OneOne Hundred Blog

Red Dragon - a project by the Ministry of Defence (MOD), Welsh Assembly Government and the then Welsh Development Agency (the Welsh Authorities) to provide modern aviation repair facilities at St Athan, South Wales - has cost the taxpayer around £113 million, although it was meant to have saved MOD money and protected jobs in the area, according to a joint report released today by the National Audit Office and the Wales Audit Office. Jeremy Colman, Auditor General for Wales, is quoted as saying: "The Ministry of Defence and the Welsh Authorities failed to collaborate sufficiently throughout the project. Although for much of the time both had complementary objectives, they did not establish a common purpose for the project or a common understanding of their respective assumptions about the future of the site. The Red Dragon project highlights the danger in large and complex projects that involve multiple public bodies of insufficient openness and information sharing."

Red Dragon was a project between the Ministry of Defence (MoD) and the Welsh Authorities for the development of the RAF St Athan site in South Wales. The original plan, which was subject to an investment appraisal in February 2002, comprised the following elements, with a cost of some £134 million excluding payments from the Welsh Authorities to MoD:

The Preferred Bidder for the super-hangar project was announced in November 2002, in January 2003 the DARA Ministerial Advisory Board considered the investment appraisal and approved Red Dragon Project, and work on-site preparation for the super-hangar commenced in February 2003. In March 2003 MoD signed an agreement with the Welsh Development Agency, which committed MoD to the rationalisation of the site and the land deal. The super-hangar was finished to approved time and budget by December 2004 and in the following month DARA began to move into its new repair facility.

Despite this work progressing at St Athan, MoD had commenced work during the Summer 2002 to identify alternative options for more efficient delivery of logistics support, an End-to-End Review of Logistics Support commenced in December 2002 and in January 2003, MoD commissioned a strategic review of aircraft support, which reported in July 2003. The findings of this End-to-End Logistics Review eventually led to announcements in March and September 2004 that DARA’s fast jet repair business for the Harrier jump jet and Tornado bomber at St Athan would close and the repair work would be moved to one main operating base for each fleet. These announcements undermined the Red Dragon project. In November 2005 MoD announced that all DARA St Athan’s fast jet repair business would close by April 2007, so the super-hangar was no longer needed for its intended purpose.

This basic evidence suggests that the management of the super-hangar project was in itself a serious failure. Due to an apparent lack of strategic thinking, MoD committed £134 million to a project for which they had no strategic need.

The NAO reports that MoD and the Welsh Authorities did not work together sufficiently closely throughout the Red Dragon project and that they had significantly differing perspectives on the longer term prospects for the St Athan site. The project was initially regarded as commercial in nature, rather than as a joint project between two Government bodies, resulting in MoD and the Welsh Authorities being unsighted on the other’s key assumptions on DARA’s viability for commercial repair work. In March 2003, a Composite Agreement had been signed between MoD and WDA (one of the Welsh Authorities), The NAO report reveals that despite a high-level inter-governmental steering group being allowed for in the governance arrangements for the site, this group was not full implemented until after the Armed Forces Minster’s announcement in September 2004 regarding the decision to remove fast jet work from the St Athan site. This suggest that in addition to the strategic management failure, the project had failed to put in place appropriate governance arrangements, that it had failed to manage key stakeholders and that it had failed to plan for benefit realisation.

The handling of this project appears to have been a classic case of an asset creation project (a new super-hangar) rather than a benefit driven project, realising gains for the South Wales community and improved value for money for the UK taxpayers.

Links
NAO - Red Dragon Report - Press Release
NAO - Red Dragon - Report Summary
NAO - Red Dragon - Full Report