Parliamentary Report

PARLIAMENTARYPARLIAMENTARY REPORTREPORT

Committee of Public Accounts/ Improving the Performance of Major Defence Equipment Contracts/October 2021

There have been numerous reviews of defence procurement over the past 35 years which have provided the MoD with opportunities to learn from experience. However, it was only in December 2020 that the MoD established a central register of Learning From Experience.The Committee is extremely disappointed by the continuing poor track record of the MoD and its suppliers.

Of the 13 major equipment programmes examined by the National Audit Office, the average delay in delivering equipment was 19 months.The MoD is at a double disadvantage because it relies on a limited specialist supplier base and also lacks the in-house skills effectively to manage the performance of suppliers. The Committee concludes that the MoD’ s broken system for acquiring military equipment needs an urgent rethink led by the Treasury and the Cabinet Office.

The recent Integrated Defence Review highlighted growing conflict and instability in the world. During evidence, retired American Lieutenant General Ben Hodges said that he believed that the USA would be at war with China within five years.The MoD said that complexity in programmes was the reason for delays and cost increases.The forecast costs of nine out of 12 programmes increased, of which three increased by more than 50%. This was a failure by the MoD to control its suppliers.The Committee was deeply concerned about the MoD’ s inability or unwillingness to answer basic questions and give a frank assessment of its major programmes. Witnesses had been reluctant to attribute problems with the CrowsnestAEW programme to suppliers ’ poor performance.The MoD does not make enough demands of its suppliers to share financial risks. Of 20 programmes examined by the NAO, 14 were wholly or partly procured non-competitively. Suppliers know that poor performance will not stop them winning the next contract.

Lack of ambition

The Committee was disappointed with the MoD’ s lack of ambition in saving money. The plan is to save £160m over ten years. However, this represents less than 0.1% of the equipment plan.The MoD continues to suffer from skills shortages in order to control programme management. It relies on expensive contractors.The Committee was surprised that the MoD is so relaxed about losing skilled personnel to the private sector. Senior Responsible Owners (SROs) must ensure that a programme meets its objectives.

However, an SRO is typically only in post for 22 months, against the average programme length of 77 months. Many SROs felt less competent to manage suppliers.The MoD continues to be unclear about what additional defence capability will be secured from the extra £16.5bn announced by the government. The Committee believes that the uplift will simply be used to plug financial holes.

There is a £7bn affordability gap in the 2020/2030 equipment plan.The MoD told the Committee that the new money would be used for both new and existing capabilities. However, witnesses were unable to say what additional capabilities would be delivered through additional funding.With regard to Crowsnest, there is a forecast delay of over two years.This programme is essential to the Navy ’ s Carrier Strike capability.The MoD conceded that an off-the-shelf acquisition with UK modifications may have been a better purchase.

Fewer frigates

The Committee noted that the MoD was procuring fewer Type 26 frigates than it had previously identified. (Comment - It had originally been planned that the 13Type 23 frigates would be replaced on a one-for-one basis.This was subsequently reduced to eight.)The delays in both the Type 26 and Type 31 frigate programmes mean that existing frigates had to be upgraded. With regard to the Type 31 programme, the MoD had not finalised weapons systems to be fitted 18 months after awarding the construction contract to Babcock.

Between one sixth and one third of staff working on the Spearfish,Type 31 and Fleet Solid Support programmes are contractors. The MoD says this is due to several major programmes being launched concurrently. Sir Geoffrey Clifton-Brown MP suggested that the MoD should be moving towards the American system whereby SROs remain in post throughout the term of a contract and that their promotion is dependent upon a successful delivery. The MoD was not convinced that that was the way forward.

Committee of Public Accounts/ Optimising the Defence Estate/ September 2021

In 2019/20, the MoD spent £4.6bn on its estate, about twice the annual cost of maintaining the UK’ s nuclear deterrent. Retaining a large estate, which the MoD does not need, wastes resources that could develop military capabilities. The MoD’ s estate is valued at £36bn.This includes the built estate with 96,000 buildings covering 75,000 hectares. In addition, there is the rural estate of 158,000 hectares (training/ranges) and 200,000 acres of land overseas.

This totals 433,000 hectares or a million acres of land.Amazingly, reform of the overseas estate remains outside the MoD’ s future plans. The MoD intends to reduce the size of the estate in order to cut running costs. However, progress is slow.This means that the MoD continues to pay for property that it does not need.The Committee is very concerned that the MoD does not have meaningful targets to develop an affordable estate that best supports defence needsThe Committee believes that there is a risk that the planned savings of £650m, by 2040, will melt away completely.

National Shipbuilding Strategy (NSS)

The government’ s paper has been awaited for some time. However, the Directorate of Defence Communications tells me that the paper will not be published until early 2022. With regard to the Navy,I believe that during the next ten years, the following orders are likely:Five Type 26 frigates, five Type 32 frigates, two survey ships (to replace Echo and Enterprise which were completed in 2002/03), three Fleet Solid Support Ships, two Littoral Support Ships and one Ocean Surveillance Ship.That would be 18 ships, an average of less than two orders per annum.The Navy is developing autonomous minewarfare craft, which will replace all minehunters.The Belgian, Dutch and French navies are developing similar plans but are building motherships.The UK government has said nothing about acquiring motherships.

The NSS may make a commitment.With regard to the replacement of RFA Argus (hospital / aviation support ship), Admiral Radakin (at the time First Sea Lord) recently told the Defence

Committee that the MoD was looking at replicating Argus ’ medical facilities on the new FSS. He made no mention of a new build. The aviation support capability of Argus may be lost entirely.The survey ship HMS Scott (decommissioning in 2022) may not be replaced.

Batch 1 OPVs

In October, DE&S indicated that the out-of-service date for HMS Severn,Tyne and

Mersey has been extended to April 2028. The Batch 1s were originally due to retire in the early 2020s.There are no replacements on order or planned. Had that retirement date been met, then that would have ended the Navy ’ s involvement in fishery protection. The current expectation is that the fiveType 31 frigates on order will gradually replace the five Batch 2 OPVs which are presently stationed overseas.With the firstType 31 (HMS Venturer) entering service in about 2027/28, a Batch 2 presently serving overseas will replace one of the fishery protection Batch 1s which will then decommission.The same will occur for the other four.This then avoids the need for new construction.

Interim Surface-to-Surface Guided Weapon (ISSGW)

In November,Admiral Radakin disclosed to the Defence Committee that it was unlikely that the government would proceed with the acquisition of the ISSGW to replace the Harpoon missile due to leave service in 2023 (only HMS Kent and HMS Montrose presently carry Harpoon).Admiral Radakin said that it would be hard to justify spending £250m on five sets of missiles to equip three ships.He also said that it could be 2027 before ISSGW could have been fitted. However, the original request for proposals from industry called for missile deliveries between 2023 and 2024.Admiral Radakin said that the Navy was more interested in hypersonic missiles with a longer range. The original plan was that the ISSGW would be fitted to the Type 45 destroyers and Type 26 frigates.

Future Cruise

The Navy will now be relying upon the Future Cruise Anti-ShippingWeapon (FCASW), a joint programme with the French scheduled for the early 2030s. Between 2023 and the early 2030s, the Navy will have no ability to sink or damage enemy surface ships, other than by SeaVenom (not yet in service) to be deployed byWildcat helicopters,the submarine- launched Spearfish torpedo (which has just undergone a £270m refurbishment) or the Spear 3 missile (long-range missile [90 miles]) for the F-35B). Defence Minister Jeremy Quinn recently said that integrating Spear 3 onto the F-35B has slipped by another four years and will not achieve FOC until 2028.The Navy is in this awkward position due to the failure by the MoD to plan or fund the replacement of Harpoon under SDSR (2010).The Prime Minister ’ s decision to build a new royal yacht may be the reason why ISSGW has been scrapped. It will be paid for out of the MoD budget at a cost of £250m.The MoD will not receive additional funds to meet this cost.It is significant that the cost of the two programmes is identical.

Other disclosures

Admiral Radakin confirmed that the Type 31 frigates will be fitted for, but not with, the Mark 41VLS missile system. How many Russian and Chinese warships are fitted ‘for but not with’?Vice-Admiral Gardener said that submarine availability has slightly improved. However,the refit of HMS Triumph at Devonport is well behind schedule.The major refit of HMS Vanguard has overrun by more than a year. All sixType 45 destroyers will have undergone modification through the PIP programme by 2028 (13 years after instigation) at a cost of £189m. That is a further slippage of three years. I was recently informed by Director of Communications (Navy) that the programme would finish by the end of 2025.Autonomous minehunting systems will be deployed in the Gulf from 2023,indicating that the Hunt and Sandown Classes will by then be withdrawn.Admiral Radakin said that the Type 32 could be a Batch 2 Type 31, but with significant technological enhancement.

CSG Fleet Submarine

Finally revealed that this was HMS Astute.

HMS Somerset

Completed Lifex refit end of 2020. But still no sea trials. WW enquiring.

Spending

In the October spending review, the MoD was the only government department to face a cut of 1.4% in its day-to-day spending over the next four years. Military personnel are likely to see a cut in salaries and pensions. John Healey, Shadow Defence Secretary,said, “The Defence Secretary should never have agreed to this. ”