Hammond: G4S issues force private sector rethink

14 August 2012

Defence Secretary Philip Hammond is rethinking his attitude to private sector procurement following a major shortage of private sector security guards at the Olympic Games and the subsequent use of military stand-ins.

Security firm G4S had been contracted to provide 10,400 security guards for the Olympic Games but fell several thousand short, leading to some 4,700 extra military personnel being deployed to make up the shortfall.

The Defence Secretary is currently considering controversial plans to part-privatise the procurement of defence equipment, converting the Defence Equipment and Support body into a government-owned, contractor-operated (GOCO) organisation. It is not clear whether the G4S incident will force a rethink of the GOCO plans , with Hammond thought to currently support privatising procurement.

In an interview with The Independent newspaper, he admitted that his background as a self-made businessman gave him a "starting prejudice" that the private sector knew best but added that the" military rescue" of the Olympics had been "quite informative".

"The G4S model says 'Here is a cost envelope within which I have to deliver an outcome and I have to do it incredibly leanly with very little resilience'," said Hammond.

"G4S were literally hiring people and expecting to deploy them three days later. They were trying to build up a management structure overnight and they placed a lot of dependence on the work force – for example getting them to schedule their own shifts by accessing an internet site.

"The military came at it from the exact opposite extreme: 'What is the job that needs to be done? OK, we'll do it. Whatever it takes we'll provide massive resourcing'. And that's why everything has operated so smoothly. When you go through these search lanes everything hums. That's because for every three people doing the work there is one watching them and there are two others watching him."

The military had told Hammond that it took four aircraft and 60 engineers to deploy one Typhoon anywhere within the UK, he said.

"Why four aircraft, I asked? Well, you say one but we always like to have two and we need a back-up aircraft just in case and we'd need the fourth just in case something went catastrophically wrong with the back-up," he said.

"Now if you asked G4S the question they'd have the aircraft and they'd probably fly it in with two blokes in case anything went wrong with it. It is a completely different ethos and way of operating."

Hammond said he was now "learning" about when it was appropriate to adopt either model.

"The application of the lean commercial approach model does have relevance in areas of the MoD but equally you can't look at a warship and say 'How can I bring a lean management model to this?' because it's doing different things with different levels of resilience that are not generally required in the private sector.

"We don't ask the military to prepare to maybe be able to do something or to have an 80 per cent chance of delivering. We ask the military to be in a position that, if we ask them to do a task, they are absolutely able to do it for us."

Shadow Defence Secretary Jim Murphy welcomed the Defence Secretary's rethink and added that any kind of prejudice, which Hammond earlier admitted to, had "no place" in ministerial business.

"The country will be concerned that the pace of defence cuts could lead to more reliance on private contractors in the army while our forces may be less able to perform vital security tasks as they have done during the Olympics.

"The Defence Secretary should now tell us whether he will reconsider his plans to rely more on outsourcing in defence policy. Mr Hammond plans to increase use of contractors to cover army capability gaps and he has caused concern over the impact of greater outsourcing in defence procurement. His own policies could exacerbate the worries he has raised today."