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Beware of Ill-Considered COTS Ideas Resurfacing By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

 

 

 

 

 

Referring to the Sunday Times article yesterday in which the suggestion that Dominic Cummings, the PM’s senior aide, had last week chaired what appeared to have been an unofficial meeting of the government’s strategic defence and security review process – one that did not apparently include some senior figures in the MOD – and that he had vowed to “tear up the defence procurement rules” I note that Mr. Cummings was reported in the article to have challenged officials to “stop funnelling taxpayers money into expensive projects that frequently overrun in both time and cost” and that he “wanted to see fewer bespoke defence projects” and also that Britain should “buy off-the-shelf” from other countries, my initial retort is that we already do buy a significant amount of defence equipment through the Commercial Off the Shelf (COTS) process and that we have all been down this road before.

A couple of weeks ago, following reported comments relating to Mr. Cummings views on defence procurement I was widely quoted as saying that “my advice [to Mr. Cummings] would be that [the government] remembers that every newcomer to defence procurement starts on an assumption that it must be possible to save money and do better than past incumbents that have presided over years of cuts but that in reality experience of attempting that had often shown that rather than save money costs had often risen”. I will stick to the advice that I gave then!

To the best of my knowledge, although much work has been going on within the military to plan for the future within the budget process already set and I suspect that the individual who will lead the process will be Angus Lapsley, current Director General Strategy and International at the MOD, my belief is that no final decision has yet been made yet over who will lead what we are told will be the Integrated Security Defence and Foreign Policy Review process. Clearly, Mr. Cummings will play a significant role in the review process but I do not expect him to formally lead it. Bear in mind that the MOD has lost some extremely good senior personnel over the past year including former Strategy Director, Will Jessett who had led the past two SDSR review processes. 

Those of us that have a professional interest in defence equipment procurement, support, infrastructure and exports can well remember the ‘National security through Technology’ White Paper in 2012 and which amongst many separate issues talked about “off-the-shelf procurement where possible, the desirability of a common set of open principles ensuring flexibility and interoperability, increased access to MoD contracts for small and medium-sized companies (SMEs), greater integration of support services provided by industry, more working with other countries, spending on science and technology and finally, support for exports.

At the time of its publication key technological priorities were still awaited and industry was itself was reeling from the single source price regulation proposal outcome that had emerged from the Currie report. Bottom line was that uncertainty that had bred from the SDSR 2010 process was compounded by even more uncertainty.

Later, when the House of Commons Defence Select Committee examined the proposals it concluded that “The White Paper’s feeble support to British Industry is in striking contrast to the model in continental Europe where for major projects a cross-Departmental approach focuses on cost and value to the nation as a whole. There appears to be no mechanism in the UK to measure the cross-government impact of a contract going overseas, where short-term redundancies and long-term loss of skills shift the problem from MOD to the DHSS and other Departments: good value for money for MOD perhaps, but poor value for the nation”.

Mr. Cummings would do as well to read the report I mention above and he will see that back then HCDC emphasised that in the original Green Paper that had preceded the White Paper that in regard of what was considered to be necessary to protect sovereignty and the principle of technological advantage industry had emphasised the need for the MOD to supply a list of which specific areas would be protected for reasons of national sovereignty on-shore. None had been forthcoming! 

Commercial Off-The-Shelf (COTS) – the notion that the UK MOD should procure more defence equipment from the US and elsewhere as opposed to maintaining UK all current sovereign design and build capability is nothing new. The reality of course is that the MOD has been procuring ‘off the shelf’ capability from the US and European allies for decades and rightly so. Examples include Boeing Chinook and Apache helicopters, Boeing Sentry E3-D AWACS aircraft, Lockheed Martin C-130J medium lift transport aircraft, the Airbus derived Voyager air-to-air tanker refuelling/transport aircraft operated by the Air Tanker consortium with the Royal Air Force, the Boeing P-8 Poseidon Maritime Patrol Aircraft of which the first of nine aircraft to be built arrived in the UK last week and the Boeing E-7A Wedgetail planned to replace the now elderly Boeing Sentry E-3D Sentry aircraft in three years all make for interesting examples.

There is nothing wrong with acquiring off-the-shelf equipment provided that firstly, we are assured that the UK defence industrial base is unable to supply because it no longer has the full capability, capacity or skills required to undertake this and secondly, when the MOD as the procurer is satisfied that, due to the low numbers of say aircraft actually required, the viability of investing in the research and development expenditure that would be required in order to design and build within a set time span questions the viability and financial sense attempting an alternative route. The third possible reason would be when the MOD has completely satisfied itself that the commonality of design standard of ship or aircraft required and that is being offered by none UK defence companies will allow bespoke UK sovereign designed weapon systems, electronic warfare equipment, radar, defensive and other attack capability required to be integrated on the equipment procured with relative ease and little additional cost. 

In almost all the specific equipment procurements noted above it is fair to say that the UK no longer has the capacity or skills available. Many would love to see this change but there is of course, a balance to be achieved of what we are able to maintain as sovereign capability and what is affordable to so do. Our defence aerospace activities including fast jet and helicopter and including Tempest together with those of our shipbuilding and submarine design, nuclear, land equipment including tanks and armoured personnel vehicles, munitions, complex weapons design and build capability must in my view remain sacrosanct. This is sovereign capability that the UK must maintain.

The UK also has significant strength in other defence related activities, in battlespace, aviation, innovative technology design and in many highly sensitive specialist areas such as cyber protection. Companies such as QinetiQ offer world-class scientific and technological research capabilities and play a huge role providing technical excellence and expertise, integrated solutions and in protecting our national interests. Our defence and aerospace component industry including companies such as Meggitt manufacturing aircraft brakes, control systems, components and sub-systems are hugely important as are support companies such as Marshalls Aerospace, Babcock International and Leidos. The UK defence supply chain consists of a vast number of small and medium sized enterprises who also provide technology and innovation support maintaining important skills that we need. These many companies need not only to be protected as part of the wider view on maintaining sovereign capability requirement but they should also be actively encouraged and supported by government.

Buying off-the-shelf from a major foreign company is, as I have said, often the right way to go when we are unable to supply from the existing defence industrial base. We need to remember that many of the companies we acquire defence equipment from have invested heavily in the UK – one thinks here of Lockheed Martin, Raytheon, Boeing, Leonardo and Thales amongst others and we should not dismiss what they do lightly. They are all extremely valuable to the UK economy, jobs and skills that we need. UK based defence companies are very actively engaged overseas and have many local subsidiaries in the US – one thinks here of BAE Systems, Rolls-Royce and Cobham – and the UK is itself a major exporter of defence equipment. Finally, we need to remember that the UK is engaged with many international partners on projects such as the Lockheed Martin F-35 Joint Strike Fighter, Eurofighter Typhoon, A400M and also on space projects. 

Bottom line is that COTS has a place, be in no doubt about that, but Mr. Cummings and others need to remember that compatibility, integration and interoperability are important factors. Whatever we might acquire needs to be able to meet OUR specific operational requirements, and we cannot ever disregard the impact of such decision to buy off the shelf might have on our own industry, jobs and potential for exports.

Lessons learned the hard way demonstrate that COTS is never as simple as it looks and that once we as buyer start interfering with the design requirement up goes the cost. The same can also be true when we acquire from our own defence industrial base and when someone decides that we need to change the design to accommodate this or that additional capability. Again, lessons learned the hard way ring true – one small and seemingly change in design requirement impacts on everything else around it increasing risk, complexity and cost.

Not only is the question of integration costs on equipment acquired an issue but additional costs of training, maintenance and support can, on COTS related procurement buys, significantly raise costs through the operational lifetime. Do we have sufficient rights to upgrade and most important of all, how does this all fit in with our national ambition? Are we comfortable being seen as an also ran – a follower rather than a leader, do we care about exportability and the huge benefit and strength that this provides the UK economy, jobs and skills, is there a danger that we become too dependent on one country only to find ourselves in the position that we are then unable to get sufficient support we need for what we have acquired?

Many, many issues to consider here and all of them relevant. It just isn’t as simple as saying that buying off the shelf is cheaper. It may well be on the face of it but not necessarily through the equipment lifetime. There is of course a balance to be had – supporting the industry and sovereign capability that we have and that industry has invested in such as BAE Systems in ships and submarine building capability and supporting partnerships such as with the US and Lockheed Martin on the F-35 and where UK participation amounts to 15% of each and every aircraft built and in buying off the shelf when we no longer have the sovereign capability required.

There will always be an element of risk involved in defence equipment but it is important that we get the balance between maintaining sufficient levels of sovereign capability that we believe we need and buying equipment off the shelf from abroad.

CHW (London – 10th February 2020)          

Howard Wheeldon FRAeS 

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

hwheeldon@wheeldonstrategic.com

@AirSeaRescue  

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