17 Jul 20. Defence Committee launches inquiry into the procurement and use of Armoured Fighting Vehicles.
Today, the Defence Committee launches its new inquiry into Armoured Fighting Vehicles (AVFs). This inquiry will focus on the procurement and use of AVFs and ask whether more must be done to ensure the Army’s ability to deploy its armoured division.
This inquiry will attempt to understand how the Army envisages employing their AVFs in future operations. Additionally, it will examine the procurement of AVFs, including how much has been spent procuring AVFs over the last 20 years and how many vehicles have been acquired. The inquiry will ask which capabilities have been sacrificed in order to fund overruns in its core armoured vehicles and which key gaps are emerging within the Army’s armoured vehicle capability.
The Committee will ask whether the Army is currently on track to be able to field the Strike Brigades and armoured division in line with the recommendations of the 2015 SDSR, and how flexible the army can be in adapting its current armoured vehicle plans to the results of the Integrated Review. The Committee will ask whether the Army will be able to match the potential threat posed by peer adversaries by 2025.
Additionally, the inquiry will examine the successes and failures of current programmes such as the Warrior CSP and Ajax and ask what lessons were learned from the previous Future Rapid Effect System (FRES) programme. The Committee will ask whether the UK would benefit from a land vehicles industrial strategy and what sovereign capability for the design and production of armoured vehicles the UK retains.
Chair of the Defence Committee, Tobias Ellwood MP, said: “Armoured Fighting Vehicles are a critical tool in the Army’s arsenal, yet for years many have voiced concerns around the current fleet’s ability to contend with newer, contemporary models and match rapid advancements in military technology. Unfortunately, the MoD’s attempts to address the issue have repeatedly met with bumps in the road, from overspending and underdelivering, to the stagnation of programmes designed to enhance or replace outmoded vehicles. The Government has been playing catch-up, and this inquiry will attempt to understand the ongoing barriers to modernisation. Modernising must be a priority for the MoD. Deploying an aging fleet leaves personnel vulnerable: the consequences of which may prove lethal. This inquiry will attempt to gauge the current capabilities of the Army’s Armoured Fighting Vehicles and establish whether the fleet is fit for purpose.”
The Committee welcomes written evidence on the following questions:
- Does the Army have a clear understanding of how it will employ its armoured vehicles in future operations?
- Given the delays to its programmes, will the Army be able to field the Strike Brigades and an armoured division as envisaged by the 2015 SDSR?
- How much has the Army spent on procuring armoured vehicles over the last 20 years? a. How many vehicles has it procured with this funding?
- What other capabilities has the Army sacrificed in order to fund overruns in its core armoured vehicles programmes?
- How flexible can the Army be in adapting its current armoured vehicle plans to the results of the Integrated Review?
- By 2025 will the Army be able to match the potential threat posed by peer adversaries?
- Is the Army still confident that the Warrior CSP can deliver an effective vehicle capability for the foreseeable future?
- To what extent does poor contractor performance explain the delays to the Warrior and Ajax programmes?
- Should the UK have a land vehicles industrial strategy, and if so what benefits would this bring?
- What sovereign capability for the design and production of armoured vehicles does the UK retain?
- Does it make sense to upgrade the Challenger 2 when newer, more capable vehicles may be available from our NATO allies?
- What other key gaps are emerging within the Army’s armoured vehicle capability?
- Has the Army learned from previous failures such as FRES to ensure new vehicles are acquired effectively?
Form of written evidence:
Submissions should be no longer than 3,000 words. The main body of any submission should use numbered paragraphs. Each submission should contain:
- a short summary, perhaps in bullet point form;
- a brief introduction about the person or organisation submitting evidence, for example explaining their area of expertise or experience;
- any factual information from which the Committee might be able to draw conclusions, or which could be put to other witnesses;
- any recommendations for action by the Government or others which the submitter would like the Committee to consider for inclusion in its report to the House.
Submissions should be in malleable format such as MS Word (not PDFs) with no use of colour or logos. Guidance on submitting written evidence and data protection information is available here: Guidance on submitting written evidence.
14 Jul 20. PAC blasts decades of MoD failure to “get a grip” on delivering key defence capabilities. In a report released today, Wednesday 15 July 2020, the Public Accounts Committee highlights the Ministry of Defence’s continued “lamentable failure” to “get a grip” and deliver on key defence capabilities needed by the UK’s Armed Forces.
Despite PAC and NAO warnings “year after year” the MoD still hasn’t established a stable basis for making an affordable military Equipment Plan, or a realistic approach to delivering efficiency savings.
The MoD admits it has encouraged a culture that prioritises hitting internal targets above delivering defence capability, with a short-term focus on managing annual financial pressures that reduces the UK’s military capabilities yet further, while increasing overall costs.
Echoing its recent report on failures in the MoD’s nuclear defence programme, the Committee urges the MoD and HM Treasury to consider moving to a system of managing strategic programmes on a multi-year basis – with the MoD to demonstrate “why it should be trusted” with this new approach as it is rolled out. Together the MoD and HMT should report to the Committee on the development of this new strategy by the end of the year.
Covid-19 has worsened existing concerns about the financial resilience of some defence equipment suppliers with the potential to worsen the already lengthy delays to the delivery of many key capabilities.
Meg Hillier MP, Chair of the Committee, said: “The MoD knows what it’s getting wrong. We know what it’s getting wrong. For years we have made concrete proposals to improve delivery of key strategic priorities and here we are again, with the same gaps in our national defence and the same risk to our armed forces personnel, year after year. We are saying to the MoD and to the Treasury now: come back to us by the end of the year with a concrete plan for how you are going to turn this around, how you are going to do this differently, from now on. The nation and the armed forces that protect us are owed that much.”
PAC Conclusions and recommendations
- The government has still not taken the strategic decisions required to establish an affordable Equipment Plan and deliver the crucial military capabilities needed by our Armed Forces. The Department’s lamentable failure to get a grip on the Equipment Plan continues, despite this Committee and the NAO consistently highlighting serious affordability issues in the Plan year after year. The Equipment Plan has been unaffordable for the last three years, echoing the wider, longer-term pressures on a fundamentally unbalanced defence budget. As the Equipment Plan accounts for around 40% of the total budget, the impact of these funding shortfalls has negative consequences across the Department’s activities – for example, by limiting investment in areas such as estate maintenance or training. These problems will persist until the government agrees an affordable multi-year investment programme for military capabilities. We urge the government to avoid the mistakes made in the last two strategic reviews in 2010 and 2015, and this time set a balanced defence budget that reflects new priorities and ambitions in developing capabilities to meet the evolving threats of modern warfare. It will need to engage widely across Whitehall, exploit new technologies, and establish cross-government initiatives in areas such as cyber and space. The Department told us the Integrated Review of Security, Defence, Development and Foreign Policy (the Integrated Review) had been delayed until 2021 due to the COVID-19 pandemic. In the interim, it is seeking to provide industry with a stable investment programme.
Recommendation: The Department must demonstrate financial prudence by developing the next Equipment Plan with affordability and long-term sustainability at its core. The Department should write to the Committee within one month of the publication of the next Equipment Plan to explain what it has done differently in order to reduce the Plan’s affordability gap. Recommendation: The government’s promised Integrated Review must balance ambitions for future military capabilities with an affordable long-term investment programme. Given the Review has been delayed, in the interim, the government should provide as much certainty as possible on as many defence programmes as possible.
- The Department’s focus on managing financial pressures on an annual basis creates bigger problems for future years as the budgetary imbalance grows, and slows the development of military capabilities. The Department has missed the last two opportunities (the Modernising Defence Programme and the Spending Review 2019) to develop an affordable Equipment Plan. As a result, it has focused on living within its in-year budget and, as the Accounting Officer emphasised, complying with government accounting standards. For example, additional funding from HM Treasury in 2018 and 2019 plugged annual funding shortfalls in existing programmes, but failed to reflect longer-term thinking. This short-termism comes at a huge cost for longer-term projects, which often have to be stopped, descoped or delayed. We are deeply concerned that the problems are getting worse as the budgetary imbalance continues, leading to reduced military capabilities and higher overall costs. The frontline commands have already made investment prioritisation decisions on some equipment projects but are facing a tighter financial position than in previous years, reducing their flexibility to manage a portfolio of projects within annual approval limits. This increases costs and represents poor value for money. We are also not convinced that any adequate consequences are in place for Accounting Officers’ failure to meet budgets.
Recommendation: In line with our recent recommendation on nuclear infrastructure programmes, we urge the Department and HM Treasury to consider greater flexibility to manage strategic programmes on a multi-year basis. Such an approach should be introduced cautiously, with the Department demonstrating why it should be trusted. Together they should report to us by 31 December 2020 on the progress of discussions to this end.
- The Department’s ways of working have not helped it to deliver capabilities effectively, and its ambitions for the reform of capability delivery will be undermined if it does not change an internal culture that focuses on milestones and cost constraints but appears not to prioritise progress towards delivery against those two measures. In its Acquisition Review, the Department has acknowledged that over the years its Head Office has encouraged a culture which prioritises passing review points and approvals above delivery of programme outputs and outcomes. In addition, delivery teams have often been keen to press on regardless of progress against formal milestones, so long as the equipment is deemed safe. The Department is implementing a range of initiatives to improve delivery but is not yet clear what practices would replace managing to the rigid set of milestones traditionally used to manage programmes. The Department wants to adopt more agile procurement methods that might formalise such an approach, but it is not clear how it will keep track of the capability that is available as a result.
Recommendation: The Department should decide how it is going to measure and demonstrate progress in transforming capability in a way that optimises delivery of results without undermining budgetary controls. It should report to the Committee on measures taken to combat poor practice in programme reporting and delivery by 31 December 2020.
- The impact of COVID-19 will increase the widespread delays to deliveries of equipment and weaken the resilience of key suppliers. The Department says that it has worked to minimise the impact of the virus on its suppliers and equipment programme. It has been paying significant sums to suppliers in advance of work done, which has been particularly valuable to suppliers where orders from private sector customers have dried up. However, the Department is concerned about the financial resilience of some suppliers. It had already begun to look at these issues prior to the pandemic as part of its work for the recently announced Integrated Review. These financial concerns, together with the ability of suppliers to continue working through the pandemic, even given their designation as key workers, will only worsen the already lengthy delays to the delivery of many key capabilities. The Department has not yet quantified the impact of delays to the delivery of key capabilities caused by the pandemic.
Recommendation: The defence and security industrial strategy offers the Department an opportunity to reset the relationship with its key suppliers. In return for commitments to support the defence industry as part of this strategy, it should set out its expectations of how the industry will improve its performance to address the endemic delivery and quality issues that afflict the sector. The Department should write to the Committee by 31 December 2020 on what steps it has taken to enhance contractor performance.
- The Department is full of good intentions as to how it will transform capability delivery, but it is unclear how it will know if this has happened. The Department is focusing its transformation activities on becoming more agile by reducing the elapsed time from project inception to approval for demonstration and manufacture, perhaps by several years for major procurements. However, after many years of reporting on defence procurements, we are well aware that delays occur at all stages, not just in this developmental phase. The Department is not sure what metrics it will set to demonstrate that significant improvements are being achieved, or how quickly real improvements will be seen.
Recommendation: The Department should set out clear metrics indicating what progress it expects to have made, and by when, against its objectives of improving the effectiveness of the reformed procurement process. It should report to the Committee on this by 31 December 2020.
- The Department has not yet established a stable basis for assessing the Equipment Plan affordability gap or a realistic approach to delivering efficiency savings. The Department’s methodology for assessing the funding shortfalls changed again in 2019 and prevented a comparison with the previous year. It has not yet established a stable approach to cost forecasting and has again made over-optimistic adjustments which make the Plan look less unaffordable. The Department accepts that unrealistic plans to achieve efficiency savings in the 2015 Strategic Defence and Security Review have contributed to today’s funding shortfalls, yet these practices persist. For example, it included £4.7bn of efficiency savings in the 2019 Plan for which it had no plans. It also has inconsistent and unrealistic expectations of what savings the frontline commands can achieve, and when. The Department has not made any real progress in strengthening its financial capabilities, despite our previous recommendations on the need to develop financial skills. The Committee will continue to hold the Department to account for its performance in managing its equipment budget and improving cost forecasting.
Recommendation: The Department should write to the Committee as soon as possible setting out its approach – agreed with the NAO – for reporting on the Equipment Plan 2020-2030. It should also provide details of a stable methodology for assessing the affordability gap, and its plans for measuring efficiency savings realistically and improving financial capabilities as soon as possible. In due course, the Department should write to the Committee on the impact of the Integrated Review.
House of Commons and House of Lords Hansard Written Answers
Q
Asked by Mr Kevan Jones
(North Durham)
Asked on: 13 July 2020
Ministry of Defence
Defence: Contracts
72823
To ask the Secretary of State for Defence, what changes his Department has made to the contract profit rate in the last five years.
A
Answered by: Jeremy Quin
Answered on: 16 July 2020
Under the Single Source Contract Regulations, the contract profit rate for a Qualifying Defence Contract (QDC) is determined by a six-step process, starting with a Baseline Profit Rate (BPR). The BPR is determined each year by the Single Source Regulations Office (SSRO). It is then adjusted to take account of various factors, including risk, capital servicing and SSRO funding, in order to determine the contract profit rate for each QDC.
Movements in the BPR over the past five years, together with details of some other adjustments, can be found in the 2020 contract profit rate update, which is published on gov.uk at the following link:
https://www.gov.uk/government/publications/2020-contract-profit-rate
The site also includes a detailed supporting analysis and information on the methodologies used.
Q
Asked by Mr Kevan Jones
(North Durham)
[N]
Asked on: 13 July 2020
Ministry of Defence
72824
To ask the Secretary of State for Defence, what the existing FOREX rate is for dollar purchases negotiated by his Department with the Bank of England.
A
Answered by: Jeremy Quin
Answered on: 16 July 2020
We address the impact of foreign exchange using forward purchase contracts agreed with the Bank of England. This mechanism provides budget stability in the forward programme and is not intended to generate gains or savings from the foreign exchange market.
The average Dollar rate secured by the Department through its forward purchase contracts for 2020-21 is 1.326, this covers 80% of the Department’s requirement.
Q
Asked by The Earl of Shrewsbury
Asked on: 07 July 2020
Ministry of Defence
Marines
HL6580
To ask Her Majesty’s Government what plans they have for the future of the 3 Commando Brigade of the Royal Marines.
A
Answered by: Baroness Goldie
Answered on: 15 July 2020
As my right hon. Friend the Secretary of State for Defence made clear during Defence oral questions in the House of Commons on Monday 6 July 2020, the size and shape of our Armed Forces should be dictated by the threat we face as a nation and our global ambition. The Integrated Review is not about cutting defence and I can assure you that this country will continue to have the world class Armed Forces that it needs and deserves.
The Littoral Strike programme, announced by the Secretary of State for Defence in February 2019, is a complete transformation of the UK’s amphibious force. The programme identifies 3 Commando Brigade Royal Marines as the central fighting formation used to deliver Littoral Strike and the Future Commando Force. It is driven by the requirement to counter the threats we will face in the future and forms a pillar to the Royal Navy’s Integrated Review offer.
Q
Asked by Mr Kevan Jones
(North Durham)
[N]
Asked on: 10 July 2020
Ministry of Defence
European Fighter Aircraft
72175
To ask the Secretary of State for Defence, what savings targets were set for the TyTAN support programme for Typhoon; what savings have been made to date; and how much of the savings have been reinvested into Typhoon capability upgrades.
A
Answered by: Jeremy Quin
Answered on: 15 July 2020
Awarded in 2016, the ten year £2.14 billion TyTAN support contract represents a savings target of 38% compared to previous support arrangements for UK Typhoon.
To date, over £500 million of savings have been realised and ringfenced for Typhoon capability upgrades over the next ten years.
Q
Asked by Mr Kevan Jones
(North Durham)
Asked on: 07 July 2020
Ministry of Defence
Type 26 Frigates: Procurement
70339
To ask the Secretary of State for Defence, pursuant to the Answer of 6 July 2020 to Question 65949 on Type 26 Frigates: Procurement, for what reason the decision on the second tranche of funding for the Type 26 Frigate has been delayed.
A
Answered by: Jeremy Quin
Answered on: 14 July 2020
There is no delay; on current plans the separate approval and contract for the Type 26 Batch 2 Frigates is expected to be awarded in the early 2020s.
Q
Asked by Lord Tunnicliffe
Asked on: 08 July 2020
Ministry of Defence
Satellites
HL6644
To ask Her Majesty’s Government what advice the Ministry of Defence has provided to other Government departments on the military capability of the OneWeb satellite system.
A
Answered by: Baroness Goldie
Answered on: 14 July 2020
The investment in OneWeb is not a Defence matter. The SKYNET satellite programme will provide for global military communications and no formal assessment has been made of the military use of OneWeb.
Grouped Questions: HL6645
Q
Asked by Baroness Ritchie of Downpatrick
Asked on: 01 July 2020
Foreign and Commonwealth Office
Integrated Security, Defence, Development and Foreign Policy Review
HL6379
To ask Her Majesty’s Government when they intend to restart the work of the Integrated Review of Security, Defence, Development and Foreign Policy.
A
Answered by: Lord Ahmad of Wimbledon
Answered on: 13 July 2020
The Government paused its Integrated Review of Security, Defence, Development and Foreign Policy in April due to the pressing need to focus on COVID-19. We formally recommenced the Review on 24 June, building on the work done since the Review was originally launched in February.
Q
Asked by Mr Kevan Jones
(North Durham)
[N]
Asked on: 07 July 2020
Ministry of Defence
AWACS: Procurement
70336
To ask the Secretary of State for Defence, pursuant the Answer of 6 July to Question 67564 on AWACS: Procurement, whether all conversion work for E-7 Wedgetail aircraft purchased by the UK will take place in Birmingham.
A
Answered by: Jeremy Quin
Answered on: 13 July 2020
Yes. As announced by Boeing in May this year, a contract has been signed with STS Aviation, based at Birmingham Airport, to carry out the modification of the base 737 Next Generation civil airliner into E7.
Q
Asked by Mr Kevan Jones
(North Durham)
[N]
Asked on: 07 July 2020
Ministry of Defence
AWACS: Procurement
70337
To ask the Secretary of State for Defence, pursuant to the Answer of 6 July 2020 to Question 67566 on AWACS: Procurement, whether he has plans to make a comparative assessment of the costs of (a) support and (b) maintenance for the E-7 Wedgetail for the US and the UK.
A
Answered by: Jeremy Quin
Answered on: 13 July 2020
The Ministry of Defence is currently defining the support and maintenance requirements for the RAF E-7 Wedgetail aircraft, and this will involve the evaluation of a number of different options. It will also include a comprehensive investment appraisal to demonstrate that whatever option is selected represents value for money for defence and the taxpayer. While it is too early to provide any specific detail, there are currently no plans for this work to be carried out in the US.
Q
Asked by Mr Kevan Jones
(North Durham)
[N]
Asked on: 07 July 2020
Ministry of Defence
AWACS: Procurement
70338
To ask the Secretary of State for Defence, pursuant to the Answer of 6 July 2020 to Question 67566 on AWACS: Procurement, for what reason his Department made the decision not to make a comparative assessment of the cost of (a) support and (b) maintenance work in the US and the UK for the E-7 Wedgetail contract prior to the award of the main contract to Boeing.
A
Answered by: Jeremy Quin
Answered on: 13 July 2020
It is common with acquisition projects of this scale and complexity for an incremental approach to be adopted, with contracts for different elements of the project being placed at the appropriate time to align delivery with capability requirement. As the aircraft acquisition contract placed with Boeing in March 2019 did not include future support and maintenance for the RAF E-7 Wedgetail fleet, there was no need to undertake such an assessment at that time. That work is being carried out as part of a different phase of the project.
Q
Asked by Mr Kevan Jones
(North Durham)
Asked on: 01 July 2020
Ministry of Defence
European Fighter Aircraft: Radar
67563
To ask the Secretary of State for Defence, what progress has been made on fitting the AESA radar to the UK Typhoon fleet.
A
Answered by: Jeremy Quin
Answered on: 10 July 2020
The Ministry of Defence is committed to implementing an Active Electronically Scanned Array radar on our Typhoon fleet. The demonstration and manufacture phase for the UK’s variant of the European Common Radar System is continuing at pace, and in June 2020 a contract was let with our European partners to develop a common integration solution across the Typhoon radar enterprise.