Party Conference Procurement Edition – part 4: Defence and MOD

Held over from last week thanks to editorial incompetence amongst our vast team here the last of our series on major policy issues in the UK government and the procurement implications, we look at Defence.

Where to start? This must be the area in which we see the biggest gap between pre-election rhetoric and post election reality.  Liam Fox - and to be fair, other commentators - talked about improving defence procurement while taking out huge chunks of cost.  Sounded easy.  But it's not when you are actually in charge...

To be fair to Fox, he has inherited a situation where MOD under Labour clearly indulged in running up their own internal 'budget deficit'. I've seen articles suggesting that 'the civil servants responsible should be identified and fired'.  That is ridiculous.  Those decisions - committing to projects knowing that the cash wasn't there to fund them properly - weren't civil servant decisions.  That is Ministerial stuff.

So a key part of the policy agenda going forward will be to get better value from the MOD's third party spend, particularly on large programmes.  But why is it that MOD, which has had - and still does - some very smart senior commercial civil servants,  always seems to be in the headlines for the wrong reasons in terms of major procurement programmes?  Well, it may just be inherent in the nature of the challenge.  The lead times are so long, inevitably technology and operational requirements change before the plane / ship / tank comes into production.  So then we get into mega change control issues.  The politics with a small and large 'p' are obviously huge as well; issues of international co-operation, industrial strategies, protecting jobs in marginal constituencies... and so on.  Commercial Director for MOD may be the toughest procurement job in the UK.

So the challenges going forward are pretty clear but hugely difficult. Getting major programmes to run - as far as possible - on time and to budget.  Supporting forces in combat zones with the operational goods and services they need in a timely and effective manner.  And doing all this, no doubt, with far fewer staff.

We may well see structural re-organisation; Fox has talked about three pillars for MOD, one being Estates and Procurement.  But where does 'procurement' start and finish?  Procurement (commercial) is seen very much as a support function on major projects, because the complexities mean that both technical experts and the operational leadership rightly have a huge role in the procurement process.  It may be that improving commercial skills amongst those groups (as well as amongst procurement staff) is part of the answer.

And while I have a lot of time - and sympathy - for MOD procurement, it is perhaps the most inward looking commercial group in government, with (still) a high number of staff doing pretty tactical work. Being based largely in Bath and Bristol doesn't help;  MOD must employ a high percentage of the procurement professionals in that part of the UK, which doesn't always make for healthy staff turnover or influx of new ideas.  There are a lot of people there who I suspect will find 'change' quite a challenge. A simple slash and burn headcount reduction isn't going to suddenly make MOD procurement a slick, well-oiled machine.

In terms of suppliers, I'll just focus on the procurement related element; folk more expert than me need to comment on equipment issues!  Anyway, there would seem to be a lot more scope for use of effective supply chain and sourcing technology, and automation of procurement processes.  And is it feasible that the necessary cost reductions and restructuring can be done without external advice  and support - or maybe even more, perhaps partial outsourcing of some sort?  We'll see, but I'd be amazed if McKinsey (and probably others) aren't already positioning themselves.  I wonder how many consultants from the big firms are working 'pro bono' in MOD at the moment in anticipation of the big project?

On that cynical note, I'll end and wish my friends in MOD procurement 'good luck' for a challenging few years!

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First Voice

  1. Les:

    Reasonably balanced! Catch up sometime

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