Q111 Chair: Okay. We know all that. I am just trying to draw us to a close. Anne wants to come in. Do you agree with recommendation "b" on page 10 of the Report, which says that you should report to Parliament where gaps in the structure and capabilities arise as a consequence of resource management decisions?
Ursula Brennan: We are concerned about the notion of reporting gaps in capabilities-about where the gaps are-that would actually give comfort to our enemies.
Q112 Chair: As a consequence of resource management decisions.
Ursula Brennan: Even if they were as a consequence of resource management decisions, we don't really want to publish something that says, "This is where you can come and get us because we've got gaps." We need to think about how we would respond to that. We try to avoid publishing things that say, "This is where our staff are not very well trained," or, "This is where our equipment isn't very good," because it is just an invitation to people to attack us in those areas.
Q113 Mrs McGuire: There is a bit of a divide here between what is a balanced budget and what is good, effective procurement. The issue of a balanced budget is probably for political discussion rather than for discussion here. As for whether or not the budget is actually the right size: you can balance a budget that is tiny in the same way that you can balance a budget that is large.
In the closing minutes, I want to look at the relationship between the MOD and the defence industries. We place a great deal of emphasis on your effectiveness and efficiency in negotiating contracts. Can I ask what engagement there has been with the defence industries, in terms of the new environment?
I will not use the word that Vice-Admiral Lambert does not like.
We are going for more off-the-shelf solutions. What discussions have there been with the industry? What has been its response? Has any assessment been made of the wider economic implications of withdrawing some of those issues relating to research and development, which might perhaps have been part of the partnership in the procurement process? I appreciate that there are three or four questions there.
Vice-Admiral Lambert: There is no doubt in industry's mind that we are heading towards more procurement off the shelf, that we are looking at making sure that we understand fully the cost drivers behind the programmes and that we need to ensure that we can upgrade all our programmes.
Q114 Mrs McGuire: Does "off the shelf mean off the shelf inside the UK, or with the USA, South America or eastern European countries? What exactly does that mean?
Vice-Admiral Lambert: I believe that international competition is the route that will give us best value for money. As far as dialogue with industry, that is done at Abbey Wood. I don't know if General Coward would like to comment.
Lieutenant-General Coward: There has been a long dialogue with industry that goes back before the defence industrial strategy, where we made a judgment that for this sector, as Admiral Lambert said, best value for money was through international competition, although we do require the ability to maintain, modify and upgrade our vehicles onshore. So, generally, industry teams with someone else. On the Scout programme, GD took a Spanish-Austrian product, brought it onshore and will modify it for use by the UK. With the utility vehicle, three competitors looked at international platforms, but they had onshore capability to deliver, maintain, upgrade, and so on.
Most of industry understands the direction of travel and companies such as BAE Systems, Lockheed Martin and GD UK are beginning to shift. They are beginning to look towards maintaining and upgrading those vehicles to maintain their core engineering capability and a degree of production. But production is largely build-to-print and assembly rather than the very sophisticated cradle-to-grave production that we may have had in the '50s and '60s.
Q115 Mrs McGuire: Does that give you any concern about future security of supply for our service personnel? Are you concerned about how we would be able to respond as a country as part of a larger alliance, be it NATO or the EU?
Lieutenant-General Coward: That is a concern, but with our arrangements, and by focusing on upgrade and modifications, we retain sufficient expertise onshore to deliver what we require, either routinely or in a time of crisis.
Q116 Mrs McGuire: Do you share that view, Vice - Admiral?
Vice-Admiral Lambert: I do not share the concern. Most, if not all, of the urgent operational requirement vehicles have come from overseas, and they have delivered to time and provided what we require.
Q117 Chair: But throughout their life they might be more expensive, because of the service, spares, logistics and so on.
Ursula Brennan: Depending on what we did with them, yes.
Chair: We would enjoy continuing this session, but there is a debate in the Chamber that is of some importance to Committee members, so we will terminate. Thank you for much clearer evidence this afternoon.