Sir John Bourn, Head of the NAO, told Parliament today that the Ministry of Defence (the MOD) is making progress towards delivering an Initial Operating Capability for the Apache helicopter in August 2004 but that risks remained. The MOD is buying 67 Apache helicopters through a £3 billion prime contract with Westland Helicopters Ltd. The Apache will provide the cornerstone of the MOD’s Air Manoeuvre capability and will improve the ability of the Armed Forces to conduct offensive mobile operations by delivering more responsive, effective and survivable firepower.
The aircraft are being delivered broadly to time and cost. Notably, the Attack Helicopter entered service in January 2001 just a few days later than scheduled.
But risks remain in the timely development of enhancements to the aircraft, such as the Defensive Aids Suite, and with some aspects of the performance of key systems on the Apache, including the Hellfire missiles, CRV7 rockets, and Longbow radar. The MOD is confident it will be able to progress solutions to these problems to deliver the Initial Operating Capability in 2004.
Some further risks remain which could also delay delivery of the Apache capability. Good progress has been made in developing the framework for how the Apache will support Land operations, but the full risks of operating Apache at sea will not be identified until March 2004 when sea trials are due to take place. The delivery of training services for Apache pilots, groundcrew and maintenance staff through a £1 billion PFI deal with Boeing and Westland has been delayed primarily by problems with the pilot Full Mission Simulator. As a consequence of this, the full Apache pilot conversion programme will not now be completed until February 2007, nearly 3 years later than expected. Some Apache aircraft will have to be stored until trained pilots are available to fly them, at an additional cost of £6 million, which has in part been offset by liquidated damages paid by the contractor.
The MOD is still developing its strategy for managing the Apache aircraft thoughout its life. For example, the Apache was initially supported by Westland, an arrangement which runs out in October 2002. Spares inclusive repair contracts are in place for the period up to 2005, and some of the required Spares Procurement Contracts have now been let although some spares may have to be to sourced from the Apache aircraft which are being stored.
Overall responsibility for delivering the Air Manoeuvre capability, which includes successful delivery of the Apache, rests with the Air Manoeuvre Policy Group. To support this group the Department has two programme managers who are responsible for delivery of all aspects of the Apache capability. These recent developments are a significant step forward in ensuring delivery of the Apache helicopter and Air Manoeuvre capability is undertaken in a coherent way. The changes also mean that the management structure for the Apache programme is now as close to meeting best practice as the current organisation of the Department as a whole (which includes two separate customer organisations) really allows.
Sir John’s report identifies actions that the Department should take if it is to maximise its chance of delivering the Initial Operating Capability. The Department needs to continue to monitor the risks associated with the performance of key Apache systems and exercise strong management of the equipment, training and support programmes.
The report also identifies lessons learned from the MOD’s experience in managing the delivery of the Apache. These lessons include the need for careful consideration at the outset of the effect of removing elements from a prime contractor’s responsibility; the advantage of transferring more risk to the contractor by relating payment to measures of actual activity rather than a defined time period, and the importance of appointing at an early stage a senior level individual with specific responsibility for directing and co-ordinating programmes.