Exclusive – MOD HAVE paid the 30% bonus to Alix Partners

Regular readers know that we exposed a dreadful bit of UK Ministry of Defence procurement – the engagement of Alix Partners without open advertising. There also wasn't much in the way of negotiation skills evident from MOD as they enegaged Alix to (ironically) negotiate cost reduction with MOD’s top suppliers.

We discovered that MOD were paying £3950 per consultant day, plus a 30% success related bonus. Oh yes, and £10 for lunch expenses. We wrote to various Ministers and others, but MOD have continued with the line that the EU “negotiated procedure without prior publication” was justified in this case – which it was clearly not (and I’d bet the mortgage on that).

Anyway, we now have the final instalment (probably) from this sad tale. And it’s a case of the good, the bad and the ugly...

The good is that MOD terminated the contract early, just before Christmas,  as we reported here, and before the full potential £12M was spent.

“I can confirm that because the activities under the Alix contract have now successfully delivered, with the last piece of work just concluding, we have exercised the break clause in the contract and the contract will cease on 23rd December (per its normal notice period)”.

The bad is that not only have MOD still spent £7.59M, they do appear to have paid the 30% success fee. Following a Freedom of Information request, we’ve been told this:

The total amount paid to AlixPartners for consultancy services under the contract was £7.59m (VAT exc), of which £1.75m (VAT exc) related to the success fee provisions of the contract.

So I make that £5.84M pre bonus plus 30% success fee on top, making £7.59M in total.

Now I do know that some MOD staff were keen not to pay the full bonus  – they felt as strongly as we did that the rates were pretty generous already at £3950 per person-day. But I suspect the contract was worded in a manner that made it tough for MOD to get out of that.

And finally the ugly. No-one has taken any accountability for this example of what is, at best, very poor procurement practice. We could ask the EU to look into the inappropriate lack of open competition, and eventually there could be a rap on the knuckles of the MOD and the UK.  But that seems a little pointless in the greater scheme of things. It’s also clear that the guys at the top of MOD procurement now – Mosco and Gray in particular – had little or nothing to do with this whole episode.

So, we’re not going to pursue it further, but (not wishing to sound too sanctimonious here), let’s just hope that we’ve played a small part in encouraging others in public procurement not to bend or break the rules, and pay way over the odds, in the interests of expediency.

And we’d still like to know what on earth the Shareholder Executive gets up to – their role in this was never fully explained, but certainly wasn’t a positive contributor to VFM...


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Voices (2)

  1. David Orr:

    Peter: Well done on this principled campaigning that has been successful.

    My neighbour opposite is in the Marines & has been to Aghanistan twice & Iraq once. He has two children and reading about the appalling waste in vital armoured vehicle procurement makes my blood boil.

    The MoD “procurement performance” & culture reflects very badly on the last Government & remains a challenge to this one.

  2. Elephant in the room:

    Interesting. I get that Gray’s fingerprints weren’t on this project but how do you conclude that Mosco was ‘out’ whilst all this was going on?

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