House of Commons Defence Committee Defence Procurement Sixth Report of Session 2003–04 Volume II Oral and written evidence Ordered by The House of Commons to be printed 14 July 2004 HC 572-II Published on Wednesday 28 July 2004 by authority of the House of Commons London: The Stationery Office Limited £16.50 The Defence Committee The Defence Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Ministry of Defence and its associated public bodies. Current membership Mr Bruce George MP (Labour, Walsall South) (Chairman) Mr Crispin Blunt MP (Conservative, Reigate) Mr James Cran MP (Conservative, Beverley and Holderness) Mr David Crausby MP (Labour, Bolton North East) Mike Gapes MP (Labour, Ilford South) Mr Mike Hancock CBE MP (Liberal Democrat, Portsmouth South) Dai Havard MP (Labour, Merthyr Tydfil and Rhymney) Mr Kevan Jones MP (Labour, North Durham) Mr Frank Roy MP (Labour, Motherwell and Wishaw) Rachel Squire MP (Labour, Dunfermline West) Mr Peter Viggers MP (Conservative, Gosport) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/parliamentary_committees/defence_committee.cfm A list of Reports of the Committee in the present Parliament is at the back of this volume. Committee staff The current staff of the Committee are Mark Hutton (Clerk), Steven Mark (Second Clerk), Ian Rogers (Audit Adviser), Dr John Gearson (Committee Specialist), Brenda Brevitt (Inquiry Manager), Lis McCracken (Committee Assistant), Sheryl Dinsdale (Secretary) and James McQuade (Senior Office Clerk). Contacts All correspondence should be addressed to the Clerks of the Defence Committee, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 5745; the Committee’s email address is [email protected]. Media enquiries should be addressed to Adele Brown on 020 7219 0724. Defence Procurement Witnesses Volume II Wednesday 5 May 2004 Page Sir Richard Evans, Chairman, BAE Systems, and Chairman, Defence Industries Council, Mr Nick Prest, Chairman and Chief Executive, Alvis, and Vice Chairman, Defence Industries Council, Mr John Howe, Vice Chairman, Thales UK, and Mr Simon Frost, Chief Executive, Claverham Ev 1 Wednesday 12 May 2004 Sir Peter Spencer KCB, Chief of Defence Procurement, Ministry of Defence Ev 20 Wednesday 20 April 2004 Lord Bach, a Member of the House of Lords, Minister for Defence Procurement, Sir Peter Spencer KCB, Chief of Defence Procurement, and Lieutenant General Rob Fulton, Deputy Chief of Defence Staff (Equipment Capability), Ministry of Defence Ev 40 Defence Procurement List of written evidence Volume II The Defence Procurement Agency Ev 65 A Stocktake of Smart Acquisition in the DPA Ev 66 Ministry of Defence Defence Industrial Policy Ev 77 Developments in Smart Acquisition Ev 77 Defence Procurement Ev 80 A400M Ev 80 Advanced Short Range Air-to-Air Missile (ASRAAM) Ev 82 Light Forces Anti-Tank Guided Weapon System (LF ATGWS) Ev 83 WAH 64 Attack Helicopter Ev 85 Type 45 Anti-Air Warfare Destroyer and PAMMS Ev 86 Meteor Ev 89 Astute Ev 91 Nimrod Maritime Reconnaissance and Attack Aircraft MK4 Ev 92 Bowman Ev 94 Typhoon Ev 95 Watchkeeper Ev 98 Future Joint Combat Aircraft (FJCA) Ev 99 Future Strategic Tanker Aircraft Ev 102 Future Rapid Effect System (FRES) Ev 103 Future Carriers (CVF) Ev 105 Defence Engineering Group Ev 108 Defence Industries Council Ev 111 Intellect Ev 115 QinetiQ Group plc Ev 118 Northern Defence Industries Ltd Ev 120 VT Group Ev 122 Humphry Crum Ewing Ev 123 Tony Purton Ev 128 Defence Manufacturers Association (DMA) Ev 129 BAE SYSTEMS Ev 130 Defence Procurement List of unprinted written evidence An additional paper has been received from the following organisation and has been reported to the House but to save printing costs it has not been printed. A copy has been placed in the House of Commons Library where it may be inspected by Members. Other copies are in the Record Office, House of Lords and are available to the public for inspection. Requests for inspection should be addressed to the Record Office, House of Lords, London SW1 (Tel 020 7219 3074); hours of inspection are from 9:30am to 5:00pm on Mondays to Fridays. PIMS Associates Limited Defence Procurement: Evidence Ev 1 Oral evidence Taken before the Defence Committee on Wednesday 5 May 2004 Members present Mr Bruce George, in the Chair Mr James Cran Mr Kevan Jones Mr David Crausby Mr Frank Roy Mike Gapes Rachel Squire Mr Mike Hancock Mr Peter Viggers Mr Dai Havard Witnesses: Sir Richard Evans, Chairman, BAE Systems, and Chairman, Defence Industries Council, Mr Nick Prest, Chairman and Chief Executive, Alvis, and Vice Chairman, Defence Industries Council, Mr John Howe, Vice-Chairman, Thales UK, and Mr Simon Frost, Chief Executive OYcer, Claverham, examined. Q1 Chairman: Welcome, gentlemen. There is future. Our impression is that it arose because nothing like a procurement session to draw a large ministers themselves felt that the procurement audience! Thank you very much for coming. Sir processes brought wider strategic and industrial Richard, as the doyen of the defence manufacturers issues into the equation far too late in the and as this is probably your final appearance before procurement cycle and not in a terribly joined-up us, we aVord you the privilege of introducing your way. Industry has always agreed with this viewpoint colleagues and maybe making a few introductory but it is something that Government have decided to remarks. try and change and we very much want to help and Sir Richard Evans: Simon Frost has I think been here be part of that change process. We are very happy to before; he represents our SME group and who of take any questions that you want to put to us and, if course are of huge importance to the supply chain; we are not able to give you specific answers, we will on my left is John Howe of Thales and Nick Prest certainly follow questions up and give you answers from Alvis. I think it is fair to say that we have all in due course. been engaged in the DIC for a period of time. I will make one or two opening remarks. First of all, we Q2 Chairman: I am sure that we have a lot of quite are genuinely quite grateful for the opportunity to contentious questions to ask of you. Gentlemen, the put an industry perspective on the development of Defence Industrial Policy was launched some 18 defence industrial policy and of course its months ago. In which areas do you think the policy implication for the defence procurement system has made some progress? In which areas do you which is so important to all of us. We know that you think the ideas in the policy have not made much have many questions that you want to ask on a progress? number of aspects in this complex area but, if I may, Sir Richard Evans: In fairness, I should re-emphasise I would like to draw attention to one fundamental that this policy was published only 18 months ago. I aspect of the policy before we get too absorbed with think it is a perfectly reasonable question in the detail. As the DIC’s written evidence described, hindsight for many of us to ask as to why we did not industry made a comprehensive input to the original address these issues some years earlier but hindsight policy that was announced in October 2002 and it is a pretty exact science. I think by definition there is was an input to a debate within Government started a great deal of expectation that came about when by MoD ministers and it was about a policy of the this paper was published that we quite seriously Government which aVects a range of the could and would not change things in the period of departments, not just the MoD. Thus, the policy was time over which this had been running. The things launched jointly by the Secretaries of State for that the Defence Industrial Policy paper have done Defence and Trade and Industry and subsequently today is that it has given an opportunity for the of course managed by a group of departments Government and particularly through the MoD to chaired by the Cabinet OYce. Sometimes it seems in actually enumerate what are essentially a set of discussions today as though industry asked for a strategic objectives that need to be brought into defence industrial policy when in fact we were account in the process of decision taking and, indeed engaged in the debate by government. What I really prior to decision taking, in the process of making want to point out at the start of this hearing is that recommendations for decisions, but I think, in the Defence Industrial Policy is not a policy for fairness, both we and the MoD would say that the industry’s sake but it is actually, we believe, very actual examples today of great success in this area much in the national interest. It is about the are pretty patchy. As of today, I would not want to sovereignty of the UK and it is about our economic give you any real examples of where I think we could Ev 2 Defence Procurement: Evidence 5 May 2004 Sir Richard Evans, Mr Nick Prest, Mr John Howe and Mr Simon Frost say that things have been decided diVerently because Mr Frost: The view I would have from slightly lower of this policy.