MOD contract notices published for Defence Equipment & Support MSPs

Last week, MOD issued contract notices advertising the opportunities we mentioned here. Defence Equipment and Support (DE&S) is planning to let six contracts to support its operations, following the collapse of the process to appoint a single partner to run the “GoCo” entity (Government owned, contractor operated) that was originally the plan. DE&S is now a “Bespoke Central Government Trading Entity”.

The six contracts are:

Work package 1 – Four Managed Service Providers (MSPs) to cover Land, Fleet, Air and Joint Enablers.
The MSPs will be a key provider of the services / requirements driving the DE&S Materiel Strategy change programme. They will drive a step-change improvement of project delivery across DE&S, be it procuring new military equipment, commodities and services, supporting in-service equipment through-life or managing global logistic operations. The MSPs will design, build, implement, help operate and embed a system of project management techniques and project controls across DE&S that will improve effectiveness and efficiency of its output delivery”.

Bidders can go for all four lots but not more than two contracts will be awarded to any one bidder. Estimated contract value is given at £200 million to £400 million. We assume this is across the four contracts and the total contract period but that’s not totally clear. Contract term is 3.5 years plus two one-year extension options.

Work Package 2 – an MSP to support Finance and IT requirements. The contract notice gives a long list of requirements – for instance, on the Finance side, “design and implement the financial elements of the DE&S Target Operating Model” and “provide, on an interim basis and as endorsed by DE&S, Knowledgeable, Skilled and Experienced (KSE) personnel to cover capability and capacity shortfalls in DE&S's finance capability and to provide specialist financial advice.”

In terms of IT, the list include “support the Project Delivery and Human Resources MSPs to identify what MI DE&S needs to run its business;   build on the current understanding of the IT infrastructure, information, applications and processes DE&S currently has, to develop a strategic roadmap and future Target Architecture;  map the DE&S landscape and make recommendations as to the best options considering all ongoing plans, systems and change initiatives across the wider MOD and pan-Government, that will impact the current situation...”

Estimated contract value is given at £50 million to £200 million.

Work Package 3 – appointment of an HR related MSP, to provide a mix of consultancy and senior ‘interims’ by the look of it, “to build upon, and embed its Human Resources (HR) management capability and to design and deliver a package that will embed the required cultural change within the DE&S workforce ... it is considered that the requirements for the HR MSP are broadly split into 3 categories:
a) those associated with the design, establishment and embedding of a dedicated new Corporate HR Function within the boundaries of the freedoms and controls given;
b) those associated with the development, implementation and embedding of the employment policy and process framework; and
c) those associated with the DE&S workforce, including designing a HR strategy featuring a new workforce model to enable effective deployment of staff, building capability, and the delivery and embedding of a changed culture within the organisation”.

Estimated contract value is given at £20 million to £100 million (that’s quite a range)!

So, what are we to make of all this? The most obvious comment is that it all looks very complicated. Even the procurement process – it is all very well saying you can’t win more than two of the core lots but what if a firm is a member of different consortia? Or how do you decide which two to award to one bidder if they come top in three? It’s not impossible but challenges ahead.

But that’s nothing compared to the operational issues if and when this goes live. The potential for fighting between these MSPs must be huge, as they potentially compete for funding and priority, and if each MSP is in itself a consortium, then it could all end up as a major dogfight.  The four core MSPs will fight each other, then gang up to rubbish the HR and IT MSPs of course.  (So Bechtel v KBR v Serco v Deloittes v Ernst and Young...)? Alternatively, if the MSPs don’t take on real risk or responsibility, then this could end up as just another compliant route for MOD to employ consultants, at a cost that no doubt the media will take great delight in exposing.

Finally, there’s an industry day next week – April 29th- which is recommended obviously to anyone interested in bidding.

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