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Privately run MoD procurement 'could harm accountability'
18 July 2012
Defence Secretary Philip Hammond said procurement body Defence Equipment and Support (DE&S) had failed to deliver value for money to the taxpayer.
Procurement chief Bernard Gray had identified the "root causes" – with DE&S suffering from "poor discipline", a "weak interface" with the rest of the MoD, an "overheated equipment programme" and "insufficient levels of business capability", said Hammond.
DE&S was itself launched under Labour in 2007 as part of a major acquisition reform programme that was designed to make the MoD a "unified customer".
But Hammond said the MoD had "wrestled with this issue without success" for decades.
There was now a "strategic case" for creating a government-owned, contractor-operated (GOCO) entity. Officials preferred a GOCO over the creation of executive non-departmental public body with a strategic partner from the private sector.
A final decision on whether to proceed with a GOCO will be reached later in the year.
But Labour has expressed reservations. Shadow defence minister Alison Seabeck said ministerial accountability and public transparency were vital on defence decisions involving "billions of taxpayer pounds", decisions which were also "central to the strength of frontline forces".
She warned proposals could "weaken accountability and ministers have important questions to answer".
"We must have evidence to support any decision made and must know who is responsible for delivery of contracts to time and cost," she said.
"The problems we have seen in relation to G4S cannot be repeated when dealing with our armed forces."
HAVE YOUR SAY
18 July 2012
"Public = bad, private = good", as we have seen with G4S.
That's why the UK has to become the only country in the world to privatise its defence procurement.
But without sorting out the other end of the M4, the capability "managers" constantly moving the goalposts, this will only result in more cost to taxpayers or less capability - not improved value for money.
Who will be making the profit from this recommendation? As with DERA/Qinetiq... follow the money.
AlMiles - Bristol, UK
18 July 2012
You can't wish away the politics that is part of government procurement. This seems to be a search for magical solution. Projects fail most often because they can't sustain coalition of supporting interests assembled on the basis exaggerated claims of technical performance and low cost. GOCOs can't avoid same problems.
H.M.Sapolsky - Cambridge MA. USA
18 July 2012
This is not the answer and will, I believe, lead either to corruption or, more likely given the evidence of previous privatisations, a fundamental distancing of government from responsibility for strategic industrial imperative.
Accountancy procedures alone cannot drive strategy; we have seen time and time again how the pursuit of the lowest price has lead to the replacement of our industrial base with unimaginative swathes of unattractive housing estates which do nothing but perpetuate the vacuity, listlessness and decadence of modern life in Britain today (official: today the UK population is the third least fit in Europe, above only Malta and Croatia).
We will never emerge from recession if all we do is build houses of dubious quality which, of course, cannot be exported.
By all means sort out procurement efficiency but - as AI Miles says - for goodness sake stop moving the goal posts: decide what you want to buy and STICK TO IT. I am sure costs would come down considerably just by doing that one small thing.
Michael - Hertfordshire
18 July 2012
This being the same Bernard Gray who produced a report recommending privatisation of MOD procurement and was then appointed to head up DE&S, where, astonishingly, he came to the conclusion that privatisation is the answer. Despite the fact that defence industry has itself made a substantial contribution to the problem over the years.
I struggle to see why the interface between a GOCO organisation and the MOD should be stronger than the current interface WITHIN the MOD between DE&S and its Service customers. Nor do I see how DE&S can be held accountable for the overheating of the equipment programme, a responsibility that surely lies ultimately with Mr Hammond's (and Dr Fox's) predecessors as SofS for Defence, going back through Labour's time in office to the previous Conservative government.
This is another purely ideological decision, the genesis of which can be seen in Fox's bogus and wildly inflated figure for the number of people he claimed were employed in DE&S.
Stan - York
18 July 2012
I do not totally agree with Mr Hammond, I do feel Bernard Grays role and strategy has yet to make the full impact it is capable of. His procurement paper made a lot of sense when it was written and even more now.
There should be less service involvement with procurement that's for sure, but I don't think the MOD has evolved enough to allow private sector companies any part of the procurement structure yet.
I see a giant conflict of interest issue.
Tim Dainton - Romsey
19 July 2012
It is interesting that a lesser armed service involvement in procurement is posited, because one of the reasons why ENDPB was seen as preferable to GOCO for a time was that a GOCO would sever the involvement of military requirements managers and subject matter experts as part of integrated project teams. Suddenly that no longer seems a problem when fat profits beckon - who cares if the equipment is less fit for the job as a result, at least it'll be on contract faster (with a nice slice of GOCO contractor's profit formula on top of manufacturing prime- and sub-contractors' current profit formula).
Should be interesting to see how they fix the investment appraisal and how this private company will get direct Treasury delegations, and IPR agreements from the USA and other collaborative partners (such companies may not be happy with their competitiors having access to all their commercial rights and information - it'll make the current tendering firewalls look like a walk in the park). And the Armed Forces Minister's announcement (why wasn't it announced by the responsible Minister for defence procurement and support, Peter Luff?) intimated that commercial skills in MOD are already inadequate; I'm not sure private contractors placing contracts on behalf of the MOD, using public money, will be any cleverer. The risks still reside with the MOD!
AlMiles - Bristol, UK
19 July 2012
How much transparancy was there with the Voyager PFI?
John Hartley - Woking/Surrey/UK
20 July 2012
Difficult to see how DE&S can ever have sufficient levels of "business capability" while the MoD continues to have so many of the business unit managers within it coming from the military, usually for 2 years or so. It is also difficult to see how privatisation will remove the need for MoD to have such capability, or how MoD will defend itself against the contractor walking away or doing a Group4.
Muddler - S Glos