Project overspend.

[PeterCrisp]

In the UK all we ever hear about military projects is how much they are late and overspent. I fail to see how every project can be this way as surely with the MOD so strapped for cash they have someone in control of how these project are run.
I know this is simplistic and every project is different but surely a defence project is like any other and if the Government is given a price that should be what it costs (surely by now we are able to do future costings with some accuracy) with and overspend being made up by the contractor.

It just seems that at the moment that one price is given to make it look like a good option them they give out the real cost about 5 years later when enough cash has been pumped in to make cancellation pointless because so much work has already been done.

 

[shrubage]

The main reason is politics. The requirement that systems be manufactured in the UK in factories that are often located in key political constituancies.

The big problem is BAE, successive Conservative and Labour governments encouraged a whole series of mergers and acquisitions in order to create a supposed world class defence company. Well what they got was BAE, its not even strictly speaking British any more as the government has given up its 'Golden share' and it does most of its business in the US.

Years ago a defence company would undertake its own R&D as well as responding to direct requirements from the MOD. BAE won't do anything unless there's a wad of cash in it for them. Typically under a cosy little 'Cost plus' type contract which actually rewards incompetance. As BAE pretty much have a monopoly on defence manufacturing capacity in the UK they know the only other option is to buy abroad which the government is reluctant to do.

Even when the MOD does buy abroad they'll usually cut BAE in for a slice of the action, as in the Mastiff PPV or Panther FLES which are manufactured abroad spend time in a BAE factory having bits and pieces added on at inflated prices ( so they meet british requirements)before eventually making their way to the army.

You can tell I'm a little prejudiced against the company, but the money they make on 4th line repair of vehicles is literally extortion. When you've got to the stage that the MOD is negotiating with the only major defence company left in the UK well... it's not really a negotiation is it?

 

[OPSSG]

The US is trying to reform their DoD Acquisition process, so in that respect the UK is not alone.

You can tell I'm a little prejudiced against the company, but the money they make on 4th line repair of vehicles is literally extortion. When you've got to the stage that the MOD is negotiating with the only major defence company left in the UK well... it's not really a negotiation is it?

To the extent that I am not a fan of monopolies, I agree.

The main reason is politics. The requirement that systems be manufactured in the UK in factories that are often located in key political constituencies.

Yes, most governments (like France) try to keep defence related jobs within their own country to ensure that their industrial capacity is maintained. China is currently the factory of the world. IMHO, where possible, UK should retain some local manufacturing capability in defence related manufacturing.

The big problem is BAE, successive Conservative and Labour governments encouraged a whole series of mergers and acquisitions in order to create a supposed world class defence company. Well what they got was BAE, its not even strictly speaking British any more as the government has given up its 'Golden share' and it does most of its business in the US.

Despite the present of other factors (driving such a change in ownership structure), I make no comment on your government's ownership structure choices.

Years ago a defence company would undertake its own R&D as well as responding to direct requirements from the MOD. BAE won't do anything unless there's a wad of cash in it for them. Typically under a cosy little 'Cost plus' type contract which actually rewards incompetence. As BAE pretty much have a monopoly on defence manufacturing capacity in the UK they know the only other option is to buy abroad which the government is reluctant to do.

So what is the alternative? I'll be interested to know.

Further, we need to divide defence procurements into at least 2 main categories: (i) Non-Developmental Items (NDIs or UOR in British lingo), which are straight buys; and (ii) Developmental Items (DIs), which serve to 'invent' new products to deploy a new capability. These DI carry more developmental risk. Should UK defence companies bear most of the risk? Would that be fair?

Even when the MOD does buy abroad they'll usually cut BAE in for a slice of the action, as in the Mastiff PPV or Panther FLES which are manufactured abroad spend time in a BAE factory having bits and pieces added on at inflated prices ( so they meet british requirements)before eventually making their way to the army.

Are these UORs only items that you have cited?

 

[shrubage]

Yes, most governments (like France) try to keep defence related jobs within their own country to ensure that their industrial capacity is maintained. China is currently the factory the world. IMHO, where possible, UK should retain some local manufacturing capability in defence related manufacturing.

The difference is that the French defence industry consistantly turns out quality (if expensive) kit. France regards engineering far more highly than the British, in the UK if you actually get your hands dirty in manufacturing you're an obvious failure. I remember reading that the board of BAE has only a single token engineer on it.

So what is the alternative? I'll be interested to know.

What I was refering to was that British companies, demand a contract from the MOD for any development work they do. In short they want a cheque for just getting out of bed and being a defence company. I'm not sure but I know that the later developments of the Mirage were developed by dassault independent of the french government, then offered to the Air force. That's something that just wouldn't compute with BAE execs.

The army went into afghanistan in 2001, the sum total of BAE's original work is the Vector. Which is essentially an armoured pinzgauer and a total death trap, thin armour combined with the driver and crew being directly above where a contact mine would detonate. Oh and because they didn't upgrade the suspension and breaks the front wheels have a habit of falling off, which has the benefit of keeping them in camp where they're less likely to get someone killed.

Are these UORs only items that you have cited?

The Mastiff is a UOR the panther was in developement for years, by development I mean they picked an italian design and spent years figuring out how they could give BAE a taste, deciding eventually they could make changes that could just as easily have been done in italy.

The mastiff was upgraged by BAE by the addition of some wierdly expensive fixed IR cameras that could have been bought off the shelf at maplins. They also added additional bar armour which cut the dismounts visibility.

 

[PeterCrisp]

It sounds like the UK has no real choice but to accept being screwed by BAE then. Would it be cheaper in the long run for the Government to buy loads of BAE shares and try to force them not do that?