The Nimrod Review - Official Documents

The Nimrod Review
‘Reduction in output costs’
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374
Sir Sam Cowan denied that there were any allocated cuts (let alone any what he termed ‘slash and burn’)
to any DLO budget as a result of the 20% target. He said that he recognised that budget holders “were
already challenged enough dealing with inherited risk, the SDR cut and the MOD’s assumed efficiencies”.
He sought to draw a distinction between a goal pitched in ‘output’ terms as opposed to ‘cash’ terms. In my
view, however, this is a distinction without a difference. As Counsel to the Review put it, the Strategic Goal
must have driven cost-cutting measures throughout the organisation. In practice, the Strategic Goal must
have felt like cuts to those at the coalface. I do not accept his assertion that “no cuts, either in manpower or
in budgets, were made as a direct result of setting up the DLO”. It is clear from the evidence that, during the
period 2000 to 2005, large amounts of time, energy and the resources of many people within the DLO were
devoted to finding ways of making ‘savings’, ‘efficiencies’, ‘reductions in costs’, ‘cuts’ etc. This inevitably
diverted and distracted people from their other duties and led to a shift in priorities.
No risk assessment
13.75
Sir Sam Cowan admitted that he did not carry out any initial ‘change risk assessment’ at the time of setting
his 20% Strategic Goal. He suggested, however: (a) it was not necessary to do so because “each proposal
that came up in terms of a programme or work to rationalise a structure, to establish a function, would be
properly assessed by risk”; and (b) it was not appropriate to do so because “all the changes were not specified
... at the outset”. I disagree with both arguments. The mere fact that it might be expected that specific safety
assessments would be carried out whenever individual changes were made does not obviate the need for
careful thought to be given at the outset to the overall impact of the launch of such a major programme
of output. In my view, the effect of setting a substantial and defined ‘Strategic Goal’ of 20% savings in
output costs in the DLO over five years inevitably had potential safety implications which ought to have been
considered from the outset for a number of reasons. First, the ‘Strategic Goal’ was inevitably going to drive
a series of cost-cutting measures and lead to a substantial amount of pressure, disruption, diversion and
distraction on, of or for those charged with delivering the goal. Second, this was a brand new organisation
that was only just bedding down and which already had the raison d’être of achieving ‘transformation’
in every area of the DLO, its structures, processes and resources, indeed, a revolution in the whole way in
which the DLO ‘did business’ was called for. Third, there was a major challenge in maintaining the values and
principles of safety and airworthiness during the organisational shift from ‘functional lines’ to ‘project lines’.
Regulations for impact assessment – JSP815
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A formal requirement to assess and control the impact of changes to organisational structure or resources
which might affect safety was introduced in the civil nuclear arena in April 2000 following incidents at Dounreay
in 1999 (Nuclear Site License Condition 36 “Control of Organizational Change”). A similar requirement was
not introduced in the military arena, however, until 2006, by an amendment to JSP815 which provided (in
Chapter 3):
“Management of Organisational Change
42. Without adequate planning and analysis, change may result in the inadvertent erosion of the emphasis
on high standards of environment and safety performance. This may manifest itself in the loss of
established formal and informal environment and safety processes, loss of critical safety culture,
knowledge and expertise, or lack of sufficient personnel to safely operate and maintain a process with
consequent increased likelihood of accidents and incidents.
43. Duty holder organizations shall, prior to any significant changes, conduct an environmental and safety
assessment to baseline the existing arrangements for critical environment and safety activities; analyse
the impact and justify the proposed changes. The rigour of the assessment shall be proportionate to
the significance of the change. Where appropriate and proportionate, the organization should seek the
views of the relevant FSBs [Functional Safety Board] or discipline leads.
44. It shall be the responsibility of the individual or team proposing the initiative to implement and