Written evidence submitted by DefenceSynergia

 

  1. DefenceSynergia (DS) is an apolitical group of operationally experienced Service people. DS is concerned with protection of the UK and offshore dependencies from external threats through independent and allied capability, the latter primarily enabled within North Atlantic Treaty Organisation (NATO) structures. DS perceives shortcomings in the United Kingdom's (UK) defence and security forces taking into account the judgement of conscious risk to be taken. In this context, DS feels UK Defence acquisition is failing as a critical military enabler to provide our Armed Forces with the right cost and operationally effective equipment, systems and capabilities to meet current and future military threats, evolving wider security challenges, and to assist the UK defence sector to be globally competitive.

 

  1. The Defence Committee has invited written submissions to its inquiry into Defence Procurement. This input is made using the HCDC questions in bold type followed by the DS response immediately below each paragraph header. The submission is within the 3000 word criteria.

 

How well is defence acquisition reform—a major Departmental initiative working?

 

  1. In 1997, the Ministry of Defence (MOD) introduced its Smart Procurement Initiative (SPI) accompanied by the Acquisition Organisation Review, based on the slogan “faster, cheaper, better”. This remains the situation today and is likely to continue until reviewed. SPI introduced the 6-stage, two approval point, Concept, Assessment, Demonstration, Manufacture, In-Service, Disposal (CADMID) system to provide a more logical procurement process, embedding the principle of ‘spend more earlier before final decisions were made’ to reduce risk and through-life support costs for the MOD main equipment programme. Unfortunately, the CADMID process and its overheads have generally been applied as a ‘one size fits all’ approach to the majority of equipment acquisitions whether for an aircraft carrier, an armoured vehicle, a UAV, an ICT system, uniforms or boots. Thus, due to protracted military procurement timescales and too early ‘technology lock-in’ decisions, some military equipment, especially in fast evolving technology sectors, can be nearing obsolescence as it enters service. Our adversaries, in today’s era of asymmetric warfare, can, within months, identify, procure, deliver and have in service a wide range of the latest and adapted technology by procuring from the internet and other responsive markets. Their procurement Observe, Orientate, Decide, Act (OODA) loop reaction times can be far quicker than MOD, thus, an enemy can evolve tactics and capabilities a number of iterations whilst we are still addressing the threat using the current approach. 

 

What issues, risks and uncertainties exist within the Equipment Plan?

 

  1. One worrying area of potential increasing risk to the equipment plan is the impact of increased procurement of equipment from the USA: Lockheed Martin F-35B; Boeing Chinook; Boeing C-17; Boeing RC-135W RIVET JOINT; Common Missile Compartment for Successor; Westinghouse radar for E-3 SENTRY; Lockheed Martin ground-based radars; MRAP; Boeing P-8 Poseidon MPA; Lockheed Martin C-130J, and potential future replacement of Apache from Boeing, etc. Whilst this might seem to increase ‘commonality’ and ‘inter-operability’ with our key ally, what it may have done in reality is reduced UK industrial design, manufacturing and support expertise.

 

  1. A more agile, adaptive and progressive procurement approach is specifically required in the Defence Joint Operating Concept as supported in the Royal Aeronautical Society briefing paper “Aerospace in the SDSR 2015: “Building flexible capability for a fast-changing world”. “Equipment should, where possible, be (a) multi-role, to avoid having expensive equipment that would not be useful in many potential scenarios, and (b) defined in close dialogue with the UK’s defence export industry so that synergy with potential export markets can enhance its affordability.” UK must have the ability to rapidly re-role platforms in hours and days, not weeks and months, as the threat changes at an increasing pace. Truly modular design should allow new threats to be countered with rapid development, procurement, re-configuration and installation of cutting edge weapons, C4ISTAR and other sub-systems improving opportunities for configuring adaptive platforms and systems to maximise export opportunities. Introducing a rapid Capability Gap filling acquisition system, with the ability to build campaign-specific Force Elements and Capability from smaller capability elements (the Lego brick approach) would leverage the innovation, ingenuity and fleetness of foot of small and medium enterprises from all sectors of UK industry. 

 

  1. A further concern in respect of US procurement is the potential constraint upon UK military freedom of operation due to some US companies’ misusing the International Traffic in Arms Regulations (ITAR) for commercial advantage. ITAR is designed to keep important technologies from potential enemies, but can also be used by US companies to limit, or deny, access by UK contractors and military personnel to US provided technology. This has the potential to significantly reduce the ability of our military and UK defence industry (Whole Force concept) to support UK Forces in undertaking equipment repairs and upgrades both at home and, crucially, when deployed on the battlefield.

 

Do we need a new Defence Industrial Strategy?

 

  1. DS argues that a reinvigorated UK Defence Industrial Strategy is crucial for both the MOD and the wider economy. However, an industrial strategy – as a sub-section of an overall UK Grand Strategy – must identify and define: core capabilities to be retained onshore; how these core capabilities will be sustained within the context of minimal UK defence orders in the pipeline; how export opportunities can be enhanced; and business diversification opportunities encouraged. The recent announcement that the Prime Minister will resurrect the concept of a UK Industrial Strategy is therefore a welcome and positive step in this direction. However, an industrial strategy must balance quality, quantity, complexity and cost on a 'Value' to UK basis not just bottom line price. In a turbulent and uncertain global threat environment a UK Defence Industrial Strategy should ensure that new systems have designed-in-rapid-through-life enhancement and upgrade potential that maximises ‘bang for buck’ for the UK tax-payer aimed at offering enhanced flexibility and adaptability for UK Forces beyond an employment support policy.

 

Post-Levene*, can the frontline commands meet their obligations.

 

  1. Capability development, requirement setting and most of the capability budget responsibility have already been transferred to the four commands (RN, Army, RAF, Joint Force) who now appear better placed to define, procure and through-life support their own requirements, systems and Capabilities. But a question still remains, why should the Royal Navy, the British Army and the Royal Air Force be beholden to an arms-length Defence Equipment & Support (DE&S) organisation for procurement of purely naval warfare, land warfare and air warfare equipment and systems? If the four DE&S divisions (maritime, land, air and Joint) were to be embedded within the four commands, then each head of Command has responsibility, budget, resources, accountability and ability to tune procurement processes in context, for the delivery of the best balance of equipment and manpower to deliver maritime, land, air and joint capabilities. There would be no more ‘I defined and provided money for X, but DE&S bought a compromise Y that isn't now fit for purpose’ excuses for failed procurement due to changing budgets, needs and priorities. The Four Service Chiefs would be held accountable for the 'Whole Force' delivery of their tasked Capabilities.

 

  1. In some respects this structure partially exists: Capability Planning staff joined Information Systems and Services (ISS) staff responsible for procurement of Information Communications Technology sitting within Joint Force Command; and DE&S naval base support staff transferred to the Royal Navy in 2013/14. So, focusing Capability procurement within Commands should reduce the current annual ‘smoke and mirrors’ financial exercises - robbing Peter to pay Paul - manoeuvrers in planning rounds at Abbeywood. Commands would be tasked to resolve 'joint issues' where generated and where the risk can be best managed – within each Command. Chief of the Defence Staff (CDS) and central staffs must have the remit for pan-Command governance and coordination of system-of-systems capability delivery (e.g. Carrier Strike ship and aircraft issues) to ensure appropriate Joint acquisition and capability development is achieved and enforced by truly Joint Capability development. Requirement setting, scrutiny and assurance governance should address inter-operability and enabling Defence Lines of Development, and should be undertaken on a ‘through-life Capability’ delivery basis, rather than by equipment or infrastructure stove-pipes. Capability delivery challenges that could not be managed within each Service would be escalated to CDS and central MOD staff for resolution in extremis.

 

How are acquisition competencies being developed and assured?

 

  1. Probably they are not. For many years NAO reports have been scathing of MOD procurement and equipment programmes highlighting common systemic problems: lack of requirement setting and/or excessive requirement changes; project time overruns and late delivery; project overspend; poor project and risk management; poor understanding and costing of procurement risk and costing by both MOD and contractors; continued annual underspend on the largest projects leading to likely future project time, cost and adverse performance. Furthermore, eliminating the “robbing Peter to pay Paul” budget management tactic used by MOD must be a core defence procurement reform.

 

  1. There continues to be a trend of procuring fewer more expensive and more complex systems that run over budget, over time, delivering less overall capability: A400M; Astute; Future Strategic Tanker Aircraft/Voyager; F-35B/Lightning II; Military Afloat Reach and Sustainability (MARS); Queen Elizabeth Class carriers; T45 Destroyer and T26 Frigate; Typhoon; FRES/Scout SV/Ajax; Warrior; etc. Many of these programmes and systems have had serious problems seen at inception and issues throughout their development and early lives: T45 propulsion and electrical power issues; Voyager refuelling pipe leaks and no defensive aid suites (DAS); FRES/Scout SV/Ajax many issues over the last 20 years; QE II carrier issues with launch and recovery system indecision; F-35B too many issues to list. This programme of procuring fewer, more expensive and more complex/vulnerable systems is driving defence strategy and locking in military funding and capability for the next 20-30 years. As a consequence a smaller ‘mass’ of equipment fleets and reduced personnel numbers is limiting operational and tactical flexibility and adaptability. It also eliminates combat attrition reserves in an era of emerging threats and adversaries that focus on mass casualty and equipment attrition. Current defence procurement is arguably based on the ‘tail wagging the dog’ where  industry can influence future military capability leading to overpricing, the late delivery or premature replacement of platforms, and/or unscheduled upgrades which contribute to unplanned funding to maintain older systems & equipment.

 

Does the emerging acquisition system offer value for money?

 

  1. Sadly DS is sceptical that the current acquisition system offers true value for money especially when 'value for money' is used as a smokescreen for delay (T26 Frigate) rather than in a genuine drive for operational cohesion. Indeed, internal HMG/MOD mantra such as 'Two Fast Jet Fleet Policy' and 'Complex Warships only Built in UK' have compounded the problem despite the 2002 Defence Industrial Strategy, updated in December 2005, which was designed to provide industry and MOD procurement with guidance to provide the UK with the equipment required, on time, at best value for money.

 

 

  1. In 2006 the Defence Technology Strategy was introduced then superseded in 2012 by the ‘National Security Through Technology’. Unfortunately, all these strategies appear to have left the impression that some ADS companies have monopolies in certain ‘sovereign capability’ and that the UK government would feed them contracts no matter what, even to the detriment of export and global competitiveness. [Note the BAES Terms Of Business Agreement (TOBA) which is largely responsible for River Class II OPV's for the RN being twice as expensive as the same ships built for the Thai and Brazilian navies] Therefore, it can be argued that industry reliance on significant MOD contracting can reduce innovation, adaptability and international competitiveness. It appears to have minimised bidding and success in attracting overseas orders, even in sovereign industrial capabilities - BAE Systems was not a bidder or winner for new Australian submarines (won by DCNS of France) or fleet support ships (won by Navantia of Spain)? Relying on UK military orders, and a few Middle East allies, for a trickle of Typhoon orders, small ship maintenance programmes, and a drip feed of very expensive ‘grey warship’ orders, does not bode well for a thriving UK defence and security sector, or the retention of world-class facilities, skills and work force.

 

What are the implications of leaving the EU for the viability of the UK-based defence industry?

 

  1. For DS the question of UK's defence acquisition position in relation to the EU is a 'red herring'. The issue is one of price and operational value for money, versus government policy, whatever the source of the procurement. So, for example, it makes little difference to MOD if a 7500 ton Frigate built in Denmark can be purchased for circa £300m (including any future tariff) if HMG's policy is that complex warships can only be built in UK – the BAES T26 currently being estimated to cost in the region of £1.3bn. If the MOD decides to buy in UK then the EU is irrelevant; if the UK buys abroad, notwithstanding self-induced restrictions, it will be because HMG/MOD have decided that the operational design either cannot be met in UK or that the overseas price is value for money irrespective of 'tariffs'. Finally, putting expensive and politically motivated UK/EU collaborative projects aside, it is difficult to define an EU military product that is not designed, built and sold outside the EU, often on more competitive terms.        

 

How is the SSRO, and the single-source procurement regime, contributing to UK defence?

 

  1. Tighter control and the need to justify the continuance of large single-source contracts should break the hold of large ADS companies on defence procurement. Over the last nine years the average proportion of MOD spend on single source procurement was around 49 per cent - taking the average MOD spend on single source procurement over the last three years alone (around 56 per cent), the MOD spend on single source procurement could be as high as £100 billion. This problem has been highlighted in the recent Single Source Regulations Office “Interim Compliance Statement” July 2016. This report highlights: continuing very poor overall single source contracting compliance by both the MOD and industry (6 of the 8 indicators being RED); poor governance of single source contracts and industry reporting verification by DE&S; quality of compliance submissions being very poor and incomplete. Indeed, the SSRO, not DE&S, identified £61million of potential non-Allowable costs such as staff overhead costs, charitable donations, faulty workmanship, rework rectification costs, risk costs not materialized, export campaign marketing costs, etc. If the SSRO is to be effective it must have teeth and these observations must be addressed by MOD, not just reviewed, or worse, ignored because internal Project Managers are not empowered, too busy, or, worrying if true, out of their professional depth.

 

How effective is the application of science and technology and research and development within the defence environment.

 

  1. This is a difficult one to answer because much of the critical game changing R&D is kept under wraps for obvious reasons. Certainly the emergence of ever powerful cyber systems, unmanned vehicle technology and laser weapons development have all featured. However, it cannot be denied that the plethora of global internet media outlets has created challenges in interpreting what is and what is not viable over time. So for example, there is much speculation as to whether the advent of underwater drone technology, quantum dynamics, wave propagation theory and gravitational variation technology will adversely impact the stealth advantages of UK submarine operations – the nuclear deterrent being top of the hit list. Therefore, perhaps the question might be put a slightly different way: “what effort is being made by HMG/MOD to ensure that where new technology does have an impact on security and defence capability, that they are reactive enough to be able to use and/or counter new technology within the likely time frame of its introduction?   

 

7 October 2016