Understanding a different ‘holy trinity’: procurement and British defence policy, part 1: capability

DR ED HAMPSHIRE

In defence procurement, as in Clausewitz’s description of warfare, there is a ‘holy trinity’ that must be kept in balance to ensure success and the achievement of objectives. The procurement trinity consists of capability, cost and time. The piece of equipment, weapon system or platform that has been procured must be able to fulfil the roles assigned to it, must not be prohibitively expensive and be delivered on time. It sounds simple doesn’t it? In fact, especially for the most complex procurements such as major warships, fast jets and armoured fighting vehicles, nothing could be further from the truth. Such procurement projects are often the most complex undertaken by either government or the private sector, involving dozens if not hundreds of sub-contractors, and thousands of individual contracts. On their success or failure depends the lives of the servicemen and women who will use them, by extension many of the objectives of British foreign and security policy, and then ultimately a significant part of the security and wellbeing of the British people.

This blogpost will analyse the first member of the procurement trinity: capability. My next blogpost will then look at cost followed by the last on time.

Before going any further it would be worth defining procurement and its sister-term ‘acquisition’ (which is currently used much more often in Ministry of Defence (MoD) literature). Although sometimes used interchangeably, ‘acquisition’ relates to the acquiring of capability, either through ‘off the shelf’ purchasing, or through the bespoke or modified manufacture of equipment to fulfil the required capability. ’Procurement’ just relates to the bespoke or modified manufacture aspect, and this is what these three blog posts will focus on. There is a lively argument about the merits and de-merits of bespoke manufacture against off the shelf purchase, but that would be an issue for another blogpost! Suffice to say, even the most ardent advocates of off the shelf purchasing acknowledge that some, usually the most complex and expensive, acquisitions have to be procured either bespoke or with some modifications for use in British service.

To start then with capability: this is fundamental to the worth of a piece of equipment, if it cannot do what it is meant to, it could be worthless to the military – a waste of time, money and effort for all concerned. The ‘user requirement document’ for a piece of equipment is written by staff officers in the capabilities sections working in the individual service commands, with reference to the overall capability that is required to fulfil a set military task or tasks. These should then set the parameters by which that project then proceeds. Unsurprisingly, staff officers are likely to prize capability above all: their colleagues will be using the equipment in the future, and they themselves might well have used its predecessors and know of that earlier piece of equipment’s limitations and weaknesses. Additionally, it is fiendishly difficult to predict future threats so the inclination to make planned equipment as capable, flexible and adaptable as possible is strong, and this flexibility rarely comes cheap. Some procurement projects are even more important to armed services, each of whom have their ‘sacred cows’ – fast jets being those of the RAF and aircraft carriers and escorts that of the navy.

This understandable and natural wish to have the very best equipment can easily lead to cost escalation: multiple changes in requirements in order to incorporate new technology or deal with new threats, can exponentially increase costs during the project’s development. Important projects might be pushed through to what is called ‘initial gate’ in MoD jargon too early before sufficient conceptual work has occurred, in order to protect the project from possible cancellation or further delay at this early stage. Initial gate occurs following the completion of the ‘conceptual’ phase and before the ‘assessment’ phase begins, and it has been acknowledged that once a project has passed through initial gate it is very difficult to cancel. A substantial investment of money and time begins at this stage, with a wide range of public and private sector actors having a strong stake in the project’s survival. Some have suggested that a ‘conspiracy of optimism’ might exist between staff officers and the defence industry, both of whom have an interest in getting a programme through ‘initial gate’ by being optimistic about the capability that could be achieved at a certain cost. This analysis was accepted by the Secretary of State for Defence on 14 May 2012 when he announced in Parliament a range of measures to prevent over-optimistic cost assumptions in defence procurement projects. Also, it is not unknown for ambitious staff officers to wish to ‘make their mark’, in the pithy words of the former head of the MoD’s Defence Equipment and Support organisation Sir Bernard Gray, and therefore change the staff requirements either when it is not entirely necessary or far too late in the project development, when changes could impose considerable costs on the project.

The other side of this argument is that sometimes projects have been delayed for so long, that not making such changes would result in an outdated and outclassed piece of equipment or system. However, it must also be acknowledged that the pursuit by staff officers of a ‘world beating’ lead in capability over other similar equipment can be incredibly expensive. For some decades now it has been well understood that a gain in only another 5% increase in capability to make a project such a ‘world beater’ can increase costs by over 50% (see Warren Chin, British Weapons Acquisition Policy, Ashgate 2004, p. 91). A classic example from the mid-1960s includes the ill-fated (and eventually cancelled) TSR2 bomber, which was marginally more capable than its US counterpart the F111 but would have cost over 200% more per aircraft (see Straw and Young, ‘The Wilson Government and the Demise of TSR2’ in the Journal of Strategic Studies, Dec 1997, p. 26). Technological over-ambition can also be seen more recently in the protracted process to procure a family of support, reconnaissance and mechanised infantry vehicles for the British Army. Originally termed the Future Rapid Effect System, which gives a hint to the technological ambition of the project, nearly £400m of taxpayers’ money was spent on early stages conceptual and development work with very little to show for it. The National Audit Office report of 2011 on the project was damning: it stated that the requirements for FRES were ‘demanding, and frequently depended upon integrating advanced, but immature, technologies from the design stage’ and recommended that the procurement of such equipment should be based upon an off the shelf solution with modifications . The MoD took these recommendations to heart and in 2014 the order for what was now called Ajax was finally placed, and what was procured was effectively a modified version of the ASCOD vehicle in service in the Spanish army.

When discussing capability the issue of personnel is often forgotten but can be crucial. In addition to a pipeline of equipment production there must be a pipeline of trained personnel in sufficient numbers to ensure that the piece of equipment, system or platform can be operated. Major warships are a classic example of this: sufficient numbers of trained chief petty officers and warrant officers – the experienced non-commissioned backbone of a ship’s crew – must be available when the new ships enter service. Such CPOs and WOs cannot be brought in fresh from outside, but take up to fifteen to twenty years to work up through from the junior ratings. Skilled specialists such as marine engineers and aircraft mechanics have been at a particular premium. An under-appreciated reason for the cancellation of the navy’s CVA01 strike carrier in 1966 was the issue of personnel. It was not clear that the navy would be able to man these colossi without denuding the rest of the fleet of manpower. Similar issues might still have relevance when HMS Queen Elizabeth and HMS Prince of Wales enter service in the next few years.

Capability is therefore much more than just getting the best bit of kit possible: a balance must be made between the ‘best’ and the ‘good’ with an understanding that pursuit of the former can be prohibitively expensive. It is about personnel and training as well as equipment, and decision-makers must ensure that sufficient early conceptual work is undertaken to ensure that the chosen capability is deliverable within the budget and timeframe and that wishful thinking does not cloud sound judgement.

Capability is only the first part of the procurement trinity. My next post will look at the second element, cost.

Image: prototype BAC TSR-2 at Warton plant and airfield in 1966 via wikimedia commons

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