GENERAL SIR KEVIN O'DONOGHUE KCB CBE, DAVID GOULD CB AND LIEUTENANT GENERAL DICK APPLEGATE OBE

29 JANUARY 2008

  Q1 Chairman: General O'Donoghue, I welcome you and your team to our evidence session on the DE&S. We meant to visit you last week. I regret that parliamentary business meant we had to stay here. We recognise that this mucked you about considerably, for which we apologise. We shall do our best not to do it again, but the vagaries of the parliamentary timetable are strange. We shall do our best to come back as soon as we can. We are conducting an inquiry into DE&S. This is something that we have been meaning to do for some time. You are supporting two major operations in Iraq and Afghanistan and have provided equipment in pretty rapid time for those two operations. That is something for which you deserve congratulations. We have a lot of ground to cover. I wonder whether my colleagues on the Committee can be as brief as possible in their questions and perhaps the witnesses can be as concise but full in their replies. We shall then be able to cover the ground. General O'Donoghue, will you please introduce your team?

General Sir Kevin O'Donoghue: Thank you very much. I am delighted to be here and I would also be delighted if you could come back to Abbey Wood when that is suitable. On my left is David Gould, Chief Operating Officer, who will pick up some of the detail on projects both on equipment procurement and through life performance. On my right is General Dick Applegate, Chief of Materiel (Land), who will pick up any detailed questions you have about support of current operations.

  Q2  Chairman: Your department has been in existence for 10 months. What has been the progress following the merger?

  General Sir Kevin O'Donoghue: Progress has been remarkably good. Going back to the second half of 2006 I and Peter Spencer, who was then CDP, put quite a lot of intellectual effort into what the new organisation should look like. We held workshops with the two stars in the spring of 2007, but it was not really until 2 April of that year that we were able to start to pull the two together. I think we have achieved the high-level strategic requirement and processes which are needed based very much on the analysis that Peter and I did. What functions would the new organisation have to deliver? What were the processes, hence what was its structure? That is the basis of DE&S. As to what we have achieved in the past 10 months, bits of the structure are coming together quicker than others. Some of them are in Abbey Wood and can come together quicker than elements of IPTs that are moving from Andover. The through life capability planning process is coming together and is beginning to be adopted throughout the department as the way to do business in the future. In DE&S through life management planning is well under way. We have certainly taken a big bite into upskilling our people. We have sorted out the skills we need and upskilled those people who need it because of gaps in professionalism in the organisation. We have also taken a huge step to pull together the two working practices, if you like the two cultures. I am not however too fond of the word "culture". We were two different organisations and we are steadily coming together. You mentioned that we were supporting two particular and quite difficult campaigns. Funnily enough, the fact we are supporting those two campaigns has brought us together quicker than it might otherwise have done.

  Q3  Chairman: That is the good side of the story. What do you say are the things where progress has not been as good as you would have liked?

  General Sir Kevin O'Donoghue: I think we should have been further ahead with through life management planning. We have through life management plans. All the programmes have plans. The big programmes have detailed plans; the smaller ones have summaries. I do not think we are as far down the route as I would have liked by making sure we support equipment through life by using those plans with industry and the front line. That is one area where I do not think we are as far ahead as we should have been. The other area is upskilling. We made huge inroads into upskilling. Had it not for the fact that people are working very hard across big chunks of the organisation perhaps we would have been able to release people for training and upskilling to a greater extent than we have.

  Q4  Mr Holloway: Is one of things you are doing less well the fact that you simply do not have the cash to fund all the programmes?

  General Sir Kevin O'Donoghue: No. The upskilling is more a question of giving people time off from busy jobs.

  Q5  Mr Holloway: I am referring to your overall problem: you do not have enough cash?

  General Sir Kevin O'Donoghue: No. I am given a certain amount of cash and am told what my outputs are to be. I have ring-fenced the cash for upskilling.

  Q6  Chairman: I think the question was slightly different. To put it a different way, what keeps you awake at night?

  General Sir Kevin O'Donoghue: Current operations keep me awake at night.

  Q7  Chairman: Why?

  General Sir Kevin O'Donoghue: Because that is our primary aim and that is where things will go wrong and, if they are to go wrong, they will have the greatest impact.

  Q8  Chairman: You said that the current operations had helped you come together?

  General Sir Kevin O'Donoghue: I believe they have. There is an imperative to support current operations, which I believe has brought us closer together with people from the DPA—I do not like to say "the old DPA"—and produce UORs, as people from the DLO have been planning and supporting them to get them to theatre. That was what forced us together.

  Q9  Chairman: What has been the feedback from your customer about how well you are doing?

  General Sir Kevin O'Donoghue: Commanders in theatre are very supportive. It was Jonathan Shaw in Iraq who said that he had never been in a theatre of operations where he had seen so much new and outstanding kit coming through. We are now beginning to get equipment through within six months of deployment. I believe that our customers on deployed operations are content.

  Q10  Mr Jenkin: We all know that priority has been given to the front line and we have been impressed by what is getting through. But we also know that the three-year spending round is a very tight settlement for the Ministry of Defence and that if the priority is the front line considerable savings will have to be made out of future programmes. That is what we want to focus upon at this point. How will you make your programme fit? We all know about the procurement bow wave and the tendency to delay main gate and contract dates in order to keep cash flow within Treasury limits. One official told me off the record that it was no longer about cheese-paring and salami-slicing; it was now a matter of looking at whole programmes. Can you give us any indication of the process in which you are involved at the moment to make future programmes fit within the budgets allocated to you?

  General Sir Kevin O'Donoghue: The process we are in, which is the same one we go through every two years, is one that looks at all the programmes. We are not yet at the end of the planning round. Everybody always says that it is the worst planning round ever, but it is progressive every year. There are always difficult decisions to make in planning rounds. As you rightly said, our aspirations are much greater than the budget ever allows us to achieve, so there are always difficult decisions to be made.

  Q11  Mr Jenkin: You have 19 major projects and you do not anticipate delaying or cutting any of them?

  General Sir Kevin O'Donoghue: I suspect that we will have to, but which they are and quite what they will be I do not know. We are in the middle of a planning round.

  Q12  Mr Hancock: When would you expect that decision to be finalised?

  General Sir Kevin O'Donoghue: I believe that recommendations will be put to ministers later next month or in March.

  Q13  Mr Jenkin: You have told me something quite important. You are looking at all the major projects and you may cut or delay any of them?

  General Sir Kevin O'Donoghue: We always look at all major projects.

  Q14  Chairman: Do you say that this planning round is different from other planning rounds in which you have been involved in terms of the scale of potential delays or cuts you have to face?

  General Sir Kevin O'Donoghue: It is certainly different from any other planning round in which I have been involved because for the first time we are looking at an equipment and equipment support budget. You will remember that in the past the equipment plan was always quite separate from the equipment support plan. I believe that what we have been able to do this year is to have much more realistic costings by bringing the two together.

  Q15  Chairman: That is a difference?

  General Sir Kevin O'Donoghue: That is a huge difference, and part of the difficulty we are in is that we now have more realistic costings.

  Q16  Chairman: To return to the question I asked, is the scale of your difficulty different?

  General Sir Kevin O'Donoghue: Yes, it probably is.

  Q17  Chairman: Are you able to quantify that?

  General Sir Kevin O'Donoghue: I cannot. We are in the middle of a planning round.

  Q18  Chairman: Is it different because it is worse or better? I have to ask that for clarity of the record.

  General Sir Kevin O'Donoghue: I think it is a greater challenge this year than it was in 2007.

  Q19  Chairman: Can you ever remember it being as much of a challenge as it is today?

  General Sir Kevin O'Donoghue: Yes. When I was an MA back in the late 1970s we had some pretty challenging times.

  Chairman: We shall come back to some of these issues in our detailed questions. We now want to go into the size and shape of your department.