WEDNESDAY 2 DECEMBER 1998

MR JOHN WESTON and MR TREVOR TRUMAN

  620.  You did mention one where a bidding was floating around.
  (Mr Weston) If I have a fundamental worry in this area at the moment it is the way that our procurement policies for defence equipment have developed in the last ten or 15 years. We are increasingly encouraging the MoD to go out to open procurement which puts local industry having to cover both the development and the recurring costs in competition with overseas' competitors who have already had their development costs paid and are bidding against us with recurring costs only. I can point to several areas in our business where irreparable damage has been done as a result of that. If that continues there will be areas where we get driven out of the business in the UK.

  621.  We did hear at one point earlier of evidence that suggested one of the things which distinguished the engineering base, for instance, compared with bioscience, was the need to do demonstrations, to have demonstration equipment or prototypes, and that put a very heavy burden on the budget whilst the risk was still rather great. As you have with CARAD, because to an extent CARAD has relieved you of some risks as I understand it, is there any case for widening that support at that sort of stage?
  (Mr Weston) I think if you look at the demonstrator programmes that have taken place, and the lesser authorities in the Treasury and the National Audit Office have applauded some of those in terms of their ability to be very big risk reduction tools before we actually launch main development programmes, I think demonstrators are a very good example of actually encouraging that transition from the idea stage through to the application stage in a way that reduces risk before you get the marching army of a very large development programme.

  622.  So that is something Government will help with?
  (Mr Truman) That was precisely the focus of programme that we had in the industry that we called Foresight Action which was about that demonstrator phase.

  623.  You mentioned Foresight, what use has it been to you? Is it an advance? What should happen with that programme, if anything?
  (Mr Truman) I think my point of view on Foresight is that it has done excellent work in building and reinforcing networks, in focusing sectors of industry. It has led us to some very worthwhile things. We have just started off a new scheme of partnership research programmes under DARPS in partnership with academia. I think it still has not delivered what perhaps we would have hoped for at the front line of competitiveness, it has still been at the front end which I think to some extent is the easier end to deal with. Foresight in the defence and aerospace field from the outset, taking over from the old NSTAP identifications, stressed the need for this bridge to competitiveness through demonstration. That is where we have done nothing yet that is very remarkable.

  624.  Just very quickly, how would you improve that?
  (Mr Weston) I think it is the point that we have been referring to earlier, to recognise the economic value of demonstrators in reducing risk and the difficulty of doing them on a totally free-standing enterprise basis when the risk is high for the reasons that your colleagues have mentioned.

  Chairman: Well, thank you very much indeed. Mr Weston and Mr Truman, we have not really asked you all the questions we wanted which is an indication really of how important we consider the evidence from your company will be in the present inquiry we are undertaking. Therefore, in addition to the two bits of prep that Mr Taylor has asked you about, would it be all right if, when we have reflected on this session and when we have collected together those questions that we have not been able to ask you, we wrote to you and you could give us a response in writing. We thank you very much indeed for coming. Once again, as I said at the beginning, it has been relatively short notice as we have rejuggled our programme, but the evidence you have given us this afternoon has been of very significant importance and interest to us in our inquiry. We hope in due course when our report is written, and I shall make sure that you are sent a copy of it, that you find it of some interest, but we are most grateful to you this afternoon for the help you have given us. Thank you very much.