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John Glen MP: How GoCo will help to improve defence procurement

Screen shot 2013-06-12 at 23.17.52John Glen is MP for Salisbury. Follow John on Twitter.

For too long, procurement in the Ministry of Defence has been expensive, unpredictable, and inefficient. To outside observers, defence procurement is a closed shop where large, specialist defence contractors hold the Government to ransom whilst others argue that government should make extensive use of cheaper, "off-the-shelf" options.

As with many such debates, the reality lies somewhere in between. It is vital to distinguish between generic items, where the required specification is already known and won't change and which will be purchased in bulk, and sophisticated weapons systems and bespoke equipment where the final specification will not be known until after a contract has been signed.

In a world with multiple and complex threats, in order to maintain strong and effective defences it is vital that the Government is ahead of the technological curve and procures for future capacity to deal with emerging challenges. It is impossible to ‘shop’ for technologies that are still in development or draw up standardised contracts when the specifications and requirements are not known before any contract period expires.

However, this is not to say that the Government should approach defence procurement with an open chequebook. The gap in technological knowledge and expertise between contractors and Defence Equipment and Support (DE&S) has meant that all governments have not been able to take out contracts that represent value-for-money for the taxpayer with providers of sophisticated military hardware. Often contractors’ superior expertise and economic power – knowing that an alternative provider is not readily available – has led to poor procurement outcomes for the taxpayer.

This is not to criticise the personnel at DE&S, who, I have no doubt, work extremely hard to get a good deal for the Government and the taxpayer: but Ministers are right to face up to the reality - that the conditions and remuneration within a civil service structure can never be comparable to the private sector ,and therefore a gap in expertise and knowledge of the technological frontiers will inevitably emerge between DE&S employees and defence contractors who pay more, and therefore acquire the best talent.

Monday’s announcement - that a Government-owned, Contractor-operated (GoCo) model is being examined, alongside a benchmark for best practice to identify improvements within a “DE&S plus”, is very welcome. A GoCo model will provide a more appropriately staffed and incentivised workforce and an environment that is able to appoint the necessary and sometimes more expensive resources to keep defence contractors on their toes.

This solution should not, however, be an excuse to open up a new blank chequebook: GoCo must not be an expensive vehicle where what is saved in procurement costs is simply spent instead on higher salaries for those employed in the GoCo. The analysis from MoD must convincingly demonstrate that GoCo will not lead to a new form of monopoly power, and that competitive remuneration and conditions will allow better outcomes and an overall reduction in cost.

The other lesson to be learned from this debate is that significant elements of procurement do not require the highly-paid, specific skill sets of a GoCo. The MoD status quo must always be constructively challenged. When off-the-shelf solutions can be used – and for much more of the time this will be the case – the focus must be on procuring at as low a cost as possible.

GoCo must be confined to the high-level procurement of complex, multi-year, multi-million or –billion pound hardware: the equipment that successive governments have found it difficult to ensure is delivered on time and within budget. Philip Hammond should be applauded for seeking a solution that gets to the heart of the problem rather than finding a quick fix that doesn't deal with the complexity of defence procurement.


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