MOD Procurement part 1- the underlying issues

We introduced this series of posts about UK military procurement yesterday.  Today in part 1 we’ll look at some the issues facing Bernard Gray and his colleagues who have the task of reforming the processes.  Issues fall into two categories; those which can be addressed perhaps from a ‘professional procurement / project management’ perspective, which we’ll look at tomorrow, and others which are wider and require some potentially fundamental changes that go way beyond procurement, which we’ll discuss here today.

1. Planning, budgeting and the role of politicians

This is the point that our contacts with internal MOD experience make most strongly.  Too many projects are approved and get into the pipeline, without the budget being available to see them through. We then see the ridiculous situation where projects are delayed almost before they’ve started because of budget constraints.  There is an element of conspiracy here between politicians, civil servants and the industry, but it ultimately comes down to politicians.  And this is where the Times was unfair to civil servants; it is not they who make decisions to announce a new project, when everyone knows it can’t be funded.

We still have a set of national defence policy positions, leading to defence capability and procurement requirements, that cannot be achieved with the funding allocated by government.  Our sources suggest this is still true and a test of this government’s seriousness to sort this out will be the required announcement of much reduced capability in 2011 – or (unlikely it has to be said), an announcement of higher funding.

Fundamentally, this issue “is the failure of politicians to take realistic decisions and the related failure of officials to stand up to them”.   This has to change or everything else we discuss here is window dressing.

2. Inter-service rivalry

This exacerbates the problem above. Gray makes this point strongly in his report and our contributors support his analysis that the ‘fighting one’s corner’ that goes on between the three services makes the planning and budgeting process even harder. No-one wants to admit when a project is behind schedule; no-one wants to give up their ‘share’ of the budget.  So these two key factors combine to ensure there are always too many projects and too little money. This means constant project reviews, even post contract, so that no one, including suppliers, has any certainty.

3. Jobs and national security

According to people we’ve spoken to, “everyone knew that the Aircraft Carriers were unaffordable”.   They were nevertheless ordered because they guaranteed jobs in Scottish constituencies; but then immediately postponed for 2 years to save £200 million in that year.  This whole episode was “a bona fide scandal” according to senior people.  It wasn’t widely reported, but it is significant that Bill Jeffrey, the previous MOD Permanent Secretary, was rebuked by the public accounts committee in December because he didn’t ask for a ‘ministerial direction’ on the purchase of the aircraft carriers.  A direction is a personal ‘get out of jail’ card for top mandarins which says, “I’m doing this at your behest Minister even though I think it is a bad idea”.

But to be fair to Jeffrey, this dreadful decision was made by politicians, not civil servants.

The consultation paper on defence equipment published just before Xmas says this:

"Our default position is to use open competition in the global market, to buy off-the-shelf where we can, and to promote open markets in defence and security capabilities. We will take action to protect our operational advantages and freedom of action, but only where essential for national security".

This seems admirable, but will see how that stands up the first time we see headlines about factories closing because MOD are sourcing from France, the US or India.   The same paper makes much of using defence acquisition to support UK exports;

"We are clear that spending on defence and security capabilities must be for the sole purpose of protecting our national security. However, there are wider benefits from having competitive and viable technological and industrial sectors in the UK; ……successful exports help build relationships with and capacity in other countries, as well as contributing to UK growth".

Looking at export potential seems sensible but could of course lead to another complication in making acquisition decisions; why not spend a bit more on the home-grown product (compared with an off-the shelf US product) because we might be able to flog it to the Saudis a few years down the line?

So, if these are perhaps the three biggest 'macro' issues facing MOD procurement, what about some of the more 'professional’ issues? We’ll take a look at those tomorrow.

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First Voice

  1. Dr Richard Skaife:

    If one comes beneath the politics of high value contracts and takes a look at the MoD procurement managment capability, there is a lack of managment capability in programme management and in systems engineering. Yes – there are things like “PRINCE” etc but too many so called project managers are appointed on the basis of paper qualifications and not on proven capability to deliver large programmes. It is akin to saying that because someone is proficient with a word processor they are automaticaly a leading author.

    A significant amount of training is provided to staff officers at places like Shrivenham, and many officers go on to posts in Procurement Executive – but for how long? 2 years then on to something completely different. At no time in an officers’ career is he given any serious opportunity to understand programme management or systems engineering. I doubt if you ask any officer in MoD Procurement Executive if he could explain the systems engineering cycle and how it is related to programme management.

    If MoD is to improve its ability to procure large complicated programmes it needs to manage its finances better, approach programmes professionally and where technology is concerned – get real about systems engineering.

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