RUSI comments on the Ministry of Defence GoCo

A short but incisive paper has just been published by the UK’s Royal United Services Institute (RUSI). Its written by  Professor Trevor Taylor, a Professorial Research Fellow at RUSI who teaches  at Cranfield University, and Dr John Louth, a Senior Research Fellow and Director of Defence, Industries and Society at RUSI. Its title and sub-title may not be elegant but they pretty much sums up what’s it all about.

“ What the Government must do in Defence Procurement - The Inherently Governmental Function and the GOCO  Proposal for Defence Equipment and Support”.

It looks at the Ministry of Defence (MOD) proposal to set up a “GoCo”, which would involve private sector contractors running much of the UK's defence acquisition and support – something we’ve featured here extensively. The authors ask the question – what are the “inherently governmental functions” that should not be outsourced?  They point out that the 2013 White Paper said this:  “Departmental and wider Governmental roles that are inherently governmental or pan-MOD are currently not expected to be transferred to  a Contracting Entity or Operating Company”.

 However, they point out that little has been done to define this "inherently governmental" term in the UK, whereas in the US, a definitive Policy Letter on the subject was issued in 2011 following a review ordered by President Obama. That came to the conclusion that most of what we would see as procurement activities were part of that inherently government function. Here’s more from the paper – actually an extract from the US policy document:

 Excerpt from the Office of Budget Management Policy Letter - Examples of Inherently Governmental Functions

‘In Federal procurement activities with respect to prime contracts:

a) determining what supplies or services are to be acquired by the government ...

b) participating as a voting member on any source selection boards

c) approving of any contractual documents, including documents defining requirements, incentive plans, and evaluation criteria;

d) determining that prices are fair and reasonable;

e) awarding contracts;

f) administering contracts (including ordering changes in contract performance or contract quantities, etc, etc, )

g) terminating contracts;

h) determining whether contract costs are reasonable, allocatable, and allowable; and

i) participating as a voting member on performance evaluation boards’.

So that pretty much covers what we would define as “procurement” and it is all seen as core, inherently government activity. Indeed, the RUSI paper points out that the US has actually gone in the opposite direction to the proposed UK move, reducing the role of the private sector. The US doesn’t say that contractors cannot carry out these tasks – but it asks departments to implement certain actions, including minimizing reliance on contractors to carry out these functions and taking steps to protect internal capability.

In the final paragraph of the RUSI paper, the authors say this.

"As things stand, however –and notwithstanding the proviso noted earlier that the advice and decision roles of the DE&S are not yet settled –with legislation to enable the creation of a DE&S GOCO currently before Parliament, it is the apparent view of the current British government that the selection of contractors and equipment to be used by the British armed forces is not a ‘function that is so intimately related to the public interest as to mandate performance by public employees'".

 If nothing else, it feels like we should have some further debate and analysis around this idea of the “inherently governmental function” before the GoCo goes any further.  But as the Minister has now got  Cabinet Office reviewing the programme, probably because there are only two bidders* left in the frame, it could all be killed off soon anyway!

(Addendum 1 - *Given there is a long way to go in the procurement, running with just two bidders at this stage is pretty high risk. Lose one more and you’re f....inished)!

(Addendum 2 - interesting stuff in the Sunday Times about how many ex MOD civil servants -  including several who have worked closely with Bernard Gray, architect of the GoCo - are now working for Bechtel, who lead one of the two remaining consortia).

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