Tuesday 30 August 2005

Oh for a grown-up newspaper

It is rather curious that The Daily Telegraph seems more interested in US military equipment than the kit bought for our own forces, hence a story in yesterday's paper, reporting that the "Humvee comes to the end of the road".

Iraqi insurgents, the paper reports, have mortally wounded the humvee. At least 350 American soldiers have been killed while riding in humvees in Iraq, about a quarter of all combat casualties. Many hundreds of vehicles have been wrecked. The Pentagon, therefore, has decided to bring forward by a decade the hunt for a successor.

What makes this report specially curious is that, just as the Americans are deciding that the Humvee has had its day, the MoD has bought 401 Italian-built Panthers for the British Army. These, it turns out, are based on a 1977 design put up to compete for the contract from which the Humvee emerged, paying four times the price that the US pays for the up-armoured vehicles that it is about to make redundant.

The plot become even more convoluted when one learns that, as an interim measure, the US forces have bought a number of the South African designed RG31s, which at, £289,000 each are £124,000 cheaper than the Panther, yet these same vehicles were rejected by the MoD even though they are built by a wholly owned subsidiary of BAE Systems.

Yet, apart from the Booker column, not one British newspaper has thought to mention these curious developments.

Nor, indeed does any newspaper – apart from The Financial Times - seem to be at all interested that a battle royal seems to be being played out over the fate of MoD contracts for the FRES system. The Telegraph last mentioned the system (but not by name) in October 2003 when it announced then that all or part of the contracts would be awarded "within the next few months". It now seems entirely incurious that it is two years later that we are coming to the stage of contract awards, with the cost having increased from £6 to £14 billion.

Yet, as reported on this Blog, where the MoD awards the contracts will be a crucial litmus test as to which way defence policy is going.

At stake are not only are the "platform" contracts – the description given to the basic armoured vehicles – but the electronic "architecture", the various electronic systems which equip the vehicles and can account for up to 80 percent of the final price.

The MoD has not named the companies involved, but it is expected that US aerospace giant Lockheed Martin and the French-owned Thales UK each will receive contracts to look at potential electronic systems. If Thales gets a contract, it looks likely that it will be fronting a Swedish-built Hägglunds CV90 vehicle which has been converted to hybrid electric drive for FRES demonstrations.

Hägglunds is wholly owned by BAE Systems and, intriguingly, its officials are saying that the vehicle is in Sweden, "where it is doing work for the MoD." "What work?", one might ask, but it would be useful if grown-up newspapers also started asking about the most expensive equipment project ever undertaken for the British Army.


Sunday 21 August 2005

Lying for Tony

Nothing is true in politics until it has been denied by a minister. And, in the wake of Booker's column last week, we have Minister of State for the Armed Forces, Adam Ingram, writing to The Sunday Telegraph to say that Christopher Booker is, yet again, wrong.

The MoD has not embarked on a secret programme to "Europeanise" our forces through the backdoor of equipment procurement, he claims. "The basis of our procurement process is clear: in an open competition, any company (UK, European, American or otherwise) can bid for a MoD contract. Ultimately, contractors are chosen on the basis of value for money for the UK taxpayer."

Interestingly, I am just reading Peter Oborne’s book, The Rise of Political Lying, in which he declares:

Britain now lives in a post-truth political environment. Public statements are no longer fact based, but operational. Realities and political narratives are constructed to serve a purpose, dismantled, and the show moves on. This is new. All governments have contained liars and most politicians deceive each other and the public from time to time. But in recent years mendacity and deception have ceased to be abnormal and become an entrenched feature of the British system.
It is in that context that Ingram's statement and the rest of his letter must be read. He is writing a "political narrative" constructed to serve a purpose. Its aim is to deceive.

Take for instance, his phrasing: "The basis of our procurement process is clear: in an open competition, any company… can bid for a MoD contract." Read superficially, it would appear to suggest that all MoD competitions are "open", but if you read the words carefully, he does not actually say that. He simply makes an assertion to the effect that, if MoD competitions were open – which is not always the case – any company could bid.

Of course, not all competitions are "open" and, in any case, it depends what you mean by the word. The Type 45 Destroyer competition was open in the sense that bids were invited to build the ships. But, a complex system like an air-defence warship is basically a platform for the radar and missiles and the government had already decided on that equipment. Thus, any potential supplier who already had his own package would not be interested in just building the platform. The options were already closed down before the bids were invited. Was that an "open" competition?

Then there is the Panther contract. Bids were invited and three companies were short-listed, who submitted four vehicle types for assessment. Then, at the behest of the MoD – after the shortlist had closed – another vehicle was entered – the Italian-built Panther – which subsequently won the contract. Was that an "open" competition, where the MoD selects the very vehicle it enters for the competition?

As for the claim that contractors are chosen for "value for money for the UK taxpayer", the Panther is as good example as any of how that is not true. Purchased at £413,000 each for what amounts to an armoured SUV, the contract cost £166 million when the same number of up-armoured Humvees would have cost the taxpayer £40 million. How is that value for money?

In his column this week, Booker just happens to address this very subject of value for money, the cost of the government's "Europe first" policy. At the time of writing, we had worked out this had wasted just over £5 billion, which is serious money. To that must also be added the £830 million wasted on the Storm Shadow, which brings it up to over £5.8 billion.

But, writes Booker, all this pales beside the proposed £14 billion cost of the 3,500 Swedish-made vehicles equipped with French-made guns we are buying to equip three brigades of the British Army under the FRES (Future Rapid Effects System), at a cost of £4.6 billion per brigade. The US Army is to equip 36 brigades with its comparable but vastly superior FCS (Future Combat System) at a cost of only £1.8 billion each. Yet until 1999 we were equal partners with the US in developing this project. That is another £8 billion down the drain.

Returning to the egregious Ingram, his letter goes on to challenge Booker about the 2000 "Framework Agreement", with him claiming that the agreement "aims to remove barriers to industrial co-operation in the European defence market." He continues:

This is a sensible agreement, which encourages nations to examine the possibility of co-operative procurement programmes in order to avoid wasteful duplication. Encouraging this is something we seek to do with many of our allies, not just these five European nations.
This, in the style of mendacity employed by this government, is not altogether untrue, but the "agreement" is a lot more than that. For a start, it is a formal treaty and, as we pointed out, it commits the parties to:

…establishing a long term master-plan that would present a common view of their future operational needs. This would constitute a framework for harmonised equipment acquisition planning and would provide orientation for a harmonised defence related R&T policy.
In this context, the use of the word "encourage" is far too bland, to the point of being positively misleading. The Treaty imposes – I stress imposes – specific obligations, to whit, "at each stage of the acquisition process, the Parties shall undertake regular and comprehensive exchanges of Documents and other relevant information and shall undertake co-operative work." Note, twice in one sentence, the word shall is used. The treaty provisions are not optional.

Ingram then goes on to say that the "Agreement" was not signed in secret. This is the "straw dog" ploy. Booker did not say it was signed in secret. What he did write was:

…everything about the way it was drawn up seemed calculated to hide its true significance. Signed by Geoff Hoon, as Defence Secretary, at the Farnborough Air Show on July 27, 2000, it was given the blandly misleading description of a "framework agreement" concerning "measures to facilitate the restructuring and operation of the European defence industry".
In his letter, Ingram continues the process. Never once does he refer to the Agreement as a Treaty and he makes no reference to the fact that it imposes specific and detailed obligations on the signatories. All he can offer is that the House of Commons Defence Committee reviewed the Agreement and was content for ratification to proceed – as if the approval of a Labour-dominated committee made any difference

To conclude, Ingram argues that "we are not embarked on a programme of cutting our Defence ties with America in pursuit of a 'European Army'". In his original, unedited letter, he says this is "is plainly and ludicrously wrong," calling in aid, "last year's Defence White Paper" which, he says, was "quite clear":

The most demanding operations could only conceivably be undertaken alongside the US, either as a NATO operation or a US led coalition. Cooperation with our European allies on humanitarian or peace-keeping operations is not occurring at the expense of our close relationship with the USA.
This passage is true, but it bears no relation to the denial preceding it, which makes it a particularly clever lie. What Ingram says applies only at the moment. It is undeniably the case that "the most demanding operations" could only be undertaken with the US, which is why the EU set out the European Capabilities Action Plan and the 2010 "Headline Goal" to redress that situation in order that the EU could mount autonomous military operations. What applies now will not apply in the future, if the "colleagues" can help it.

Furthermore, it is not the "humanitarian or peace-keeping operations" which are affecting our relationship with the US. It is the process of re-equipping the armed forces to take part in the European Rapid Reaction Force, with the intention of carrying out "peace-making" operations, that is doing the damage.

But then, Ingram is a government minister in an administration that believes in "constructing the truth". A good and faithful servant, he is simply, as Oborne would put it, "lying for Tony".


Wednesday 17 August 2005

The tragedy of the Type 45

Of all the many defence projects that we have looked at in the last months, few approach the scale of insanity and expense of the UK's current plans to provide air-defence ships for the Royal Navy. Just about every decision taken has been flawed, with the result that we are to receive fewer, less-capable ships, later than anticipated, at a vastly increased cost.

We are, of course, referring to the Type 45, currently under construction, about which we wrote briefly in an earlier post. But the sheer scale of the disaster – which is effectively wasting £2.4 billion of our hard-earned money – deserves a separate post, not least because of the baleful effects of European co-operation in the project.

The project itself actually has its genesis in 1985, with the ill-fated NFR-90 (NATO Frigate Replacement for 90s) programme, a multi-national attempt at designing a common frigate for several Nato nations, including France, Germany, Italy, the UK, the United States and Canada.

Inevitably, with such an ambitious project and with such disparate requirements, the project could not succeed and it was abandoned in the early 1990s, after US and the UK had withdrawn, the latter in 1989 after fears that the design would not meet the requirements for replacing its ageing Type 42 air-defence destroyers.

Not deterred by the difficulties inherent in multi-national projects, however, the then Conservative government opted for a "European" solution, setting up in 1992 the Horizon "Common New Generation Frigate" project with France and Italy.

The project comprised two separate but linked projects – the basic platform (ship), and the missile/radar complex. And while the platform was a common venture, and the British elected for their own radar, the missile system – known as the PAAMS (Principal Anti-Aircraft Missiles system) – was to be French-built by EUROPAAMS.

This is a company jointly established by EUROSAM, a joint venture company formed by the two French companies Thomson-CSF (now Thales) and Aerospatiale Matra (now part of EADS) and the Italian company Alenia Marconi Systems) and UKAMS (a subsidiary of Matra BAe Dynamics, UK).

The system comprises two parts, the missile itself, called the Aster, and the "Sylver" launcher. Aerospatiale Matra is responsible for the missiles and Alenia Marconi Systems for the launchers, actually built by DCN of France.

The project turned out to be a disaster, and in April 1999, the UK pulled out of the platform component. The National Audit Office estimated the loss to the MoD at £537 million, including the costs of refitting existing warships to cover the delays in procuring new equipment, leaving the Ministry with a problem it did not want. Unfortunately, however, it continued with PAAMS enabling the partners to sign up to a development and production agreement at a cost to the MoD of about £1 billion.

From the outset, the underlying thinking of collaborative development was sound, in that the development costs of building a relatively small number of ships (the MoD originally projected 12) was so high that it made absolute sense to try to spread the cost over a larger number of platforms.

But, having pulled out of the Horizon project, yet still being committed to the French missile system, there was no prospect of collaborative development with other partners and, by default, the MoD was left with no option but to commission a British design.

A "fixed price" contract was awarded to BAE Systems in April 2000 for twelve ships, scheduled to enter service by the end of 2014, with the entire programme budgeted at about £6 billion, including PAAMS. The target cost per ship (excluding missiles) was about £270 million,

Over term, however, delays and more delays occurred, with the first ship not now due for commissioning until September 2008. The MoD has only confirmed orders for six of the twelve ships and, currently, the Defence Procurement Agency is forecasting a price of £6 billion for just six ships, double the original cost.

In theory, the Aster missile is the most advanced in the world and the combination of the British radar and the missile gives the ships world-beating performance – again in theory. The system is, however, designed to deal with advanced Soviet systems which were on the drawing board when the Aster was first envisaged, but since have not materialised. Existing systems are more than adequate to deal with any known threats.

Against that, is the proven US system, the world-class AEGIS Combat System based on the Arleigh Burke DDG-51 platform, of which over 50 models have been built, making it a mature and trouble-free alternative,

As importantly, the current French launch system is capable of handling only anti-aircraft missiles. The US system can also fire Tomahawk cruise and ASROC anti-submarine missiles, making the Arleigh Burke class truly multi-purpose ships. Yet, to save money, the Type 45s are not even to be fitted with Sonar detection equipment. Our Navy is to be equipped with a single-purpose ship which, in a campaign where there is no significant air-threat, will be of little use.

Purchase of the US ships, at a cost of £600 million per platform, would have saved the British taxpayer £2.4 billion and, on the basis of the Australian deal, they could have been built in British yards, safeguarding jobs.

The tragedy of it all is that it is too late. The contracts have been signed and the funds committed. Once again, we are paying for the obsession with European collaboration.


Friday 12 August 2005

The cost of Blair's vanity

Recently, I published piece under the title "the price of collaboration", pointing out that the UK government's participation in the abortive "Trigat" European anti-tank missile projects had cost us £314 million before we abandoned them and bought off-the-shelf US missiles.

As always though, this has turned out to be the tip of the iceberg and, with further research, it looks like the "Europeanisation" of our defence policy has so far cost us over £1 billion and looks set to cost us many billions more. And for the privilege of paying considerably more, we will end up with an inferior military capability.

One of the earlier cash drains was a project called the Multirole Armoured Vehicle (MRAV), a collaborative programme with the Germans and the Dutch. Hailed at the time as "a major boost to the European defence industry… a prime example of… collaboration with our allies," it was signed in November 1999 for the collaborative development and initial production of the family of next generation armoured utility vehicles.

However, the UK pulled out in July 2003, losing £48 million in the process, when it decided to pursue the FRES concept. MRAV – by then renamed the "Boxer" - at 31 tons per vehicle, was too heavy for the C-130 Hercules air transport needed for "rapid reaction" operations envisaged for FRES.

By defence procurement standards, of course, a mere £48 million is small beer, although it is still real money and it was poured down the drain. We got nothing at all in return.

In a slightly bigger league is the Panther debacle, where the MoD spent £166 million on 401 armoured Italian SUVs when, for £40 million we could have had the equivalent M1114 up-armoured "Humvees" – an excess expenditure of £126 million.

However, behind the Panther story is an even more fascinating tale as this was bought after the cancellation of a joint Anglo-American Project called TRACER/FSCS, started in 1996 to develop a high-tech tracked reconnaissance vehicle. In February 2000, however, the project was cancelled when the US Congress shifted funding to a more ambitious, all-embracing concept known as the Future Combat System (FCS).

The British government chose not to join in this venture, pulling out to develop FRES, losing £131 million that it had already spent. Within the framework of FCS, the US went on to develop the vehicle, known as the Sika combat vehicle, while we went on to buy the Pather which, supposedly does the same job.

On just those four projects, therefore – MRAV, TRIGAT, Panther and TRACER, we have blown just short of £620 million, for absolutely no gain at all.

This sum, however, pales into insignificance, against the costs of FRES, currently estimated at £14 billion – the largest Army re-equipment project in history. The US, on the other hand, is spending $120 billion on FCS – the project that we chose not to join. But, while we aim to equip three Brigades for our money, the US is planning to equip 36 with theirs.

By my reckoning, therefore, we will be paying £4.6 billion per Brigade, compared with £1.8 billion for a US Brigade, two-and-a-half times more than the US for formations which will not actually be as well equipped. Notionally, co-operation with the Americans - from which we withdrew - would have given us bigger bangs for fewer bucks: less than £6 billion as opposed to the projected £14 billion.

There is also, seemingly, another major loss-maker in the offing, in the form of a £10bn project called the "Future Offensive Air System" (FOAS). In a situation which has some parallels with TRACER, the UK has been working for the last seven years with the US on producing a high-tech Unmanned Combat Aerial Vehicle (UCAV) by around 2018 when the RAF's fleet of Tornado GR4s is expected to reach the end of its operational life.

Once again, however, this time in June 2005, the British government pulled out of the project, even though the "definition phase" was not due for completion until 2008. As yet no loss has been declared, though it is likely to be substantial and, meanwhile, the UK government is thinking about joining the French in its "Neuron" UCAV project – at an unspecified cost.

The one thing we do know about joint French projects, though, is that they always cost us a lot of money and – especially with missiles, as in Trigat – they do not always work.

Nevertheless, we have gone ahead with another joint project to produce the Meteor long range air-to-air missile to equip the Eurofighter. Supposedly offering advanced technology, its cost is estimated at £1.4 billion, chosen in preference to the "extended range" missile produced by US arms manufacturer Raytheon at a cost of £500 million. Although theoretically less capable, it had the merit of being a development of a battle-proven system, but Blair has chosen the "European" route.

Predictably, this has backfired. Although the Meteor was supposed to be in service in 2005, to match the introduction of the Eurofighter, it is now not expected to come into service until 2012 – at the earliest. As a stop-gap, therefore, the MoD has had to spend £200 million on Raytheon missiles, to give Eurofighter pilots something to play with. By my reckoning, therefore, the Meteor project – if it works - will have cost the taxpayer £1.1 billion more than the US option.

Just to tidy up the accounts, there is also the cost of the totally unnecessary Galileo global positioning system which will have cost the British taxpayer about £400 million by the time it gets into orbit, and – to add insult to injury – the Commission has recently announced a defence research programme, our contribution to which is at least £120 million, while most of the work will go to the French.

And all this because, at St Malo in 1998, Tony Blair wanted a seat at the European "top table" and offered to kick-start European defence integration in exchange. We cannot afford the cost of his vanity.


Wednesday 3 August 2005

The price of collaboration

A few days ago the MoD issued a self-congratulatory press release announcing that the Army's new shoulder-launched anti-tank missile was entering service four months early.

This is the Javelin missile, which the MoD describes as "one of the most advanced anti-armour missile systems in the world". If the press release is taken at face value, then we can take some comfort in the MoD, after the many defence procurement disasters, having at least got this right.

However, as we have come to learn when dealing with New Labour and its "spin" machine, it is unwise to take anything from this government at face value. This is a case in point.

Contrary to the trend of "Europeanising" Britain’s armed forces, the Javelin is in fact a US-designed weapon, produced by Raytheon/Lockheed Martin.

Herein lies the first question mark. The missile was actually first issued to US forces in 1996 and ordered for the British Army by the MoD in January 2003, to replace the 20-year-old Milan missile. For the MoD to bring a missile, nearly ten years old, into British service, "six months early" does not, in itself, seem to be a great feat.

From here, though, the story gets murkier. The Javelin was not by any means the MoD's first choice of weapons system. It seems that its preference was for a European solution, to which effect, after a feasibility study had been carried out in 1980 and 1981, followed by a project definition exercise from 1983 to 1986, it set up a consortium called the Euromissile Dynamics Group, composed of Aerospatiale (France), MBD/UK (United Kingdom) and Daimler Benz Aerospace (Germany), to produce a missile known as MR (Medium Range) Trigat.

Belgium and the Netherlands joined the project later but, by June 1999, substantial delays had been experienced in the missile development. Nevertheless, the UK signed a "Memorandum of Understanding for the Industrialisation and Production" phase, announcing triumphantly in a press release how the decision also demonstrated "our determination to promote the restructuring of the European defence industry."

Other partners, however, were not so determined and, concerned that the project was going nowhere, refused to agree to the manufacturing phase. With that, the UK was now dangerously exposed as existing stocks of the Milan missile were running down. In July 2000, therefore, the MoD reluctantly announced that it was withdrawing from the project, leaving it no option but to buy an off-the-shelf system.

Only later, tucked in on page 29 of an obscure 32-page document did we learn the cost. There, a bland statement revealed that "a constructive loss estimated at £109,314,000" had been incurred during the development of the MR Trigat.

Nor indeed was that the full extent of the loss. There was another project in the offing, a missile system to arm the UK's Apache attack helicopters. Instead of the battle-proven US-built Longbow/Hellfire Weapons Systems, the MoD had decided to go "European" and procure the LR (Long Range) Trigat. That project also collapsed, with an estimated loss of £205,010,000, when the MoD finally decided to go ahead with the US weapons system.

Altogether, therefore, the grandiose project, fittingly named "Euromissile", cost the British taxpayer over £314 million - more than the £300 million cost of the Javelin contract - with absolutely nothing to show for it. We ended up buying proven US weapons which we could have had earlier, without the enormous costs and delays brought about by the attempt at European collaboration.

As for Euromissile, it has gone from strength to strength. Now a wholly-owned subsidiary of EADS, it has gone on to produce the Milan 3 and is now offering a missile system based on the Milan 3 firing post combined with the MR Trigat missile, to be known as Trigan. Built in France, with a substantial amount of its development costs found by the British taxpayer, it is intended as a replacement for the MR Trigat missile system for the French and German Ministries of Defence.

In a way, this typifies the whole European project – expensive, late and ultimately useless. And, in the final analysis, when it doesn't work, we end up running to the Yanks to bail us out, while the French are the ultimate beneficiaries.