Mark Leftly: Audacious they may be, but defence reforms look a complete mess

Outlook Bernard Gray is a yo-yo dieter, but when it comes to philosophical conviction he is as steadfast as the sturdiest dreadnought. Mind you, plenty of those super-battleships were sunk by undetected mines and enemies.

The former Financial Times hack holds the grand title of chief of defence materiel at the Ministry of Defence (MoD).

Mr Gray is the brain behind arguably the most dramatic set of reforms of any defence department ever seen anywhere around the world: a pair of ultra-ambitious quasi-privatisations so revolutionary they have spooked even our tough transatlantic partners who run the Pentagon.

However, the Defence Secretary, Philip Hammond, agrees with Mr Gray that Defence Equipment & Support (DE&S), the £14bn budget agency that buys the army's tanks and the navy's aircraft carriers, would be better run by the private sector. Only with that commercial nous could Bristol-based DE&S buy more things that go "bang" for its buck.

He also concurs that the Defence Infrastructure Organisation (DIO), which looks after the MoD's estate from airfields to training bases, should be handed over to companies which can make the best use of these facilities for the armed forces.

This is a breath-taking programme that earns top marks for both audacity and originality and gains bonus points for being a financially meaningful commitment to cutting the eye-watering cost of government.

Others argue it is folly to in effect privatise national security. And the unions are waking up to the fact that DE&S reform will mean thousands of job cuts, badly hurting the South-west economy.

We have previously reported that there is also potential for extreme conflicts of interest. For example, many of the companies involved could end up handing out DE&S contracts worth hundreds of millions to defence firms that are their major clients in other parts of their business. (I should declare my own conflict, of a sort, which is that I worked for the publisher that Mr Gray ran years ago, albeit he was on the top rung of a managerial ladder that I didn't even have a foot on.)

What happened this week was that one of the three consortiums bidding to oversee DE&S pulled out of the process, leaving just two teams. One of these groupings includes Serco, the FTSE 100 giant which is at the centre of the scandal that allegedly saw the taxpayer charged £50m to monitor non-existent electronic tags allocated to the dead and those who were back in custody; the other is led by Bechtel, the US engineer which is helping to dig the 21km tunnel under London that will be the centrepiece of Crossrail.

What is problematic is that these two firms are working together on a bid for DIO and are widely thought to be hot favourites. Should they win and Mr Hammond pursues his preferred plan for DE&S, that would mean one of Serco or Bechtel would be responsible for both agencies and more than half of the MoD's entire budget.

Even if the reality turned out to be that this is not a problem in practice, at the bare minimum the idea that a company – and in Serco's case, a company with a very chequered recent past – has that much control over national defence is distinctly unpalatable. Any decision that the company made would also be open to accusations of laziness through power or bias towards certain defence contractors, whether there was any truth in those claims or not.

There is another option for Mr Hammond, which is to just modify DE&S in what has been called DE&S-Plus. No one seems to know what this would actually entail and this seemingly minor change to the costly status quo is certainly not the defence secretary's preferred choice.

However, unless the bid teams are hastily swapped around or a party withdraws from one of the consortiums, it seems unfeasible that the MoD will be able to pursue DE&S reform should Serco and Bechtel indeed win the right to look after the department's estate. The only alternative would be to in effect exclude the pair from the DIO contract – and it is surely not in the best interests of the department to weaken the competitive process, let alone blank what is said to be an excellent bid.

In other words, defence reforms might be a good idea in theory, but in practice they look like a complete mess.

Start your day with The Independent, sign up for daily news emails
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine