It’s been a busy few weeks in the world of UK defence with a couple of think tank reports, the usual cast of senior officers saying we are at breaking point, a Labour Party defence re-launch, news of Royal Navy redundancies, the mythical projects of concern list going live and Liam Fox getting punchy on the eve of the Conservative Party conference.
Will be looking at each of them but this one covers the efforts of the Labour Party to take the initiative on defence.
To coincide with their annual conference the Labour Party thought it would be a good time to start the long road to credibility on defence, recruiting a cast of luminaries to add gravitas to their ideas for procurement reform.
Ho Ho Ho
In 1998 the resurgent Labour Party published what was then regarded and still is to this day, a coherent and sensible defence review called the Strategic Defence Review. It set out a clear set of roles, avoided too much bullshit and laid out the ways and means by which the elucidated objectives would be met.
As a report (forgiving the dodgy desktop publishing of the day) it was pretty damned good.
Unfortunately it all went downhill from there; aspirations met political and financial reality, a dalliance from which they never quite recovered.
It is probably fair to say that the Labour Party did a lot of good things for defence but in equal measure they did a lot of bad things as well.
Perhaps the biggest failing they had was actually recognising that those aspirations could not be afforded and did not have the political testicles to put a stop to it, checking the aspirations of Senior Officers and Industrialists alike, in fact, they presided over an era where the boundaries between those two groups became increasingly blurred.
The net result was the infamous black hole in the MoD’s budget, everyone knew someone was going to have to fill it but senior officers and politicians in the Labour Party simply failed to demonstrate the moral courage to do the right thing.
Besides the gimmick of Labour Party membership for armed forces personnel for a quid so came the time for the Labour Party to airbrush out the last decade or so and tell us all how they are in fact the true saviours of the nation.
Demonstrating a flair for being completely out of touch with reality and all round general fuckwittery synonymous with the type, someone, and I am not naming names, trotted out the immortal line
We are not bloody Denmark or Belgium
So that would be the Belgium that provided a mine hunter and 6 F16’s for operations over Libya and the Denmark that provides 750 personnel to ISAF (just under 10% of its active Army strength) and has suffered 42 casualties, amongst the highest of all contributing nations relative to population, not to mention hundreds of strike sorties over Libya.
Fancy a job ACAS, best leave the briefcase at home though!
Although Jim Murphy tried to make light the remark, hopefully he will have learned his lesson and realised that a break with the past is needed, not a hangover from it, politically it’s a trivial target which Liam Fox took full advantage of, tearing them both a new exit hole.
Jim Murphy, the Shadow Defence Minister, has been quietly impressive in his role but he has the considerable challenge of shaking off the undoubted legacy of the ‘black hole’ and Labours skeletons in the defence cupboard.
Despite the noble Lord firing a Spearfish torpedo at the re-launch and effectively sinking it, Jim’s speech at the Labour conference wasn’t all that bad, if a little light in the details and with far too many references to overseas issues that really shouldn’t concern us.
The real meat on the bones was a policy paper on defence procurement, have a read here
Of course, the Labour Party proposing ideas on defence procurement might seem to some like a burglar offering advice on home security from within Wormwood Scrubs but the paper is worth a read.
The ten year budget idea is perhaps one of the best, if nothing new, but the fundamental problem with this is that one Parliament cannot bind the next one so it’s difficult to see how this could be implemented without cross party consensus.
It also talks about the best being the enemy of good enough and this is a sound principle but if I was sitting in a ship under fire from supersonic sea skimming anti-ship missiles do I want my defence system to be good enough.
This is a fundamental problem and not easily addressed.
The report somewhat embarrassingly mixes FRES SV and UV and comes to the wrong conclusions, if anyone wants to check this and see if it is me that is barking mad, check out page 83 of the report.
The controversy caused by the Belgium and Denmark remarks cast a shadow over what is a pretty reasonable document.
Good effort but must try harder chaps
The report (Murphy & Co) nicely picks up two inconsistencies:
” Define ‘absolute’ and ‘deployment’ sovereign capabilities in each defence spending
review. In order to guide industry, it is essential to distinguish between ‘absolute’
sovereign capabilities (equipment that is vital to national security and that we must be
able to design, construct, produce and support in the UK) and ‘deployment’ sovereign
capabilities (equipment designed and developed off-shore, but that we must be able to
modify, upgrade, provide support capability and deploy for UK needs).
Due to the implications for UK freedom of action, there should be very few occasions
where the UK does not develop and maintain the capacity to upgrade and modify its key
military equipment and systems. To ensure UK-based engineering, upgrade capability
and UORs can be provided and maintained for systems purchased offshore…”
- ie. clear prioritisation to get a proper return on meager resources, as opposed to sowing them into the wind
A related point ” On an annual basis, the UK spends 4% of its equipment
budget on R&T and a further 20% on equipment development. This level of research and
development is high considering that UK defence procurement policy for many years has
been open competition with the aim of buying established equipment”
wonder how that is benchmarked against other nations like Germany or France
The French equivalent of the JIC has traditionally defined independence in the modern world as a % of GDP on industrial and especially defence R&D, I forget what the X was, but that’s their measure.
Lest we forget, before the election Jim Murphy, as Scottish SoS, was touring the shipyards with the message that Aircraft Carriers were safe in Labour’s planned SDR. At the same time, Bob Ainsworth was saying nothing, bar Trident, was exempt. This after Labour rushed through signing the carrier contracts after years of delay without ensuring that the necessary funding was available in the short term, resulting in the costly need to reprofile the project.
With the forthcoming independence battle with the SNP and Murphy’s prominent role in Scottish Labour, what hope is there that the MoD budget, under Murphy, will cease being used as a political football?
With regard to suggestion of 10 year budgets: one of the lessons that came out of the Bernard Gray review was that 12 years was too long an interval for Defence Reviews. He pointed to industry where it would be every 18 months, or 60 months at the outside.
The bigger problem with the idea is that it does not address the issue of trying to fulfil a SDR on a budget that doesn’t actually allow you to do that (in isolation) while at the same time commitments have increased above and beyond the expectations of the SDR. How much of the £36 billion blackhole is actually equipment that was in the 1998 SDR (Carriers, Typhoon, FRES?) but delays and cuts pushed the cost above the original planned cost and the budget allocated was too small for the latter, let alone the former?
The past 12 years (if not the past century) has demonstrated that governments are incapable of living within the allocated Defence budget.
“one of the lessons that came out of the Bernard Gray review was that 12 years was too long an interval for Defence Reviews. He pointed to industry where it would be every 18 months, or 60 months at the outside”
- Amen
I have never read such a companion of dishonest marketing speech than this pamphlet.
Design-to-cost, what a term. There are two economic priciples:
- make a given out of a min
- make a max out of a given
Currently, we seem to make a given and try to get the best price. As we only have BAE as a supplier for most big items, this fails, as BAE has no competition and can therefore set prices on their own.
Design-to-cost is setting a budget (??), and tries to get the maximum capability out of it. As we only have BAE as a supplier for most big ticket items, this fails, because BAE will take the money and will drive down the capability where possible to reduce it’s own cost.
Bottom line: it will not make a difference, as competition is key here. What does the pamphlet says about this competition?
“When an effective market exists (at least three credible suppliers), competition is of course the
best procurement policy. However, the reality is that there is seldom a viable market for major and complex defence projects.”
Three credible suppliers!
Wasn’t it Labours policy in the 60s and early 70s, to consolidate the arms, aerospace and finally shipbuilding industries? Wasn’t the Blair-administration the main driver behind starving VT out of the shipbuilding business to enforce consolidation?
That Labour proposes to shorten procurement cycles is another bitter joke. If they had handled affairs this way, we would have one CVF and another in final assembly.
The generic Weapon Engineering Service was outsourced by Labour and is known as QinetiQ.
But my favourites are:
“The Government’s current claim of a £38 billion unfunded liability over the next ten years has been impossible for us to verify.”
and
“In this context, where the Government faces a new affordability problem going forward, real reforms are urgently required.”
A ‘new affordability problem’! Maybe they should ask Bob, he has got the numbers.
Instead of a 10 years budget, we need a 30 years capability overview, such as the USN 30-years shipbuilding plan. This measure would instantyl make clear, what effect delays have on the wider picture.
Hi McZ
Just to put some background against your comments
Information on spend and percentages with MoD suppliers
http://www.dasa.mod.uk/modintranet/UKDS/UKDS2011/c1/table117a.php
http://www.dasa.mod.uk/modintranet/UKDS/UKDS2011/c1/table112a.php
You may find this
http://www-958.ibm.com/software/data/cognos/manyeyes/visualizations/the-biggest-suppliers-in-the-minis
easier to take in
If any further evidence is required that Murphy sees his brief as supporting BAE Systems rather than the defence of the realm or ensuring the forces have effective equipment they need when they need it, look no further than his letter to Fox yesterday:
http://www.scribd.com/doc/67450281
I haven’t followed what was said today, but the UAV thing seems to come across strongly in the letter from Murphy to Fox, dated yesterday:
“believe it is important that tomorrow you provide a commitment to maintaining UAV and fast jet capability in the UK over the long-term, with an MoD-led industrial strategy for how they will be supported…”
Surely the only way to introduce competition to procurement is to seperate design/development and manufacture? There are a lot of very clever engineering consultants about, but not many factories. Take away the need for the supplier to have large scale manufacturing facilities and you would have many more suppliers. If a project went tits skyward then the designers could go bust, without the loss of manufacturing jobs.
For the real big ticket items (ships/aircraft/helicopters) you could even justify nationalised manufacturing facilities (the Tories could lease/franchise them out to Serco etc to keep their private is best credentials). You could design here and build abroad (or threaten to….), or you could buy foreign designs on condition they/we build it here.
ChrisM
That’s a common thread that keeps cropping up – the idea of separate design groups from manufacturing. Hopefully it’ll start to gain some traction.
RE ” a common thread that keeps cropping up – the idea of separate design groups from manufacturing. ”
- that’s how the Russian jet aviation industry is structured; miraculously they survived a decade of practically no investment (except through Sukhoi export sales)
RE “or you could buy foreign designs on condition they/we build it here”
- that’s what is happening within the so called “deployment” capabilities, as opposed to strategic
- without the facility you can’t support/ modify over the life cycle (at least cost effectively)
Just that there are so many vested interests , causing cross-pull, or just intellectual laziness that the categorisation of capabilities has not been done (the DIS of 2005 focussed more on technology enablers, and the R&D investment, all the way through to what is being done in universities; I haven’t read the newer Green Paper though)
“that’s how the Russian jet aviation industry is structured”
And that’s just for starts. As I pointed out on some other thread, the list of companies (not always military, granted) that simply do the design and promotion work, but leave the manufacturing to the cheapest third party bidder is endless. It’s the de facto standard of the private sector outside of defence.
Chrisb
No it isn’t currently not in civil aerospace. design and build is always preferable. It allows risk sharing to be spread thru the supply chain. If you separate design and build there is no incentive for the design house to reduce cost of manufacture which is were all the cost is. The main consultancies currently provide additional on site engineering resource as it is.
“without the facility you can’t support/ modify over the life cycle”
Make sure you get the IPR and then you will have a big queue of people with clever ideas of how to support/modify your assets.
” there is no incentive for the design house to reduce cost of manufacture which is were all the cost is”
That will be part of the bid, especially if the design group are picking a build partner, rather than the MOD picking
Mark, outside of the military, Boeind and Airbus then. I’m sure there are a few other examples dotted here and there.
But as I said in that other thread, wherever it may now be;
Apple – design, then contract out the manufacturing.
Dell – same,
Sony – same,
But it’s not just electrics. The new class of Maersk ships will be built by Daewoo. There are an overwhelming number of examples of this in practice.
“there is no incentive for the design house to reduce cost of manufacture which is were all the cost is”
Apart from keeping down the cost of their products…
And that the manufacturer has methods of controlling costs…
Etc.
chris in the examples you mention the design house eg apple sony dell ect control the manufacturing budget and therefore want to make it as efficient as possible. This type of outsourcing goes on already. F35 is done this way, the carriers are done this way ect. The problem you have with military programs is you have limited companies that have the security clearances required to make the bits and indeed the staff pool you can recruit from it gets worse if theres ITAR requirements.
The mod saying to one company you design it and then another you build means each get there own budget if you go to the design house and say the manufacturing company says we can make this cheaper if we do this the design company goes maybe but you asked for a design we give you one if you want another we need more money. The design may cost less than 10% of the budget will have a bearing on over 50%.
@TD
Errm, to exactly what point are those tables counterfacts?
What big ticket item was target of a large scale competition? F35? Typhoon? Astute?
Compare this to the 60s, when each and every aircraft project saw 5 contenders.
“each and every aircraft project saw 5 contenders.”
- bankrupted the whole industry, now we can’t even bid, except to build some components
The other extreme is LM having control of both F22 and F35
- I hope the Silent Eagles and Gripen NGs sell well, otherwise we will be in a very odd situation for the next gen fighter plane
@ACC
“bankrupted the whole industry”
No, not making numbers out of those projects and politically hampering development of maginicent designs bankrupted the industry. Add to this a misguided nationalization scheme, to mirror the french taste for global players.
“otherwise we will be in a very odd situation for the next gen fighter plane”
Especially as we currently outsell our UAV-tech to the frenchies.
If our politicians would have any knowledge about industry, they would be no politician.
All factors you mention are correct; for anyone else interested I highly recommend “Empire of the Clouds” as reading, covering how we ended up, over decades, where we are now.
- competition is always a good thing, but only when administered in correct doses
The UAV field that you mention is a joke globally:
- the Americans restricting their technology exports
- the Israelis selling that technology to any one who pays; they are even helping Russia to modernise that sector
- Europe? The same kind of hyper-competion (on the surface) that leaves no project properly “taking off”