MOD Procurement – part 3 (conclusions)

So last week we looked at the issues facing MOD procurement.  Today we’ll finish the series with thoughts on what could be done to address some of the key issues.

It is hard to over-estimate the challenge for Bernard Gray 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 exports, 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 sector, 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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