HL Deb 19 July 2001 vol 626 cc1592-9

3.57 p.m.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach)

My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend the Secretary of State in another place. The Statement is as follows:

"I should like to make a Statement on the Bowman communications programme.

"This project will provide the Armed Forces with a modern, highly capable tactical combat radio communications system to replace Clansman. It will provide secure, reliable communications to our land forces and selected elements of the Royal Navy and Royal Air Force. In addition to voice communications, the system provides a tactical internet and automatic position location, navigation and reporting. Delivery will include more than 48,000 radios, 30,000 computers, conversion of over 30,000 platforms and training for over 100,000 members of the Armed Forces.

"Until recently, the history of the Bowman project has been a saga of difficulties. The requirement for this system was originally endorsed as long ago as 1988, but the initial attempt at competition collapsed in 1996. The following year, in March 1997. it was decided to pursue a single source procurement with Archer Communications Systems Ltd. Last summer, in the light of continuing major problems with the programme, this Government decided that the competition for the Bowman combat radio would have to be relaunched.

"That decision has now been vindicated. Over the past year we have made impressive progress on the project. There has been a vigorous competition with three strong bids submitted by Thales, TRW and CDC, a subsidiary of General Dynamics already operating in the United Kingdom.

"Following careful analysis of these bids, I am pleased to announce today that CDC has been selected as the department's preferred supplier of the Bowman system.

"We have evaluated a wide range of issues. Given the project's chequered past and the continuing operational need, the priority has been to deliver a successful and low-risk solution that will fill this capability gap at the earliest possible opportunity.

"CDC offers just that. Its solution is the clear winner of the competition. It provides the best value for money solution, fully meeting our military requirements. I am confident that it will meet our demanding timetable for getting this system into service. It is based on experience of developing a proven system and includes best of class radios and a very efficient approach to rolling out and supporting the equipment.

"The Ministry of Defence and CDC will now work together on the programme to bring Bowman into service. We aim to be in a position to let a contract in late summer this year to achieve an in-service date of early 2004.

"The contract is valued at around £1.8 billion. This will cover the supply of the Bowman system and the first five years of support up to the year 2009. It will use the ITT VHF radio sub-system and the Cogent cryptographic system.

"CDC's solution provides employment opportunities in the UK in a broad range of system areas, including design, development, manufacture and project management. Ninety per cent of the work content of the CDC bid will be based in the UK—the highest proportion of any of the three bids. Around 1,600 jobs will be secured across the UK, including 400 new high technology and support posts at the company's headquarters which CDC plans to establish in South Wales. The company has also earmarked South Wales for a new Army communications technology research and development centre. This will be staffed by around 65 leading scientists. Other regions will benefit as well. We expect subcontract work to secure more than 100 jobs in Scotland, more than 300 jobs in south-west England and around 75 jobs in the South East, centred on Hastings. Major UK subcontractors include Alvis and Westlands.

"This is excellent news for British industry and not just in terms of job opportunities. The high quality jobs it brings will allow for the continuation of this country's defence communications capability. In particular, there will be significant technology transfer to the United Kingdom. The Ministry of Defence will hold appropriate intellectual property rights, available for use by other companies working on linked projects. Industry has committed itself to maintain a development and production facility as a UK concern. All this will mean that we will maintain a strong UK strategic capability.

"This month will also see the first deliveries, ahead of schedule, of the personal role radios. This is a new capability, separated from the main Bowman requirement in 1999 to ensure early delivery to the front line. These radios will provide short range communications for dismounted infantry and will transform the way that they operate.

"The progress that we have made, and this announcement today, draws a clear line under the problems of the past. It confirms that the Bowman programme is on track for success. And it shows that our commitment to Smart acquisition—to best practice—is delivering tangible results for the Armed Forces. Selection of the preferred supplier, just one year after we re-opened the competition, underlines our determination to deliver this battle winning capability to our servicemen and women. Our Armed Forces can now look forward to receiving the most modern and integrated secure communications system available anywhere in the world.

"I recognise that today's announcement will be a disappointment to the other two bidders. Thales and TRW have invested considerable time and effort on their respective solutions. Both submitted proposals that were substantially better than the one we rejected last year. Their involvement has ensured a hard fought and successful competition. As a result, their reputations as credible prime contractors have been enhanced. I want to stress in particular how much we have valued the significant Thales presence in the UK defence sector.

"However, for this project, it is CDC that offers the best solution to meet our military requirements in the right timescale. As I have outlined, it does so with an excellent package of work in the United Kingdom.

"I am confident that we have made the right decision both for the Armed Forces and for UK industry. I commend it to the House."

My Lords, that concludes the Statement.

4.5 p.m.

Lord Burnham

My Lords, I thank the Minister most sincerely for repeating the Statement made by his right honourable friend in another place. The Statement and the decisions underlying it are extremely welcome. We have been waiting for them for far too long.

Let there be no doubt: the initial slippage came under the Conservative government. But there have been two feasibility studies since then and there were years of fiddling about before the Ministry of Defence removed the preferred bidder status from Archer in June of last year.

I have specific questions under two headings: cost and the in-service date. The Statement states that the contract is valued at £1.8 billion. But the latest MoD estimate is £2.345 billion, of which £351 million has already been spent. This tallies with the National Audit Office estimate of £1.95 billion for the demonstration and manufacture stage of the project.

In March 1999 the Archer consortium delivered a submission which totalled £4 billion. Sir Robert Walmsley, Chief of Defence Procurement, told the House of Commons Select Committee on Defence that this was brought back into budget, not entirely by shouting at the company but by shaving off bits of the requirement here and there". To what extent are we now getting a cut-price reduced specification project? After all, you get what you pay for. The National Audit Office has given examples of capability trade-offs by certifying Bowman to less stringent standards and reducing the equipment numbers. How does this contract differ from the previous Bowman specification?

The Minister has given an in-service date of early 2004. (I have to say that I shall have a bet on that one!) More important than the in-service date is the date for all the platforms to be completed, including the Territorial Army. When will that be? At present, if we were to face an enemy with a full armoured capability we would be in trouble. There is need for Bowman everywhere; it is vital. Clansman is bad enough as it stands but in the words of the National Audit Office, if Bowman is delayed beyond 2004 it is likely that problems arising from obsolescence, such as unreliability and lack of availability owing to repairs will increasingly affect Clansman". The delay to date and the decision to abandon Archer means that the Ministry of Defence will have to write off development costs of between £35 million and £102 million. This is probably small beer for the Minister of Defence but what amount will have to be written off?

I remind the Minister that the capacity of laptop computers doubles in 18 months. The Ministry of Defence cannot buy anything in under five years. It is no wonder that we are behind. Again, I hope that we can get a move on.

Today and in speeches on previous occasions I have asked a number of specific questions of the Minister and her noble friend. Like my right honourable friend William Hague, I have not been very lucky in getting answers. May I please have some now—possibly through a secure radio system?

4.9 p.m.

Lord Wallace of Saltaire

My Lords, we on these Benches welcome this much-delayed announcement. The Armed Forces need far better combat radio systems. We are all aware that Clansman is becoming extremely obsolete. The sooner the equipment is available, the better. We also welcome the decision to adopt the best equipment available; and welcome this as a tried system.

I am struck by the way that this Government follow the same path as their predecessors. The civilian manufacturing industry is not given any particular privilege for home-produced manufactures in the Treasury's or sometimes the DTI's approach. In the defence industry the approach to the number of jobs in this country for each contract is applied somewhat differently from the civilian sphere. In that respect, they have chosen the best equipment, even though it has not necessarily provided the best jobs in this country.

In the context of being half way between the declaration of the Helsinki goals and their achievement, with a clear British commitment to closer European security and defence policy, perhaps I may ask how closely that takes us, if at all, towards commonality of equipment with the armed forces with which we are most likely to operate in conflict management, conflict prevention or forceful interventions over the next few years. Is there full inter-operability between Bowman and the Dutch, German, French and other forces with which we are likely to operate in the field?

Secondly, how long is the estimated service life of the system? We all hope that it will have a rather shorter service life than Clansman has had thus far, but it would be useful to have an idea of how rapidly we believe obsolescence will occur.

4.11 p.m.

Lord Bach

My Lords, I am grateful to both noble Lords for having welcomed the announcement this afternoon. They are quite right: it is a very important announcement, and our priority in making it is to ensure that the Armed Forces have a proper system in place at the earliest possible time.

So far as concerns the past, although we cannot exactly draw a veil over it, I believe that the noble Lord, Lord Burnham, should be slightly cautious in claiming that the present Administration has been involved in any delays that may have occurred. The single source contract was first made in February 1997. However, I believe that in relation to a matter such as this, which is very good news for the Armed Forces and for the country generally, it does not help greatly to hark back too much. Instead, we should look forward and try to ensure that the scepticism shown by the noble Lord, Lord Burnham, in respect of the in-service date is, in this case, misplaced. We are determined that the system will come into operation at the earliest possible opportunity.

With regard to write-offs, there is no doubt that some will occur. However, it is important to know that a large part of the money spent in the past will have been of benefit in ensuring that the new system works properly. Therefore, by no means has all the money been wasted; a large part has gone towards ensuring that we have a decent system in place.

The noble Lord, Lord Wallace of Saltaire, raised the point that we should not change the way in which we approach these matters. I do not know whether or not that is the case. However, the manner in which this particular decision was reached within a year of the crucial, good decision taken a year ago to restart competition is, we believe, a good example of how Smart acquisition has worked. I am not sure that such a decision would have been reached so quickly in the days before Smart acquisition.

The noble Lord's point in relation to inter-operability is most important. We shall, of course, try to ensure that the new system also works well with the defence systems of our European partners and neighbours.

I do not know whether the noble Lord will be pleased or disappointed to hear that it is intended that the Bowman system should apply until the year of our Lord 2030. I dare say that some big adjustments will be made to it well before the end of this decade, let alone before 2030. However, that goes to show that the Government have today made a major decision. It was made on distinct and clear advice and will, I believe, represent a very good way forward for our Armed Forces.

Lord Burnham

My Lords, before the noble Lord sits down, perhaps I may ask him whether he can give the date by which all platforms will be equipped with Bowman.

Lord Bach

My Lords, I cannot give the noble Lord the final date by which that will happen. However, if the in-service date is 2004—a critical date—it is hoped that the system will be in place on a large number of platforms by 2005. I do not want to mislead the noble Lord into believing that I can provide him with a definite date, but it is hoped that all platforms will be brought into operation at the earliest opportunity.

The noble Lord should not play down the importance of the in-service date. That will cover two infantry battalions and brigrade signals, converted and trained—that is, approximately 1,800 members of the Armed Forces. I am glad that, to some extent, I played for time because I now have the answer which the noble Lord sought. All platforms will be completed by the year 2008. I hope that that answer does not come to haunt me.

4.15 p.m.

Lord Gilbert

My Lords, perhaps I may congratulate my noble friend unreservedly on today's extremely important announcement. I wish him every success in his decision and hope that he has found a solution that, until now, has eluded even his most distinguished predecessors in the responsibility that he holds.

I have one or two questions to put to my noble friend. First, can he tell us whether, as the price of obtaining this agreement, there has been any derogation of the originally intended TACAIR and marine elements of the Bowman solution? If he is unable to answer that question in public, which may well be the case, can he undertake to find a way of providing a classified briefing on this matter to seriously interested Members of the House? We are starved of classified briefings because this House does not have a defence committee. The lower House has such a committee and receives that type of information automatically.

Lord Bach

My Lords, I am grateful to my noble friend for his kind comments. As to my predecessors, perhaps I may tell my noble friend that they were all quite outstanding and all played their part in leading to today's decision. I hope that that answer satisfies my noble friend.

So far as concerns the changing of requirements. in this instance I have no need to offer a classified briefing because I can explain the position to the House. I am always happy to provide classified briefings to noble Lords who are interested. However, in this case, I believe that I can satisfy my noble friend. There has been no derogation. The requirement for operational capability has not changed. We have traded some of the more demanding technical aspects in order to maintain affordability.

In December 1999, when we first placed the programme on a Smart deployment footing, we diluted some of the more demanding specifications that appeared in the original requirement; for example, allowing United States rather than European levels of electro-magnetic protection, and continuing the use of current standards of antennae rather than developing new ones. There may be other examples. If there are, I shall inform my noble friend of them. However, he can remain content that the requirement for operational capability has not changed.

Lord Craig of Radley

My Lords, first, I welcome this very encouraging announcement. However, perhaps I may press the noble Lord to deal further with the question of inter-operability raised by the noble Lord, Lord Wallace of Saltaire. I believe that the noble Lord's response was not quite complete. Therefore, I should like to give him another opportunity to deal with that matter, particularly in relation to the United States armed forces. We have experienced trouble in the past and it would be a great reassurance to know that when we have Bowman we shall be much better placed.

Lord Bach

My Lords, I am not sure that I can be of much more assistance to the noble and gallant Lord, except to say that the new system that we intend to adopt meets all the necessary NATO standards. It does not go outside or beyond them, but meets all existing standards. There is no reason to fear that, if we adopt this system, somehow we shall not be able to work with our colleagues in NATO.

Lord Chalfont

My Lords, is the Minister aware that the announcement will be very much welcomed in the Armed Forces and especially in the Army? I congratulate the Government on bringing this long saga to a successful conclusion. It is easy to talk about the past with the benefit of hindsight, but the Government deserve to be congratulated on this occasion. I also congratulate them and their chosen contractor on the inspired choice of South Wales as a base for the operations.

I have another question, which follows on from other points that have already been made. Although it would be foolish to expect any guarantees from the Government about in-service dates, would the Minister be prepared to tell us, on a scale of one to 10, how optimistic he is about bringing this excellent new system into operation by 2004?

Lord Bach

My Lords, I am grateful to the noble Lord for his kind comments on the Government's decision and I am delighted that he is pleased about the part of the country in which the headquarters will be sited. However, I emphasise that there will be sustained and new jobs throughout the United Kingdom—in Scotland, the South West, the South East and, of course, in Wales. This is a particularly "good news" story for that part of Wales, which many of us think has suffered much in recent years for various reasons. I turn to the noble Lord's second question. On a scale of one to 10, the answer, he may not be surprised to hear, is nine.

Lord Brookman

My Lords, I want to pursue the comments of the noble Lord, Lord Chalfont, with whom I agree entirely. The announcement is good news for South Wales. I hope that the scheme will be part of the regeneration programme for Wales as a whole and for South Wales and the Valleys in particular. That brings me to my question. Will the Minister confirm that a large proportion of the jobs that he said would come to South Wales will be allocated to the Valleys where, as he well knows, there have been massive job losses in the coal and steel industries? That would be of great assistance to the Valleys, and the eastern Valleys in particular.

Lord Bach

My Lords, I am grateful to my noble friend, who, through his distinguished career, has vast experience of industrial matters in South Wales. I confirm that the Valleys of South Wales will be among the main beneficiaries of the decision that the Government reached today.