Ministry of Defence Helicopter Logistics · operating in the three Services and disparate...

REPORT BY THE COMPTROLLER AND AUDITOR GENERALHC 840 Session 2001-2002: 23 May 2002

Ministry of Defence

Helicopter Logistics

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Ministry of Defence

Helicopter Logistics

REPORT BY THE COMPTROLLER AND AUDITOR GENERALHC 840 Session 2001-2002: 23 May 2002

This report has been prepared under Section 6 of theNational Audit Act 1983 for presentation to the Houseof Commons in accordance with Section 9 of the Act.

John Bourn National Audit OfficeComptroller and Auditor General 9 May 2002

The National Audit Office study team consisted of:

Simon Smith, Toby Evans, Tom McDonald, andHoward Revill under the direction of David Clarke.

This report can be found on the National Audit Officeweb site at www.nao.gov.uk

For further information about the National Audit Officeplease contact:

National Audit OfficePress Office157-197 Buckingham Palace RoadVictoriaLondonSW1W 9SP

Tel: 020 7798 7400

Email: [email protected]

ContentsExecutive summary 1

Part 1

In this difficult area the Defence 9Logistics Organisation has not yet been able to deliver all the requiredlogistics support

Logistics support for helicopters is a 9complicated task

The Defence Logistics Organisation is striving 11to meet its helicopter related Customer Supplier Agreements

Analysis of serviceable helicopters shows 16shortfalls in logistics performance

Weaknesses in logistics support can have severe 17operational impacts

Part 2

The Defence Logistics Organisation 19is tackling helicopter logistics problems but there is scope to improve performance and so increase helicopter outputs

The Defence Logistics Organisation has many 19initiatives in place to improve performance but management information is not yet sufficiently robust

There are many examples of good practice within 22the Defence Logistics Organisation which should be disseminated

Lessons can be learned from outside organisations 23

Appendices

1. Previous PAC Recommendations 26

2. Methodology 28

MINISTRY OF DEFENCE: HELICOPTER LOGISTICS

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1 The Ministry of Defence's (the Department's) 1998 Strategic Defence Reviewemphasised the need for flexibility, adaptability and responsiveness inundertaking military tasks, including expeditionary operations. Helicopters area key component of defence capability as they make a unique contribution toa wide range of operations. Keeping them available to fly is therefore critical tothe success of future defence capability.

2 This study focuses on the Department's six main established helicopter fleets,comprising 470 helicopters at the front line, whose logistics support costs some£260 million a year. Seventy per cent of these helicopters are operated by theJoint Helicopter Command which was established to facilitate the deploymentof all battlefield helicopters on joint operations and which draws on helicoptersowned by the Royal Navy, the Army and the Royal Air Force. In addition theRoyal Navy (Commodore Naval Aviation) and Royal Air Force (StrikeCommand) operate smaller numbers of ship-borne and search and rescuehelicopters which are not part of the Joint Helicopter Command.

3 Many of the current helicopter fleets will reach the end of their operational livesin the next ten to fifteen years, but are likely to be required to perform at a highoperational tempo until then. They will therefore need careful management ifthey are to contribute to the expected military tasks. The formation of theDefence Logistics Organisation in April 2000 has provided the Departmentwith the means of addressing logistics support issues coherently on a tri-servicebasis and the Defence Logistics Organisation is working hard to converge thevarious single service systems and practices.

4 This report examines the Department's performance in providing logisticssupport to its helicopters and the initiatives being taken to improve logisticsmanagement. It follows up the Committee of Public Accounts' past work onhelicopters (Appendix 1). The methodology we adopted is set out inAppendix 2.

5 We found that the Defence Logistics Organisation has not yet been able todeliver fully the levels of logistics support that it had agreed to supply. This ispartly due to unforeseen one-off events that have had wide impacts onhelicopter fleet maintenance. The Defence Logistics Organisation has also hadto manage its business utilising the legacy systems from the three predecessorService areas and resource constraints have also played a part. The Defence


Logistics Organisation has a comprehensive programme designed to improvethe quality of the logistics support it provides. This includes the development ofmodern, integrated IT systems and processes, adopting innovative supportarrangements with industry using Smart Acquisition principles, and theidentification of best practice and its application across the organisation. Butthere remains scope to improve performance and so increase helicopternumbers. Our recommendations complement the Defence LogisticsOrganisation's various initiatives, highlighting areas for management actionthat should result in increased availability of helicopters at the front line.

In this difficult area the Defence Logistics Organisationhas not yet been able to deliver all the required logisticssupport (Part 1)

6 Providing helicopter logistics support is a complicated task and has proved amajor challenge. The Defence Logistics Organisation has had to address anumber of 'legacy' issues including the different procedures and ways ofoperating in the three Services and disparate information systems. And it hashad to do this against the background of severe pressure on resources. Militaryhelicopter logistics is also intrinsically complicated. For example a number oforganisations combine to produce a helicopter that is ready to fly:

! The Defence Logistics Organisation is responsible for ensuring thathelicopters are 'available' - that is the provision of airworthy helicopters thatcan be readily maintained by front line units.

! Maintenance at the front line is carried out by the units themselves with theDefence Logistics Organisation setting maintenance policy and providingspares and expertise. 'Serviceability', having a helicopter ready to fly amission, is therefore the product of both the Defence Logistics Organisationand the front line units, together with the Service personnel organisationsresponsible for recruitment and training.

! The performance of the Defence Logistics Organisation and the front line unitsis also critically dependent on industry for the provision of replacement sparesand in helping to investigate problems and identify solutions.

7 Against this background, the Defence Logistics Organisation is striving to meetthe required level of service. Service levels are set out in Customer SupplierAgreements with its three helicopter customers - the Joint HelicopterCommand, Commodore Naval Aviation and Strike Command. The Defence

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Logistics Organisation has not yet been able to deliver all the required logisticssupport. As regards making helicopters available, performance has been patchy.For example, for Joint Helicopter Command the Defence Logistics Organisationachieved its targets more often than not. Where targets have been missed,performance has generally been marginally below target.

8 Many logistics problems have arisen because of one-off events. For examplefollowing the major failure of a Dutch Lynx main rotor head, many UnitedKingdom Lynx helicopters were grounded. The Defence Logistics Organisationresponded promptly, consulting its front line customers, Commodore NavalAviation and the Joint Helicopter Command, and agreeing revised targets forLynx availability, typically involving a 20 per cent reduction. The Lynx mainrotor head is highly complex and has a total lead time of more than two years.The Department and Westland Helicopters worked closely together to resolvethe problem, with Westland Helicopters delivering the first replacement mainrotor heads within a few months of the Department placing a contract. A robustfleet wide recovery programme is on target for completion in June 2002, whenLynx availability is to be restored to previous levels, and replenishment of allspares is scheduled for March 2003. This case illustrates the importance ofdeveloping innovative logistics solutions in partnership with industry.

9 Front line units are fundamentally concerned with the number of helicoptersthat are serviceable, that is having a helicopter ready to fly a mission. Analysisof the numbers of serviceable helicopters shows shortcomings in performance,with Joint Helicopter Command serviceability targets achieved on average fortwo of the six helicopter fleets in the twelve months to September 2001.Customer Supplier Agreements between front line commands and the DefenceLogistics Organisation are still evolving and there are differences interminology and content. For example, the Agreement for Commodore NavalAviation includes serviceability targets whilst these are not incorporated inAgreements with other customers. Analysis of D states, where helicopters aregrounded as a result of a lack of spares, and 'robberies', where a spare is takenfrom one helicopter to put on another, can highlight logistics weaknesses.However, the reasons for any shortcomings in logistics outputs need carefulexamination and the Defence Logistics Organisation is not yet able easily tointerpret information regarding the level of D states and robberies, or to identifyclear trends in performance. Greater consistency in definition and collection ofdata on performance aspects such as D states would facilitate comparisonbetween the helicopter fleets and the development of a performancemanagement regime that focuses on logistics outputs.

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10 Weaknesses in logistics support can have severe operational impacts. Recentoperations and exercises have highlighted shortcomings in helicopter logistics.The main rotor head problem reduced the number of available Lynx aircraft andthe Royal Navy protected front line operations and the flying trainingprogramme, resulting in some ships going to sea without an embarked Lynxhelicopter. The same problem contributed to the Joint Helicopter Commandhaving to review its helicopter deployments. Thus the Lynx helicopters in therapid reaction forces not currently deployed on operations are at lower levelsof readiness. During an exercise in Oman in Autumn 2001 numbers ofserviceable helicopters averaged 55 per cent. For European exercises the targetis 75 per cent although the Department considered that this was ambitious forenvironmental conditions in Oman.

The Defence Logistics Organisation is tackling helicopterlogistics problems but there is scope to improve performanceand so increase helicopter outputs (Part 2)

11 The Defence Logistics Organisation has many initiatives in place to improveperformance. It has identified key areas for change by which it might transformlogistics support and is introducing the European Foundation for QualityManagement Excellence model. It is driving forward Resource Accounting andBudgeting and the Smart Acquisition initiative. Many of these changes havedirect implications for the current and future success of helicopter logistics.

12 Following a structure implemented across the Department's acquisitionorganisations, the Defence Logistics Organisation has established IntegratedProject Teams to manage helicopter logistics. Feedback from front linecustomer organisations suggests that they broadly welcome the new structure.The establishment of a single focus for helicopter logistics support within theDefence Logistics Organisation has been highlighted by the Joint HelicopterCommand as having a particularly positive effect on the way in which supportis managed. The numbers of teams all contracting with a small number ofindustry players can, however, lead to some confusion between theDepartment and industry. Many teams are dealing with the same industrialsuppliers and potentially there are competing demands between the teamsworking unilaterally to drive better performance from industry and anoverarching industrial strategy. Aware of this, the Defence LogisticsOrganisation has developed a strategy to provide a set of resilient guidelines toenable coherent and integrated support across the logistics and acquisitioncommunity. For example, the Defence Logistics Organisation brings togetherIntegrated Project Team leaders and industry directors to ensure that business isjointly taken forward and requirements prioritised. However, not all projectteams yet have fully developed or effective business plans to achieve this. Thereare also complaints of initiative overload as teams are faced with implementingtheir own improvement programmes whilst preparing for Defence LogisticsOrganisation initiatives.

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13 Our previous work on helicopter logistics pointed to weaknesses inmanagement information and the Department gave assurances to theCommittee of Public Accounts in 1992 that progress was being made.However, it will take some years before the Defence Logistics Organisation hasestablished a fully converged management information system bringingtogether data from the Sea, Land and Air environments. Meanwhile legacysingle Service information systems and practices remain. Integrated ProjectTeams are developing cost data in line with Resource Accounting andBudgeting and establishing cost of ownership models but these are immature.Project teams also have to develop new approaches to forecasting demand forspares. Traditionally forecast demand has been based very much on historicconsumption but there is a need to look at future demands and the implicationsof reliability. On both these aspects there is a need for better quality data.

14 There are many examples of good practice, particularly as regards contractingand business planning, which have wider application across the DefenceLogistics Organisation. Several Integrated Project Teams have developedinnovative partnering or contractual arrangements, either on their own initiativeor with the help of support and advice from the Defence Logistics OrganisationCentre. Others, such as the Helicopter Engines Integrated Project Team, haveincreased their management grip of their assets and resources, enabling themto dispose of unnecessary assets and deliver better outputs to their front linecustomers. The Defence Logistics Organisation is also taking steps to improveits relationship with industry and ensure that industry is better able to deliverits part in logistics support. For example project teams are contracting for theguaranteed delivery of spares.

15 While recognising the Department's particular operational circumstances,international comparators and private sector organisations are using practiceswhich are of direct relevance. Improved analysis of stock holding and forecastdemand has led to higher levels of equipment availability for the United StatesArmy. British Airways has comprehensive asset tracking and performanceindicator data for its aircraft fleets and is able to make informed managementdecisions and achieve high availability percentages. Bristow HelicoptersLimited achieves similarly high availability rates and both companies have arange of contracts which allow them to minimise their asset holdings andmaximise performance. Whilst there are clear differences between thecommercial sector and military logistics, the quality of managementinformation and the lessons of innovative contracting are recognised by theDefence Logistics Organisation and are being addressed.

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Recommendations16 The Defence Logistics Organisation is making progress in tackling helicopter

logistics and has many initiatives in train to improve logistics management andefficiency in the use of logistics assets. By building on these initiatives, ourrecommendations should help improve support to helicopters at the front line,directly contributing to military outputs. The possible effects on logisticsoutputs are summarised in Figure 1. Such is the importance of helicopters inthe Department's defence tasks that even a small percentage increase in thenumbers of helicopters will have a noticeable impact on exercises andoperations. Our recommendations are applicable to both existing helicopterfleets and to the new Merlin and Apache fleets being brought into service overthe next few years. The new fleets present major technical challenges withmuch of the procurement pre-dating Smart Acquisition. The existing fleets willcontinue to provide an essential component of defence capability during thenext decade.

1 The Defence Logistics Organisation and its front line customers should aimto develop a consistent regime for measuring outputs and performance,and this should include mechanisms for analysing and addressing thereasons for any shortfalls in serviceability and trends in the numbers of D states and robberies.

2 For more effective business management the Defence LogisticsOrganisation needs to obtain better data, covering assets (the numbers ofstocks, their condition and where they are located), financial data andreliability of equipments.

3 With more responsibilities being given to Integrated Project Teams,including negotiation of contractual arrangements, management ofrelations with industry needs to be better co-ordinated to drive betterperformance from contractors.

4 The Defence Logistics Organisation should look to benchmark the qualityand timeliness of its management information and the robustness of itscontractual arrangements with best practice in industry.

5 More needs to be done to disseminate the many good practices that are beingimplemented and the lessons that are available from external best practice.

6 There is a need to prioritise the various management initiatives, focusing onthose that most directly contribute to improving logistics performance andincreasing helicopter availability.

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Summary of the Department's initiatives to improve helicopter logistics1

Logistics Initiative

1 Establishment of Integrated ProjectTeams (para 2.3)

! Guidelines for Integrated ProjectTeams (para 2.7)

! Business plans (para 2.22)

! Working with other operators (para 2.23)

2 Improving performance measurement(Part 1 and para 2.14 - 2.17)

! Customer Supplier Agreements(para 1.8 - 1.11)

! Improving analysis of reliabilityand forecast demand (para 2.20)

3 E-commerce and managementinformation projects (para 2.10)

4 Full application of ResourceAccounting and Budgeting, WholeLife Costing (para 2.8-2.9)

5 Innovative contracting (para 2.24 - 2.25)

6 Best practice dissemination (para 2.13)

! Heads of Specialisation (para 2.9)

! Drawing on best practice fromindustry and other countries'defence departments(para 2.28-2.37)

Effect on Outputs

! Project teams have improved communication, allowing greater focus on customers'concerns

! Guidelines aim to balance a project team's autonomy with a strategic approachdesigned to maximise industry and internal resources

! Better planning should result in improved business performance as demonstrated bythe Helicopter Engines Team

! Cooperative working with others and exchange of ideas can drive down costs with suppliers as achieved by the Chinook Team in its relations with the UnitedStates Army

! Consistent measures of performance will highlight problems more effectively to allstakeholders and promote more efficient use of resources

! Agreements are evolving and there is a need for greater consistency and focus onlogistics outputs

! Reliability work carried out by the Support Chain Integrated Business Team andproject teams should provide better demand forecasts

! New management, IT and asset tracking packages should provide a clear picture ofthe condition and location of assets, and promote better use of existing assets

! Better information on the full cost of activities should help project teams deliver theirbusiness aims and promote wider efficiency

! New arrangements should allow the Department to contract more efficiently forspares and repairs and help reduce stock holdings

! Targeted benchmarking and further best practice dissemination should help theDepartment make better use of its resources and expertise by enabling and equippingproject teams

! More effective sweating of assets should increase outputs

Source: National Audit Office

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Part 1


In this difficult area the Defence Logistics

Organisation has not yet been able to

deliver all the required logistics support

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1.1 Logistics support for helicopters is a complicated taskwith responsibility for aspects of performance beingshared between the Defence Logistics Organisationand front line commands. The Defence LogisticsOrganisation is also crucially dependent on industry toprovide spares. The Defence Logistics Organisation is striving to meet its performance targets andweaknesses in helicopter logistics can have severeoperational impacts.

Logistics support for helicopters is acomplicated task1.2 The Department's 1998 Strategic Defence Review

emphasised the need for flexibility, adaptability andresponsiveness in undertaking military tasks, includingexpeditionary operations. Helicopters are a keycomponent of defence capability as they make a uniquecontribution to operations. The quality, timeliness andreliability of their support are therefore critical to thesuccess of future defence missions.

1.3 This study focuses on the Department's six mainestablished helicopter fleets supported by the DefenceLogistics Organisation, comprising 470 helicopters atthe front line, whose logistics support costs some£260 million a year (Figure 2). Many of the current

helicopter fleets are reaching the end of theiroperational lives and need careful management if theyare to contribute to the expected military tasks. Newfleets of Merlin and Apache helicopters are beingbrought into service by the Defence ProcurementAgency, but have not been operated for sufficient timeto demonstrate significant trends in logisticsperformance. The good practices identified in thisreport within the Defence Logistics Organisation, theDefence Procurement Agency and industry, however,will be of significant value to the new and current fleetsin the future.

1.4 Seventy per cent of the Department's helicopters areoperated by the Joint Helicopter Command, a neworganisation that was formed in October 1999. It wasdesigned to bring together all battlefield helicopters inorder to facilitate their deployment on joint operationsand draws on helicopters owned by the Royal Navy, theArmy and the Royal Air Force. In addition CommodoreNaval Aviation and Strike Command operate smallernumbers of helicopters which are not included in theJoint Helicopter Command. This is because they areeither considered integral parts of a ship's weaponssystem or because they undertake non-battlefield tasks,such as domestic search and rescue work.

Main helicopter types2

Helicopter Number Role Operators

Wessex 11 Light Support Joint Helicopter Command / Strike Command

Puma 33 Tactical Transport Joint Helicopter Command

Gazelle 122 Reconnaissance Joint Helicopter Command

Sea King 100 Numerous roles Joint Helicopter Command / Strike Command / Commodore Naval Aviation

Chinook 31 Medium Support Joint Helicopter Command

Lynx 169 Light Utility Joint Helicopter Command / Commodore Naval Aviation

Source: Ministry of Defence Performance Report 2000/2001

The main helicopter types have been in service for more than 20 years with the United Kingdom armed forces.

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1.5 Providing helicopter logistics support has proved amajor challenge for the Department. The mainresponsibility rests with the Defence LogisticsOrganisation. Prior to the Defence LogisticsOrganisation's establishment in April 1999, eachService was responsible for logistics support for its ownhelicopters and operated its own systems, althoughsome progress had been made in rationalising supportand logistics systems with the formation of the DefenceHelicopter Support Authority in 1994. In addition, theRoyal Navy and the Royal Air Force have co-operatedclosely for over thirty years in the provision of air storesand other logistics matters.

1.6 The Defence Logistics Organisation is not alone inproviding logistics support to helicopters. Themaintenance policy for the aircraft is set by the DefenceLogistics Organisation in discussion with the customerand front line units are responsible for manymaintenance activities. Their performance is not thedirect responsibility of the Defence LogisticsOrganisation, although the Defence Logistics

Organisation provides spares and technical advice(Figure 3). The Defence Logistics Organisation is alsocrucially dependent on industry for the supply of spares.In addition Service personnel organisations areresponsible for providing the trained people needed.

1.7 The complexities of helicopter logistics support areillustrated by the Defence Logistics Organisation'sresponse to the management of the Lynx fleet followinga crash of a Dutch Lynx in 1998:

Logistics support for helicopters3

The Defence Logistics Organisation is responsible for:

! 4th Line maintenance. The deep repair or overhaul ofhelicopters by industry.

! 3rd Line maintenance. Major repair carried out byDepartment bodies such as the Defence Aviation Repair Agency.

When helicopters are not subject to such maintenance, thenthey are technically available to front line units.

A technically available aircraft will still not necessarily becapable of flying. To do so it must first be serviceable.Helicopters are serviceable when they are technicallyavailable, are not subject to 1st or 2nd Line maintenance, andhave been equipped with the necessary weapon systems toundertake their designated mission.

The Defence Logistics Organisation is not directly responsible for:

! 2nd Line maintenance. Minor repairs and partsreplacement. Some major repairs.

! 1st Line maintenance. Daily servicing and maintenance,and routine defects investigations.

This maintenance is performed by front line units. TheDefence Logistics Organisation acts as an enabler, providing spares, technical support and advice, and liaisonwith industry.

For a serviceable helicopter to be ready to fly, air crew haveto be available and the helicopter has to be armed, fuelled,have the correct role equipment and be supported bysufficient numbers of adequately trained ground crew.


Other bodies, in addition to the Defence LogisticsOrganisation, are involved in the provision of logistics supportfor helicopters.

The Joint Helicopter Command andCommodore Naval Aviation operate Lynxhelicopters in a variety of different roles.

In November 1998 a Dutch Lynx suffered an unforeseencritical failure of its main rotor head. As a result of thisincident, the service life between maintenance of rotorheads fitted to the Department's own helicopters wasreduced. The Defence Logistics Organisation did nothave accurate data on the consumed lives of rotor heads,particularly those being operated by the Army. In theabsence of good data, the Defence Logistics Organisationhad to adopt a conservative position when undertakingrepairs and a number of rotor heads may have been takenout of service prematurely.

The effect was an overall shortage of rotor heads andmany helicopters were grounded. The Defence LogisticsOrganisation responded promptly, consulting its frontline customers, Commodore Naval Aviation and the JointHelicopter Command and agreeing revised targets forLynx availability, typically involving a 20 per centreduction. The Lynx main rotor head is a complex andhigh performance component which is constructed froma special material, processed through a number ofspecialist suppliers and has a total lead time of more thantwo years. The rate at which rotor heads could bemanufactured and delivered was insufficient to avoid theoverall fleet shortage. The Lynx Integrated Project Teamreacted quickly given the long lead times and themanufacturer, Westland Helicopters initiated recoveryaction well in advance of new contractual arrangements.

The Defence Logistics Organisation has worked closelywith Westland Helicopters to deliver additional rotorheads and has put in place a robust fleet wide recoveryprogramme that is on target for completion in June 2002,when Lynx availability is to be restored to previous levelsand replenishment of all spares is scheduled for March 2003. Progress against the recovery programmehas been carefully monitored by the Defence LogisticsOrganisation and included in the monthly performancereports provided to senior management.

The Defence Logistics Organisation is striving to meet its helicopter related CustomerSupplier Agreements1.8 Performance against Customer Supplier Agreements is

mixed and the agreements do not provide a comprehensivemeasure of helicopter logistics performance.

Performance against Customer SupplierAgreements is mixed

1.9 The Defence Logistics Organisation has establishedCustomer Supplier Agreements with its three customers ofhelicopter logistics: the Joint Helicopter Command,Commodore Naval Aviation and Strike Command. TheseAgreements are negotiated annually and cover the totalityof the logistics support provided by the Defence LogisticsOrganisation. Figure 4 illustrates the key outputs andperformance indicators in these agreements.

1.10 During 2000 and 2001 the Defence LogisticsOrganisation reported its performance against theseAgreements as unsatisfactory, although in recent monthsits performance has started to improve. It identified alack of spares, including vital repairable items, as themain reason for its performance weaknesses. Wherethere is a requirement for replacement spares theDefence Logistics Organisation is very much dependenton capacity in industry.

Key outputs in Customer Supplier Agreements4

Output Example of Performance Indicator

Sufficient aircraft ! Number of aircraft technically available

! Flying hours achieved against agreed target

Airworthy aircraft ! Number of urgent maintenance instructions

Capable aircraft ! Percentage of aircraft not fittedwith required equipment

Reliable aircraft ! Mean time between replacement for technical failure of major rotables

Maintainable aircraft ! Unscheduled maintenance manhours per flying hour

Sustainable aircraft ! Numbers of robberies

! Numbers of D states

Source: Defence Logistics Organisation

The Customer Supplier Agreements detail the agreed keyoutputs and performance indicators.


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1.11 Our examination of the Defence LogisticsOrganisation's detailed performance under theCustomer Supplier Agreements revealed somevariability between customers in the performanceinformation collected to monitor service delivery,limiting the comparisons that could be made in thestandards of service provided to these customers.Standardisation of performance monitoring wouldfacilitate comparison.

1.12 For each type of helicopter the Defence LogisticsOrganisation agrees the number of aircraft that it willmake technically available to its customers during theyear. Its performance in meeting these targets has been patchy:

! For Commodore Naval Aviation Sea King and Lynxhelicopters, in 2000 the Defence LogisticsOrganisation succeeded in making all of the agreedhelicopters available for use half the time.

! For the Joint Helicopter Command, in the 12 months to September 2001 the DefenceLogistics Organisation achieved its targets moreoften than not (Figure 5). It succeeded in making allagreed helicopters for five of the six helicopter typesavailable for use 30 per cent of the time. Wheretargets were missed performance was marginally below target, with availability at more than 80 per cent (Figure 6). For Lynx, the sixthhelicopter, as a result of the main rotor headproblem (Box page 8), the Defence LogisticsOrganisation never succeeded in meeting itsavailability targets. Availability targets for Chinook,Gazelle and Puma helicopters for 2001-02 weregenerally made more demanding and the DefenceLogistics Organisation has experienced difficultiesin achieving these higher standards - hence fromApril 2001 Figure 5 shows more red than green.

Helicopter availability - Joint Helicopter Command5

Source: Joint Helicopter Command

During 2001 performance deteriorated with the Defence Logistics Organisation not meeting its availability targets for one or more of the Joint Helicopter Command's helicopter types.

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! For Strike Command's main search and rescuehelicopter, the Sea King, the Defence LogisticsOrganisation succeeded in making all agreedhelicopters available 40 per cent of the time. For theremaining time it did not meet this target, but thenumber of helicopters made available never fellbelow 94 per cent of the agreed levels.

The numbers of D states and robberies indicatelogistics weaknesses

1.13 The Customer Supplier Agreements contain targetswhich cover the Defence Logistics Organisation'sprovision of logistics support to front line units to assistin making helicopters serviceable. Thus targets are setfor the number of helicopters which are grounded as aresult of a lack of spares to enable front line units tocarry out maintenance (D states), and the number oftimes units have to take equipments, such as gear boxes

or rotor heads, and spares from one helicopter to placein another (robberies). In these cases, the DefenceLogistics Organisation's target is to ensure that thenumber of D states and robberies is as low as reasonablypractical. A zero D state target would not be practicableor cost-effective as this would require disproportionateincreases in spares holdings. Nevertheless, robberies arehugely time-consuming for ground crew, since itmultiplies their workload and delays other scheduledmaintenance. There are also knock-on effects fromcontinual robbing, with increasing risk of damage tocomponents and fixings.

Availability of the Joint Helicopter Command's six helicopter types6


The figure shows performance in meeting the 100 per cent availability target for the Joint Helicopter Command's six helicopter types for the 12 months to September 2001. In the light of the major problems with the Lynx main rotor head the availability target was eased in April 2001 but was still not achieved (Box page 8). Performance dipped in the last 6 months for Chinook helicopters as the availability target was made more demanding. There are 8 Wessex helicopters and unavailability of one helicopter has a marked effect on overall performance.

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1.14 Analysis of performance for these two aspects illustrateweaknesses in the Defence Logistics Organisation'ssupport for front line units. The raw statistics suggestthat overall performance has been mixed with apparentincreases in D states and little change in numbers ofrobberies for the Joint Helicopter Command(Figures 7 and 8). However, care needs to be takenwhen interpreting results as there are concernsregarding the consistency of data. Definitions havechanged over time and some units may adopt differentapproaches to data collection and reporting, makingthe identification of clear performance trends difficult.In addition the unit of measurement is broad, coveringan entire engine to a minor component. Raw statisticson D states require careful interpretation as onehelicopter may be affected by more than one D state.Indicators such as the number of days lost awaitingspares provide additional information but data are notcollected consistently.

Performance on flying hours achieved has been poor

1.15 The Customer Supplier Agreements detail the number offlying hours to be achieved during the year. For most ofthe helicopters operated by the Joint HelicopterCommand, these targets have not been met (Figure 9).The flying hours targets for Strike Command Sea Kingshave also not been met; in 2000 86 per cent of plannedflying hours were achieved, falling to 79 per cent in2001. Commodore Naval Aviation achieved 76 per centof planned flying hours in 2000-01 and 89 per cent toJanuary 2002 in 2001-02. The low level of flying hoursin 2000-01 was partly the result of a deliberatereduction during the year in the number of hours flownas part of a cost savings exercise.

Level of D states - Joint Helicopter Command7


During 2000-01 the number of D states for Joint Helicopter Command helicopters increased by over 160 per cent.

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The above data needs to be treated with caution as there were changes in the definition of D state.

Level of robberies - Joint Helicopter Command8


During 2000 and 2001 there was no improvement in the total number of robberies on Joint Helicopter Command helicopters.

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The Department needs to extend the scope of Customer Supplier Agreements toprovide a more comprehensive measure of performance

1.16 One measure of output in the Customer SupplierAgreement is annual flying hours. Flying hours,however, are the product of a number of factorsincluding spares provisioning, appropriate maintenancescheduling and both air and ground crew training andmanning levels. Front line manning and training is theresponsibility of service personnel organisations, whilstfront line units are responsible for the performance ofcertain levels of maintenance and the Defence LogisticsOrganisation for making helicopters technicallyavailable and providing spares and technical support tothe front line. Since the achievement of flying hours isdependent on so many parties, they are not a definitivemeasure of the Defence Logistics Organisation'sperformance. However, they are monitored as they area key cost driver for the Defence Logistics Organisation.Flying hours are also an important measure for theDefence Logistics Organisation's customers as they arerelated to the achievement of outputs, such as trainingcourses and aircrew currency, for which the customersare responsible.

1.17 In contrast, the Customer Supplier Agreements do notgenerally contain targets for the number of helicopterswhich are serviceable during the year - the CommodoreNaval Aviation Agreement is the exception. As withflying hours, the numbers of serviceable helicopters isdependent on the performance of both the Defence

Logistics Organisation and its customers. Whendetermining whether helicopters are able to be used,the Defence Logistics Organisation's customers arefundamentally concerned with the number ofserviceable helicopters which are ready to fly, ratherthan the number of those that the Defence LogisticsOrganisation has made available to them. TheCustomer Supplier Agreements should thereforeinclude targets for the number of serviceablehelicopters during the year, with supporting analysis toidentify the causes of any shortcomings in performanceand responsibilities for improvements.

1.18 The inclusion of targets for serviceable helicopters willavoid the situation which has occurred in the past wherethe Defence Logistics Organisation has reported itsperformance as satisfactory, as it has succeeded inmeeting its targets for making helicopters available tothe front line units. At the same time front linecommanders have reported helicopter numbers to beunsatisfactory as they have focused on the number ofserviceable helicopters for use. In 1992 the Committeeof Public Accounts raised similar concerns on the needfor greater consistency in the definition andmeasurement of availability between the Services(Appendix 1).

1.19 The Customer Supplier Agreements do contain targetsfor aspects of the Defence Logistics Organisation'ssupport to front line units in making helicoptersserviceable. For example, the targets for D states androbberies (paragraph 1.13) cover the Defence LogisticsOrganisation's performance in providing the front line

Flying hours achieved - Joint Helicopter Command9

2000-01 2001-02First Quarter (1)

Targets met Puma Gazelle

Sea King

Targets not met Percentage of target Percentage of target achieved achieved

Wessex 93 Sea King 98

Gazelle 84 Puma 96

Chinook 78 Lynx 85

Lynx 76 Wessex 82

Chinook 73

NOTE

1. Figures for 2001-02 are the actual number of flying hours achieved in April to June 2001.


The Joint Helicopter Command has met three out of 12 targets for flying hours.

16

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units with spares. However, the Agreements do notcover other aspects of the Defence LogisticsOrganisation's support, such as the provision oftechnical advice and publications. These Agreementsshould therefore be extended to include performanceindicators covering the timeliness and quality of suchsupport. As partnering arrangements evolve this maylead to closer co-operation between front line customersand industry, as is the case with Westland Helicoptersand the Sea King, Merlin and Apache fleets.

1.20 The levels of service to be provided under the CustomerSupplier Agreements agreed each year reflect the levelsof funding available to the Defence LogisticsOrganisation. The Agreements can be renegotiatedduring the year to reflect funding pressures, changes inthe outputs required by the customers in response tomilitary operations, or technical problems.

Analysis of serviceable helicopters shows shortfalls inlogistics performance1.21 The Defence Logistics Organisation and its front line

customers share responsibility for aspects of helicopterlogistics performance. The Defence LogisticsOrganisation is clearly responsible for the provision ofset numbers of 'available' helicopters to the front line. Itsets a maintenance policy for each helicopter type indiscussion with the customer. Newer types such asMerlin and Apache have their maintenance policiesjointly derived with the manufacturer. The advantages ofthis approach are being investigated for the current SeaKing fleet. Through this maintenance policy, spares andexpertise are provided to front line units. The front lineunits are themselves responsible for many maintenanceactivities, including daily servicing and maintenance,routine defect investigations, minor repairs and partsreplacement. The deployment of helicopters which areserviceable rather than simply available is, therefore, ajoint effort between the Defence Logistics Organisationand its customers.

1.22 Analysis of the number of serviceable helicoptersreveals shortcomings in logistics performance, althoughthe data for Lynx have been heavily influenced by theproblems associated with the main rotor head (Box page 10):

! For Commodore Naval Aviation helicoptersperformance has been mixed. Over the past fiveyears the number of serviceable Sea King helicoptershas increased to over 70 per cent. In contrast thenumber of serviceable Lynx helicopters hasdecreased significantly to just over 50 per cent(Figure 10).

! For the Joint Helicopter Command the target is fortwo thirds of its available helicopters to beserviceable. Serviceability targets were achieved onaverage for two of the six helicopter fleets in thetwelve months to September 2001 (Figure 11). Asfor availability, where targets were missed,performance was marginally below target.

! Strike Command's target for its main search andrescue helicopter, the Sea King, is for 60 per cent ofthese to be serviceable. In the 18 months toSeptember 2001 this target was only met in threemonths (Figure 12). Search and rescue units arerequired to have two helicopters at very high levelsof readiness and serviceability for the first standbyhelicopter was 98 per cent.

Serviceable helicopters - Commodore Naval Aviation10

Source: Royal Navy

Performance in making Commodore Naval Aviation helicoptersserviceable has been mixed.

Num

ber

of s

ervi

ceab

le h

elic

opte

rs (

per

cent

)

NOTE

The Defence Logistics Organisation was established in April 2000.

80

70

60

50

40

30

20

10

0Lynx Sea King

97/98 98/99 99/00

00/01 01/02

17

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Weaknesses in logistics support canhave severe operational impacts1.23 Weaknesses in logistics support can have severe impacts

on operations and exercises but the Department hasmanaged its limited resources in such a way to protectcritical operations and the training programme.

Operations

1.24 The recent operational performance of several aircrafthas been diminished by logistics shortcomings. Whilesome shortcomings can be attributed to heavy use or theextension of a platform's out of service date, logisticsdifficulties remain. Shortages of spares have affected anumber of types of helicopter in particular.

1.25 Lynx outputs have been severely affected by problemswith the main rotor head (Box page 10). This issuereduced the number of available aircraft and the RoyalNavy protected front-line operations and the flyingtraining programme, resulting in some ships going to seawithout an embarked Lynx helicopter. This means thatthe ship as a whole lacks anti-submarine and air-to-surface warfare components as well as the other utilityroles provided by the Lynx. This represents a significantdowngrading of operational capability. Furthermore, the

Serviceable helicopters - Joint Helicopter Command11


In the 12 months to September 2001 Joint Helicopter Command serviceability targets were achieved on average for two of the six helicopter fleets.

-6

-4

-2

0

2

4

6

Num

ber

of h

elic

opte

r ty

pes

Met or above target Below target

Oct 00 Nov 00 Dec 00 Jan 01 Feb 01 Mar 01 Apr 01 May 01 Jun 01 Jul 01 Aug 01 Sept 01

Serviceability of Strike Command's Sea King helicopters

12

Source: Royal Air Force

In the 18 months to September 2001 the serviceability target for Strike Command's Sea King helicopters was only met in three months.

Serv

icea

ble

hel

icop

ters

(pe

r ce

nt)

Apr

00

May

00

Jun

00Ju

l 00

Aug

00

Sept

00

Oct

00

Nov

00

Dec

00

Jan

01Fe

b 01

Mar

01

Apr

01

May

01

Jun

01Ju

l 01

Aug

01

Sept

01

70

60

50

40

30

20

10

0

18

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longer a ship operates without its helicopters, the harderit becomes for the crew to maintain their aviation-related skills and experience. The same rotor headproblem contributed to the Joint Helicopter Commandhaving to review its helicopter deployments. As a result,the Lynx helicopters in the rapid reaction forces notcurrently deployed on operations are at a lower level ofreadiness than targeted.

1.26 There have also been problems with the rotor heads androtor gear boxes of Sea Kings. Again action is being takento address these problems. Despite this, there have beenoperational difficulties. When amphibious assault SeaKings were deployed to Sierra Leone, all spare Sea Kingengines were sent with them. This impacted on searchand rescue Sea Kings in the United Kingdom as there wasa consequent increase in the number of D states and anincrease on the workload on ground crews, althoughhelicopter availability was maintained.

1.27 Problems have also emerged with the Gazellehelicopters. A recent accident highlighted faulty torsionbars dating from before 1997. The Design Authorityintroduced a new monitoring requirement and theDefence Logistics Organisation had to use manualtracking systems to identify which Gazelles containedtorsion bars from this period. The Defence LogisticsOrganisation reacted swiftly to identify the affectedcomponents and briefly grounded three quarters of theGazelle fleet to enable inspections to be carried out toidentify faulty parts. Learning valuable lessons for thefuture, the Puma/Gazelle Integrated Project Teamworked closely with the Joint Helicopter Command andthe Design Authority to manage the recovery plan andminimise operational impacts.

1.28 Front line units have experienced difficulty in meetingtheir sustainability requirements. For example, althoughthe Royal Air Force's requirement is for five primingequipment packs for its Chinook fleets, only one ofthese has been funded. These packs are sets of keyspares which are crucial for expeditionary operations.

Exercises

1.29 From our discussions with front line units, aircraftunavailability is contributing to poor staff retention.Some aircrew cannot achieve their stipulated flyinghours ('currency') since aircraft are grounded. Otheraircrew are unhappy that they are only achieving theirstipulated flying hours through equipment testing flightsrather than through more technically demandingtraining and exercises. Training opportunities are limitedas training units' requests for scarce spares for theirhelicopters take a lower priority than requests from unitson operations.

1.30 During the recent exercise in Oman, Saif Sareea II,experience gained from the Gulf War suggested that theharsh conditions would have an effect on helicopterperformance and logistics planning was changedaccordingly. However, the extreme environmentalconditions caused some components, such as the Lynxrotor blades, to break down at a faster rate thanexpected. The necessary spares had to be sent from theUnited Kingdom and there were delays as availablespace on freight flights to Oman was limited.Consequently helicopter serviceability during theexercise averaged below 55 per cent. For Europeanexercises the target serviceability rate is 75 per cent,although the Department considered that this wasambitious for conditions in Oman.

Part 2

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two

2.1 The Defence Logistics Organisation has many initiativesin train to improve performance but managementinformation is not yet sufficiently robust. There areexamples of good practice within the Defence LogisticsOrganisation which should be disseminated. In additionlessons can be learned from outside organisations.

The Defence Logistics Organisationhas many initiatives in place toimprove performance butmanagement information is not yet sufficiently robust 2.2 The Defence Logistics Organisation has established

Integrated Project Teams and introduced a number ofinitiatives to improve performance but it needs to ensurethat project teams have the data to manage theirbusinesses effectively.

Integrated Project Teams manage helicopter logistics

2.3 There has been considerable change in the managementof helicopter logistics in the last decade. Before theestablishment of the Defence Logistics Organisationthere was very much a silo mentality. Despite theformation of the Defence Helicopter Support Authority,the three Services continued to operate their ownsystems and budgetary structures, limiting progress onconvergence. Following a structure implemented acrossthe Department's acquisition organisations, the DefenceLogistics Organisation has established Integrated ProjectTeams to manage helicopter logistics. Directresponsibility for those Integrated Project Teamsresponsible for helicopter support falls to the EquipmentSupport (Air) pillar, which is also responsible forlogistics support for fixed wing aircraft (Figure 13).

2.4 Equipment Support (Air) operates five main helicopterplatform Integrated Project Teams (Sea King, Chinook, Puma/Gazelle, Lynx, Helicopter/Islander) and four commodity teams (Helicopter Engines, Avionics,

Aircraft Support and Air Launched Munitions). A furthertwo platform teams for new helicopters (Apache andMerlin) will remain predominantly within the DefenceProcurement Agency until the aircraft are fully broughtinto service, at which point they will migrate to theDefence Logistics Organisation.

2.5 Feedback from front line customer organisations suggeststhat they broadly welcome the Integrated Project Teamstructure. They are particularly keen on using the teamleader as a single point of contact through which tochannel their technical, replenishment and budgetaryconcerns. As part of its development of performancemeasurement, the Defence Logistics Organisation is toestablish customer satisfaction indicators, and so monitorcustomer opinion more formally, but other priorities haveresulted in the project slipping.

Part 2 The Defence Logistics Organisation is

tackling helicopter logistics problems but

there is scope to improve performance and

so increase helicopter outputs


Commodore Naval

Aviation

JointHelicopterCommand

RAFStrike

Command

Platform and Commodity Integrated Project Teams

Equipment Support (Air)

Support arrangements for the Department's three helicopter customers

13


Support for helicopter customers is channelled through Equipment Support (Air) Integrated Project Teams.

Defence Logistics Organisation

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2.6 There are competing demands between helicopterplatform and commodity teams and it is important toensure that there are clear lines of accountabilitybetween the customer via the platform teams. TheDefence Logistics Organisation is reviewing itsarrangements in the light of experience across the Airand other Service pillars.

! The helicopter area of the Defence LogisticsOrganisation maintains a separate HelicopterEngines Integrated Project Team, which givessubstantial advantages in dealing with industry andgetting efficiencies when managing similar engines.In contrast, in the fixed wing area, platform teamshave been responsible for their own engines sincetheir inception, with the advantage that one team isresponsible for the integrated performance of eachplatform. For helicopters, platform teams haveprimacy and have established internal businessagreements with the commodity teams. Platformteam leaders take the lead in dealing with customersbut there are varying interpretations as to when theleaders of commodity teams should be involved.

! The Avionics Integrated Project Team managesavionics equipment only when it is used by more thanone platform team, although there are exceptions tothis rule, decided on a case-by-case basis. The resultis a degree of confusion as to who should take thelead on new avionics equipment support.

2.7 The numbers of teams all contracting with a smallnumber of industry players can lead to confusionbetween the Department and industry. Many teams aredealing with the same industrial suppliers and potentiallythere are competing demands between the teamsworking unilaterally to drive better performance fromindustry and an overarching industrial strategy that isgenerally implemented at senior levels. This is difficult toachieve with a set of 'empowered' teams, but isnecessary if better performance is to be achieved. Awareof this, the Defence Logistics Organisation hasdeveloped a strategy to provide a set of resilientguidelines to enable coherent and integrated supportacross the logistics and acquisition community. Forexample, the Defence Logistics Organisation bringstogether Integrated Project Team leaders and industrydirectors to ensure that business is jointly taken forwardand requirements prioritised. The principal manufacturer,Westland Helicopters, welcomes this initiative incontributing to convergence in helicopter support. Themanagement of dealings with commercial suppliers andmanufacturers should be more closely co-ordinated inorder to drive better performance from industry.

The Defence Logistics Organisation hasintroduced many concurrent initiatives

2.8 In its 2000 Corporate Plan, the Defence LogisticsOrganisation identified seven key areas for change bywhich it might transform logistics support, namelypeople, inventory, industry, capital asset management,engineering support, e-business and convergence. Manyof these changes have direct implications for the currentand future success of helicopter logistics. The DefenceLogistics Organisation has also developed businessplanning and performance monitoring through balancedscorecards, which are cascaded down through itsbusiness units. Other projects include the introduction ofthe European Foundation for Quality ManagementExcellence model, adopting a Whole Life Cost Approachand driving forward Smart Acquisition initiatives.

2.9 Work continues on the full application of ResourceAccounting and Budgeting, and there are targets forreducing stock and generating efficiency savings. TheChief of Defence Logistics has set a target of a 20 per centreduction in output costs by 2005, whilst continuing todeliver or improve the quality of outputs. The DefenceLogistics Organisation is introducing a number of Headsof Specialism for various areas of expertise. These Headswould be the focal point for Integrated Project Teamsseeking advice and also for the dissemination of bestpractice across the three environments.

2.10 The Defence Logistics Organisation is working totransform its business, people and processes andconverge information systems across the threeenvironments but much still remains to be done. Arange of electronic solutions to current business needsforms part of this work.

! Asset tracking and inventory management should beimproved by the introduction of new systems,although implementation of these will take time.While new systems may be comprehensive, theymay lack the sophistication of some systems whichare already in place.

! An e-commerce framework should speed upinteractions between the Defence LogisticsOrganisation, the Defence Procurement Agency, theDefence Bills Agency and industry.

! In addition, work is underway to ensure that all thedata used to populate these new systems is asaccurate as possible.

21

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2.11 Whilst these projects are pan-logistics applications, theirsuccessful introduction should result in increasedserviceability of helicopters, as a result of optimisinginventories, converging business and engineeringpractices, reducing the repair cycle and giving bettercontrol of assets. However, the timescales for theseprojects are medium term (three or four years), their fullfunding is not yet guaranteed and there is therefore a needfor interim solutions which Integrated Project Teams aredeveloping. These interim solutions are not interoperablewith the major systems currently being developed.

2.12 Integrated Project Teams are keen to implement thevarious Defence Logistics Organisation initiatives buttheir uptake is more advanced in some areas thanothers. Much depends on the maturity of the bedding inof Smart Acquisition changes. There are alsowidespread complaints of initiative overload, withteams stating that they are not always given the time orresources to train and be able to implement newworking practices successfully.

2.13 In addition to the business change programme mentionedabove, the Air environment headquarters is pursuing anumber of business process improvement initiatives,although some of these are directly cascaded from theDefence Logistics Organisation centre. The Airenvironment business plan sets out a number of theseinitiatives, including: developing a Whole Life Costapproach, Smart Acquisition initiatives and improvingefficiency through Resource Accounting and Budgeting.A Change Programme Management Group has beenformed to prioritise extant initiatives. The Air environmenthas added Best Practice web pages to its intranet site andinstituted a Best Practice newsletter in order to spreadinnovation throughout the Integrated Project Teams, andpeer group meetings are regularly held. The staff at the Airsite in Yeovilton have instituted a series of lunchtimeseminars with similar aims in mind.

The Defence Logistics Organisation needs toensure that teams have the data needed tomanage their business effectively

2.14 For the successful provision of logistics support,management information should be timely, accurate andreliable, and requires data on key areas such as end userdemands, the location and condition of assets, accuratecosts, the reliability of equipments, and the supply base.The Department's management information hashistorically been poor, as shown in the Committee ofPublic Accounts 1992 report when the Department gaveassurances that progress was being made (Appendix 1).

2.15 Whilst the Department has systems to record costs, assettracking and other data, the Defence LogisticsOrganisation has not yet completed the convergence ofthese systems. Legacy single Service information systems

and practices remain, denying Integrated Project Teamsand the Defence Logistics Organisation the managementinformation they need. The problem of connectivityremains an ongoing concern. In this context the Airenvironment mirrors the Defence Logistics Organisationbecause it has inherited a number of legacy systemswhich are gradually being brought together. The newApache and Merlin helicopter fleets, which are beingbrought into service by Defence Procurement AgencyIntegrated Project Teams, present even greater technicaland engineering challenges for the Defence LogisticsOrganisation than the current fleets. It is crucial,therefore, that effective systems are put in place in orderto operate these fleets efficiently.

2.16 By way of example, poor asset tracking exacerbatedproblems on Lynx and Gazelle where the Departmentdid not have the data readily available on the age,condition and location of key components (Box page 10and paragraph 1.27). Particular difficulties arise whenspares are transferred across fleets, for example from aCommodore Naval Aviation Lynx to a Joint HelicopterCommand Lynx and therefore across asset trackingsystems. The Royal Navy and the Royal Air Force bothuse automated asset tracking systems, whereas the Armyuses a manual tracking system. There is therefore limitedinteroperability between the three systems.

2.17 The Sea King Integrated Project Team has a particularchallenge in terms of information convergence since itsupports helicopters from Commodore Naval Aviation,Strike Command and the Joint Helicopter Command. Ittherefore has to use data from a range of legacy systemswhen conducting its activities. In conjunction withEquipment Support (Air) IT staff, the Sea King IntegratedProject Team is developing a data warehousing project,designed to bring together all extant informationsystems into one package. Besides allowing the team tomanage its assets in an efficient way, the project shouldprovide an early sample of the benefits that are expectedfrom improvements in IT systems.

2.18 The Defence Logistics Organisation is currently looking atoptions for achieving information systems convergenceacross the helicopter community, both to aidinteroperability and to improve data consistency andaccuracy. This is being done in conjunction withWestland Helicopters in order that data and informationcan be shared and collaborative working facilitated. Keyto this is the exploitation of new technological systemsbeing introduced in support of the Merlin and Apachehelicopters. Westland Helicopters has produced ahelicopter management information convergencestrategy for the Defence Logistics Organisation based onthe Merlin Enhanced Health and Usage Diagnostics(EHUDS) which the company is developing for the MerlinIntegrated Project Team. EHUDS is being assessed by theDepartment who considers that the system has potentialto be used across other helicopter types.

22

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2.19 The introduction of Resource Accounting and Budgetinghas engendered a much closer focus amongst all staff onthe real costs of their business. Integrated Project Teamsare developing cost data in line with Resource Accountingand Budgeting and establishing cost of ownership modelsbut these are immature. Progress is patchy and there is aneed for more training in some areas.

2.20 Previous National Audit Office work on theDepartment's logistics operations suggests thatreliability data across the maintenance area have beenpoor and that this has contributed to poor forecastdemand data. Our analysis of the data available toIntegrated Project Teams suggests that this is also true inmany cases for helicopter support. Traditionally forecastdemand has been based very much on historicconsumption but there is a need to look at futuredemands and the implications of reliability. On boththese aspects there is a need for better quality data. Inorder to improve repairable stock optimisation levelcalculations, much better data are required onreliability, and a proper reliability monitoring systemneeds to be put in place. At present reliability ismeasured in terms of constant failure rates, such asMean Time Between Failure, and often the cause offailures within equipments is not properly analysed.There is a clear need for a generic, understandablemethodology for carrying out reliability analysis to assistequipment managers in minimising the life cycle costsfor legacy systems.

There are many examples of good practice within the Defence Logistics Organisationwhich should be disseminated2.21 Within the Defence Logistics Organisation there are

examples where Integrated Project Teams haveimplemented robust business plans and pursuedinnovative contracting.

Robust business plans

2.22 Some Integrated Project Teams have developed robustbusiness plans. Helicopter Engines Integrated ProjectTeam as a 'Beacon' Integrated Project Team has usedconsultancy support to develop a strong business plan.The plan incorporates a 25 per cent hard targetreduction in costs of ownership by 2005 and a stretchtarget of 50 per cent. Key aspects of the business strategyare: reviewing current stock holdings to developimproved provisioning models; improving assetmanagement and generating better information systems;and developing new support arrangements.

2.23 Some Integrated Project Teams have delivered efficiencysavings. The Helicopter Engines and Chinook teamshave already made savings with further savings forecast.

! The Chinook Integrated Project Team has developeda close working relationship with the United StatesArmy - the world's major Chinook operator. Onebenefit of this relationship is an innovative jointprogramme to develop a low maintenance rotorhead, which, if successful, has a projected whole lifecost saving of £49 million.

! The Helicopter Engines Integrated Project Team usedconsultants to conduct a physical audit of all theirengines. This has given the team a reliable baselineupon which to plan future work. As a result of thisaudit, the team was able to identify a number ofdefunct engines still on its books and strike them off.This had the added benefit of reducing ResourceAccounting and Budgeting charges. In addition, theaudit gave the team better visibility of its inventoryand allowed it to identify efficiencies in the repairand supply loop. Front line customers report that thisaction has led to a reduction in D states attributableto engine unavailability.

! Finance staff on the Avionics Integrated Project Teamhave recently produced work on reclaiming VATpayments for Contracted Out Services which, ifapplied across the Air environment, could producesavings of £21 million.

Innovative contracting

2.24 The Defence Logistics Organisation is committed atsenior levels to transforming relations with industry andincentivising key suppliers to perform better. Much of thishigh level aim is being implemented by Integrated ProjectTeam leaders, who are seeking to replace excessivenumbers of contracts either with single contracts orreduced numbers. These new contracts are beingdesigned as much broader packages that will rewardeffective performance. In the past manufacturers have notbeen incentivised to build in reliability in equipments.

! The Chinook Integrated Project Team has let a DirectVendor Delivery contract for the provision of spares.This is a contract for the provision of a small,selected range of spares directly to the user. Resultsto date have been promising, prompting the possibleextension of the range of application to othercomponents. This enables the team to hold fewstocks itself and thus cut its operating costs. It is alsoworking actively towards a total support contractwith Boeing, which would include data sharingarrangements. This arrangement is seen as thecutting edge of Equipment Support (Air)'scontractual work and its successful implementationwill be a boon for those proposing the wider use ofinnovative industry relations.

23

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! Another innovation in spares supply is the SparesCatalogue System introduced jointly with WestlandHelicopters. This system, which is available on-lineto the Defence Logistics Organisation at itsYeovilton site, provides an electronic catalogue ofparts which are displayed with firm prices, lead-times and delivery options. Defence LogisticsOrganisation staff are able to place electronicorders which are transmitted automatically toWestland Helicopters' suppliers. The parts aredelivered directly from the suppliers to theDepartment's packing and distribution agent. In thisarrangement, Westland Helicopters' role as DesignAuthority is to manage the capability (capacity,stability and quality) of its supply base rather thanprocess individual orders.

! In December 2000 the Sea King and Lynx IntegratedProject Teams placed new repair and deliverycontracts with Westland Helicopters covering the'blade to blade' components of the respectiveaircraft. These contracts have firm prices,guaranteed turn round times, componentguarantees and incentives to improve reliability. Italso enables the Defence Logistics Organisation tomonitor supplier performance.

! The Sea King Integrated Project Team and WestlandHelicopters as prime contractor are developing theSea King Integrated Operational Support project(SKIOS). The object is to deliver a total supportsolution to the various Sea King fleets. Designed tobe implemented in stages from the end of 2002, theproject should deliver reliable and accurate supportfor the Sea King user community, as well as cuttingdown the lengthy repair and re-provisioning times.

! Two examples of support innovation come fromhelicopter Integrated Project Teams within theDefence Procurement Agency: the Apache SpecialRepair Activity and the Integrated MerlinOperational Support project.

a) The Special Repair Activity facility allows fourthline repair and overhaul of significant number ofApache Weapons System components to occurat the front line by locating a comprehensiveindustry facility within the boundaries of thefront line unit. This allows a fast, direct exchangeof these key components, maintaining theiravailability to a high state of readiness.

b) The Integrated Merlin Operational Support(IMOS) initial business case is being compiledquickly because good data exists within astructured database. Similar in approach toSKIOS, it builds on experience gained from theEnhanced Health and Usage Diagnostic Systemand electronic technical publication techniquesalready developed. It is expected to promote

continuous improvement of life cycle coststhroughout the operational life of the Merlinhelicopter weapons system.

! The Sea King, Merlin and Apache projects wouldalso benefit the other helicopter fleets supported bythe Defence Logistics Organisation and providegood examples of the beneficial cross-pollination ofhelicopter support ideas between the DefenceProcurement Agency and the Defence LogisticsOrganisation. Both the Merlin and Sea Kinginitiatives also consider the linkages between thetraining of front line units and support outputs as akey innovative element.

2.25 Contracting for repair is a key area where improvementsmust be made. Some Integrated Project Teams havemade crucial first steps in this area. Modelling its workon a United States Navy project, the Avionics IntegratedProject Team has let a new contract with SmithsIndustries for the repair or replacement of proprietaryHorizontal Situation Indicators, a crucial piece ofnavigational equipment. This replaces three separatecontracts across the fixed wing and helicoptercommunities and guarantees a single firm price andavailability. Previous shortages of these components hadled to D states across the Air environment and initialfeedback is that the new contract has largely eradicatedthese D states, leading to more serviceable helicopters.

2.26 Strategic partnering is another area where much goodwork is taking place. The Helicopter and IslanderIntegrated Project Team has taken advantage of the factthat it has small helicopter fleets based in singlelocations to develop innovative partneringarrangements, mostly on the Contractor Owned MilitaryRegistered principle. Whilst these arrangements do notyet apply to the larger established fleets, they arechanging perceptions within both industry and thelogistics community and could have a positive effect onfuture support arrangements.

Lessons can be learned fromoutside organisations 2.27 The Defence Logistics Organisation can learn lessons

from international comparators and from private sectororganisations. There are examples of timely andcomprehensive management information, bettersweating of assets and tauter contracting arrangements.

International comparators

2.28 The challenge of providing effective helicopter logisticssupport is not unique to the Defence LogisticsOrganisation. A recent Australian National Audit Officeperformance audit of the Department of Defence's Naval

24

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Aviation Force revealed similar difficulties1. The auditfound significant shortfalls in helicopter availability,leading to difficulties in meeting operational and trainingrequirements. These shortfalls were attributed in large partto logistics issues, specifically inefficient inventorymanagement systems, inaccurate data and a lack ofchallenging performance targets. The audit also foundthat there was scope to review and improve relations withindustry and maintenance policy. The Australian NationalAudit Office made the following recommendations:

! The introduction of a broader and more challengingperformance regime, linked to flying hours andoperationally available aircraft.

! Enhancing inventory management controls in orderto increase connectivity between ship and shore,provide systems for tracking, controlling andrecording stocks across repair and stores boundariesand facilitate obsolete stock disposals.

! Reviewing maintenance policy and practices with a view to controlling costs and increasingaircraft availability.

! Increasing co-operation on the management ofcommon aircraft parts and repairable items acrossthe Australian forces as a whole.

2.29 The Rand Corporation2 analysed methods of forecastingdemand for stock and concluded that the use of a newalgorithm to calculate inventory levels has producedimmediate and significant gains in performance at littleor no additional inventory cost for the United StatesArmy. The algorithm enabled the Army to calculatedemand history and make adjustments for mobilityrequirements and costs. By reducing the customer waittime, especially for critical items, the algorithm reducesthe risk of stock shortages and gives greater flexibility insetting desired levels of stock which are appropriate toboth customer demand and replenishment patterns.Since the algorithm was introduced, equipmentavailability has risen from 79 per cent to 86 per cent.This algorithm represents the kind of innovativeprovisioning arrangements which could do much tosweat existing assets in the Defence LogisticsOrganisation's helicopter support inventory.

Private sector timely and comprehensivemanagement information

2.30 Management information in the Defence LogisticsOrganisation has been poor, and it will take some yearsbefore there is a fully converged system (paragraph2.15). In contrast the private sector places considerableemphasis on the need for comprehensive and timelymanagement information in order to drive their

businesses. For example both British Airways andBristow Helicopters Limited highlighted the resourcesthey allocate to forecasting demand for spares. TheDefence Logistics Organisation is improving itsmanagement records. One example is placing Lynx and Gazelle data on one system, facilitating overallfleet management.

2.31 We visited British Airways at its headquarters inHeathrow to discuss best practice in aviation logistics.British Airways Engineering as a whole controls around320 aircraft of eight types, £400 million of materialsassets and 7,500 staff at over 160 locations world wide.It supports fleet operations 24 hours a day, 365 days ayear. British Airways has to deploy large numbers ofaircraft from different fleets to a considerable number ofairports. The comparisons with the Department,therefore, are numerous. Whilst the outputs are basedon making profits, while maintaining the highest safetystandards, rather than supporting military operations,the price of failure is extremely serious in both cases.Logistics failures for British Airways have an immediateimpact on customer satisfaction and profitability. Inorder to reduce the occurrence of logistics failures,British Airways has established taut supply and repairsystems and constantly sets targets to improve thosesystems. British Airways' key performance measure is aTechnical Despatch Reliability rate. This provides apicture of how many aircraft leave on time. The target is96 per cent and performance met or bettered this for the last year.

2.32 In order to support this performance, British Airways hasestablished a number of systems, practices and targetswhich relate to spares provisioning, repair and overhauland management information. As regards managementinformation, British Airways is facing a similar situationto the Defence Logistics Organisation, in that it has toconverge legacy information systems to achieve betterefficiency. British Airways has recently invested £60 million in a commercial off the shelf product whichwill make the vast majority of its information systemsinteroperable. Even without this, however, the range ofmanagement information available is impressive. Aninventory management tool facilitates asset trackingaround the repair loop, assesses their condition andflags up re-provisioning orders when necessary. This andother systems enable British Airways to meet two otherkey targets. The first is a 97 per cent availability target forthose spares designated 'critical' and the second is a100 per cent availability target for those spares requiredfor planned maintenance. As a result, few robberiesoccur and the vast majority of maintenance can becarried out without delays.

1 'Naval Aviation Force'. Audit Report No.44, Australian National Audit Office 1999 (www.anao.gov.au)2 'Improved Inventory Policy Contributes to Equipment Readiness', RAND Arroyo Centre, Army Research Division, RB-3026-A, 2001

(www.rand.org/publications/RB/RB3026/)

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More effective sweating of assets

2.33 Private sector companies operate with lower levels ofspares and achieve considerably higher levels ofavailability. The Defence Logistics Organisation shouldseek to learn from industry best practice and benchmarkhelicopter logistics activities accordingly. It is clearlymore realistic to benchmark industry best practiceagainst certain parts of helicopter operations thanagainst others. The Army Air Corps' 7 Regiment, forexample, operates its helicopters in ways that are moresimilar to civilian schedules than ship-borne Lynx. Therole of the Regiment is primarily liaison flying for boththe Regular and Territorial Army in the UK and insupport of overseas exercises. It is not normally involvedin operations. Nonetheless, the private sector usespractices that would be applicable across theDepartment's helicopter fleets.

2.34 Whilst being a civilian operator, Bristow HelicoptersLimited operates a number of different helicopter types,some in austere conditions, such as those serving oil rigplatforms in the North Sea. There are, therefore, somesimilarities between Bristow Helicopters Limited andthe Department. Bristow Helicopters Limited operatesits helicopter fleets with a maximum 30 per cent ofcritical spares (engines, gearboxes, and rotables) andachieves availability of more than 90 per cent. TheDepartment's figures for holding spares are significantlygreater (the Department holds 2,100 helicopter enginesfor some 800 engine placements) but many of thesespares are unserviceable and helicopters are groundedbecause of a lack of spares, resulting in loweravailability and serviceability rates.

2.35 The Defence Helicopter Flying School at RAF Shawburyprovides a benchmark for helicopter performance. Thecontractor, FB Heli Services (a joint venture betweenFRA Serco and Bristow Helicopters Limited), owns and operates the fleet, provides all logistics support and achieves more than 97 per cent serviceability. The 32 helicopters required for training activities everyday are made available from a total fleet of only 35 witha monthly lost sortie rate of around 2 per cent. Althoughthese helicopters are used on reasonably predictableschedules and flying patterns, their high serviceabilitylevels provide the Department with an in-houseexample of what can be achieved.

2.36 The British Airways case illustrates how bettermanagement information is required for achievingbusiness efficiencies through better use of assets. A fullawareness of asset costs and tracking has enabledBritish Airways to optimise stockholding. It has alsotransferred stock holding risks to a number of suppliers.British Airways has therefore achieved reductions inlogistics costs whilst improving performance(paragraphs 2.31 and 2.32)

Contracts which guarantee service outputsfor key components and repairs

2.37 Private sector organisations have establishedarrangements with their contractors for 'power by thehour' contracts which guarantee service outputs for keycomponents and repairs such as engines. For exampleBristow Helicopters Limited has contracted for engine,main rotor head and gear box repair, guaranteeingservice outputs. British Airways also outsources theprovision of engines on a 'power by the hour' basis.However, the adoption of such an approach for militaryhelicopters would require careful consideration, as'power by the hour' necessitates greater control ofoperator maintenance policies by the manufacturer.

Treasury Minute on the Eighth Report from the Committee of Public Accounts 1992-93 -Ministry of Defence: Helicopter Maintenance

This appendix details some of the Public Accounts Committee's previous recommendations on helicopter maintenance and theGovernment's responses, as well as an assessment of progress made since those responses.

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Appendix 1 Previous PAC Recommendations

PAC Conclusion Treasury Minute Progress

PAC conclusion (ii): ... each Service sets its ownavailability targets, using itsown definitions of when anaircraft is "available" ...although some targets areachieved and others not, it isdifficult to get a clear picture.

A single definition of availability for aircraftand equipments, based on Military Standard1388, has been developed and is beingconsidered for introduction across all threeServices. Information Technology systemsproposed for introduction will be capable ofgathering data which will be transferablebetween the Services.

The establishment of the DefenceLogistics Organisation and the JointHelicopter Command has producedsome progress in agreeing definitions ofavailability. Further development ofCustomer Supplier Agreements shouldaid this process. The Department's ITsystems are not yet capable of gatheringdata which can be transferred across theservices. (Para 1.11)

PAC conclusion (iii): ...greater consistency in thedefinition and measurementof availability within andbetween the Services wouldmake comparisons ofperformance easier, and lead to a better assessment of the effectiveness ofmaintenance expenditure

The single definition of availability referred toabove will provide consistent and accuratemeasurement of availability within andbetween the Services. However, there is awide range of factors which must be taken intoaccount when attempting to compareperformance between the Services. Forexample, only one aircraft type (Gazelle) iscommon to all three Services but it is used in10 different roles and comparison ofperformance between a united Kingdomtraining unit and an overseas operational unitcannot be based on availability alone.'

There is still a lack of consistency in thedefinitions and measurement ofavailability and comparison ofperformance therefore remains difficult.However, the establishment ofIntegrated Project Teams has promotedmore effective maintenanceexpenditure, since all versions of eachhelicopter type are supported by thesame Team. (Paras 1.16 - 1.20)


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PAC Conclusion Treasury Minute Progress

PAC conclusion (xi): ...progress is being made inimproving the cost andperformance managementinformation available ... Butwe remain concerned thatdespite significantinvestments in informationtechnology, the Departmentstill do not have sufficientreliable information toidentify the full cost ofhelicopter maintenance.

The Department welcomes the Committee'sacknowledgement of its progress to date.Reliable information relating to the full cost ofaircraft and component repair and maintenanceat the third line is now both available and inuse. Additional information is also beinggathered to assess the National Aircraft RepairOrganisation's performance against the targetsset for it as an Agency. At first and second lines,maintenance cost information will be providedin the Royal Navy by the Work Recording andAsset Management, the Logistics Support andCost Management IT projects. Within the RoyalAir Force, similar information will be providedthrough the introduction of systems within theLogistic Information Technology Strategy. TheStatement of User Requirement, which iscurrently being drafted for the Army's futureaircraft management IT system, will specify theneed to collect first and second linemaintenance cost information.

Single service IT systems are graduallybeing replaced by pan-logistics systemswhich should improve the performancemanagement information. Theimplementation of Resource Accountingand Budgeting is helping the Departmentto identify the full cost of helicoptermaintenance. (Paras 2.9 - 2.11)

PAC conclusion (xii): We recommend that theDepartment take steps toensure greater consistencybetween the Services in thetype and amount of data inputto their information systems.

The Department fully accepts the need forconsistency between the Services in terms ofthe type and amount of data input to theirinformation systems. To this end, close liaisonis being maintained between all three Servicesduring the development of IT systems designedto meet both common and specific needs toensure maximum consistency for relevant data.A study recently commissioned into theinterface emphasis on interfacing andcompatibility rather than integration andconsolidation on the grounds that the latter islikely to be uneconomic and lead to delays.The formation of the Defence HelicopterSupport Authority will offer scope for ensuringthat there is greater consistency in the datainput to the Services' IT systems.'

Since the formation of the DefenceHelicopter Support Authority and,subsequently, the Defence LogisticsOrganisation, progress has been madein converging data. More remains to bedone and the Defence LogisticsOrganisation is not yet able to interpretperformance information or identifyclear trends. Common IT systems arenow being introduced for logisticsmanagement and these should have abeneficial effect on data consistency.(Para 1.14)

1 This appendix sets out the methodology for the study,covering our analysis of the delivery of logistics outputsand how these might be enhanced.

Analysis of helicopter availability2 We analysed logistics performance in delivering

available helicopters to customers. Our work illustrateda number of ways in which customers and logisticssuppliers collect availability data. We therefore analysedwhat was meant by 'availability', and presentedinformation on a consistent basis that would berecognised by customers and the Defence LogisticsOrganisation. We examined the causes of shortfalls inavailability through analysis of the reasons for D states(helicopters grounded because of a lack of spares) androbberies (equipments and spares taken from onehelicopter to ensure another helicopter is serviceable).

Scope for improvement in logistics3 Turning to the scope for identifying further

improvements in logistics performance, we undertook aprogramme of visits to the main Integrated Project Teamsfor helicopter logistics, concentrating on the wellestablished fleets - Chinook, Lynx, Puma/Gazelle, SeaKing and also visiting the Avionics and HelicopterEngine teams. We reviewed business plans, theperformance regime (hard and stretch targets andperformance achievements) and the quality ofinformation available to the team leaders. We alsoexamined the challenges facing the teams inimplementing new information systems whilstdelivering day to day logistics services to customers andengendering a business culture.

4 In order to ensure that we had a customer perspective,we visited the customer organisations' headquarters andfront line units operating Chinook, Lynx, Sea King andGazelle helicopters.

The Process Map 5 As part of our work, we developed an overview of the

helicopter logistics cycle in the form of a process map(Figure 14). This helped to structure our subsequentanalyses, and provided assurance that no critical areaswere omitted from our investigations. It also assisted usin ensuring that improving logistics support would havea direct impact on the number of helicopters availablefor the front line. The map can be used to explain the

relationship between different parts of the helicopterlogistics cycle. We employed HVR Consulting ServicesLtd as consultants to develop the process map.

6 The process map broadly illustrates the dependenciesbetween spares reprovisioning, demand forecasting,usage rates and the activities of the various suppliers oflogistics. The map uses influence diagram notation todepict the cause and effect relationships betweenvariables. Influence diagram notation consists of anarrow, to show the direction of the influence (thevariable at the tail of the arrow exerts an influence uponthe variable at the head), with + and - signs to depictthe sense of the influence. Thus a positive (+) influenceimplies that if the tail variable increased in value, thenthe head variable would also be expected to increase.A negative (-) influence suggests that if the tail variableincreased in value, then the head variable would beexpected to reduce. Chains of cause and effect canthen be established by tracing influence betweenseveral variables.

7 The overall cycle of logistics management is depicted inthe flow that may be traced around the perimeter of themap. This shows that flying hours, the key output oflogistics, may fall short of the performance targets set bythe front line users. These shortfalls require correctiveactions to be taken by the Integrated Project Teams,resulting in contracts placed upon suppliers andmanufacturers. New equipment and services aredelivered to improve the availability of assets foroperational use, hence improving operational readinessand increasing the output.

8 Within this outer loop a number of localised processescan be identified. Broadly, those associated with theuser are to the right of the diagram. Across the top arethe performance monitoring and supplier contractactions, with platform Integrated Project Teams as thefocal point. To the left are the sources of supply. Deliveryis across the bottom, with maintenance processes at3rd/4th line and also 1st/2nd line, depicted in the lowerhalf of the diagram.

9 Some broad messages are apparent from the diagram:

! Output is the result of a balance between fourautonomous processes: major repair and overhaulprocesses at 3rd/4th line; 1st/2nd line maintenance;contracting arrangements and setting andmonitoring of user targets.

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Appendix 2 Methodology

! Ranging and scaling of spares, spares supply andasset tracking to locate spares in the system are a keydeterminant of all these processes.

! A number of factors (inherent reliability of theequipment, manufacturing and delivery delays,effort and skill levels of 1st and 2nd line maintainersand overall budget constraints) are outside the directcontrol of the Integrated Project Team.

! Maintenance at 3rd/4th line can be increaseddirectly by contract action with suppliers of theseservices and indirectly by contract actions toimprove parts availability, reducing the sparesrobbing and D states.

! Maintenance at 1st/2nd line can be assistedindirectly by the spares provisioning process.


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Influence diagram for helicopter logistics management14

The flow around the perimeter of the map links flying hours, the logistics output, to the performance regime, contractual arrangements and maintenance activities (see paragraphs 5 to 9 of this Appendix)

Corrective actions and initiatives by IPT

Budget constraintsValue of contracts

placed on agencies and industry

Orders placed by IPTs

Internal BusinessAgreements

placed

Through LifeManagementPlan setting

Manufacturing and delivery delays

New equipment, services and

spares availability

Shortfall monitoring

Inherentreliability

Predictedimprovementin operational

reliability

Shortfall measured via:! Inventory measurement! Asset tracking! Supplier capability ratings

Operational andtraining tasks defined

in front line management plans

Performance targetsor CSA

Annual flying task achieved

Serviceable aircraftat required readiness

Unserviceable aircraft

Permitted flying hours

Budget constraintsIncrease in

ranging and scaling

D states and robberies

Repairs andoverhaul

completed at3rd/4th line

Delays incommencingmajor repairor overhaul

Asset availabilityfor operational fleet

Effort and skills at1st and 2nd line

Maintenancecompleted at

1st and 2nd line

+ + +

+

+

+

+

++

+ -

-+

+-+

-

+ +

+

+

-

-

-+

++

-

+

+

-

-

-

++

+

+

+

+

+-

+

Comparators10 We were keen to discover good practice examples of

managing logistics in the private sector. In order to doso, we visited three companies: British Airways, BristowHelicopters Limited and Fast Helicopters. We metmanagement and engineering staff in all threecompanies and discussed their managementinformation, spares provisioning practices and relationswith suppliers. We also undertook a literature search ofother countries' National Audit Offices and researchbodies to provide an international perspective.

Expert panel11 We established an expert panel to review our work.

The panel included representatives from the Departmentand two consultants, Dr Jezdimir Knezevic of MIRCEAkademy (Management of Industrial Reliability, Cost and Effectiveness, Devon) and Keith Milk of HVR Consulting Services Ltd.

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