A waste of aerospace?

22 June 2006

Andrew Brookes, Aerospace Analyst for the International Institute for Strategic Studies, offers an insight into future defence aerospace procurement.

The 1998 Strategic Defence Review (SDR) set a course for British defence well into the 21st Century. At its heart was the creation of modern, flexible, high quality conventional Forces capable of engaging in expeditionary warfare as the international situation demanded. SDR endorsed Eurofighter Typhoons as the cornerstone of the RAF's future equipment programme, while the RAF and RN were to share the operation of what was to become the F35 Joint Strike Fighter (JSF). There would be 'a new range of rotary wing aircraft for force projection operations', while the strategic air transport fleet was to be supplemented in the short term by the lease of four C17s until 25 A400Ms came into Service. Half of the C130K fleet was to be replaced by C130J.

Then came the growing pains. A post-September 11th chapter to the SDR proclaimed the importance of a Network Enabled Capability (NEC) to deliver timely military effect accurately and reliably, which meant investing a range of airborne stand-off surveillance sensors, including an updated Nimrod 4A, ASTOR, RAPTOR and the Watchkeeper battlefield unmanned air vehicle (UAV).

The Defence White Paper of December 2003 proclaimed that the forthcoming introduction of the Apache Attack Helicopter (AH) would represent a step change in capability. It also emphasised the need to project air power from both land and sea, with a clear emphasis on offensive effort. Storm Shadow missiles were to provide a long range stand-off precision strike capability while the introduction of Paveway IV, a dual GPS and laser guided weapon with a hardened penetration warhead, would ensure a high degree of all-weather accuracy. There was also acknowledgment in the wake of the Afghan operation that rapid deployment of combat power was dependent on having sufficient air lift capacity for oversized loads. The leasing of C17s pending the introduction of A400Ms morphed into C17 and A400M. Within six months, the MOD had decided that its Globemasters would not be handed back once their lease expired, but rather the current fleet of four would be bought outright with a fifth added.

This re-alignment of the SDR was all very well but it overlooked the fundamental problem that there was insufficient funding to sustain the 1998 buys, let alone the add-ons. Successful exploitation of modern air power is much more about aircraft systems than shiny air platforms, and the cost of developing and delivering cutting edge technology is escalating far faster than inflation. Take the PR Canberra, which is one of the RAF's key niche capabilities but is going out of Service. The ideal replacement would be a reconnaissance UAV along the lines of US Global Hawk, but that doesn't come cheap. Its base cost has risen from $10m in 1994 to a projected cost of $43.1m between 2007-11, brought about by cost escalation in sensors and the irresistible urge to keep adding to requirements.

Back in 1998, the SDR proclaimed that 'only a radical re-appraisal of the way in which we procure equipment could hope to solve the problems of delayed and over budget projects. We have produced a new approach – Smart Procurement'. It was a worthy aspiration because, within a year, the National Audit Office (NAO) found that the MOD's top 25 procurement programmes were expected to cost £2.9bn more than originally forecast and, on average, would enter Service 43 months later than originally estimated.

Management theory is all about changing the paradigms, and it came as no surprise to the cognoscente when smart procurement metamorphosed into 'smart acquisition'. But whatever the buzz phrase, Britain's deep-seated procurement problems stemmed from the military's natural tendency constantly to fiddle with a requirement once the project is defined; MOD project managers' reluctance to play hard ball to ensure deliveries to promised time and cost; defence companies' tendency to overplay traditional lobbying while backsliding on full responsibility for meeting contractual obligations; and finally, ministers' temptation to rig the award of defence contracts to serve narrow political ends.

Even before Iraqi Freedom, commitments to Typhoon and A400M were absorbing such a high slice of available development and production funding that there is little left over for significant new programmes such as the heavy-lift Chinook helicopter replacement. A 2003 NAO report said that errors and delays in the Apache AH programme had added £1bn to the bill and 40 aircraft had been put into storage for four years due to a miscalculation over training schedules. As manpower numbers reduce, the ability to move the remainder from one hot-spot to another becomes ever more crucial. The main way of doing that rapidly is via the support helicopter, yet there are reports of a large cut in the RAF Puma and the RN Sea King fleet. In 2004, the NAO calculated that there was an overall shortfall in battlefield support helicopter lift of 38%, which included an 87% gap in ship optimised capability. The MOD has still to make decisions over replacing the Lynx AH7/9, Gazelle AH1, Sea King HC4 and Puma HC1 fleets. Those paying attention will have noticed a tendency for the MOD to declare that it has 'down selected' something like the Future Lynx but to delay actually ordering it.

There is some superb British aerospace equipment on the market, with Storm Shadow being a prime example of exceptional transformation technology. However, there is no disguising the fact that the MOD has £84bn worth of projects over the next decade, set against a procurement budget of £66bn. In the absence of any major new defence money, the only practicable alternative has been to cut the sharp end. There is much to be said for paying off older systems to fund upgrades that will enable remaining platforms to deliver much more potent Storm Shadow, Brimstone and Meteor. But despite all the network-enabled chatter, there is no funding allocation for such crucial sensor-shooter mechanisms as data-linking the formidable intelligence pictures of JSF and Apache. Even worse, the savings from withdrawing Jaguars and Sea Harriers have been taken by the Treasury with no guarantee that any of them will be returned to keep future defence programmes alive.

The way forward
The Defence Industrial Strategy (DIS) rolled-out last December recognised the important contribution that the UK defence industry makes to delivering military capability. Ministers hope that the Strategy will promote a dynamic, sustainable and globally competitive defence manufacturing sector. The report set out in broad terms what capabilities and skills the MOD required over the next 10 years, what systems it wanted produced domestically for strategic reasons and just how the Government intended to engage with industry to achieve those ends. A crucial factor was the MOD's vision of the industrial future, which was moving away from the current platform-centric approach to a position where through life support and rapid incorporation of technology updates will dominate. Lord Drayson told journalists that the DIS gave industry the clarity it needed to invest, with the prospect of reasonable profits. In return, he expected affordable equipment.

This value for money approach was underlined by an explicit effort to identify capabilities that should remain in Britain for reasons of defence, rather than of commerce, politics or national glory. Such capabilities did not have to be British-owned, and the relative openness of the UK market meant that major suppliers already included a number of foreign companies, most of which own UK industrial assets. When it came to military aerospace, the DIS concluded that there was no need for British industry to be able to design or build manned military aircraft after the Eurofighter Typhoon and Hawk advanced jet trainer, nor was there a defence need to assemble the F-35 Joint Strike Fighter in the UK. Precise skills that must be kept in Britain were not specified. The focus was 'to identify and preserve the key underpinning skills and technologies that will allow the UK to conduct operations and deploy new world class systems without undue dependence on other nations'. Aircraft in Service were to be supported, maintained and upgraded, but this 'does not necessarily mean that we will need to support all aspects of our aircraft in the UK'. Much would depend on whether the relationship with BAE Systems could provide value for money for the MOD. UAVs were a promising area for British capabilities. Turning to weapons, industry's ability to design, build and support missiles had to be kept, but was under threat because of lack of demand. It was desirable to retain the ability to design and make some general munitions. With regard to systems and network technologies, Britain had a healthy range of suppliers of C4ISTAR (command, control, communications, computers, intelligence, surveillance, target acquisition and reconnaissance) technologies. While such equipment did not have to be built in Britain, related systems engineering skills should be retained.

However, it is one thing to focus on change in broad strategy, but it is another to deliver it at the tactical level. Although, British defence order books are currently full thanks to Eurofighter Typhoon, Type-45 destroyers, Astute-class
submarines and specialist land vehicles, not to mention the prospect of production orders for aircraft carriers, JSF and a new generation of armoured vehicles. But as these long-lasting new platforms come on-stream, British demand for new design and construction will begin a dramatic decline during the next decade. Therefore, the balance of the UK defence industry will shift towards support activities and its overall size will inevitably contract. Even BAE Systems, which will be pivotal in determining the success or failure of the DIS, will only benefit from partnering arrangements covering aircraft, submarines and land vehicles provided that the company meets demands for improved performance, behavioural change and industrial rationalisation.

Good Integrated Project Teams are thinking of capabilities throughout equipment Service life, and they are keeping an open mind about platforms and systems. But in general, the MOD will have to transform the way it operates. A first step would be to address the heavily oversubscribed equipment spending programme. Then there needs to be a culture change in Whitehall because it is clear that 'smart acquisition' is unattainable while there are too many stakeholders who can interfere to 'unsmarten' decisions. A single agency must be empowered to ensure that any military specification is built around what technology could sensibly deliver on time, on budget. Fortunately, a Directorate of Defence Acquisition has been created to co-ordinate and push through the change programme, but it will only fulfil its remit if it can forbid those with no direct operational or financial responsibility from interfering with a project. In addition, the political, civil service and military elites must make a good case to the general public. The eight Chinooks stuck at Boscombe Down after millions were spent on modifications that made them virtually unflyable typify the hugely wasteful nature of defence in public perception. Finally, the MOD and industry have to find a way to introduce technology updates faster. They have to get product cycles closer to the five years achieved by the commercial world, not the 10 years-plus turnaround they manage at present.

In summary, there are too many British aerospace projects chasing too little funding and too many bureaucratic dots unjoined. The aerospace industry has transformed itself in recent years to stay flexible and able to cope as the situation requires. However, there are still questions about Whitehall's ability to embrace radical cultural change and to accept innovative solutions that make long-term financial sense. But a coherent political-military-industrial partnership is vital if British war-fighters and peace-keepers are to act efficiently and globally.