Q121 Ian Swales: You are tightening up that process. Using submarine as an example, how many people work at the MOD end of submarine procurement, including Abbey Wood?
Commodore Beverstock: In the Submarine Operating Centre there are about 900 people.
Bernard Gray: It is about 1,000 people.
Commodore Beverstock: In Head Office it is not that many. My team is only 20-strong.
Q122 Ian Swales: Where are the 1,000, at Abbey Wood?
Commodore Beverstock: They are at Abbey Wood.
Q123 Ian Swales: What do they do all day, I suppose is the good question? If I am one of those 1,000 and I walk in, what am I doing on that particular day, given that the submarine is being built at Barrow or wherever?
Bernard Gray: The Astute exercise neatly demonstrates that you cannot just let a contract, walk away and expect somebody to build it and deliver it on time.
Q124 Ian Swales: Are they acting as a main contractor for these three level 1 suppliers? Surely not. They are not coordinating the physical contracting, are they?
Bernard Gray: No.
Commodore Beverstock: It may sound a lot when you say 900 people, but split it down into the component parts of a submarine, which we have got to deliver, including the nuclear warhead enterprise: 900 is what is in the submarine cluster. The submarine cluster, as Mr Gray has already explained, is made up of a number of constituent components, which make up the submarine capability. It includes the production submarines that look after the Astute class, and there are about 120 people in that project team. There is the future submarines project-delivering the future deterrent-in which there are about 80 people. There is an in-service support submarine team who look after the Vanguard class, the S class who are now being paid off, the T class-those which are in disposal-the in-service modifications, which is about 200 people. They have to deal with the torpedoes, the command systems, the weapons systems, the sonar systems and all that equipment. There is another team who deal with the nuclear warhead enterprise, with the Trident weapons system, which incorporates quite a lot, plus the warhead area.
Q125 Ian Swales: I very much understand a lot of what you are saying, both in terms of the existing fleet and the R&D for future capability. It is the 100 who are in the Astute programme: what are they doing?
Commodore Beverstock: It is a question for CDM, but there are some people in Barrow who are working with the shipbuilder on things like quality control issues, on ensuring that we have the right scheduling, and looking at the risk of the design, and some of the design changes that we are looking at, to ensure that we deliver these submarines on time and cost. There will be another group of people who are doing the contracting strategy for the future boats and the approval. There will be another group looking at the finances, then there will be a design team.
Q126 Ian Swales: I cannot possibly make a value judgement on all that. However, going back to Ms Mactaggart's question of whether this is a bespoke design or off the high street, this sounds like a heavyweight effort from the MoD against a product that we have already decided to buy.
Bernard Gray: It is a heavyweight effort, and should be, because we have to maintain a safe and reliable set of nuclear submarines in production, in operation, and in disposal. A deterrent submarine is probably the most complicated single object on the earth, which has significant safety implications. We have to be able to cost it, and we have to try and run it better than we have in the past. It may be frustrating, but I am trying to manage this on a day-to-day basis. This activity is my number one project priority. I am looking at how I can strengthen our governance project management and control of that activity so that I ensure, because of the large sums of money involved, the safety issues that we have to manage and the importance to the country of this activity around deterrents, we manage that appropriately.
In addition to that we are in a workout situation against the Astute submarines, where we are working through the backlog of problems from what happened over a decade ago, effectively. It is the appropriate thing to put significant effort against them.
Q127 Ian Swales: I was pleased with what you said a few minutes ago about looking at making sure change is properly managed, because the hidden concern I have in this line of questioning is that that number of people facing one shipyard could be part of driving the costs up rather than down, if it is not well managed.
Bernard Gray: I understand why you might be concerned about that in the general case. In this particular case I do not think that is true.
Q128 Matthew Hancock: Unfortunately, I have to go in a couple of minutes, but I want push on something that came up earlier that we then moved off, which is the Levene Report. We have discussed this before, especially with the new Secretary of State; how is progress going on the implementation of the Levene Report?
Ursula Brennan: The Levene Report is progressing well: there is an astonishing array of strands of activity going on. The Vice Chief of Defence Staff and the Second Permanent Secretary have a weekly meeting where they hold people to account. We have given people what we call in the MoD mandates to say, "You take away your slice of the business, you now have clarity about what we want you to do, go away and start making the change against that." A chunk of it is around the business that Bernard Gray is doing in Defence Equipment and Support. A chunk of it is around restructuring the headquarters, which will impact on the size, shape, and role of the people in Admiral Lambert's responsibilities. A chunk of it is about delivering the actual SDSR deliverables and changes we have to make. A chunk of it is about the three front line commands reshaping themselves and the new joint-forces command where; we have appointed someone, and are starting to set that up. That is motoring on at a pace.
One thing we worry about is the volume of things that we are doing. Our non-executive directors are concerned about the capacity to change so many things at once. The basing changes alone are enough to keep a Department occupied for the next five years, and that is just one aspect of the changes.
Q129 Matthew Hancock: Which elements of the Report are proving to be the most difficult to push through?
Ursula Brennan: Two types of things are difficult to push through. One is the basing thing, because it is so complex: it is like a house-buying chain multiplied on a grand scale. We wanted to press ahead with that as fast as we can, but there are a lot of factors that are outside our control, including the state of the property market and the amount of money we will get from selling properties, which changes. That sometimes makes us say, "Maybe that is not such a good move if we are not going to get that return from it. Will we get planning permission on that site?" and so on. That is a very complex piece of the jigsaw, and it is very difficult. It is probably less true of the submarine enterprise, but elsewhere in the Equipment Programme you have some new helicopters, and you have to have places to put them, but the Basing Review may be saying we should move them out of there and put them somewhere else. The Basing Review is technically difficult to pursue. The other bit that is difficult is something we touched on at the beginning, which is changing people's culture. The MoD is quite good at saying, "If you give us an instruction we will take it away and get on with it." If you actually want to change the way people behave to make them think about value for money and affordability in a different kind of way than the way they thought about it previously, and to have that more visible, to subject things to control, to stop having people in the centre interfering, that is harder to change.
Q130 Matthew Hancock: If it gives you any support in delivering these sorts of changes, I am sure this Committee will be holding your feet to the fire in terms of the delivery of its agenda for a long time to come.
Ursula Brennan: I do not doubt.
Amyas Morse: I thought what Mr Gray was saying in response to Ian Swales' question was key: the point about remaining as a design authority means that the MoD is responsible for every feature of the boats they are constructing, seeing that it remains integrated properly, and that it is going to work in future. It is not always done, but in this case is significant. I was agreeing with your comments about the cost of variations in projects; does that mean we have stopped having the practice of trading and deliberately putting aspects into projects that you can trade in response to annual adjustments in programmes? Has that sort of thing been stamped out now?
Bernard Gray: We are not there yet. Ursula Brennan: That is the cultural point. Bernard Gray: I was making the point in the context of a set of changes that we are beginning to introduce to DE&S, because Mr Swales was asking about change control effectively, and I said, "That is a particular component". There is a much wider piece of work on materiel strategy that I am doing, which has not yet gone to Ministers. We have not yet implemented all of that, of which this change and control process is part. It is currently our planning: it is not yet done.
Amyas Morse: Hopefully, as we approach balance in the programme, this process of trading each year to stay in balance should be eliminated. Is it fair to expect that?
Bernard Gray: It should be for the purpose of cash flow management: we still have to control the behaviours around specification changes-"While I am here, shall I just do X?"