NATIONAL AUDIT OFFICE Report by the Comptroller and Auditor General Ministry of Defence: The Torpedo Programme Orderedby the House of Commonsto beprinted 21 March 1985 LONDON HER MAJESTY’S STATIONERY OFFICE 52.10 net 291 This report is presented to the House of Commons in accordance with Section 9 of the National Audit Act. 1983. Gordon Downey Comptroller and Auditor General Nationril Audit Office 20 March 1985 Contents Ministry of Defence: The Torpedo Programme Pages Report l-6 History of torpedo development Management by MOD CommitmentoffurtherresourcestoTigerfish Achievement of Value for Money Conclusions Glossary of abbreviations Ministry of Defence: The Torpedo Programme Report 1. The Heavyweight Torpedo (HWT) is the major armament of the United Kingdom’s submarine forces and it is important for the overall effectiveness of these forces that such a weapon should be successfully acquired and integrated into the total underwater weapon system. The Lightweight Torpedo (LWT) is the principal anti-submarine weapon of ships, aircraft and helicopters. Substantial resources are involved in the development and production of these torpedoes, the total estimated costs up to the mid 1990s of the 3 current major projects, ie the Mark 24 Tigerfish, Sting Ray and Spearfish torpedoes, being more than f5,OOO million at constant 1984 prices. To date the Ministry of Defence (MOD) have not managed to share the costs of such programmes by entering into collaborative ventures with other NATO countries but they have informed me that world-wide sales are being pursued vigorously to widen the productions base. 2. This Report records the results of a National Audit Office (NAO) examin- ation of the problems which have been encountered by MOD in development of these weapons. For HWTs in particular, their complexity, the need to integrate the torpedo into the total weapon system and the relationship of the latter with other items of equipments on the submarine platforms have made it difficult for MOD to implement satisfactory arrangements for management of the pro- gramme. Nevertheless the position is much better than a few years ago; MOD have informed me that the Sting Ray LWT has successfully entered service and they have every confidence that the new Spearfish HWT will be successfully de- veloped. I intend to provide the Committee of Public Accounts with some further details to supplement the Report, on a confidential basis. 3. The NAO examination, which has concentrated on the HWTs, has shown a need, which has been recognised by MOD, first, for improvements in manage- ment systems and information requirements, accompanied by adequate staff re- sources to ensure satisfactory control of the programme and liaison with the contractor; secondly, to improve management of the complete torpedo weapons systems, possibly by appointing a prime contractor in industry; and thirdly, for close monitoring of progress of the Tigerfish project and the cost-effectiveness of allocating further resources to it. The examination also indicated that the prob- lems encountered and the lack of competition for the main contractor role in the United Kingdom have created difficulties for MOD in ensuring fully that value for money is obtained for the resources invested. History of torpedo 4. Until the late 1960s United Kingdom torpedo design and manufacture was development managed in-house by MOD. However the impact of the development of nuclear propulsion power on submarine capabilities led to the need for a new kind of torpedo with capabilities not unlike those found in airborne guided missiles. The significant technological advances and associated risks of failure which this 1 development entailed could not be sucessfully handled solely by MOD, who de- cided in 1970, as a result of experience with early in-house projects, that in future industry would be associated with MOD’s experts in research and development, including the co-ordination of sub contracts; also more time and care would be devoted to the development phase so as to avoid the dangers of venturing into production prematurely. 5. Hence development of the Mark 24 HWT Tigerfish which began in-house in 1959 was eventually taken on by the Marconi Company in 1972, although the project continued under the existing arrangements involving several hundred contracts placed by MOD with various contractors, but with Marconi as the principal one. Marconi later became prime contractor for the Sting Ray LWT and the Spearfish HWT, although not as yet for the total weapons systems. The company, now Marconi Underwater Systems Limited (MUSL), is currently in a monopoly position for torpedo development and production in the United King- dom, supporting MOD in the three on-going projects referred to above. However other equipments within the total weapons systems are subject to separate con- tractual arrangements by MOD with various companies. 6. Following the difficulties arising from inadequacies in project control and management of the early torpedo projects, MOD strengthened their own man- agement arrangements. In particular the Special Project Executive (SPE) was established in 1977 to deal exclusively with the Sting Ray project. Subsequently it also assumed responsibility for Tigerfish and Spearfish. In July 1984, following a review, the MOD introduced further changes in its management organisation designed specifically to improve its overall systemsmanagement ability. The post of Special Project Director, the Head of SPE, was abolished as part of the planned reductions in MOD manpower and SPE’s functions were transferred to a Directorate of Torpedoes (DTU) reporting to the Director General of Under- water Weapons Navy (DGUW(N)). 7. Significant technical problems have been encountered in the development of these new weapons, which are at the forefront of technology. The position for each of the major projects is as follows: (a) (i) Mark 24 HWT Tigerfish Development of Tigerfish began in-house in 1959 with the expectation that it would come into service in 1967. Due to development and engineering problems a limited version with less capability than originally envisaged did not enter service until 1974 and only received full Fleet Weapon Acceptance (FWA) in 1979. An improved version, with greater capabilities, has been developed since 1972 by Marconi acting as principal contractor for the project. This variant has also encountered technical and managerial prob- lems. There were 4 MOD investigations into the Mark 24 problems between 1969 and 1982. Expenditure on the Tigerfish project to 31 March 1984 was $95 1 million at constant 1984 prices. (ii) Mark 24 Tigerfish Consolidation Programme Some organisational, managerial and technical changes have been made but as a result of the 1982 investigation a comprehensive Consolidation Pro- gramme (CP) has now been approved. It seeksto effect improvements in the Tigerfish torpedo through continuing Post Design Services (PDS) work and to improve the weapon system project management arrangements. (b) Sting Ray LWT Early in-house development of an interim LWT (the Mark 31) was unsuc- cessful and was abandoned by the Ministry in 1970. Subsequently contracts were placed with Marconi for development and production of the Sting Ray LWT, the first United Kingdom torpedo to be developed entirely by private industry, although the design was conceived intramurally. The contract for development and initial production was later subsumed into the Spearfish /Sting Ray contract (see below). MOD have informed me that following its deployment in the Falklands campaign in 1982, Sting Ray successfully entered service with the Royal Navy and RAF in 1983, on time and within cost. The project is now at the difficult transition stage between develop- ment and production. MOD have informed me that although there are some minor areas where further work is required, this is not unexpected given the scale and complexity of the task and they are confident of achieving full FWA without increasing the unit production cost. Expenditure to 31 March 1984 was f691 million at constant 1984 prices. (c) Spearfish HWT The decision to develop anew HWT to supersede the Tigerfish was taken by MOD in February 1980. In September 1981 the Government approved de- velopment of the Spearfish HWT designed by Marconi, in preference to purchase of a US torpedo also under development, subject to satisfactory financial and contractual arrangements being concluded. Subsequently a joint fixed price contract was placed with Marconi for the completion of development and initial production of Spearfish and Sting Ray torpedoes. MOD have informed me that current progress on development of Spearfish is generally on schedule, although there have been some problems, which were not unexpected in view of the scale and complexity of the project. Expenditure to 31 March 1984 was f131 million at constant 1984prices. 8. A major problem encountered with the Tigerfish HWT has been the inter- face between the constituent parts of the total weapon system. The 1982 investi- gation (paragraph 7 (a) above) concluded that a major cause of the problem was that organisation in MOD and in industry was too fragmented and lacking in a total systems approach. No one person was in charge of the total weapon system, there was no prime contractor to draw the weapon system together in industry and there were problems in interfaces between the different authorities in MOD, the Navy and industry. Other causes were under-estimation of technical difficul- ties, insufficient development trials and inadequate funding and resources in the post design phase. t by MOD Current developments 9. As stated at paragraph 6, MOD have reviewed and progressively made changes to internal management arrangements culminating in the total integ- ration of the torpedo management task as part of the overall management of the underwater weapons programme. Currently there are separate system project managers for each of the torpedo projects responsible through the DTU to DGUW(N), who in turn is responsible to two top level torpedo policy Com- mittees.