Defence IssuesMinister of Defence Procurement, Lord Drayson, addresses the Directorate of Equipment Capability Ground Manoeuvre Industry Day - 21 September 2005
Military Capabilities in the 21st Century
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| Lord Drayson, Minister for Defence Procurement |
Firstly I would like to take this opportunity to personally thank you all, for all the hard work that has gone into delivering the Urgent Operational Requirements (UORs) that have helped support our forces in Iraq. When I visited Basra earlier this Summer I saw for myself the tremendous job our forces are doing to help the Iraqis. They are supported in this task by world class equipment, much of which is down to all of you. Industry’s response to the evolving operational requirement has borne testimony to the whole "can do" attitude that pervades the business we are in, and is indeed a fine example to answer Brigadier Moore and his team’s strap line "What have you done for them today".
Many of you will know that I have been asked by John Reid to produce a Defence Industrial Strategy and while some of you will have heard me speak about this last week, I wish to take this opportunity to emphasise again some key points and draw out some points relating to Ground Manoeuvre. In building a partnership with industry it is vital that you understand what we are trying to achieve as the strategy is formulated.
So, what are the key tenets that will form the bedrock of the Defence Industrial Strategy?
Firstly, it is about the needs of defence. It is about maximising the battle winning capacity of our armed forces and the security of this country.
Secondly, the DIS is not a fundamental rewriting of the Defence Industrial Policy. It will build on that Policy, addressing some of the difficult questions which surround the future shape of the defence industrial base, and explaining, in some detail, how Government has been and continues to apply the Policy in practice. Not least, I intend it to develop a clearer joint understanding across Government and with industry of the technologies and industrial capabilities which are essential for us to retain on shore in the UK.
Thirdly it is about value for defence. Despite the savings we may be able to extract from an internationalised defence supply chain, we also need to remember the direct value to Defence derived from a healthy, competitive and dynamic national industry. For MOD, my primary concern will always be to maximise the fighting capabilities of defence – secondary benefits to the broader economy may or may not apply, and whether they are disputed. Keeping up with technological change, and rapid threat evolution, is challenge enough. But we should not ignore the actual and potential benefits to the broader economy, including the UK science & technology base, and we need to do more work in this area to understand properly its effect.
For instance, it is in the industry’s, MOD’s, and in fact wider society’s interests that, with obvious security exemptions, there is an exchange of technology and knowledge across the boundaries of civil and defence industry. An example of this is that during the technology development for the LAW 80 shoulder fired anti tank weapon, a revolutionary concept was developed for replacing compressed air systems. This has subsequently been used by divers, firemen and other safety workers who needed a portable air supply. A more recent example is in the case of Global Positional Satellite (GPS) Systems where the team which advise the MOD on GPS and other Satellite Navigational issues have developed a low signal strength GPS system which is now being built into all the UK police radios, so the police command centres know exactly where human resources need to be deployed. But I do wonder whether the overall exchange is really optimised, and if not, whether we have adequately addressed the relative roles of both Government and the industry in this area.
Now the fact that I intend the strategy to be published before Christmas means the work has to be prioritised. By December, we will not be able to cover all the sectors to the same depth, and there will be an element of ongoing work. In defence procurement, time is money and I am demanding gritty conclusions on shipbuilding and ship support; fixed wing aircraft (including Unmanned Air Vehicles (UAVs)); rotorcraft; guided weapons; general munitions; armoured fighting vehicles; Chemical, Biological, Radiological and Nuclear (CBRN) and Command Control Communication & Computation Intelligence Surveillance Target Acquisition and Reconnaisance (C4ISTAR).
You will note that I mentioned armoured fighting vehicles. This capability makes up a fair percentage of DEC GM’s area now, with Challenger 2 and its support derivatives, Warrior, FV430, CVR(T), Saxon and the like; in the future it will include both Panther, Future Rapid Effects System (FRES), Titan and Trojan as you have been discussing.
There has been a methodology agreed with the National Defence Industries Council, Research and Technology Sub Committee which provides an outline framework by which the MOD will be able to identify those technologies and industrial capabilities we believe are important to remain in the UK both for Armoured Fighting Vehicles and more widely for the other sectors I have mentioned.
We intend to ask MOD experts with their industry counterparts to identify important technologies that we want to retain in each sector using this framework, recognising that final decisions will rest with Government. Following this, the MOD will conduct detailed discussions with the Armoured Fighting Vehicles industry to establish, where appropriate, sustainment paths for the maintenance of those technologies that have been identified as important. While I appreciate that Armoured Fighting Vehicles do not make up anywhere near all of the land sector, it is in this area that we face the most immediate decisions.
In an industry which is simultaneously concentrating and globalising, even with the distortions inherent in the global defence market, competition often means international competition. The list of industrial capabilities that must be sourced from the UK will, I expect, be a short one. And of course, we continue to include foreign-owned companies operating within the UK within this. The UK defence industry is defined in terms of where technology is created, where high value skills are and where the intellectual property resides. It is about where the investment is made, not where the shareholders live.
Just as the Defence Industrial Policy is ‘driven by the need to provide the Armed Forces with the equipment which they require, on time, and at best value for money for the taxpayer’, so will the Strategy be. Not blanket protectionism for domestic industry, whether for initial procurement or through-life support. But a hard-headed assessment of what kind of industry – globally and nationally – we need to interact with, and how we can best promote it. Defence needs, as I have said, come first; the military challenges we face need effective and efficient responses, and the challenge to industry is to help us form such a response. When a non-competitive or national arrangement can be shown to be more effective and efficient than an open competition, we should pursue it; but only then.
So, as I said, I do not expect the list of capabilities that must be fostered and sustained in the UK to be a long one. But it does extend beyond those where we have long had an absolute requirement, for reasons of national security, to retain a full capability, from concept through delivery, support and regular upgrade, to disposal.
So, the key principles that we are developing in the Defence Industrial Strategy include; appropriate sovereignty, evolution not revolution, the maintenance of key industrial capabilities and skills, maintaining our abilities to be both intelligent customers and suppliers and, most importantly, achieving good value for money for defence. Let me just remind you of the main drivers in each of these areas.
Appropriate Sovereignty is a key principle we are using in our analysis. Appropriate sovereignty does not mean having a completely national industrial base in all areas. Nor is it just security of supply in the traditional sense. There will remain some areas, like aspects of the nuclear-powered submarine industry, which we cannot depend on another nation to develop or sell to the UK. But given that we rely on overseas supply for equipment as significant as the C-17, this is probably a short list. The other areas we need to investigate include:
- where we need to retain, in the UK, through-life support, including upgrade and urgent operational requirements; in the Ground Manoeuvre area, UORs have been successfully delivered in both Iraq and Afghanistan, notably in the force protection area as I am sure you are all aware, and we would wish to continue to build on such success.
- where specific UK capabilities give us important strategic influence, in military, political or industrial terms, this is also key;
- and in some cases, to maintain realistic global competition – in other words, so we are not subject to an overseas monopoly.
We are clear that it is no longer possible to rely on the traditional method of designing and manufacturing successive generations of platforms. We know that equipment will need to be in service for longer, be more adaptable, both in terms of how they may be employed and also in the way in which they are designed with upgrades and through life improvements. Sustainability, supportability and incremental enhancements of systems effectiveness will become more important in the future.
Such an evolutionary approach means that we must also use our excellent research base to pull through technologies of real military significance – and ensure that we can access as wide a pool of innovation as possible. We do have world-class defence science and technology organisations with significant scale already – Dstl, the Met Office, QinetiQ, the Atomic Weapons Establishment. But in the last few years, we have moved QinetiQ closer to our industrial supplier base, and introduced competition into the research programme. In three years time, the vast majority of work undertaken outside the remaining Government-owned labs will be competitively tendered. Indeed, how this approach is being managed in the Ground Manoeuvre area will be covered in detail later today.
The challenge for industry and MOD is to exploit this overall flowering of development before our adversaries do, and to do so in potentially unforeseen ways; to shorten the innovation life cycle; to keep a wide overview, but be agile enough to develop practically those areas where specific military design is needed; and to focus comparatively limited research funding on the areas of key military priorities, both for incremental improvements, and for paradigm shifts. In this context, it is good to see that the Ground Manoeuvre area is already managing to pull through some novel technologies, for instance increased protection for armoured vehicles, that are already helping to improve the way in which the UK is conducting operations in Iraq today.
Our strategy also needs to address the challenge of maintaining key industrial capabilities and skills where reduced UK and export market opportunities cannot any longer provide a sustainable production profile. The answer is not going to be creating sudden new programmes to fill the gaps, as we are occasionally lobbied to do. Government revenues are not immune to the economic cycle and fluctuations over time must be expected. Nor, given that this Government has overseen a succession of sustained increases in Defence spending and launched a marked period of modernizing our capabilities, including with the largest shipbuilding programme for decades, am I altogether sympathetic to suggestions that business cannot survive without current or imminent peaks of production being sustained ad infinitum. But where we can sensibly smooth out the peaks and troughs, we should do so. Nevertheless, there will be areas where, following the end of one project, business activity may risk falling to unsustainable levels. We need to ensure this does not lead to the loss of vital long-term knowledge, whose re-creation may be prohibitively expensive to recreate. In order to achieve such sustainability we will require a very open approach between the MOD and Industry and I hope that the Defence Industrial Strategy will allow us the opportunity to set the conditions for improving further our relationships.
We will also need to be clearer on the weight, if any, we give to things like the impact of defence exports on the balance of payments. Defence exports clearly have an important role in sustaining key knowledge and industrial capabilities, and profit generation, in areas where domestic demand alone is insufficient. Where we collect export levies, there is a direct and obvious feedback benefit to the MOD. And an eye to export can lead to industry independently developing equipment for a broader market which may also be of significant interest to us – so this is a proactive model which may be increasingly useful, as we ourselves become more open about our future needs. Defence Export Services Organisation (DESO) have an important role to play in supporting industry in this.
So far I have talked about how we are going to approach writing the Defence Industrial Strategy. I now want to quickly touch on some of the elements that you might see in the end product. As a businessman, I can recognise the benefit to industry of being given more detail about the future levels of business the MOD expects to do, and in what areas. It is important for us to address this. In the past, there has been an issue regarding how transparent the MOD has been prepared to be about its future programme. This makes future investments for business much more difficult to plan - it makes the defence industry in the UK a higher risk for the international investment capital and it is understandable that before committing funds business want a good idea of a programme’s future prospects. It is vital therefore that the Defence Industrial Strategy has a real deliverable in this area. Discussions with senior colleagues in the Ministry have made me aware of the risks that will need to be managed over greater transparency, not least in our ability to secure value for money, but there is a determination within the MOD to expose more of our future plans. This will help industry to invest its own resources more wisely, and in the end help the Defence Industry to deliver equipment for the Armed Forces.
As I said earlier, the Defence Industrial Strategy will talk about the industrial range of sectors. I recognise from my time in business that the MOD needs to talk about product; Industry does not talk about providing precision attack capability, it talks about providing bombs and attack aircraft! You will recognise therefore the sectors covered by the Defence Industrial Strategy, which will include Land, Sea and Air spaces. But despite this appreciation of Industry’s need to talk about product, I believe the discussion needs to move onto the next level and we talk about cross cutting technologies. What I mean by this it that both MOD and Industry needs to begin the transformation to discuss future defence requirements across sectors such as Systems Integration, and Test and Evaluation. We need to make the transition from a Defence Industry that focuses solely on delivering equipment to one that thinks about cross cutting capabilities.
Working with Industry in partnership is vital to the sustainment of a strong defence industrial base. It is important therefore that the rules of this engagement are clear. When a non-competitive or national arrangement can be shown to be more effective, we should pursue it; but only then. We expect significant efficiency and effectiveness improvements as a result of entering long term partnering arrangements with industry. If I may put it like this: "If we are going to get married, we want to know that Industry will stay sexy!"
I hope that that gives you a sufficiently clear idea of where the MOD is headed. But I would like to talk a little bit now about the Ground Manoeuvre area and the challenges and opportunities it faces.
The tempo and nature of current operations is markedly different to what has gone before. The relative certainties of the Cold War no longer exist. The asymmetric threat is becoming increasingly apparent. Against this background our forces must be flexible and adaptable. This has implications for both our armoured vehicles and our dismounted close combat capability.
People talk about the "enduring nature of close combat" and the age old difficulty of quickly detecting the presence of the enemy by day and by night remains key. So does the importance of minimising the physical load carried by forces in the field. Emerging technology, such as Network Enabled Capability (NEC) and night vision systems, can help us to address these issues. The success of operations in Iraq and Afghanistan has demonstrated this. But harnessing evolving technology brings with it new challenges, and in future we will need to consider how technology effects the mental as well as the physical load on the soldier. We must work out how best to translate the advantages NEC can bring down to the individual soldier on the battlefield, as opposed to the higher levels of Command. For example, it is all very well for the solider to be able to see what lies beyond the next corner, but this information will only be useful if it can be provided swiftly and in an easily digested manner so that he can actually change his next action. These are not simple questions, but I have every confidence that with your help we can solve them.
Rapid effect is another area where we are concentrating much effort. It is increasingly important that our forces can deploy quickly over large distances. The argument for expeditionary forces is clear, but implementing this poses some real challenges. Not least the extent to which firepower and protection should be traded for deployability. The FRES programme, which will replace the Army’s ageing fleet of vehicles, is key to meeting this challenge.
While FRES and the creation of medium weight forces have rightly received much attention, it should also be clear that these will not replace our heavy armoured forces. Challenger and Warrior continue to be important – ongoing operations in Iraq have clearly demonstrated this. We will need to ensure that our capability in this area remains more than equal to the tasks we ask of it and the threats it faces.
So, that constitutes a brief run through of the DIS and where we stand on it, and our priorities in the Ground Manoeuvre area. I hope that you find the remainder of the day useful and informative. My apologies that I will not be able to stay, but I am sure that Brigadier Bill and his team will be able to answer any questions of detail later in the day. In the meantime, I would be happy to take any general questions that you may have.
Last Updated: 27 Sep 05