Modern defence procurement is complicated, with the need to acquire a capability not just a platform, but is proving more difficult than expected
When in 1995 the British Army selected the Boeing AH-64D Apache Longbow to meet its attack helicopter need, it was clear that the service would be achieving a massive step forward in capability. But it was equally obvious that the army was faced with an equally giant task of ensuring that the Army Air Corps got its Westland-built Apache AH1s on time, on budget and in a way that provided a meaningful operational capability.
Realising the undoubted complexity of the task, the UK Ministry of Defence, the army and others took a six-pronged approach to acquire a capability, not just a programme. This in itself was a step forward in defence procurement, a shift from the seemingly traditional "let's get the shiny new toys and worry how to use them later" approach. The six lines adopted were: delivery of equipment; development of force structures and infrastructure; development of concepts and doctrine; training; recruitment and retention of manpower; and supporting and sustaining the Apache in service.
Last week the UK's National Audit Office (NAO) released a report on progress. The good news is that the NAO, not known for giving the MoD an easy ride, found positive aspects to the programme. Deliveries are a little late, but four months is nothing to worry about, while overspend is a miserly 2.5%. The force structure and infrastructure will be in place when needed, and manpower issues appear minor. However, the training programme is way behind schedule - it should have started in September last year but is running two years late. There are issues with the military aircraft release, acquisition of defensive aids test equipment, and the support system is not fully defined.
Some of the problems are a result of removing acquisition of the weapons and training packages from the prime contract and making them separate awards. It was intended to compete the supply of pilot and groundcrew tuition, but it was then decided to award the contract without competition to a Boeing/Westland joint venture Aviation Training International (ATIL). The 30-year private finance initiative (PFI)-funded deal was predicted to save the taxpayer £23 million ($36 million). Unfortunately, the contract signed by the MoD means it has paid£34 million for courses not taken because training material was not available from Westland as prime contractor. Other training problems have incurred a £6 million cost to pay for storing around half of the Apaches after delivery.
From the evidence in the NAO report, the MoD has taken a best-practice approach to the Apache, and it should be given a pat on the back for concentrating on acquiring the capability and not just the platform. However, the ministry does seem to have ignored commonsense in a number of areas.
Perhaps the most shocking slip was a £120 million spares package contract awarded to Westland to support the first 30 months of flying. That two-and-a-half year period ended on 31 October - last week - and unfortunately, because training is delayed and the number of flying hours about two-thirds fewer than planned, around 67% of the spares spend has gone to waste. The situation is exacerbated by a failure to agree the follow-on contract and the British Army could be faced with key spares shortages, particularly of long lead items. The NAO recommends in its report that more risk should have been transferred to the contractor by linking payments to measures of actual activity, such as flying hours.
Having learned some tough lessons on the Apache contract, the MoD should now set out to make sure that it learns from its mistakes and does not repeat them on future contracts. The ministry should create a team or organisation or invest in some software package that will drive home to all those involved in spending the taxpayers' money how to use the funds wisely. Not only should it learn from the NAO's latest report, but also from best practice it has established elsewhere in the procurement chain. For instance, "linking payments to measures of actual activity" is a standard way of paying for PFI services, so why not in the case of the Apache contractor spares package? However, on a cautionary note, the armed forces and those around them have a tendency to perform procedures "by numbers" rather than applying the right processes to suitable problems. This is as harmful as not learning important lessons.
The MoD can take some heart from the NAO's report. The ministry has used initiative and escaped from outdated methods of doing business, but now it must ensure that some hard lessons are not wasted.
Source: Flight International
