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Cold-cuts, Rehash and Fresh Ingredients: Labour's 'Ideas for Future UK Defence Procurement'

John Louth
Commentary, 27 September 2011
Defence, Industries and Society, Equipment and Acquisitions, Defence Management, Defence Policy, UK, UK Defence Policy, UK Defence, Europe
The Labour Party’s emerging policies for future defence procurement represent a mix of new ideas for the future along with old concepts from the past. It is now the job of Labour to convert procurement 'ideas' into a detailed implementation plan.

The Labour Party launched the results of its ten-month review into defence procurement in London on 22 September. The study team comprising of Admiral Lord West, Bill Thomas and Tony Roulstone developed a number of specific recommendations around five key areas: firstly, to balance the Defence Equipment and Support Budget (DE&S); secondly, strategic 'make-buy' decisions surrounding what capabilities are to be developed in the UK and what is purchased 'off-the-shelf'; thirdly, firmer and fairer contracts with industry; fourthly on procurement processes and, finally, on procurement professionalism in both people and organisations. Recommendations will now be submitted to the Labour Party policy review team led by Liam Byrne to see whether these ideas should form part of the Party's future policy platform.

The Defence Equipment and Support Budget

The study team recommends that the Ministry of Defence (MoD) moves to ten-year rolling budgets rather than the current four to five year spending plans. Whilst Labour's proposed longer-term financial planning horizon is clearly sensible, the 'planning timeline' must be matched by a corresponding 'responsibility timeline', resulting in key decision makers, even those from the political classes, being in post for much longer than is currently the case.

Moreover, Labour's idea of 'designing to cost' is laudable but fraught with dangers as the national security/procurement ambition may be for a castle, for example, but a programme management approach fixed at the point of cost may only be able to generate a bungalow. Rather, there will always be the need for trade-offs between ambition, performance, time, volumes, integration and - yes - cost. In mid-long term programmes this trade-off is always dynamic, so the decision making process must be constructed around this practice as it is at the heart of effective programme management.

'Make-Buy' Decisions

The notion of identifying and classifying core sovereign capabilities to drive 'make-buy' decisions has been welcomed by a number of commentators and practitioners. However, the practice must be aligned to both the MoD's Defence equipment plan and research programme, clear links that were found wanting following the 2005 Defence Industrial Strategy when Labour previously considered this subject.

Without doubt this is a key topic, truly strategic in scope, and its reintroduction to the political landscape is timely. However, the devil is in the detail as the processes and mechanisms for ensuring the defence pound follows the philosophy are, as yet, unarticulated.  

Firmer and Fairer Contracts with Industry

With regard to procurement contracting, the report recommends that competition should be used where there are alternative equipment items or systems to be purchased and there is an effective market with at least three competent suppliers.  Additionally, 'fixed price' contracts should be regarded as the norm.

This seems a sensible set of recommendations but there is no dazzling new thinking here. The National Audit Office has been championing this for the past ten years. Nonetheless, it should be welcomed by industrialists and citizens alike as a sensible strategy to try and generate both value for money and a transparent process. Yet, within this area the key enabling forces of research and development, effective IP management and the role and importance of smaller and mid-size enterprises needs addressing, and this engagement should be detailed, robust and credible. It is, perhaps, not too harsh to judge that more work is needed here.   

Procurement Processes

The main recommendation of the study team regarding the procurement process is to ensure stronger project management discipline within the MoD, giving project and programme managers the ability to control change and be held accountable.

The responsibility for project delivery is critical, and there is still some confusion as to where the buck stops. Under these proposals, for a major capital procurement programme, does responsibility rest with the project manager, Senior Responsible Owner, Chief of Defence Materiel, appropriate Service chief or even the politician? Moreover, contingency plans need to be modelled and properly costed irrespective of the procurement lifecycle with this mitigation adding costs to procurement in the short term.

Procurement Professionalism - Organisation and People

Finally, the report postulates that the key to better performance is greater professional project and programme management, faster decision-making and fuller accountability for outcomes. Furthermore, the report demands the establishment of a new Weapons Engineering Service to manage the training, development, career and pay of civilian and military defence procurement staff, recognising equipment procurement as an independent professional service.

Whilst DE&S organisational reform must be part of any defence procurement solution, it may not be possible without some kind of future Government Owned/Contractor Operated commercial arrangement. The case has not been made by Labour for taking this option from the table and focussing instead on an executive Non-Departmental Public Body or agency as the organisational solution. It feels very much like the same conversation that was held in the late 1990s on the formation of the Defence Procurement Agency.

Likewise, the proposed Weapons Engineering Service seems a rehash of the old Acquisition Leadership Development Scheme and Acquisition Stream, albeit with a punchier designation and HR management with DE&S rather than the single Services.

So, all in all, a mixture of the easily digested, sensible, one or two new ingredients and some elements reheated from yesterday's courses. But, in essence, a deliberate and considered attempt to engage with some profoundly complicated issues. The migration from 'idea' to 'policy' to a detailed 'implementation plan' is must now be the focus of this work.

The views expressed here are the author's alone and do not necessarily reflect those of RUSI.

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