14 Mar 22. Calls and even more calls for UK defence spending to rise over the weekend have been rather like those cold March winds that many might remember and that often went on for days without end.
No matter how often and how loud the calls for defence spending to rise the one thing we can be certain of is that although we might well be told that spending will rise, there will be a quid pro quo meaning that something else will have to give.
Sadly we have not yet reached a time when honesty and integrity in respect of defence has been reached and although, as I did a couple of weeks ago, I could list a number of IR related decisions that need to be reversed I am old enough and wise enough to know that none of these are about to occur.
Even if Chancellor of the Exchequer Rishi Sunak was to announce an increase in the defence budget over and above the supposed £16.5bn increase spread over four years as promised in the now all but redundant ‘Integrated Review’ process, one might well find more spending of other departments of government dumped in defence. Cynical maybe but quite possible although I might I hope that I am proved wrong. Until proven otherwise, I fear the cynical view will prevail although I sincerely hope that I am proved wrong.
At some point I suspect that there will need to be funding for delivery of equipment being provided to assist Ukrainian armed forces. However, despite the persistence of calls and need, the Spring Statement from Chancellor Sunak due on the 23rd of this month will in my view be very unlikely to contain much if anything new in respect of UK defence spending although it may well suggest that the door has been left open for this to occur.
Time to End Farce That is Ajax Procurement
From Gareth Davies – Head of the National Audit Office following publication of the NAO report on the Ajax armoured fighting vehicle procurement farce:
“The Ministry of Defence and GDLS-UK’s approach was flawed from the start. They did not fully understand the scale or complexity of the Ajax programme and a series of failures have led to delays and unresolved safety issues that will have a significant impact on the Army’s ability to use the vehicles. We have seen similar problems on other defence programmes, and the Department must demonstrate that it understands the fundamental improvement required in its management of major programmes.”
In terms of quick detail in the report issued late last week in case not seen:
Delivering the Ajax programme will be a significant challenge for the Ministry of Defence because of failures that have led to delays and unresolved safety issues, according to the National Audit Office (NAO).
The MoD has a £5.522 billion contract with General Dynamics Land Systems UK (GDLS-UK) for the design, manufacture and initial in-service support of 589 Ajax armoured vehicles.1 At December 2021, the Department had paid GDLS-UK £3.167 billion. At this point, GDLS-UK had designed the vehicles, built 324 hulls, and assembled and completed factory acceptance testing of 143 vehicles. The Department had received 26 Ajax vehicles, as well as associated training systems and support.
The Ajax programme has encountered significant problems and the MoD does not know when it will be delivered. The Department’s initial planning assumption was that the vehicles would be in service in 2017. It subsequently set an initial operating capability (IOC) date of July 2020, which it then pushed back to June 2021, but missed. Concerns about excessive noise and vibration levels remain unresolved, and the MoD has not yet set a new IOC target date. It has no confidence that the April 2025 target for full operating capability (FOC) is achievable.
The delays will have important operational impacts for the Army. The Army’s plans rely on delivering a network of digital capabilities by 2030, centred around Ajax, Boxer and Challenger 3 armoured fighting vehicles. However, the delays to the Ajax programme mean it is not clear how the Army will achieve its planned restructuring by 2025.
The MoD transferred financial risks to GDLS-UK by agreeing a firm-priced contract to deliver the Ajax vehicles, but this may not protect it from further expenditure. Ajax will be delivered late, leaving the Army to operate with ageing armoured vehicles, which are expensive to maintain.
The MoD’s original requirements for Ajax were highly specified, and its management of design changes has led to disputes and delays. Around 1,200 capability requirements were set, making Ajax more complex than other armoured vehicles. The MoD and GDLS-UK did not fully understand some of the requirements, which led to many changes to the design specification. This caused disputes, and the time taken to agree design changes contributed to programme delays.
The MoD and GDLS-UK did not understand the scale of work or technical challenge, which meant that sufficient contingency was not built into the programme schedule. Milestones were missed because it took longer than GDLS-UK expected to undertake design work, complete testing, resolve defects and manage supply chain disputes. GDLS-UK told the NAO that this was because the MoD’s standards were not fully defined and subject to change. However, the Department repeatedly found GDLS-UK’s safety documentation insufficient.
The MoD has not managed the programme effectively. It did not establish effective governance arrangements or the necessary resources to manage the programme. There were multiple lines of reporting and complex assurance arrangements; insufficient senior management time; a high turnover of senior staff; an under-resourced programme management team; and an ineffective programme board. The MoD and GDLS-UK reset the contract in 2018, but this did not resolve the programme’s underlying problems.
The MoD knew of noise and vibration issues before soldiers reported injuries but was not aware of the severity of potential problems. Reporting of issues identified in trials was limited and slow, meaning that safety concerns were not shared or escalated by the Army or Defence Equipment & Support (DE&S). The Army’s trials team began reporting injuries from July 2020, but one month later the Army and DE&S signed off safety documentation that said, with some limitations on use, the vehicles were safe to commence training.
The MoD is taking steps to resolve the noise and vibration issues, but they continue to represent a significant risk to the programme. The Department and GDLS-UK continue to disagree on the safety of the vehicles and whether the levels of noise and vibration breached contractual requirements. It is likely to take until late 2022 to agree on solutions, increasing schedule and cost pressures.
It is not yet clear whether the programme’s issues are resolvable. It is a year behind the revised 2021 schedule, trials involving Army crews have been stopped, and safety issues remain unresolved. GDLS-UK has continued production without receiving any payment in 2021, with the MoD having paid GDLS-UK £1.1 billion less than scheduled at December 2021. The programme team is exploring how to recover the programme but will not agree a revised target date for IOC until noise and vibration issues are resolved. The Department will need to consider carefully whether the programme can deliver the intended capabilities but does not expect to be in a position to do so until late 2022.
The MoD also faces significant challenges in delivering supporting programmes that will allow it to use Ajax as intended. This includes new communication systems, training facilities and infrastructure projects to store the vehicles. In particular, the MoD is planning to enhance Ajax’s digital capability through the delivery of the Morpheus programme. However, this programme has had significant cost increases and is running at least three years late.
The NAO recommends that the MoD should agree a credible delivery plan to IOC and FOC with GDLS-UK, including considering what contingency is needed to resolve existing issues and manage unknown risks. The MoD should also ensure there is a clear process for reporting, considering and implementing safety recommendations.
And My Response?
Why risk spending a penny more on a project that was, as the NAO rightly says, flawed from the very beginning. The MOD should be brave, pull the plug on Ajax now, go back to the drawing board, discuss what is needed now as opposed to what the Army thought or indeed, might still think it needs, reverse announced policy and rather than scrapping, retain and upgrade a limited number of Warrior Armoured Personnel Carriers and acquire a fleet of tracked armoured fighting vehicle to replace these and that are already proven in service with other armed forces. Last but not least, bring all those involved in the shabby Ajax procurement process over the past dozen or so years, no matter how small their involvement, to book. End of story!
CHW (London 14th March 2022)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785