Guardian latest on MOD consulting spend – Spend Matters reported it in August

The news, broken by the Guardian following FOI requests, about MOD spending money on consultants from budgets meant for equipment wasn’t a huge shock. In fact, we might claim it was our exclusive. After our expose on the Alix Partners contract, we had heard that MOD was “concealing” consulting spend. In our Sherlock Holmes spoof back in August we featured this from an anonymous email we’d received:

This sounds like it might be an abuse of the Ministry of Defence’s FATS contract system. In order to give the appearance of reduced spend on consultants (External Assistance), they have been rebadging work as Technical Support, avoiding usual procurement rules. FATS spend has gone up from around £6M to almost £300M pa in the last couple of years – mirroring the reduction in declared EA spend. Questions have been raised and FATS has been the subject of an audit. Watch this space. And ask more questions if the audit turns into a whitewash. 

To be honest, we didn’t have the time or inclination to do more digging on this, given we were still pursuing the Alix story and my wife was already worrying about the consequences of making myself too unpopular with the MOD....  but well done to the Guardian for doing so.  We have also heard that consulting spend was being disguised through the use of Prime Contractors – I’m not clear whether that is the same issue as the use of FATS  or a separate one. So you engage an equipment supplier – a BAE or Boeing – but then instruct them that you want them to provide a consulting firm to do a piece of work as a sub-contractor.  That would hide the spend effectively, but again it means that competition has been avoided.

I would suggest that the auditors and Cabinet Office (whose power to ‘control’ MOD procurement spend is looking more tenuous by the day) should keep an eye out for that ruse as well.

Bernard Gray, the Chief of Defence Materiel, has only been in post since January 2011, so he can probably claim most of this didn’t happen on his watch.  Amyas Morse left his MOD Commercial Director post in June 2009 to go and run the National Audit Office, so it looks like he got out just in time to avoid blame! So as usual it is hard to pin the blame on any individuals.

The most depressing element for me is not the spend in itself, or even the apparent element of budgetary “concealment” – it is this:

In 75% of cases looked at, contracts were awarded without any kind of competition, meaning that the "ability to demonstrate value for money was compromised".

Closely followed by this.

Not enough effort was put in to ensure the jobs could not have been done "in-house".

We’ve been writing about consulting spend recently and these are fundamentals to getting good value – demand management and the importance of competition .

The other puzzle is this.  There are very capable procurement people in MOD – what stopped them making more of a fuss about this? Were they complicit? Or (as I suspect) do they get overruled by senior military types when it comes to this sort of thing?

So, for the future, can Gray, and Les Mosco in his expanded role as the top procurement professional in MOD, get to grips with this apparent disregard for value for money (which we also saw in the Alix Partners case)? Or is it just endemic in the MOD? In which case, maybe Gray’s most dramatic ideas from his 2009 report need re-visiting – let’s hand the whole lot over to the private sector to run.

And, speaking of Mr Mosco, we’ve had a reply from him finally to our letter to the Permanent Secretary on the Alix Partners matter. We’ll feature that shortly.

Voices (3)

  1. Phoenix:

    I do hope this isn’t held up by critics as another reason to diss framework agreements. FA-hating does seem to have died down a bit since Government realised that it couldn’t actually replace all frameworks with contracts – not even the first new deal to come out of the new GPS. It’s hard to tell from the Guardian article, but reading between the lines, there may be issues about how FATs was managed or operated. Everyone knows that contracts with committed volumes offer the best deals, but FAs have their place and are here to stay as far as I’m concerned. As long as they are managed effectively and not seen as a way of appointing anyone you like to carry out consultancy at any price they may care to charge (not that I’m suggesting this has happened at the MoD, you understand).

    1. huhh?:

      It’s not that people hate FAs..It’s just that they never ever do what they supposed to do! I.e. control spend of commodities into certain approved suppliers to aggregate demand and provide transparency.

      It makes a mockery of public procurement! It does beg the question why we are paying for multiple procurement departments in multiple departments, all of who choose to do their own thing.

      I agree with PlanBee – this is a national disgrace.

      Set up one central gov procurement dept, sack all the rest in each department and make it a “business partner” to every other department supplying a procurement service.. That’d stop these unelected muppets spending 300m of my money on their mates in consulting companies. I mean if they need 300m of taxpayers cash to tell them if they’re buying as well as they can – then sack them all, they’re clearly incompetent.

  2. PlanBee:

    Peter, the ‘spend in itself’ IS the most depressing thing. With a public sector strike due on Wednesday, and having watched Nick Robinsons programme last night, £300m unapproved, unchallenged, uncompeted spend is a national disgrace.

    And thats before I complete my tax return

    Angry of the Hive

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