NAO - Major Projects 2010

[Squirrel 41]

More news on the incompetence of the MoD under Brown and Comrade Bob, courtesy of the NAO:

Ministry of Defence: The Major Projects Report 2010 (http://www.nao.org.uk/publications/1011/major_projects_report_2010.aspx)

Will read with "interest" (and foreboding, with a large scotch).

S41

[Rakshasa]

Ah, the MoD, the only organization that could waste 2 billion trying to save 200 million. :ugh:

Thanks for the link, S41.

[GOLF_BRAVO_ZULU]

Morse Code for stating the bloody obvious.

The 2009 Report

To address the deficit the Ministry of Defence has reduced equipment numbers being bought on some projects and taken short-term decisions to slip other projects. This short-term approach to savings will lead to long-term cost increases. In 2008-09, costs on the 15 major defence projects examined by the NAO increased by £1.2 billion, with two thirds of this increase (£733 million) directly due to the decision to slow projects. Attempting to save money in this way does not address the fundamental affordability problems, increases through-life costs and represents poor value for money on the specific projects affected.

The MoD, at working level, has known that for years. At significantly above "working level", the grown ups have been saddled with in year "control totals" that have required in year fund shuffling to comply with Treasury spending rules.

Although it is fashionable and fun to knock the MoD, DE&S in particular, the core problem origin is external. The politicians and the Treasury are nicely insulated from any poo that escapes from the fan, though. Getting somebody to commit suicide isn't murder, is it.

[Not_a_boffin]

Absolutely right. The chunk of MB that "owns" the Equipment and Support budget lines are usually the ones who play balance the budget against CDEL & RDEL control totals by using Excel silt charts. This involves moving projects and budget lines between years (without any consideration of the cost impact of doing so) just to stay within an artificial line that with any sense* the Treasury would allow variance on (provided it was made up within a certain timeframe). This happens for both Resource Budget (ie MoD manpower & "studies") and CDEL (capital stuff) and results in the ludicrous shift of teh Fleet tanker programme in the midst of a shipbuilding recession (we would have been "given" ships) and the last significant increase in the CVF a couple of years back.


*I may have spotted the flaw in this argument.....

[Squirrel 41]

Mr Boffin speaks as one who has clearly been there! But he also has the kernel of his answer to why Treasury behaves so apparently irrationally in his piece:

"the Treasury would allow variance on (provided it was made up within a certain timeframe)"

I suspect that the Treasury would say something like:

"Yes, but every time we've tried this, Department X never actually gets around to paying the money back, and we get stuffed."

What you're talking about would be described as "Inverse End-Year Flexibility", and I'm aware of it only once (to the Foreign Office for a capital programme a few years back).

If MoD were to have a central pot of unallocated cash, as opposed to programming overspends every year leading to in-year cuts becoming inevitable, then perhaps the Treasury and the rest of Whitehall would be slightly more understanding.

As boring as it sounds, the NAO's MoD Financial Management Report (Strategic Financial Management of the Defence Budget (http://www.nao.org.uk/publications/1011/mod_financial_management.aspx)) provides lots of areas for MoD to improve. Bill Jeffrey as PUS and Accounting Officer should be ashamed.

S41

[Could be the last?]

Although many projects themselves have overrun, or have been over budget, there is another probable cause for the massive debt that the procurement system is now in - Manpower costs.

One specific IPT I'm aware of reorganized several years ago under one of the various rationalization progs and was reduced by approx 40%, the work was federated to other IPTs (or so they were promised) and their mandate was to manage in-service equipment only! However, this tied in with the HERRICK push and the work didn't reduce as was predicted, moreover it increased in line with the massive jump in UORs. So having made the savings, they were unable to support the frontline, and after much deliberation they were given the nod to import contractors. The snag is, that was 4 years ago, and as you have probably guessed many of the contractors are still there! (Min fee ........£450 per contractor per day!!)

So with this being a relatively small IPT, it would be interesting to see the total cost of contractors for DE&S for the period of the last gov.....?

[Not_a_boffin]

S41

Fair point, well made - the actual way to do it would be to spread the "payback" over a few years, say 2-5, but of course, the MoD record is not going to give the Treasury a warm fuzzy, so that's unlikely.

That said, the amount of staff work and nugatory knobbing about that occurs twice a year just to produce the current unsatisfactory result (savings measures / options) has to stop too.

Fortunately, I've only observed the process in action, but my gast was well and truly flabbered by the randomness of it all.

[tucumseh]

randomness of it all.Spot on NAB. The structured approach was abandoned in the late 80s, although certain HQ departments carried manfully on, the last good attempt being LTC 94 (Feb 93) by the FAA; however the basic problem is Treasury driven.


The NAO report is a depressing read. It blithely reports that one project, 9 years after Initial Gate (and 3 years after the notional ISD) has been cancelled because the wrong frequency spectrum was selected for its radios. Come on; this is really basic stuff. How can you trial kit for years without checking if you are actually allowed to use the frequencies? So many red flags would be raised at regular intervals. Yet the NAO skips over it. And if the project is cancelled, does that mean the requirement is too? For 12 years the MoD website has been tumpeting this as a #1 priority. Any replacement is now 5-10 years late.

[VinRouge]

Problem is, if its COTS, they dont want to know. Too many overspecifications for kit, when actually, there are some pretty funky commercial solutions to military problems, particularly when it comes to Comms and electronics. It might not be electronically "Hardened" or meet all the mil std requirements, but if it does the job, whats the issue?

Then you get into a furball with the UK manufacturers every time you buy a piece of kit thats twice as effective and at half the cost of the UK version. Although to be fair, MBDA and BAE Systems are churning out some good individual items, instead of complete systems.

The only pieces of kit that should be cutting edge are the "eyes and ears" stuff - ISTAR, Sentinel etc, as this is the key.

[Two's in]

Too many overspecifications for kit, when actually, there are some pretty funky commercial solutions to military problems, particularly when it comes to Comms and electronics. It might not be electronically "Hardened" or meet all the mil std requirements, but if it does the job, whats the issue?

VR, maybe it has changed since I was around, but one of the issues against COTS was it threatened all those cosy jobs for the "specialist" advisors from all over the place. They would always manage to whip up a scare story about how the Tempest clearance on a can-opener was an essential requirement if their (formerly DERA) advisor was involved in that procurement. But that was a few years back, I'm sure there is no place for parochial short term cronyism in today's procurement world.

[Gravelbelly]

Nice bumper-sticker arguments, but a bit simplistic.

Problem is, if its COTS, they dont want to know. Too many overspecifications for kit, when actually, there are some pretty funky commercial solutions to military problems, particularly when it comes to Comms and electronics. It might not be electronically "Hardened" or meet all the mil std requirements, but if it does the job, whats the issue?

MIL-STD kit has an increased temperature range over commercial or industrial electronics standards. Your unhardened little walkie-talkie that's great on a sunny day in UK, might be sod-all use when it's -15 on a hilltop, or at 35C and 100% humidity somewhere sweaty. Still less if you dunk it in a stream before trying to use it. Those cute USB connectors might be great at home, but not play nicely where it's dusty and awful. They might wear down and start to self-disconnect (see "Clansman pressel box").

When it comes to batteries, some terribly helpful Mover or Loadmaster might get all irate about carrying unqualified and potentially flammable kit in the airframe; please remind me what happens when Lithium cells meet water? If Dell and Toshiba can't stop laptops bursting into flames in the homeor office, why would it be any easier after a few extreme trips around pressure or humidity cycles?

"Take walkie-talkie and stick it in a plastic bag" is great if you've got plentiful and close logistic support, but it's rock-all use if you're in a rather primitive platoon FOB at the wrong end of a week's-delay logistic chain. Horses for courses.

...one of the issues against COTS was it threatened all those cosy jobs for the "specialist" advisors from all over the place. They would always manage to whip up a scare story about how the Tempest clearance on a can-opener was an essential requirement...

Having tried to work with COTS on a military project, it isn't that simple.
What happens in five years, when the kit breaks? The COTS manufacturers and their suppliers aren't going to keep running a production line to support ancient technology, so you still have to do lifetime buys of the kit. (I'm sorry, we don't make memories that small any more)
What happens in five years, if you discover a problem that was missed because of your "cheap and cheerful" approach to trials? (Of course it will stand repeated hot/cold cycles without any trouble, the manufacturer says so!) And your lifetime buy of parts is being eaten up at twice the rate it should?
What happens if interoperability suffers (see "cheap and cheerful approach to trials")? The Americans ended up with a combat helmet that wouldn't fit their radio headset in the 1980s. HMS Sheffield allegedly had a satphone that interfered with the EW suite at the wrong moment.Have a good hard think about maintainability man hours per flying hour, and ask yourself which is more expensive - another million quid on the design/trials cycle, or having to employ another ten maintainers per squadron over the life of the gear.

COTS is useful, and it can be good, but it certainly isn't a magic wand. We had to replace our processor board supplier when we discovered that they had lied to us about the Ethernet performance which was critical to our data transfers. ("Buy our kit, we already meet your spec". Followed several months of design effort later, after our initial dry-runs at system acceptance testing of the live kit by "Of course we tested it in point-to-point mode and got those figures". Followed after two weeks of data gathering and measurement by "Errrr..... actually, no we didn't, and we can't get it to work").

[BEagle]

Which is why an independent SME is often of benefit. Someone familiar with the requirement and who has also advised the COTS supplier of the aircrew needs.

Independent testing will reveal whether the COTS supplier has fully understood the system requirement (assuming it had been correctly specified...:oh:) - then bench/flight testing with the end user to assess whether the end user is being picky about a new requirement which his specification writer forgot about or is using the system without having RTFM or bothered with any training etc. The independent SME assessor will be able to arbitrate fairly between both sides and recommend whether or not , in his opinion, the kit meets the specified needs of the user.

Relying upon a supplier to simply read the spec. and nail the system into the aircraft without any independent assessment will often lead to tears!

[Gravelbelly]

The independent SME assessor will be able to arbitrate fairly between both sides and recommend whether or not , in his opinion, the kit meets the specified needs of the user.

Your suggestion is worthy - but who will employ the "independent" SME? Where will they gain their experience? By way of example, when you engage a surveyor to value a house before you buy it, for whom does the surveyor really work - for you, or for the lender? By the time you've hit arbitration, it's too late.

The next problem is "Off-the-Shelf". What shelf? There isn't enough of a market to keep big-ticket items sitting around. You can't just say "here's £2 billion, give us an EW system for an MPA by next Tuesday". When Boeing says "we can do you a tanker aircraft, no problem", it sounds plausible...

Here's an alternative. Why doesn't MoD(PE) employ some SMEs, and get them to sign off on the acceptance tests performed by the prime contractor? Or perhaps have the right to audit those acceptance tests? With the additional power of being able to withhold payment? Perhaps be involved from project inception, and be present when decisions are made about the requirements?

No, wait, that's what happened on our COTS project. And I still have a copy of a nice letter to us (at BAE Systems, from Abbey Wood) about how successful a project it had been, and what wonderful people we were.

[Squirrel 41]

Now Treasury gets the truth out - MoD in "special measures".

Treasury chief says ministries lost control of spending under Labour | Politics | The Guardian (http://www.guardian.co.uk/politics/2011/jan/19/treasury-chief-labour-spending)

Doesn't seem to have worked just yet, Sir Nick....

S41