centre
for Defence Analysis, one of the so-called strategic extract sectors,
would themselves also be involved in systems integration in the
analysis they are doing, similarly for people in Porton Down.
To give you my personal estimate I would say about 1,200 to 1,300
across the organisation as opposed to people working on pure technology
in as much as that can be defined.
187. Have you worked out a career structure
for your scientists that is going to keep them in touch with current
developments in the outside world and how will they be able to
stay up to speed without being involved in hands on laboratory
(Mr Clifford) We have not yet finished the work. I
personally became involved in this in May last year and we have
been talking to our colleagues in the Ministry of Defence, other
Government Departments, universities around the UK. We have been
talking on this subject with people in the Pentagon and we are
bringing together a career development and mid term refresh process
specifically to address that issue. As you know the Ministry of
Defence will be competing research so we must expect to work with
a broader base of technology suppliers over the next decade. That
is a key issue for us. As I say, the work began in May, it is
not quite finished but it is well advanced. I am confident that
it will give us the sort of staff capability we need.
188. Will you in that context be sending people
on secondment to New DERA?
(Mr Clifford) We have a wish for our staff to become
involved with teams around the world, as you said yourself, where
technology is created. New DERA, as Sir John has said, and as
Lady Symons has said, will be a major supplier to MoD, therefore
that must be one of the options for us. I suspect secondment will
not be the word. New DERA will be as any other industry will be
in that respect. The answer is yes.
189. Do you not see a potential problem given
all that we have said about Chinese walls and everything else?
Have there been any concerns expressed either by defence industry
outside generally and the US authorities about the potential of
such a relationship?
(Mr Clifford) Not at all. I tried to make the point
in my previous answer that that relationship will not be special
other than in the sense that New DERA will be a major supplier.
It is actually quite common in the United States for people to
be seconded from Government to industry and vice versa.
(Baroness Symons of Vernham Dean) And in this country.
(Mr Clifford) And in this country, indeed. One simply
puts in place appropriate processes to make sure information stays
where it is. Very much part of our life is dealing with highly
classified information which we have to maintain in compartments
so we have the processes which are well tried to do that.
190. You do not see this as being a kind of
cosy relationship with a privatised organisation which does not
apply in general elsewhere?
(Mr Clifford) Most certainly not. We need to have
an intellectually stimulating relationship with anybody who provides
technology, advice, research, capability to the Ministry of defence.
One of those organisations will be for a very long time new DERA.
It will be quite wrong for DSTL to put up the shutters in that
respect against New DERA. It will be equally wrong for us to treat
New DERA specially other than as a major supplier.
191. You do not seem to have any concern but
would not some foreign governments or companies in industry regard
this as being not a level playing field because of the history?
(Mr Clifford) I have travelled to the USA and, indeed,
I was also in Australia a couple of weeks ago. I have not heard
that concern at all.
192. One of the concerns we have and I know
the Defence Science Advisory Council has expressed its concerns
about the structure of scientific research in the MoD. Traditionally
the MoD has contracted some of the very best scientists and now
with the split I am not sure whether Sir John will be so keen
as to allow the fluidity of movement of very, very good scientists
from his section back into the MoD or the circulation of scientists
that currently exists who have entered the service of the Ministry
of Defence. I hope that Professor O'Nions is going to look at
this as well as the structure and ethos of scientific research
in retained DERA. Are you going to be generous by letting your
very best scientists move around back into the MoD, Sir John,
or are you going to keep them?
(Sir John Chisholm) As a manager of a large scientific
organisation, I know well the value, exactly as Bill has been
expressing, of maintaining good contacts with all other players
in the field, you have to. It is not a business which you can
succeed in by thinking you invented world science all on your
own. Maintaining fluidity, as you put it, in our resource base
is just as much a challenge and objective for New DERA as it is
Chairman: Thank you. We have one last
lot of questions. Harry Cohen.
193. Yes, on the Defence Diversification Agency
which was a manifesto commitment of the Government. Indeed, I
was the chair of the Labour backbench Defence Committee which
worked through to this, and although it is a small agency it is
an important one. It does seem to me that it is being treated
as an afterthought as part of these changes and I am concerned
about that. It is going to be divided up under your consultation
document, headquarters at the MoD. Most of the technology diversification
managers will stay in current locations but being with New DERA
and some being with the retained DERA. Surely this division is
unsatisfactory. What will the relationship be between the Defence
Diversification Agency HQ and the front line managers within the
New DERA, for example?
(Baroness Symons of Vernham Dean) Can I say, first
of all, that we actually do regard the Defence Diversification
Agency as a little jewel, but it is a jewel.
194. It is.
(Baroness Symons of Vernham Dean) It has had a very
successful start in delivering our objective since its establishment
since 1999 and the DDA has helped more than 300 small and medium
sized businesses solve their problems since it got underway. If
you have taken from the consultation document an idea that it
is a sort of tail end Charlie in all this, I am very sorry because
that is certainly not how it is viewed. As you rightly say, it
was part of our manifesto commitments last time and we are rather
pleased and proud with what the Defence Diversification Agency
has been able to do. The fact is that life is moving on with the
public/private partnership proposals and we have honestly tried
to set out what we think is the best course of action for it in
this consultation document. This is a period of genuine consultation,
Mr Cohen, and I hope you will accept that for what it is, a genuine
assurance on that point. I am looking for input. I know that particularly
many of my own party are very concerned with what will happen
with this and this is a genuine exercise that we are trying to
progress. I would be very sorry and disappointed indeed if it
was felt that somehow this was all being put on one side because
from our point of view it absolutely is not, from the Secretary
of State's point of view it absolutely is not. We have had discussions
about this and I know that he is very keen to ensure that it goes
on doing valuable work.
195. I appreciate that comment about it being
in the consultation. I think it is quite important that it be
kept unified as much as possible and I hope that there will be
improvements on the consultation document.
(Baroness Symons of Vernham Dean) Any particular comments
that you have I will be very happy to take into account over the
196. Can we explore some of this detail then
on the technology diversification managers. Who will direct their
work: the MoD or New DERA? Who will pay for them? Whose interest
will they serve: the MoD or New DERA?
(Mr Jagger) Perhaps I can start as it involves both
organisations. I think the real critical point about how we try
to arrange this is that the job these people do depends on being
close to where the technology is generated. Obviously some of
our technology is generated in what will be New DERA, some in
DSTL. To take everyone in the DDA and put them in one organisation
or the other or in the MoD would actually be to take a lot of
people away from, if you like, the front line of technology which
would not enable them to do their jobs well. The thinking behind
the current plan is to leave, if you like, the front line people
where they are best able to keep in touch with technological developments,
whether that is at Porton Down or at Fort Halstead or Farnborough
or wherever, under the general direction of the MoD. The Chief
Executive of the DDA, Damian McDonnell who has been in front of
this Committee before, will report to the MoD, he will be a member
of MoD staff. He will be responsible for directing them and paying
them and saying what the strategy should be. The key thing is
to keep them close to the technology that John's and Bill's organisations
197. Let me push on quickly. On your main activities
which you summarise in your consultation documents, which again
I think are successes, "to encourage as wide as possible
exploitation in the civil sector of defence technology . . . to
provide information on defence equipment for the defence industry's
own diversification planning and to facilitate civil spin in the
defence programmes". All very important but will this not
all be being done through a filter of New DERA, it will not be
industry-wide? How will it go industry-wide other than through
this filter of New DERA?
(Baroness Symons of Vernham Dean) If it were to be
solely in New DERA I think there would be some validity in your
fears and criticism but as Mr Jagger has said the fact that we
have got people working closely with people in New DERA on the
one hand but with overall control from the MoD does I hope give
you some confidence that it is not through a filter. It is nonetheless,
obviously, drawing on New DERA experience and expertise and that,
of course, we hope, as I was indicating a little while ago will
be both in the opening up of DERA expertise but also in DERA being
open to what is going on in the private sector as well. I have
some difficulty with your idea that this is somehow closing it
down, working through a filter when actually I believe it is rather
198. We have not got much time to explore this
but they are going to be based at their current locations. Many
of them are going to be working directly with New DERA.
(Baroness Symons of Vernham Dean) Yes.
199. And are going to be involved in their directions
through New DERA in some form or another. New DERA is going to
be a competitor with other sectors in the defence industry. Getting
this information, which is industry-wide, out to all the defence
industry is limited by New DERA's interests, or potentially limited.
(Sir John Chisholm) That is not exactly how it works
at the moment, to be honest. The way it works is that there is
a networking process whereby particularly SMEs can articulate
the issues that they need a solution to and the technology transfer
managers can access the technology which is going to solve that
problem. That is the way it works at the moment. Therefore, if
you cut them off from those laboratories then actually you might
very significantly reduce their effectiveness. That is why, as
Terence Jagger has said, keeping that contact going is really
rather important. I do not recognise at all the context of competition
with other defence suppliers, that is not really the context in
which this is happening. What is happening is SMEs who are typically
not involved in defence are accessing some defence technology
in order to solve their problems. Actually being able to access
that technology is what the key thing is.
200. For all the defence industry?
(Sir John Chisholm) Yes. Anybody can use the DDA.
201. All right.
(Baroness Symons of Vernham Dean) Chairman, might
I suggest, would it help any Members of the Committee who felt
that they would benefit to have a meeting with the Chief Executive
of the DDA?
Mr Cohen: That is helpful.
202. Very interesting.
(Baroness Symons of Vernham Dean) It might help deal
with some of these problems that Mr Cohen is expressing which
are obviously ones which are concerning him and other Members
of the Committee. I am very happy to facilitate that.
203. I appreciate that. One last question, one
of the options not considered in the consultation document is
to move the whole of the DDA to the Department of Trade and Industry.
Why was that rejected as even an option worthy of considering?
(Mr Jagger) I think it is this question of access
again. For a DTI organisation to have this role, these people
would be even further, if you like, from the front line than they
would be if we put them in DSTL or MoD. It is the same rationalisation,
I think, that we are just trying to explore about leaving them
where the technology is.
Mr Cohen: All right. Thank you for the
offer of the meeting. I still have a number of questions but I
will take them up with him.
204. I think Sir John will be with the new Defence
Diversification Agency and any good ideas from the MoD will be
quickly whipped around his organisation so we will have no anxiety
whatsoever, Mr Cohen. Thank you very much. I am sorry we could
not beat your earlier record of 25 minutes past one o'clock but
I am afraid you snookered us by offering Mr Cohen a visit.
(Baroness Symons of Vernham Dean) I am very grateful
to be allowed to go and answer the questions in the House of Lords,
205. Nobody was incandescent with rage, we have
tried our very best. I think you have convinced about as many
people this time as you did last time which is very few. However,
it occurred to me that whilst we have disposed as a Select Committee
in the short term with this issue, I do note the Leader of the
House said that there is going to be a Committee set up on the
Defence Science & Technology Laboratory Trading Fund Order
so we might all move en masse to that Committee. Tell Lewis
Moonie that maybe we will see him there to be allowed to participate.
(Baroness Symons of Vernham Dean) I am sure Dr Moonie
will be delighted.
206. However, I suspect the Whips will round
up the usual suspects of loyalists which will exclude anybody
serving on this Committee.
(Baroness Symons of Vernham Dean) I am sure that is
not true, Chairman, I am sure you are all jolly loyal. I will
certainly let Dr Moonie know.
Chairman: Thank you all very much indeed.