'We were hugely frustrated by the waste in the MoD'

25 May 2012

Public Accounts Committee chair Margaret Hodge shares her views on MoD relations and how the budget can be balanced for the better with Defence Management Journal editor Anthony Hall…

Public Accounts Committee chair Margaret Hodge believes relations between the MoD and the committee have continued to improve since the formation of the coalition government heralded a largely new committee in early 2010. A more seasoned committee is now more accustomed to dealing with the Ministry of Defence, she believes.

"I think they are now beginning to understand that what we are after is direct answers to our questions, not obfuscated answers," says Hodge. "We can't indulge in waffle. I think in the early days I was interrupting witnesses from the MoD quite a lot. Now I find I have to do so less. So that is very welcome."

The PAC, she admits, did feel frustrated with the MoD at first, and that feeling was generated very quickly during their first encounters. "We are a new committee. There are only two members who have been members of the committee for a long period and the rest of us are new to this Parliament. We felt huge frustration at the enormous sums involved that seemed to be completely wasted, and so inevitably that led to tensions."

The early reports the committee received on defence procurement, Hodge says, "were just so awful that inevitably that set up suspicion, hostility and some anger on behalf of the taxpayer". A case in point was the report on the Future Strategic Tanker Aircraft (FSTA) programme, initiated in 1997 and signed in 2008, a project that has come under National Audit Office scrutiny and whose details are also now being reviewed by the Defence Secretary.

"It was the first one we looked at: a project that was taking forever for decisions to be made. They went down the PFI route, which was appalling value for money, they signed the contract and then we found out that they had commissioned a plane that didn't have the right protection and therefore couldn't fly in theatre." A potty decision, says Hodge, "and it was supposed to be transporting our troops to a theatre of war!"

It was a programme that created real anger among the committee members, but she insists that this wasn't a partisan issue: "At that point the anger was directed at the government – which I was part of – because we felt that the Permanent Secretary at the time ought to have stopped the signing of the contract. They signed it knowing we didn't have enough money in the budget." The FSTA deal ties the MoD into a 27-year PFI contract costing £10.5bn, a figure that began to rise almost immediately. "Six months after signing - surprise, surprise – they had to renegotiate a deferral, and the figures for that were well over £1bn." In the committee's view, the Permanent Secretary should have signed a letter of direction that put on record that the MoD had made the decision against his advice.

There is also a feeling that cost-effective management is being stymied by the rapid turnover of senior officials who take charge of programmes only to leave the post after two years. "I know these projects are long, but all too often when somebody else comes along they re-specify," Hodge explains. "So by the time you are looking at a disaster with delays and additional costs, they are passing the blame to the person who had the role before them."

It was not only the procedures and culture that led to a bad atmosphere in the committee room, says Hodge – it was the evidence that there seemed to be waste everywhere. "I remember coming out after two and half hours having identified £8.5bn from wasted spending – and that was just in one afternoon's work."
On taking office, the coalition government moved quickly to address these issues with its programme of defence reform, and DMJ asks Hodge how the PAC regards the success of this programme and if the MoD has provided evidence that the broad swathe of change cutting through the Ministry is producing cost benefits. The chair is circumspect. "I think the jury is out. The recent exchanges we've had have been much more positive, and I think they are trying to get to grips with the financial problems they face."

Hodge acknowledges the fact that the MoD is attempting to put their financial house in order whilst also redefining the role of UK defence in the world and the way in which the nation is defended. Such facts provide Hodge with a degree of hope, though once again she introduces an element of caution.

"All their plans are based on an assumption that they're going to get a 1% increase in their procurement budget in the next spending review. It is very clear from the discussions we have had with the Treasury that we are going to see a really tough review. I would be very surprised if that commitment holds good with other pressures that will be on public spending."

It worries Hodge that the MoD's culture of optimism is still there: that spending a little more money this year will come right in the next, and that, in her words, "it will all come good". She provides an example from earlier this year. "They set the budget after the Strategic Defence Review. They then had a three-month exercise, which showed they hadn't cut enough out to balance the budget, so they tried to find more cuts, including losing 5,000 people from the army. As far as we could see from a session we had in March, they are not clear at all on how they are going to achieve that."

In February, the National Audit Office issued a report, 'Managing Change in the Defence Workforce' on the impact of the redundancy and early release schemes. In the committee's view, had the ministry taken notice of the NAO's comments on the loss of essential skills? "That is unclear," she says, explaining that the very early shedding of staff through voluntary redundancy schemes rather than early compulsory retirement or redundancy had left the MoD with little idea of the skills base being lost. "They still don't have a thorough understanding of the skills they need, and the skills they have, which is particularly true in the civil service department." What is worrying the committee in that context, Hodge goes on, is the growth in the cost of using the framework agreement for technical support (FATS) to bring in outside consultants to do the work, "which from a very small number in 2006/7 has risen to about £300m now".

Reorganising national defence does not come cheap, and we come on to the proposed move of the army from Germany. The MoD, says Hodge, has not as yet provided the PAC with either costings or a timetable. "It is a really important issue and we have started asking questions." There is also the matter of the UOR vehicles in Afghanistan and the cost of transferring them to the core programme. Have the MoD come up with any figures for that? "My reading between the lines is that there won't be a transfer. They think that those vehicles will not be fit for any other purpose, and in my view they are thinking about how to abandon them or sell them on."

The PAC's work in armoured vehicle procurement, continues Hodge, is one of the more depressing studies. "Every time, they have this culture of optimism. They programme more than they can afford, so halfway through the year they have to start cutting back." It is, she says, always easier to cut back on armoured vehicle programmes than others. "It has always been chopped year on year on year. Then when people are getting killed because of IEDs and the fact they didn't have the right vehicles, they go outside the MoD budget straight to the Treasury, and get funding through the Treasury for UORs." This results in the Treasury putting more money into armoured vehicles than the MoD.

"My worry was always that it was a way for the MoD to get round their budget problems," she says, and the whole UOR programme for armoured vehicles, in Hodge's view, is a mess. "They've ended up with fit-for-purpose vehicles that will do the work in Afghanistan but may well be redundant afterwards. We've pushed very, very hard, but it's still unclear as to whether these armoured vehicles will become a victim of the MoD's determination to find further cuts."

HAVE YOUR SAY

25 May 2012

In future reports re the 'big deck' aircraft carrier project why couldn't the House of Commons' Public Accounts Committee:

- provide a written comparison of the projected number of man-hours required during 2018- 2030 for maintenance, servicing and repairs of BOTH the F-35C and F-35B for each hour of flight time of EACH variant of the F-35 fighter/bomber?;

- stipulate in easy-to-understand terms what are the design requirements & technical hurdles that would have to be surmounted in order to fit the UK's 2 undergoing construction aircraft carriers with aircraft launch catapults and landing equipment?;

- inform the public whether the UK's planned carriers have the energy generation capabilities required to operate electromagnetic aircraft launch catapults- particularly in combat situations- while the ship's engines are still providing power for the ship's propulsion?;

- inform the public whether the fitting of electromagnetic aircraft launch catapults and landing equipment to the UK's planned carriers would have so adversely affected these vessels' centre of gravity and at-sea-stability that their sea worthiness would have been reduced to an unworkable level??...

- inform the public what the differences in operating costs per flight hour are between F-35B, F-35C and F-18 E/F fighter/bombers??...

- inform the public how many man-hours of maintenance, servicing and repairs are required CURRENTLY for each flight hour of the F-35B, F-35C and F-18 E/F fighter/bombers??...

- inform the public how many man-hours of maintenance, servicing and repairs are PROJECTED TO BE REQUIRED DURING 2018- 2030 for each flight hour of the F-35B, F-35C and F-18 E/F fighter/bombers??...

- inform the public what the differences in capabilities are between the F-35B, F-35C and F-18 E/F fighter/bombers??....

- inform the public what the differences in purchase prices are between the F-35B, F-35C and F-18 E/F fighter/bombers??....
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The aircraft carrier designs that were agreed to and paid for by the previous Labour govt between January-2003 and July-2008 (when the then UK govt approved construction-funding) had provisions that would make the 2 new 'big deck' carriers 'adaptable' in future- after construction- to be fitted with aircraft launch catapults and landing equipment 'cats and traps' )...

Now- it seems as a way of making their recently alleged 2 billion pounds per-ship cat and trap conversion cost claims appear believable- MoD and UK govt representatives are claiming that the carriers' designs don't have and never had provisions for the fitting of cats and traps + landing equipment:

On May 15-2012 Peter Luff MP, Minister for Defence Equipment, Support and Technology and Bernard Gray, Chief of Defence Materiel testified before the House of Commons Defence Committee about the aircraft carrier project and cat and trap issues-

UK Defence Committee hearing, May 15-2012 (Video):
http://news.bbc.co.uk/democracylive/hi/house_of_commons/newsid_9720000/9720798.stm -

Carrier project mainly from 2:09 ... adaptable carrier design evidence from about 2:21 ...

UK Defence Committee hearing, May 15-2012:
http://www.publications.parliament.uk/pa/cm201213/cmselect/cmdfence/uc9-ii/uc901.htm -

... "Q153 Thomas Docherty: The concern is that a vastly significant decision was taken... to change the carrier- not just the carrier itself, but the things that rolled on from it, which I will not list because of the time- without... firm, solid numbers. Please tell me that you are never doing that again.

"Peter Luff: ".... If I am honest with the Committee, and I must be, I think the fundamental misunderstanding that many of us had (CAUSED BY WHAT??!!!! rvl) was that these carriers would be relatively easy to convert and had been designed for conversion and for adaptability...

"That is what we were told (BY WHOM??!!!!- rvl) . It was not true. They were not.

"They were physically big enough to accommodate conversion, but it came at a higher price than was apparent at the time when the decision was taken...

"Q154 Chair: Having been 'designed for conversion', and conversion having proved far more expensive than we expected, do we have any comeback against those companies that did the design?

"Peter Luff: It is not my belief that they were genuinely designed for conversion, or that the contract allowed them to be designed for conversion (BELEIFS ARE IRRELEVANT... WHAT ARE THE FACTS??!!! MAKE THE CONTRACT PUBLIC!!- rvl).

"It was an assertion that was probably unfounded. That is my view (MP's 'VIEWS' ARE NOT RELEVANT, FACTS ARE!!- rvl)...

"Bernard Gray: They had the physical space. They are, as we all know, very large. However, because the decision to go STOVL was taken in... 2002, no serious work had been done. It had been noodled in 2005, but no serious work had been done on it.... (GRAY's TESTIMONY DIRECTLY CONTRADICTS LUFF's TESTIMONY ABOVE!!- rvl)

"It was not a contract-quality offer; it was a simple assertion that that could be done, but nobody said, 'It can be done at this price', and certainly nobody put that in a contract..."

PROVE IT- MAKE THE AIRCRAFT CARRIER CONTRACTS PUBLIC!!!
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Considering the high-public-interest, couldn't the Public Accounts Committee obtain and make-part-of-future-Committee-reports-about-the-aircraft-carrier-project evidence and information from sources other than UK govt and MoD officials??...

Why couldn't members of the Public Accounts Committee travel to the U.S. and speak directly to/take evidence from the manufacturer of the electromagnetic aircraft launch catapults and landing equipment- General Atomics; F-35 main contractor- Lockheed; US Department of Defense officials; etc???

Similarly, why couldn't several of the Public Accounts Committee's members and several US's elected officials form a joint UK/US F-35 project oversight committee- charged with evaluating and regularly reporting on the F-35 project??
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As part of strategies to further develop & enhance the UK's defence & high-technology industries- & their capacities for exports- the UK govt/MoD ought to commission UK firms to design new models of economical-to-operate big deck aircraft carriers that are both nuclear powered & catapult-equipped + both bigger AND smaller in displacements than the currently underway carrier project's 65,000 tonne vessels....

THE UK SHOULD SELL BOTH OF THEIR 2 UNDERGOING-CONSTRUCTION 'BIG DECK' AIRCRAFT CARRIERS AND COMMISSION THE DESIGN OF BIGGER, BETTER, MORE IMPRESSIVE ONES->>> AIMING FOR THE EXPORT MARKET!!
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Roderick V. Louis - Vancouver, BC, Canada

25 May 2012

Scrap the MOD and start again from scratch, its done with weapon systems and troops lives all the time, why not the people who cause the mess in the first place be thay civil or srvice MOD.
JC - UK

29 May 2012

If MPs are elected for 5 years, then MoD project managers should stay on that project for 5 years. That way they cannot run away from it when it goes wrong.
The 1977 Unfair Contracts Act should be a precedent for a new law that allows unfair PFI contracts to be disolved.
The Global economic crisis has made the World unstable. If we scrap/sell the mine resistant vehicles, then end up in another IED threat situation, good luck explaining to the public why their troops are being blown up in unsuitable vehicles.
John Hartley - Woking/Surrey/UK

01 June 2012

An 'Adaptable' Aircraft Carrier design' has been one of the carrier project's Key User Requirements- as established by the MoD- since before December-2002,

IE: the new carriers would be designed and eventually constructed with specific provisions that would enable and cost-effectively simplify their fitting in future- after construction- with cats and traps **

During 2002-2008 projected total costs for fitting the UK's 2 new carriers with aircraft launch catapults and landing equipment ('cats and traps') were regularly quoted by MoD representatives as between 100 and 150 million pounds:
http://www.publications.parliament.uk/pa/cm200102/cmselect/cmdfence/779/2042503.htm -

"... there will be a capital issue of providing catapults and arresting gear. Probably with a couple of ships that might be 100 million... "

So how did the UK govt and MoD go from a situation where fitting both new aircraft carriers with cats and traps would cost 100 million pounds to today's situation where fitting both carriers with cats and traps would be expected to cost upwards of 40 times as much- 4 billion pounds???

Surely the outrageous incongruities and hyper escalating costs of the aircraft carrier project warrant a full public inquiry…

The House of Commons' standing and ad hoc committees should be calling for such or at the least demanding increased powers and expanded terms of references so that they could carry out such a role!!
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** "Pride of the fleet", August 29-2003
http://www.theengineer.co.uk/in-depth/pride-of-the-fleet/279174.article -

Chief naval architect Simon Knight talks about the planned new carriers' 'adaptable-for-future-fitting-of-cats-and-traps' design AND about the immense cuts and deletions-from-the-originally-agreed-aircraft-carrier-design that had been occurring since January-2003 in order to meet unrealistic UK govt/MoD budget parameters and 'moving goal post' capability requirements:

"... The carrier is designed with a ramp to suit the STOVL jet, but the design includes space for a steam-driven catapult (which could be used by Conventional Take-off & Land (CTOL) fixed-wing aircraft such as the F-35C )..."

NAO's 2005 Major Projects Report:
http://www.official-documents.gov.uk/document/hc0506/hc05/0595/0595_ii.pdf
Page 130 (135 in Acrobat Reader)

NAO's July-2011 Aircraft Carrier project report:
http://www.nao.org.uk/idoc.ashx?docId=D144D7D9-E564-4C67-AE6C-107A24E714C7&version=-1 (opens in new window) -
Page # 13 (15 in Acrobat reader)
Roderick V. Louis - Vancouver, BC, Canada

06 June 2012

It should be remembered that, up to 2009, the designs for France's planned new aircraft-launch-catapult-equipped aircraft carriers (PA2) were copies of designs for the UK's new without-aircraft-launch-catapults carriers**...

France's planned PA2 carriers were to share 90 percent commonality with the UK's new flat tops**...

France's apparently abrupt cancellation*** of the joint UK/France build arrangements for the 2 countries' 3 new carriers, in June-2008, came after France had successfully obtained UK agreement to alter the designs for the 2 countries' 3 carriers- with provisions incorporated to the ships' designs to improve at-sea stability, within-ship aircraft movement & storage and the eventual fitting of aircraft catapults, landing and related equipment...

In March-2007, an offer submitted by the business consortium contracted to build France's new AIRCRAFT LAUNCH CATAPULT EQUIPPED aircraft carriers put the price of each PA2 carrier at between 2.5 and 2.85 billion euros (2.0- 2.2 billion pounds):

http://web02.aviationweek.com/aw/jsp_includes/articlePrint.jsp?headLine=&storyID=news/dtiCARRIERS.xml
http://web02.aviationweek.com/aw/generic/story_generic.jsp?channel=dti&id=news/dtiCARRIERS.xml&headline=Britain%20and%20France%20Develop%20New%20Carriers

On May 07-2007, France's defense ministry even signed a 50-million Euro contract for 2 American-made C13-2 steam catapults intended to be fitted to their version of the UK's CVF, the PA2 carrier***

So if France can build 'cat and trap' equipped aircraft carriers- that are virtual clones of UK's carriers' designs- for roughly 2 billion pounds each, what is the basis for the UK MoD's claims that if cats and traps are fitted to the UK's undergoing construction carriers that total costs will be over 5 billion pounds for each ship???!!! ( 1/2 the MoD's most recent 7-billion pounds cost estimates for building both carriers= 3.5 billion pounds. 3.5 billion pounds + the MoD's alleged 2 billion pounds for fitting cats and traps= 5.5 billion pounds!!...)

In order to counterbalance the UK MoD's recent, plainly absurd claims that fitting the 2 undergoing construction aircraft carriers with aircraft launch catapults, landing & associated equipment would cost upwards of 4 billion pounds- mainstream news media and interest groups should attempt to obtain documents and records from France- and the UK govt & MoD- regarding:

1) 'what were the estimates in 2008 of the costs of building the PA2 carrier??' and

2) 'of these estimates, how much was associated with the fitting of aircraft launch catapults, landing & associated equipment to France's PA2 carrier??'....

Surely the outrageous incongruities and hyper escalating costs of the aircraft carrier project warrant a full public inquiry!!!

Mainstream news media, interest groups and House of Commons' standing and ad hoc committees should be calling for such...

At the very least, the House of Commons' standing and ad hoc committees should be demanding increased powers and expanded terms of references so that they could carry out such a role!!
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** "UK & France sign carrier deal", 06_03-2006:
http://news.bbc.co.uk/2/hi/europe/4780630.stm

"UK-French agreement on aircraft carriers", 24 Jan 06:
http://webarchive.nationalarchives.gov.uk/+/http://www.mod.uk:80/DefenceInternet/DefenceNews/DefencePolicyAndBusiness/UkfrenchAgreementOnAircraftCarriers.htm

http://www.meretmarine.com/article.cfm?id=105153
http://navy-matters.beedall.com/pa2-1.htm
http://www.defenseindustrydaily.com/france-steaming-ahead-on-pa2cvf-carrier-project-01621/
http://www.defenseindustrydaily.com/design-preparations-continue-for-britains-new-cvf-future-carrier-updated-01630/

"Britain and France Develop New Carriers", Jun 13, 2007:
http://web02.aviationweek.com/aw/generic/story_generic.jsp?channel=dti&id=news/dtiCARRIERS.xml&headline=Britain%20and%20France%20Develop%20New%20Carriers -

or printable version:
http://web02.aviationweek.com/aw/jsp_includes/articlePrint.jsp?headLine=&storyID=news/dtiCARRIERS.xml -

"...The French carrier (PA2) will be built with about 90% of the design of the British version. Differences reflect operational needs.

"The French catapult system will support operations with the Dassault Aviation Rafale fighter jet and Northrop Grumman's E-2C Hawkeye surveillance aircraft...

"An executive representing (the industry groups contracted to build France's PA2) MO-PA2 said a new offer submitted before the end of March put the price of each (PA2) ship between 2.5 and 2.85 billion Euros. 'What we are waiting for above all is the announcement of an industrial deal from the British side,' he said.

"To maximize the flexibility CVF offers over its potential 50-year service life, the (UK's) carriers will be built to an innovative adaptable design. Although catapults can be installed on the British ships, they will initially have a ramp for STOVL operations."

*** "PA2 deferment scuppers CVF savings", 08_07-2008:
http://www.janes.com/news/defence/naval/jdw/jdw080708_1_n.shtml or
http://www.janes.com/products/janes/defence-security-report.aspx?ID=1065927557

France's 2008 Defence White Paper:
http://www.rpfrance-otan.org/IMG/pdf/Dossier_de_presse_Livre_Blanc.pdf - (pages 116-118):

"After analysis, the decision on the construction of a second aircraft carrier (PA2) is postponed (to 2012)....

"... Economic conditions have changed since the 2007 election... (the costs) of conventional propulsion for (France's) new aircraft carriers (has risen) and further studies are now needed to assess the balance of conventional and nuclear propulsion options ..."

http://www.dcnsgroup.com/wp-content/uploads/2010/10/Dossier-de-presse-Euronaval-2010-GB.pdf
(pages 20- 22)
Roderick V. Louis - Vancouver, BC, Canada