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Industry: 60% of U.K. ‘White Board’ Programs Could Be Cut

Nov. 17, 2012 - 12:34PM   |  
By ANDREW CHUTER   |   Comments
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LONDON — The British Ministry of Defence could dump dozens of equipment programs as officials cull a list of projects drawn up for possible future funding to help balance the books.

Several industry sources, and others, said they were aware of MoD work to reduce the number of projects on the so-called white board. Two of the executives said they had heard roughly 60 percent of the programs could be cut as officials attempt to come up with a realistic list of equipment procurements given the limited amount of uncommitted defense funds available over the next 10 years.

Virtually none of the 8 billion pounds ($12.7 billion) set aside for uncommitted program funding by the MoD in its midyear announcement on spending for the next 10 years will be available before the 2015 strategic defense and security review, Defence Equipment & Support boss Bernard Gray told a parliamentary committee Nov. 16.

The white board — or, as it is known officially, the Single Integrated Priority List — is a register of unfunded but important programs that armed forces chiefs and others would like to implement if cash becomes available. What goes and what stays on the white board is unknown at this stage. Work on axing programs is expected to be completed by the end of the year.

Several industry executives said they remain uncertain about the identity of even the top 10 programs on the list, let alone those at the bottom.

“It’s opaque. When we ask the [MoD’s] Defence Equipment & Support arm what’s the top priorities on the list so that we can make investment decisions to reflect that, we are told to go away and focus on delivering the programs we already have under contract. It’s a typically short-sighted view,” one senior executive said.

Projects likely to be on the white board include several capability upgrades for the Typhoon fighter, the Multi Role Vehicle (Protected) program, C5ISR programs — particularly information dissemination improvements — maritime patrol aircraft, UAVs and upgrades to the Sentinel battlefield surveillance aircraft if it is retained in service past 2015.

Britain’s ISTAR requirements are the subject of an MoD review expected to finish by the second quarter of the year.

“The notion that you should continuously have a list of priorities to invest funds as they become available is a good one, but there is no point in having a list of, say, 100 priorities if you are only going to have money for 10,” one executive said.

“In a sense, this is not a new spike of activity. It’s always been the case that from its inception the white board would need to be refined to something more manageable,” he said.

A second executive said he estimated the white board list stood at between 60 and 70 programs and projects.

Howard Wheeldon, the policy director at ADS, the British aerospace, defense and security lobby organization, said the program cull had mixed blessings for industry but he fears worse will come.

“As we get closer and closer to the 2015 strategic defense and security review, we are going to see more attempts at clearing out programs that are never going to see the light of day given the pressure the MoD is under,” he said.

“While refining the white board does produce some clarity, the problem is it also frees up space to put other things on. There may be programs we hope are going to occur that suddenly find themselves on the white board if the MoD opts to shift them back another two years or so.”

With tough spending decisions needed to keep the budget balanced, executives are concerned committed programs could be delayed or extended in duration.

Analyst Alex Ashbourne-Walmsley of Ashbourne Strategic Consulting said Defence Secretary Philip Hammond had proved to be “extremely good about not getting sentimental over weeding out programs. It’s better for industry to get the [program cuts] over with and not prolong the pain.”

An MoD spokesman did not answer questions about whether there was work underway at the MoD to reduce the number of programs listed for future funding.

“Some people have used the term ‘white board’ to suggest a list of projects which we can pick from as funding becomes available. In reality, there is an ever-changing list of potential projects that could be added to the fully funded equipment program if the Armed Forces Committee decide they are a priority,” he said.

“These include a number of projects and proposed enhancements that we may need in the future, but which we don’t need to commit to at this point. To ensure greater flexibility, we will not bring these projects into the committed core program until they can demonstrate priority and affordability,” he said.

The equipment list emerged midyear as Hammond reported the department had balanced its books for the first time in years, reducing a 38 billion pound black hole in the budget left by the previous Labour administration, as well as accommodating a nearly 8 percent cut in spending caused by government austerity measures.

Hammond announced in mid-May that for the first time, the MoD’s core equipment program was fully funded, but that didn’t include projects on the white board. Included in the core funding was the purchase of two aircraft carriers for the Royal Navy, updated Warrior infantry fighting vehicles, complex weapons and Wildcat helicopters.

Hammond announced the committed core equipment program over the next 10 years amounted to 152 billion pounds, with a further 8 billion pounds in unallocated funds put aside for emerging equipment requirements and an additional 4 billion pounds in contingency funding to cope with program overspend and other risks.

Few in industry think the 4 billion pound contingency will be sufficient to allow much, if any, unused cash to be recycled into the equipment procurement budget.

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