Five Innovations that Make Defence Procurement Faster and Cut Cost and Risk

On 8 November, the UK government announced its continued commitment to the Global Combat Air Programme (GCAP). The announcement was likely a relief to Japan and Italy, the UK’s treaty partners in the programme. GCAP – and the Future Combat Air System (FCAS) programme of which it is a part -– promises to take UK combat air and industrial capability into the sixth generation of combat jet platforms. 

Government, Military and Industry as One Team 

GCAP from its inception involved a government-industry team rather than the traditional adversarial model. The GCAP announcement at the Farnborough air show in 2018 presented a team of the MoD and the RAF alongside four core companies. BAE Systems, Rolls Royce, Leonardo and MBDA – to generate a new aircraft and its weapons. This was a broader and earlier grouping than had been used in the 1980s with Eurofighter Typhoon, and a strong contrast even with recent naval practice in which the Navy first works out its requirement and only then goes to industry to find the best supplier. As Vice Admiral Paul Marshall told the House of Commons Defence Committee in 2023: 

‘When we have a programme or project in the concept phase, that is done by the Navy Command Headquarters development team. They take the concept and work out the requirements that the Navy needs to meet the threats of the future. Once those requirements are set, what normally happens is that it is passed to a delivery team to get on with the business of full design and implementation.’

Two lines of logic underpin the MoD’s new approach in Team Tempest. The first logic was that one purpose of the strategy was sustaining and developing UK industrial capability in the combat air domain. This capability primarily lay in four companies that had survived decades of industrial consolidation. The second logic was that the approach offered the prospect of better integrating and exploiting the expertise of government and industry: the MoD with its understanding of future threats and their nature, and industry with its knowledge of technology, engineering and manufacturing. 

We acknowledge that government-industry partnering in defence is not entirely new. But even the Carrier Alliance had been preceded by a formal competition between BAE Systems and Thales. The nearest thing to the partnering approach to what was first called Tempest may be the relationship between the government, Rolls Royce and other firms in the Submarine Delivery Agency on submarine nuclear reactors. Thus, the expansion of this approach beyond the immediate industrial concerns around the nuclear deterrent is new. 

Securing Industry Funding for Early-Stage Work

Selecting key partners could be seen as encouraging corporate complacency, but this risk was mitigated by the readiness of the firms to invest significant sums of their own money in the early work without formal assurance of development, let alone production. The companies have not formally revealed their individual spending, but in total it has been around £800 million, compared to the government’s contribution of around £2 billion. The need to recover this funding, along with recognition that production will be shared across the three partners and that exports will be essential to sustain industrial capability long-term, is a major incentive for companies to avoid slacking. 

The dedication of corporate funding was feasible given more than 13 years of firm government signalling of an intention to maintain the national combat air industrial capability. This had been part of the Labour government’s Defence Industrial Strategy of 2005, which led to the Taranis uncrewed stealthy vehicle and the exploration of collaboration on an aircraft with France. The Conservatives’ 2015 Strategic Defence and Security Review stated:

‘We will invest in the next generation of combat aircraft technology, in partnership with our defence aerospace industry and our closest allies. We are working with the US to build and support the F35 Lightning. We will work with France to develop our Unmanned Combat Air System programme, and collaborate on complex weapons.’

These words emerged publicly as the Future Combat Air Systems Technology Initiative and launched the commitment to joint MoD and private sector investment. 

Thus, the Team Tempest model in the Combat Air Strategy emerged after years of discussions on how best to sustain UK industrial capabilities in the broad field of combat air. It was far from being a spur of the moment choice, and reflected an MoD recognition that:

‘The UK’s ability to choose how we deliver our future requirements (including maintenance and upgrade of current systems) is dependent on maintaining access to a dynamic and innovative industrial base.’

Novel Collaborative Decision-Making Structures

The UK has participated in many collaborative aircraft projects, but a negative feature of even Typhoon was the limited authority of the government and corporate structures that were supposed to manage and deliver the project. Subsequently decision-making was often slow. 

With GCAP, the emphasis is on empowered structures and streamlined decision-making processes. The three governments were able to agree quickly on a treaty-based GCAP International Government Organisation with the legal and political powers needed to be able to manage the project from the customer side. Its commercial delivery structure – bringing together the top-level industrial players – is understood to be largely settled, with a formal announcement expected by the end of this year. 

The capacity of these bodies to make choices quickly without having to send everything back to national capitals and company headquarters will be exposed only during the operation of the project, but certainly the intention in 2024 is that the joint executive bodies should be able to proceed at pace in order to keep the project on track.

Japan is a new collaborative partner for the UK, but GCAP is a key element in a strengthening of UK–Japan security relations that dates back to at least 2013. UK Typhoons exercised with Japanese counterparts in 2016, and Theresa May visited Japan as prime minister in 2017. All this was accompanied by company-to-company discussions among the key players. Thus, when the formal announcement of an Italy–Japan–UK aircraft programme was made in 2022, many political, military and industrial preparations had already been made. 

Development for the Unknown: Spiral Development in Action

A further feature of GCAP is its conception as an initially defined project in its own right (a crewed aircraft), and also a platform that will be designed to evolve and spirally develop over time. There will thus be no single declaration of Full Operational Capability because the final ‘full’ stage of the platform is unknown. Moreover, that platform is to be part of a wider and only partially defined evolving system of equipment and capabilities under the FCAS umbrella. Thus, the aim for 2035 is for a minimum viable product that can deal effectively with threats in the 2035–2040 timeframe, but which will be capable of regular, perhaps even continuous improvements. 

In terms of industrial motivation, spiral development offers an appealing base for the export potential of GCAP. All the companies are aware that the long-term sustainment of their combat air capabilities will not be satisfied by demand from the three core countries alone: exports will be necessary, and the UK government is clear that exporting needs to be a key element of its defence industrial strategy.

There is nothing innovative about thinking of an aircraft as part of a wider system: the Spitfires and Hurricanes that were so effective in the Battle of Britain owed much of their effectiveness to the radar, communication and ground-based fighter control direction that made up the air defence system of the time. Moreover, the idea of ‘spiral development’ is pretty much the same as the concept of ‘incremental acquisition’ that was prominent in defence procurement earlier in the millennium. However, that idea was little implemented, in part because of customer reluctance to compromise on requirements when access to funding for future improvements was uncertain. 

A key consideration for how effectively spiral development can operate will be the availability of early funding to build in the key enablers of advances, not least strength, space and electric power in the platform as well the ease of upgrading software. 

Significantly Enhancing the Use of Digital Engineering

Finally, a key enabler of affordability and speed of delivery will be digital engineering (DE). While largely a technology matter, DE also has organisational implications, not least in the form of company and governmental relationships with the Military Aviation Authority (MAA).

The practice of designing aircraft in a computerised, digital environment is not new. All modern civil and military equipment is designed first on a computer using engineers’ expertise to inform how different elements will interact. Digital simulations enable a digital-twin aircraft to be operated by humans in a simulated ‘cockpit’ and environment. Tests with a real system then evaluate how this simulation data corresponds with reality. However, as the documentary film about the competition for the F-35 contract between Lockheed Martin and Boeing illustrates, while these tests often confirmed the simulation data, some unexpected faults emerged. This was over 25 years ago. As time has passed, the computing capacity of simulations has dramatically improved, and so has the data base for generating high fidelity environments in benign and contested scenarios. 

This development in data quality and quantity and processing speed is especially important in the combat air sector because of the time and costs taken up by real-world testing and flying. The US’s transparency on many defence matters enables a sense of the scale of what ‘testing’ has involved to date. This is apparent in a 2018 statement by Vice Admiral Mat Winter, F-35 Program Executive Officer:

‘Since the first flight of AA-1 in 2006, the developmental flight test program has operated for more than 11 years mishap-free, conducting more than 9,200 sorties, accumulating over 17,000 flight hours, and executing more than 65,000 test points to verify the design, durability, software, sensors, weapons capability and performance for all three F-35 variants.’

The average sortie lasted less than two hours. Over the 11 years, more than 16 sorties were flown a week. These numbers give some sense of both the time and money that could be saved if development could be done largely online rather than in the air. 

The vision associated with DE is that a large amount of testing will be done online at great speed and low cost. Computers can operate ‘flights’ on a 24-hours a day basis if need be. Sub-system testing, which is usually less expensive, can be done both online and on the ground. But the role of flight testing should be massively reduced, generating significant savings. 

All defence systems must have an approved Safety Case. In the case of aircraft, arrangements need the approval of the MoD’s safety authorities including the MAA. This suggests that safety and certification people should be involved throughout development, as opposed to being asked for cooperation late in the day (as was the case, for example, with the Ajax armoured vehicle programme).

Another major impact of advanced DE is that it will enable numerous engineers to work on different aspects of the system simultaneously as simulation data on the mutually dependent components is shared, analysed and acted upon at much greater speed. As one key programme manager confirmed to us, this process – from simulation data to design alternations that result from it and from implementation to a model to re-run a simulation – would have taken months in the last significant UK combat air programme. Today, it can be done overnight, as the simulation alternates designs automatically to improve. In the case of GCAP, there is the prospect of a long working day for the humans involved, as those ending their day in Japan can be succeeded by staff in Italy and the UK.

Development is far from the only area where DE could be a key enabler. The potential reach of DE is extraordinary. BAE Systems is already invested in digital manufacturing, robotic assembly, and training support for those doing skilled manual work. Additive manufacturing is a sub-element in DE, as are computer-controlled machine tools. It could thus cut manufacturing time and increase product reliability. In-service modification and spiral development would be quicker and easier with DE. Building data-collecting sensors into systems would support longer usage rates for platforms and enable condition-based maintenance rather than time- or usage-based maintenance. Many modern civil aircraft engines are already fitted with such sensors (linked to computers analysing their results). These mean that engine companies can take on profitable availability contracts.

DE is the clear direction of travel for much of manufacturing. For GCAP, expanding the boundaries of DE is key to holding costs down and delivering an aircraft for 2035: it could and should be rewarding but also inevitably risky. Significantly, it is a field which US defence companies, not least Boeing, Lockheed Martin and Northrop Grumman are actively exploring. Because of the hundreds of sub-contractors that will need to be captured within the GCAP DE tent, the expertise they acquire can be applied on other manufacturing projects, both military and civil. Subject to respect for companies’ intellectual property, the government could work to diffuse GCAP-origin DE experiences to other industrial sectors beyond aerospace. This could enable progress, especially in productivity growth, under the government’s industrial ambitions as laid out in its Green Paper of October 2024.

However, this will require resources and skill. For instance, a highly secure information infrastructure that enables DE is pivotal. Clearly, information on GCAP’s digital twin and its performance in a countless number of combat scenarios will be highly prized, with state and perhaps corporate bodies focused on accessing it. A key to its GCAP capability is keeping that information safe. This has significant implications for the organisations that handle this data, including security clearances, establishing processes, and having the necessary IT infrastructure to handle data securely and at great speed. Skill is also an important factor. Government and industry alike will need to muster the necessary talent to maintain and develop DE capabilities. GCAP is conceptualised as an open-platform system that seeks to enable seamless integration of mission-specific FCAS capabilities from a multitude of suppliers. These suppliers must also be able to recruit the people required for the new digital working environment that they cannot grow themselves. Thus, government and industrial primes will need to produce a skill spill-over to make the FCAS system work. 

All this has consequences for the financial approach to GCAP. Historically, major defence development programmes start cheap and then build up. The DE element of GCAP means that significant initial costs of computing, staff recruitment and training and model development have to be incurred. Investment in a highly secure information storage, processing and communication system is needed early. What this means in UK terms is that Treasury approval for higher than usual early costs is needed. It is a matter of approving a 'spend to save' strategy, which clearly involves risk. But DE could then play a pivotal role in materialising the cost reduction and increases in speed. 

Conclusions

The five areas of innovation in GCAP should be seen holistically as a transformational approach to defence acquisition:

• Government-industry partnering from the outset.
• Securing access to significant industrial cost contributions for the early stages.
• Bringing in a novel collaborative partner and setting up customer and industry delivery structures to facilitate timely decision-making.
• Starting from a minimum viable capability while envisaging spiral development. 
• Pushing the boundaries of digital engineering to reduce the time and cost of development and production. 

This will require persistent teamworking across government departments, among multiple businesses and between government and the private sector. But each offers the prospect of lowering costs and flattening the tendency towards increased inter-generational aircraft costs first pointed out by Norman Augustine more than 40 years ago.

The case for this approach rests on the simple observation that different things should be bought in different ways. There is no doubt that GCAP will require a mindset change from those in Defence Equipment & Support whose instinct is that the only way to secure value is through competitive tendering, passing as much risk as possible to the private supplier, and relying primarily on contracted commitments to assure delivery. Also, for teaming to be effective, there will be a need for government technical expertise to be available, not least on the design and meaning of digital and real-world tests. To be specific, the GCAP approach is particularly relevant for projects in which national operational independence is valued and there is little or no scope for sustained competition within the country. 

The elements of this approach give real hope for effective cost control: incentivising industry by securing early significant company investments, focusing government and industrial delivery structures on pace regarding decisions, defining a realistic but militarily adequate requirement from the outset and, perhaps above all, investing in DE to speed development, reduce risks and lower costs. 

Successive UK governments have shown that they can talk the talk on defence industrial matters, and their defence industrial partners have expressed confidence in their potential. Maintaining the momentum of GCAP will require all concerned to show that they can also walk the walk. 

© RUSI, 2024

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