MOD Procurement – The Same Old Issues? (Part 2)

(This series of articles was first published by us in December 2010 but seems relevant given the recent debate around the suitability or otherwise of the F-35 fighter planes bought by the UK’s Ministry of Defence. We have slightly edited it and are publishing in two parts rather than the original four – hence this part 2 is somewhat longer than our usual.)

In part 1 we looked at the major strategic issues around MOD acquisition.  Today we’ll focus on more specific procurement issues that were highlighted by our expert contributors, consulted as part of our research.

The uniformed / civilian staff issue

In military acquisition – all the way from specification and requirements, through tendering and contracting, project management and delivery, the MOD uses teams that mix civilian experts with uniformed staff from the three services.  This brings a number of problems.

Uniformed staff generally only have a 2-year tour of duty; not long when projects can run for several times this period.  They often think that civilians don’t understand the pressure of front line troops, while the civilians think that the military just want the most expensive stuff, now, and don’t understand the technicalities of procurement or EU procurement processes.

Even amongst the civil service staff, the system does not encourage specialism.  It creates generalists who, in themselves, move on frequently from function to function in order to gain promotion.  We’ve heard it suggested that many of the gains made by MOD procurement around 2005-7 through the introduction of category management – and extensive training – have been lost partly because of this.  And at the top levels, the most knowledgeable about acquisition and procurement don’t always end up leading the key organisations

Lack of accountability

The MOD, like many other large organisations, private or public, suffers from layers of committees, reviews and audits, which can make it hard to allocate real responsibility.  And of course, the more MOD is criticised, the greater the tendency there is to avoid making decisions and protect yourself by ensuring that any blame will be widely shared!   It was sad to see so many comments on websites when issues like the aircraft carriers hit the press along the lines of “we should give people clear responsibility, they should be dynamic and risk-taking – oh, then we should sack them if it goes wrong.”

This is the paradox – the more criticism of MOD acquisition there is, then the less and less likely it is that people are going to take risks, accept personal responsibility, or stick their heads above the parapet.  (And as we said earlier, civil servants cannot respond publically, even when they believe that some of the recent accusations are “incorrect and borderline defamatory”).

Structures and leadership

Our contributors who have worked with MOD without being civil servants agree that there are some very capable people in MOD acquisition roles.  There is then a whole batch of people at operational level who basically ‘do what they are told’.  Some are capable of change; others are not.  But the top people, who do understand what is needed, have difficulty getting their message through to the ‘troops’. That may be a sign of overly long management chains; or cultural problems; or the need to change a mid-level cohort of change blockers.

External vision

Linked to that last point, it does seem that there is limited movement in and out of MOD procurement. Being based largely in Bristol does not help; Abbeywood must employ about half of the total Bristol population of procurement professionals! The culture of a comfortable job for life does not help drive change, and even though in my personal experience there are many good people there, more cross-fertilization with other public and private bodies would help the level of experience and confidence in the procurement team.

So, having diagnosed some of the key issues, what can be done?

It is hard to over-estimate the challenge for Bernard Gray (Chief of Defence Materiel, 2011-16) and his colleagues over the next couple of years – even if MOD acquisition is not as bad as it has been publicly painted (which some insiders would argue), the public image is now hugely tarnished by issues such as the Aircraft Carrier fiasco.  Ironically, politicians deserve much of the blame for such episodes, yet will of course be the first to criticise ‘incompetent’ civil servants and dysfunctional procurement processes.  And partly because politics and politicians are at the heart of many of these issues, we’ve found little confidence amongst our contacts that the willpower and capability is in place to really ‘sort out’ defence acquisition.

We hope we’re wrong. So let’s be more positive.  There are lots of ideas around, and indeed the Gray report has some very good analysis and some good recommendations.  Here are our headline thoughts based on what we’ve heard from our experts.

Firstly and most importantly, there needs to be clear linkage between the capability desired, the equipment to support that, and the budget available.  If that isn’t sorted out…then all bets are off.

Then clarity is needed around the role of defence acquisition; if it is all about value, and not protecting jobs, then fine.  But as soon as you start introducing issues around promoting experts, I fear confusion will reign again. You can see the manufacturers’ arguments now;

“If you fund our exciting new ‘bespoke’ piece of equipment, we’ll be able to make exports worth £26 Billion over the next decade…”

A statement that MOD will buy the best value, most appropriate off the shelf kit, wherever possible, and wherever it comes from, would be very helpful in terms of clarity for the acquisition process.

In terms of professional procurement issues, getting better alignment between uniformed and civilian staff is key – and the Gray report has interesting ideas around getting clarity of decision lines here, and longer tours of duty for uniformed staff – sensible thoughts generally.  I wonder whether on the other side there is more that could be done to get civilian staff on the same wavelength as their uniformed colleagues?  Here’s a crazy idea that might just help - what about some Territorial type training for new procurement staff?

Across Government there are moves to make procurement processes more efficient and less time / resource intensive.  That should be a priority for MOD.  Could they benefit from better use of technology for instance and a real drive to use more eSourcing and similar platforms?  Although MOD probably utilises auctions better than many parts of the public sectors, there is more scope we suspect and some of the more complex MOD projects and procurements might be ripe for the use of optimization engines.

Gray talked about major outsourcing of Defence Equipment and Support organisation, or setting up a government owned, private sector operated ‘company’.  This feels like a step too far – and we suspect one that would be very costly in the short term.  But it does feel like some injection of external expertise might be useful, but it has to be on the right basis, and it must be operationally focused and accepting of some risk; not (and no disrespect to McKinsey) yet another high-level ‘smart procurement’ strategic initiative.  Perhaps using an organization to take on an equipment programme (post contract, through to delivery) as a pilot; in line with the way CLM have successfully managed the Olympics construction programme?

And finally, motivation of acquisition staff is going to be key.  Does anyone really think that the kicking MOD procurement has taken recently makes it more likely that staff will take risks, be decisive, act commercially?  Or does it make it inevitable that there will be even more risk aversion, management by committee, passing decisions up the line?  I know which I think is more likely.  Meanwhile, as someone who knows MOD procurement very well said to me;

“The impending headcount reductions will make the matter worse as the good people - confident that they can make the transition to the private sector culture - will leave and the less capable people will stay for as long as possible as they know they won't survive in any other environment”.

Another contact said, of the top level political change in approach that is needed, “don’t hold your breath”.  They expect major job losses in MOD staff, including acquisition related, (which the Tories ‘promised’ even before the election), then some rushed outsourcing – followed finally by disastrous results a few years down the line.

Sorry to finish on that negative note – but let’s hope, as the immortal D:Ream once said,  “things can only get better”.

 

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