Below, with the permission of the author, I have repeated a question posed – one that is not untypical of those that I receive from time to time:
I apologise that I keep bothering you but I have been thinking about MOD procurement lately and I’m a little dismayed.
From the outside looking in it seems like it’s a huge problem for the MOD. From TSR-2 to Tornado, through MBT-80, Challenger 1 and 2, F-35, QE class and now Warrior CSP and Ajax. While there have been some success stories, they seem to be diamonds in the rough.
Does this mismanagement happen with the same frequency in countries like France and Germany as it does here? If we do have a problem in this area, how can we mitigate it so as not to have it hamper future projects such as Tempest and Challenger 3.
I’ve always wanted to end up working in the defence sector but the more I look into procurement the less driven I am. Yours etc
One answer to the question posed in relation to how we can mitigate problems on future development contracts is by forming a ‘partnership’ between customer (MOD) and manufacturer right from the start. The return of honesty and integrity on the part of the MOD and within the procurement system as a whole would help and importantly, the message to government is to ensure programmes are properly funded right from the start. To that I would add, stop changing things mid-way through a programme stick to original planned numbers. Finally, apart from spending more on R&D (something that IR has promised) I would add that the MOD must better ensure that it has sufficient numbers of qualified people who are able to understand the complications of defence programme management from the start.
Politics and the failure on the part of the MOD to properly fund defence programmes from the start are also reasons that we can fail. Companies can also sometimes fail to get the pricing right but that in part is a result of changing from a ‘cost-plus’ system that worked very well in the dim and distant past to a competition based fixed price system of procurement and then trying to limit the percentage of profit that the manufacturer is allowed to make!
OK, so it is not quite so simple as that. TSR2 for example was a combination of politics, inter-service rivalry and a Chief of Defence Staff back in those days, a Royal Navy man, who was absolutely determined to keep the Royal Air Force in its place – meaning that it should not have better fast jet capability than the Royal Navy.
In respect of the Panavia Tornado – developed by a tri-national UK, Italian and German based consortium, whilst there were delays caused by politics and it is also true to say that the Tornado F-3 never quite achieved all that was expected of it, in respect of capability performance the Tornado GR1/3 variants provided unsurpassed level of capability and service in the Royal Air Force just as they are still doing with the Italian and German Air Forces to this day.
Picking up some of the other points made by my correspondent, although I could probably write a book on the Military Vehicles and Engineering Establishment development of the Challenger Main Battle Tank in the early 1980’s and its build by the Royal Ordnance Factory in Leeds (later taken over by Vickers Defence Systems) and by Vickers after that and also the somewhat protracted development of Challenger 2, because I knew many of the personalities involved at the time I will keep my powder dry.
The development of MCV-80 (later to become Warrior) by GKN Sankey following the award of a main development contract in 1980 should be regarded as having been a success story right from the start. GKN bent over backwards to get it right – going out to soldiers in the field asking what they wanted and thought most important [Alec Daly who ran GKN Sankey at the time tells the story that “we went out to the soldiers and asked them what they wanted most from the vehicle. They picked out two things: one, they want a mine to be able to blow it up when the vehicle went over it, and two, they wanted it to start every time you pressed the button”.
Warrior MCV-80 development was completed on time and on budget. However, despite this success, then Secretary of State for Defence Michael Heseltine insisted that a manufacturing contract would be put out to competition – thus GKN was up against Vickers Defence Systems, Alvis and the then still state-owned Royal Ordnance Factories. Emphasising success of the development contract and quality, GKN Sankey which had stuck to its original pricing throughout was awarded the manufacturing contract in 1984.
My correspondent is of course absolutely correct in including the upgrade programme for Warrior (known as Warrior CSP) suffered a number of difficulties. However, whilst these had led to delays and development cost overruns, most had been satisfactorily sorted by the end of last year before awful the hand of politics and a Secretary of State who seemed determined to kill the programme off, took another hand meaning that Warrior CSP programme was cancelled before manufacturing contracts has been given. You know my views on this and I find the decision to decommission the existing Warrior capability over the next few years ahead of its ‘replacement’ by a non-tracked Boxer vehicle difficult to comprehend.
Perhaps if Warrior CSP development which included a new turret had been renamed it might have had a better chance of being seen as a new development as opposed to what many saw it as – an upgrade. However, its cancellation after so much work had been put in and of a capability that the Army continues to need, can in my view only be seen as another great political mistake and one that HMG will come to regret.
All of which leads us on to Ajax – a disaster that has in my view been waiting to happen ever since General Dynamics was awarded a fixed-firm £3.5bn contract for the development, manufacture and delivery of 589 Scout (the name was later changed to Ajax) in September 2014. I wrote on this specific subject only two weeks ago and will not repeat my views again save for saying that General Dynamics and the MOD have a lot to answer for.
MY correspondent mentions the QE class carriers built by the Carrier Alliance in his list. While the end result has undoubtedly been a great success story, once again the rise in costs can mainly be put down to politics. Also included is the F-35 although I am unclear what lies behind the inclusion.
Are we alone in – are France and Germany better than us in respect of getting procurement programmes, right? Far from it – look at difficulties experienced in A400M development, a programme which in a partnership of nations, Germany and France led as being an example of where development costs rocketed.
One problem that Germany, France and the UK have in common is that their respective governments initially commit to aircraft, ship, helicopter and armoured fighting vehicle numbers only to cut those numbers back during the build programme. The French ‘Tiger’ Helicopter programme (Germany cuts numbers substantially) A400M and in the UK, numbers of Typhoon and Type 45 Destroyers are examples. It also looks as if the UK is backing away from buying all 138 of the originally planned numbers of F-35’s.
Cutting numbers may save cash but it pushes up the overall cost. It is often to be regarded as a false economy. Pushing back is another very common problem – saving cash from one year into another but again, because of defence inflation, pushing up the overall cost.
I would also add here that France goes into defence programmes with a very different attitude to that of the UK. Right from the start France looks at exportability whereas the UK has traditionally seen this only as a possibility.
Hopefully, as already seen in the Type 26 frigate with the building of the Hunter class variant in Australia and also of the Canadian Government’s decision to base the Canadian Surface Combatant on the Type 26 design, ‘exportability’ is now high on the list. Hopefully we will see similar success with Type 31 and the proposed Type 32.
Changing specific requirements during a build programme is another problem that raises programme costs. Put simply, changing one item of capability impacts on so many others. Another way of putting this with a collegiate base procurement system is that a decision made by one person in the military to change something impacts on decisions already made by so many others.
So, is it politics or mismanagement that lies at the heart of procurement problems? Is the customer always to blame or is industry equally culpable?
I would argue that politics lies at the heart of the issues we face. I would also argue that part of the problem is that, unlike France, we have yet to fully commit to maintaining sufficient levels of sovereign defence capability. Defence has lacked a cohesive industrial strategy to support it. While it is true to say that industry and MOD customer are working far better together today than in the past, there remains scope for further improvement.
I would argue that part of the success of the ‘Carrier Alliance’ Queen Elizabeth class aircraft carrier programme was that the MOD was not just the customer but also a partner the programme.
The same is true of Team Tempest, a programme that is next on the list for me to write on. Being a partner on development programmes matters and I believe it is the best and most important change for the good that I have witnessed in ten years. The same is true from a different aspect with the UK being a Tier One partner on the F-35 Joint Strike Fighter programme right form the very start.
The importance of the UK maintaining strong sovereign defence manufacturing capability has probably never been more important than it is today. There are lessons that we need to learn from France and while we will always need to buy important elements of defence equipment from allied countries we need to get behind our own industry. That also mean that the MOD must start saying what it means and meaning what it says. Honesty and integrity are and should always be hugely important factors in defence procurement.
There are many other reasons why procurement sometimes fails but be under no allusion that we get far more procurement programmes right than we get wrong! We have a great defence industrial base – we just need to get behind it and support it with a strategy that is workable and affordable in equal measure.
CHW (London – 10th June 2021)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785